General Insurance

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Insurance sector in India

Index

TopicPage numbers
1.Brief history of the Insurance sector in India1 – 3

2.Life Insurance industry in India3 – 31
- Market structure
- Product mix and margins
- Key factors driving growth and profitability
- Market share dynamics – LIC v/s Private cos
- Analysis of the big 5 private players
- Life Re-insurance

3.Non-Life insurance industry in India32 – 42
- Market structure and products
- Market share dynamics
- Impact of de-tariffing
- Re-insurance

4.Expanding access to insurance43 – 53
- Rural insurance
- Micro-insurance
- Crop insurance
- Credit insurance

8.Challenges to the Indian insurance industry54 – 58

9.Conclusion59 – 60

10.Bibliography and Glossary61 – 63

Appendices
1.Life product features64
2.Overview of regulations65 – 69
3.India, China and UK market comparison – Life insurance70 4.Market access regimes in Asia71
5.Financial saving of the Household sector (Gross) – IRDA Annual report 2005-0672 6.List of Regulations framed under the IRDA Act, 199973
7.Solvency ratios of Life and Non-Life insurers (2005-06)74 - 75 8.Bancassurance – Banks as distribution partners76

Insurance sector in India

The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. Insurance in India started without any regulations in the nineteenth century. It was a typical story of a colonial era: a few British insurance companies dominating the market serving mostly large urban centers.

A brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: •1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. •1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. •1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. •1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: •1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. •1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. •1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. •1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. •107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms:
In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.N. Malhotra...
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