Reforms initiated in the early 90’s have changed the face of
the Indian economic landscape resulting from a major shift
in the development policy. As a part of the reforms
programme, India opened up certain sectors of the economy
that hitherto were the sole prerogative of the government.
One of the most significant impacts of economic
liberalisation and allowing private participation has
happened in the Insurance sector. From a limited choice of
one single insurance provider, consumers today can choose
from a number of other private insurers to service their
demands, and with a fast-changing demographics, it is one
among the many sectors that is set to witness exponential
growth in the years to come. Let’s peek into the past,
present and future of this dynamic and all pervasive sector,
but first the basics.
were consolidated to form the
palmist may read back to the eighteenth century. It has
your hand as per the actually come a full circle from being an Insurance Act in 1938 with an
inexact science of open competitive market to being objective to protect the interests of the
astrology, but, how accurately, is regulated and controlled exclusively by insuring public.
anybody’s guess. So what’s the best the government and back to a liberalised
The initial phases saw a mass
way of beating an uncertain future? The regime again.
proliferation of companies in the
best bet to beat uncertain circumstances
Life Insurance insurance business that increased the
is to hedge oneself against the probable
The sector is broadly divided into two risk of the insuring public and forced the
risks of the future. In other words, to
categories including Life and Non-life government to take over the business
ensure against the uncertain future
Insurance. The former encompasses the from the private sector. In 1956, about
through some sort of mechanism and
bulk of business but the non-life segment 245 Indian and foreign insurers and
insurance is all about hedging oneself
nevertheless is also as important. The provident societies were taken over by
from the vagaries of an uncertain future.
commencement of Life insurance in India the central government and nationalised.
The term insurance is all-pervasive dates back to 1818 when the Oriental The LIC Act of 1956 laid the foundation
in the sense that it enables one to Life Insurance Company in Calcutta for the creation of the Life Insurance
protect everything from one’s life to the was established. The Indian Life Corporation of India (LIC), which today
is one of the largest and the most
smallest of assets that you can think of Assurance Companies Act was
successful public sector enterprises in
from the vagaries of an uncertain future. enacted as the first statute to regulate
the country. LIC enjoyed a status of a
Though the sector is being fancied of the life insurance business in India in the
late on the Indian economic scene, year 1912. Later, as the sector grew in virtual monopoly till recently when the
insurance business in India per se dates importance, all the acts formed till date government, as part of its larger
Major Life Insurers in India
economic programme of allowing private participation, again
decided to open the Insurance Sector to the private players. Allianz Bajaj Life Insurance Co. Ltd.
AMP Sanmar Assurance Company Limited
Birla Sun Life Insurance Co. Ltd.
The Triton Insurance Company Limited parented the general
Dabur CGU Life Insurance Company Pvt. Ltd
insurance business in India. It was the first general insurance
HDFC Standard Life Insurance Co. Ltd.
company established in 1850 by the British in Calcutta. In
ICICI Prudential Life Insurance Co Ltd.
1907 came The Indian Mercantile Insurance Ltd which
ING Vysya Life Insurance Co. Pvt. Ltd.
transacted all classes of general insurance. This sub-segment
Life Insurance Corporation of India
too was nationalised in 1972 having passed the General
Max NewYork Life Insurance Co. Ltd.
Insurance Business (Nationalisation) Act. This saw the
MetLife India Insurance Company
amalgamation of 107 insurers under a group of 4 companies
OM Kotak Mahindra Life Insurance Co. Ltd.
namely; the National Insurance Company Ltd., the New India
SBI Life Insurance Company Ltd.
Assurance Company Ltd., the Oriental Insurance Company Ltd.
Tata AIG Life Insurance Co. Ltd.
and the United India Insurance Company Ltd.
LIC in life insurance and GIC in general insurance with its
subsidiaries had for long been monopoly players in the insurance
sector. Of late, however, with the setting up of the Insurance
Regulatory and Development Authority (IRDA), the government
has once again de-regulated the sector opening it for private
players. With this, many large Indian business houses along
with other multinational players have setup shop for selling
insurance services in India.
Insurance sector reforms
Major Non-Life Insurers in India
As part of the liberalisation process, the government
appointed a committee headed by the former Finance Secretary Bajaj Allianz General Insurance Co. Ltd.
and RBI governor, Mr. R N Malhotra, to evaluate the insurance Cholamandalam General Insurance Co. Ltd.
industry and to recommend its future direction. This HDFC Chubb General Insurance Co. Ltd
committee, in its report submitted in 1994, suggested the ICICI Lombard General Insurance Co. Ltd.
following changes: IFFCO TOKIO General Insurance Co. Ltd.
National Insurance Company Ltd.
New India Assurance Company Ltd.
quot; Government stake in Insurance companies be brought down
Oriental Insurance Company Ltd.
Reliance General Insurance Co. Ltd.
quot; The holdings of GIC and its subsidiaries be taken over in
Royal Sundaram General Insurance Co. Ltd.
order to facilitate their functioning as independent
Tata AIG General Insurance Co. Ltd.
United India Insurance Company Ltd.
quot; Greater freedom of operation for all the Insurance
Changes for fuelling competition hold more than 5% in any company. The insurance sector today offers a
quot; Allowing private enterprise in the Their current holding will be brought host of job opportunities especially for
sector with companies with a paid-up down to this level over a period of time. those with a finance background and
capital of a minimum of Rs.100 crore. particularly so for marketing specialists,
The Insurance Regulatory and
quot; No single entity to function in both finance experts, human resource
Development Authority (IRDA)
Life and General Insurance segments. professionals, engineers from diverse
The insurance sector began its
quot; Foreign companies to be allowed only streams like the petrochemical and
reforms process with the passage of the
in combination with an Indian partner. power sectors, systems professionals,
IRDA bill in parliament in December
quot; Postal Life Insurance to be allowed statisticians and even medical
1999. Since its incorporation as a
in rural markets. professionals. The demand for under-
statutory body in April 2000, IRDA has
quot; Only one state level Life Insurance writers claims management and
been working towards the framing and
Company to be allowed in each state. actuaries is also rising by the day.
implementation of the various regulatory
Regulatory Changes measures for the smooth working of the Systems professionals especially
quot; Changes to be made to the Insurance industry. That apart, one of the most
would be required to generate the MIS
Act. important initiative of the IRDA was the
(Management Information Systems), to
quot; An independent Insurance regulatory launching of IRDA’s online service for
help the organisations in decision-making
authority to be set up. issue and renewal of licenses to agents.
and product pricing. Also needed would
Moreover, the approval of institutions
Investments be advertising and sales promotion
for imparting training to agents has also
quot; Reduction in the mandatory people for image-building exercises.
ensured that the insurance companies
investments of LIC Life Fund in
Along with the regular jobs, a range
would have a trained workforce of
government securities to be brought
of professionals linked with the sector
insurance agents in place to sell their
down from 75% to 50%.
will be required and that will include
quot; GIC and its subsidiaries are not to
sales agents and independent claims
Following the various
adjusters who will bring new
recommendations over the
opportunities to the surveyors.
past couple of years, a host
Opportunities will be created for those
of Indian companies have
who are already working in the industry
entered the sector with
to upgrade their skills.
major foreign companies as
their partners. Kotak
The insurance industry in India in its
Mahindra has tied up with
new form is in its initial stages of
Chubb, SBI with Alliance
development. However, considering the
capital, IDBI with Principal
pace at which things are moving, it will
and Tata group with AIG.
soon come to be recognised as one of
All these add up to new
the most vital segments of the economy.
products, better packaging,
Proper regulatory framework and a
improved customer service
backyard support of the government
and, most importantly,
would see this sector develop as a major
area in a short time.