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IMPACT OF LIBERALISATION ON INDIAN LIFE INSURANCE INDUSTRY: A TRULY MULTIVARIATE APPROACH

In a liberalised landscape, the Indian life insurance industry saw the participation of foreign players in the domestic market, which revolutionised the industry. Consequently, the public sector giant, Life Insurance Corporation of India, has also redrawn its priorities and revamped its marketing strategy. There is a substantial amount of debate regarding the change factors induced by liberalisation. However, there has been little focus on the examination of its key components such as productivity and efficiency. This study was carried out with the main purpose of examining the impact of liberalisation on the Indian life insurance industry in terms of efficiency characterised by functional performance.

Descriptive research design was employed, and samples were drawn from the intermediaries, customers and employees of Indian life insurers across the country. Disproportionate stratified sampling method was applied with a convenient sampling option. Data of 552 respondents from Indian life insurers was used for the empirical examination. Interviewer-administered survey utilising cross-sectional methodology was conducted through questionnaires that contained statements based on multiple choice and a five-point Likert scale.

Survey data was analysed and change factors such as marketing mix (MM), service quality (SRQ) and insurance awareness (IA) were extracted by conducting exploratory factor analysis (EFA). The main effects and interactions of the change factors were measured by conducting multivariate analysis of variance (MANOVA) test. The effect sizes were calculated based on Maher, Markey and Ebert-May’s guidelines (2013) and APA guidelines. G*Power software was used to calculate effect sizes and power. 

The study indicates a large and positive impact of liberalisation on the Indian life insurance industry on MM as compared to SRQ and IA. There was a wide gap between perceived service quality and expected service quality, and  a wide gap in insurance awareness across types of place of residence. Therefore, we conclude that while there is a positive impact of liberalisation on the Indian insurance industry, the two major challenges to be addressed are providing world class service quality,  and increasing penetration and density.