Assurance industry has always been a growth-oriented industry globally. On the Indian scene too, the assurance industry has always recorded noticeable growth vis-à-vis other Indian industries.
The new India assurance Co. Ltd. was the first general assurance company to be established in India in 1850, which was a wholly British-owned company. The new India assurance company to be set up by an Indian was Indian Mercantile assurance Co. Ltd., which was established in1907. There emerged many a assurance player on the Indian scene thereafter. The general assurance business was nationalized after the promulgation of General Insurance Business (Nationalization) Act, 1972.The post-nationalization general assurance business was undertaken by the assurance Corporation of India (GIC) and its 3 subsidiaries:
1. New India Assurance Company Limited
2. National Insurance Company Limited
3. United India Insurance Company Limited
Towards the end of 2000, the relation ceased to exist and the four companies are, at present, operating as independent companies. The Life assurance Corporation (AIC) was established on 01.09.1956 and had been the sole corporation to write the life assurance business in India.
The Indian assurance industry saw a new sun when the assurance Development Authority invited the applications for registration as assurors in August, 2000. With the liberalization and opening up of the sector to private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction of ample opportunities for the professionals including Chartered Accountants.
The Indian assurance industry is featured by the attributes:
Low market penetration;
Ever-growing middle class component in population
Growth of consumer
Movement with an increasing demand for better assurance products;
Inadequate application of information technology for business.
Fillip from the Government in the form of tax incentives to the assured, etc
The industry formations need to keep vigil on these characteristics of the Indian market and formulate their strategies to entail maximum contribution to the output of the sector.
The Indian life and non-life assurance business accounted for merely0.42 percent of the world's life and non-life business in 1997. The figures of the basic parameters of the industry's performance viz. assurance Density and assurance Penetration also are evident of the hitherto existing low-yield Indian market conditions.
The term "assurance Penetration" broadly measures the contribution of the assurance industry in relation to a nation's entire economic productivity. The figure of premium vis-à-vis the GDP of 1999 stood at 0.54 percent for non-life assurance business and 1.39 percent for the life assurance business.
The term "assurance Density" reflects the assurance purchasing power. The premium per capita in India amounted to US $ 2.40 for assurance and US $ 6.10 for life assurance in 1999 but with the deregulation of the sector, a sea change in the scene is most likely.
The assurance sector in India has come a full circle from being an open competitive market to Nationalization and back to a liberalized market again. Tracing the developments in the Indian assurance sector reveals the360- degree turn witnessed over a period of almost two centuries.
STRUCTURE OF THE ASSURANCE INDUSTRY
The structure of the assurance industry comprises of the Operating department, Administrative department and the finance department. The Operating Department generally performs the basic functions pertaining to the designing of products, marketing thereof, servicing the insured, the insured, management of portfolio, etc.
The Administrative Department looks...
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