insurance in india started without any regulations in the nineteenth century

8/13/2019 Insurance in India Started Without Any Regulations in the Nineteenth Century

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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. After the independence, the Life Insurance Company was nationalized in 1956,

and then the general insurance business was nationalized in 1972. Only in 1999 private

insurance companies were allowed back into the business of insurance with a maximum of 26

per cent of foreign holding (World Bank Economic Review 2000). The entry of the State Bank ofIndia with its proposal of bank assurance brings a new dynamics in the game. On July 14, 2000

Insurance Regulatory and Development Authority bill was passed to protect the interest of the

policyholders from private and foreign players. The following companies are entitled to do

insurance business in India.

The private insurance joint ventures have collected the premium of Rs.1019.09 crore with the

investment of just Rs.3,000 crore in three years of liberalization. The private insurance players

have significantly improving their market share when compared to 50 years Old Corporation

(i.e.LIC). As per the figures compiled by IRDA, the Life Insurance Industry recorded a total

premium underwritten of Rs. 10,707.96 crore for the period under review. Of this, private players

contributed to Rs.1, 019.09 crore, accounting for 10 percent. Life Insurance Corporation of India

(LIC), the public sector giant, continued to lead with a premium collection of Rs.9,688.87 crore,

translating into a market share of 90 per cent. In terms of number of policies and schemes sold,

private sector accounted for only 3.77per cent as compared to 96.23 per cent share of LIC (The

Economic Times, 21 March,2004).

The ICICI Prudential topped among the private players in terms of premium collection. It

recorded a premium of Rs. 364.9 crore and a market share of 25 per cent, followed by Birla

SunLife with a premium underwritten Rs.170 crore and a market share of 15 percent, HDFC

Standard with 132.7 crore and Max New York Life with Rs.76.8 crore with a market share of

approximately 15 per cent each. Unlike their counterpart in the life insurance business, private

non-life insurance companies have not yet started addressing the retail market. All is set to

change in the coming years. Like in the banking sector, non-life insurance companies will soon

have no choice but to focus on individual buyers.

In case of private non-life insurance players, that their market share rose to 14.13 per cent,

recording a growth of 70.75 per cent on an annual basis, while the market share of public sector

stood at 85.87 per cent, registering a marginal growth of 6.34 per cent. The overall market has

recorded a growth of 12.32 per cent by the end of January 2004. Among the private non-life

insurance players, ICICI Lombard topped the list with a premium collection of Rs.403.62 crore in

one year period with a market share of 3.05 per cent and with an annual 131.6 per cent, followed

by Bajaj Allianz with a premium of Rs.385.02 crore and 2.91 per cent market share and Tata AIG

with 300.49 crore premium and 2.27 per cent market share with an annual growth rate of 62.60per cent.

Among the public sector players, New India garnered a market share of 24.38 per cent,

Rs.3,229.49 crore premium and an annual growth rate of 0.38 per cent, followed by National with

a market share of 21.43 per cent, Rs.2,839.11 crore premium and an annual growth rate of 19.88

per cent, United India with a market share of 19.47 per cent (Rs.2,578.83 crore premium) and

Oriental with a market share of 18.25 per cent, Rs.2,417.17 crore premium and an annual growth

rate of 1.86 per cent. It is significant to note that HDFC Chubb and Cholamandalam have

registered annual growth rates of 4030.26 per cent and 1101.20 per cent respectively, whereas

New India has registered it as 0.38 per cent. If this trend continues, private insurer would

dominate the public sector like New India Insurance Corporation. It is obviously reflect theinsurance sector has facing the challenges with foreign counter parties as well as private counter


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parties and lot more opportunities are prevailing to penetrate the insurance business among the

uncovered people and area of India. Further, it leads to economic development of the country. In

this regard, it assumes greater significance to conduct debate among the inter- disciplinary

persons.

It is, therefore, an urgent need to explore the challenges and opportunities faced by the

insurance sector in India. Accordingly, the proposed seminar title is INSURANCE SECTOR IN

INDIACHALLENGES AND OPPORTUNITIES.

II. OBJECTIVES OF THE SEMINAR

The following objectives have been formed, such as:

1. To discuss the challenges that the insurance sector is facing in India.

2. To focus the opportunities that the insurance sector in India is having.

3. To assess the growth of private insurance sector in India.

4. To discuss on the cost (premium amount) and on the Rate of Return (RoR) on insurance

policies.

5. To review the role of the Insurance Regulatory Authority of India (IRDA) in regulating

insurance business in India.

6. To discuss the determinants (Economic, demographic, Risk factor etc.) of the insurance policy

holders.

7. To review why the rural people have remained outside the purview of the insurance sector in

India.

III. ACADEMIC SIGNIFICANE OF THE PROPOSED SEMINAR

Insurance sector is now receiving serious attention by colleges and universities. Many

educational institutions are offering Post Graduate Diploma in insurance on part time or full time

basis or in the distance mode to cater the needs of the students. Vast literature made available

on Insurance in the form of books, magazines and research papers. However, the existing

literature covered by principles, nature and scope of insurance, documents and marketing of

insurance. Thus very few studies attempted to evaluate the risk factor.

It is, therefore, the proposed seminar would concentrate to deliberate on Rate of Return (RoR),

inflation rates, discount rates, mortality rates, and Net Present Values etc. No adequate debate

has been carried out on the proposed topic of the seminar to the extent that it demands. Hence,

the proposed seminar assumes a greater significance in the academic field.

IV.RELEVANCE TO PRESENT-DAY PROBLEMS/NEEDS OF THE SOCIETY/ COUNTRY

The latest series of bomb attacks, attack on parliament, attack on Ayodya, attacks of the Maoists,

nature calamities like tsunami, floods and drought, ragging are prevailed in the country and need

not to say about the farmer who has been insecure about rains, seeds, crops and suitable price

for his crop. In developed countries, the owners have insured even pet dogs. Whereas in India,

about 80 percent of human beings and major natural resources have not been insured in

globalization era.

Based on the above fact, this seminar has quite relevance to the present day problems of life

insurance, non-life insurance, rural health insurance, ragging insurance, natural calamitiesinsurance, pension insurance and terrorism insurance.


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V. RELAVANCE TO NEEDS OF THE SOCIETY/COUNTRY

Insurance sector is a major contributor to the financial savings of the household sector in the

country, which are further channelized into various investment avenues. As per the Annual

Report 2003-04 of IRDA, contribution of insurance funds to the financial savings was 14.9 per

cent in 2003-04, viz 2.2 per cent of the GDP at current market price. The premium underwritten

has grown from Rs 45,677.57 crore in 2000-01 to Rs.83,645.11 crore in 2003-04. Afterliberalization of insurance sector, insurers have introduced innovative product and tailor made

products which are absolutely sit to rural population. Efforts at increasing consumer awareness

and putting the regulatory framework for protection of policyholders interest have been made

both the industry and regulatory level. Global market conditions have also resulted in driving

down premium rates/charges in respect of certain products and in improving the quality of

services offered by the insurer. Finally, insurance sector has been penetrating in India, thus the

proposed seminar has quite relevant to the society.

insurance in india started without any regulations in the nineteenth century

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