Literature Review of Life Insurance Markets: Developing a New Perspective to improve the Indian Market

Despite of being the second most populous country, India’s life insurance penetration and density (the two accepted parameters of performance) are low. To look at the causes of underperformance of this vital market, the existing literature needs to be reviewed. Thus the objective of this paper is to identify research gaps and to suggest an appropriate theoretical framework to study the market. An attempt has been made to review the existing literature in relation to foreign as well as Indian life insurance markets. The review of studies in relation to foreign markets clearly shows the difference in the approach to look at the market across the world and the Indian studies. The literature review reveals that most of the existing Indian studies are descriptive in nature looking only at the profile of companies, buyers; nature of products; comparison of public and private companies; service quality etc. However, in case of foreign studies, informational and behavioural aspects are studied in greater detail vis-à-vis the life insurance market focusing on phenomena like information asymmetry, heuristics and biases etc. There is no study till date that has focused on the informational aspects and bounded rationality with respect to Indian life insurance market. It is therefore suggested that Behavioural Economics framework is the appropriate theoretical framework that can help in identifying the causes of underperformance.