 Insurance in India has a long history dating back to 1818 and has undergone significant changes over the years, with major milestones including the nationalization of life and general insurance.  The insurance sector was opened up to private companies in 1999 with the passing of the IRDA Act, and has since seen considerable growth and investment from foreign players.  Today the insurance industry is one of the largest sectors in India and is well-regulated by the Insurance Regulatory and Development Authority. It comprises both government and private life and general insurers.

1. Indian Scenario
Dr. Prashant Mehta
Assistant Professor, National Law University, Jodhpur

2. Insurance is concerned with protection of economic value of assets. Tangible assets are human beings, house,
furniture, motor cycle etc. Intangible assets are liabilities.
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3.  It started from Lloyd’s coffee house London. First policy issued in England in 1583 .
 Insurance in India has its history dating back until 1818, when Oriental Life
Insurance Company was started by Anita Bhavsar in Calcutta to cater to the needs
of European community.
 The pre-independence era in India saw discrimination between the lives of
foreigners (English) and Indians with higher premiums being charged for the
latter.
 In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer .
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5.  1912: The Indian Life Assurance Companies Act came into force for
regulating the life insurance business.
 1928: The Indian Insurance Companies Act was enacted for enabling the
government to collect statistical information on both life and non-life
insurance businesses.
 1938: The earlier legislation consolidated the Insurance Act with the aim of
safeguarding the interests of the insuring public.
 1956: 245 Indian and foreign insurers and provident societies were taken
over by the central government and they got nationalized. LIC was formed
by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs.
5 crore and that too from the Government of India.
 1850: The history of general insurance business in India can be traced back
to Triton Insurance Company Ltd. (the first general insurance company)
which was formed in Kolkata by the British.
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6.  1907: The Indian Mercantile Insurance Ltd. was set up which was the first company
of its type to transact all general insurance business.
 1957: General Insurance Council, an arm of the Insurance Association of India,
framed a code of conduct for guaranteeing fair conduct and sound business
patterns.
 1968: The Insurance Act improved for regulating investments and set minimal
solvency levels and the Tariff Advisory Committee was set up.
 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India. It was with effect from 1st January 1973.
 107 insurers integrated 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 was incorporated as
a company.
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7.  Aviva Life Insurance
 Bajaj Allianz Life Insurance
 Birla Sun-Life Insurance
 HDFC Standard Life Insurance
 ING Vysya Life Insurance
 Life Insurance Corporation
 Max New York Life Insurance
 MetLife Insurance
 Om Kotak Mahindra Life
Insurance
 Reliance Life Insurance
 Sahara India Life Insurance
 SBI Life Insurance
 TATA AIG Life Insurance
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8.  Agriculture Insurance
 Amsure Insurance
 ANZ Insurance
 Bajaj Allianz General Insurance
 Cholamandalam General Insurance
 Employee State Insurance
 Export Credit Guarantee
Corporation
 ICICI Lombard General Insurance
 IFFCO-Tokio General Insurance
 National Insurance
 Oriental Insurance
 Peerless Smart Financial
 Royal Sundaram Alliance
 TATA AIG General Insurance
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11.  Providing Protection – The elementary purpose of
insurance is to allow security against future risk, accidents
and uncertainty. Insurance cannot arrest the risk from
taking place, but can for sure allow for the losses arising
with the risk. Insurance is in reality a protective cover
against economic loss, by apportioning the risk with
others.
 Collective Risk Bearing – Insurance is an instrument to
share the financial loss. It is a medium through which few
losses are divided among larger number of people. All the
insured add the premiums towards a fund and out of
which the persons facing a specific risk is paid.
 Evaluating Risk – Insurance fixes the likely volume of risk
by assessing diverse factors that give rise to risk. Risk is
the basis for ascertaining the premium rate as well.
 Provide Certainty – Insurance is a device, which assists in
changing uncertainty to certainty.
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12.  Preventing Losses – Insurance warns individuals and
businessmen to embrace appropriate device to prevent
unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm
systems, etc.
 Covering larger risks with Small Capital – Insurance
assuages the businessmen from security investments. This
is done by paying small amount of premium against larger
risks and dubiety.
 Helps in the Development of Larger Industries – Insurance
provides an opportunity to develop to those larger
industries which have more risks in their setting up.
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13.  Is a savings and investment tool – Insurance is the best savings and investment
option, restricting unnecessary expenses by the insured. Also to take the benefit
of income tax exemptions, people take up insurance as a good investment option.
 Medium of earning foreign exchange – Being an international business, any
country can earn foreign exchange by way of issue of marine insurance policies
and a different other ways.
 Risk Free trade – Insurance boosts exports insurance, making foreign trade risk
free with the help of different types of policies under marine insurance cover.
 Insurance provides indemnity, or reimbursement, in the event of an unanticipated
loss or disaster. There are different types of insurance policies under the sun cover
almost anything that one might think of. There are loads of companies who are
providing such customized insurance policies.
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14.  The US$ 41-billion Indian life
insurance industry is considered
the fifth largest life insurance
market, and growing at a rapid
pace of 32-34% annually,
according to the Life Insurance
Council.
 Since the opening up of the
insurance sector in India, the
industry has received FDI to the
tune of US$ 525.6 million.
 The government is likely to
reintroduce the Insurance Bill
which proposes to increase the
FDI cap in private sector
insurance companies from 26% to
49%.
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15.  The total number of life insurers
registered with the IRDA has gone up
to 23.
 The Life Insurance Corporation (LIC)
posted a 50% growth in new premium
collection in the first nine months of
the 2010 fiscal, increasing its market
share to 65% from 56% a year ago.
 LIC’s new premium collection touched
US$ 9.58 billion in the April-December
2009 period while the combined
business of the 22 private insurers
grew to US$ 5.07 billion from the
previous year, as per data collated by
IRDA.
 Overall the industry grew at 29% in the
April-December period of the fiscal
year 2010.
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16.  The total number of general insurers
registered with IRDA has gone up to 22, with
the registration of SBI General Insurance
Company Limited.
 Overall, the non-life insurance sector grew
9.95% in April-December 2009, compared to
the corresponding period last year
 According to IRDA data, out of the US$ 5.46
billion premium underwritten by the industry
during the April-December 2009 period, US$
3.24 billion came from the four public sector
companies as compared to US$ 2.91 billion
during the same period in 2008.
 The Gross Premium underwritten by public
sector non-life insurers for the April-
December 2009 period posted year-on-year
growth of 11.37% as compared to the year-
on-year growth of 7.93% posted by private
sector non-life insurers 16

20.  Moreover, in the 2010-11 budget, Finance Minister, has decided to roll back the
government’s decision to tax the unrealised gains of non-life insurance companies.
 “The appreciation in the value of investments, being in the nature of unrealized gain
is not taken into account for determining profit or loss of non-life insurance
business as per the IRDA regulations. It is, therefore, proposed that the unrealized
gains due to appreciation in the value of investments will not be included in the
total income,” according to the budget documents.
 According to data from the IRDA (Summary Reports of Motor Data of Public and
Private Sector Insurers - 2008-09), in 2008-09, nearly 30 million vehicles were
registered and a total premium worth US$ 2.03 billion was collected.
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21.  Insurance companies are also witnessing increasing demand for project insurance in the last
few months. Corporates are beginning to demand project insurance across sectors such as
power generation with the cover beginning right from the start of the project till it is declared
ready for commercial use.
 Some of the big projects also take cover for financial loss arising out of delay in completion.
 Industry players estimate that premiums collected from project insurance will be around US$
216.2 million for the industry as a whole and is expected to increase significantly.
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22.  The health insurance market stood at around US$
1.5 billion in 2008-09 and is expected to grow to
US$ 9 billion by 2016-17. While health insurance
policies are mostly provided by general insurance
companies, life insurers contribute about 5% to the
overall health insurance business.
 Apollo Munich is a joint venture between Asia’s
largest integrated healthcare provider, The Apollo
Hospitals Group, and Germany-based Munich Re's
segment, Munich Health.
 Max India is planning to invest US$ 43.25 million in
its health insurance joint venture (Max Bupa) and
will launch a product over the January–June 2010
period.
 Star Health and Allied Insurance expects to invest
US$ 38.9 million during the current financial year to
grow its health insurance business, taking the total
invested capital to US$ 67 million.
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24.  Private insurers have adopted bancassurance in a much bigger way than the state-
owned Life Insurance Corporation (LIC) in the recent years. Bancassurance is
distribution of insurance products through a bank's network.
 In 2008-09, private insurers forked out US$ 44.4 million as commission for
banassurance, while the payout by LIC for this distribution model was US$ 25,948.
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25.  Reinsurance is a contract between the insurance company (insurer) and a third party
(re-insurer), wherein the latter will protect the former by paying losses sustained by it
under the original contract of insurance.
 Re-insurers from London, as well as other parts of Europe, see significant potential in
the re-insurance market in India. Top four global re-insurers, Lloyds, Swiss Re,
Munich Re and Berkshire Hathaway are amongst those eyeing India.
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26.  The FDI limit in the insurance space for foreign players is capped at 26% permissible under the
automatic route subject to a licence from the official regulator, IRDA—but the government is
planning to raise it to 49%.
 IRDA has stipulated that the mandatory ceding by every general insurer in the country to the
national reinsurer – General Insurance Corporation (GIC), would continue to remain at 10% as
under current regulations.
 IRDA has also allowed insurance companies to offer 'Health plus Life Combi Product', a policy
that would provide life cover along with health insurance to subscribers.
 Pension Fund Regulatory and Development Authority (PFRDA) would launch a low-cost
pension scheme on April 1, 2010, to provide social security cover to economically weaker
sections like rickshaw pullers, barbers and daily-wage labourers
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27.  Micro insurance is defined as insurance
provided for low-income people by a variety of
insurers, run in accordance with generally
accepted insurance principles, and funded by
premiums
Comprises of risk-pooling products :
 Appropriate for the low-income market cost,
terms, coverage, and delivery mechanisms
 Micro Finance helps people improve livelihoods
and Micro Insurance helps them to protect the
gains in the event of any unfortunate events.
 Potential market for insurance in developing
economies estimated to be between 1.5 and 3
billion policies.
 Significant demand for a range of insurance
products – health, life, agricultural and property
insurance, catastrophe cover.
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28.  Saturation of insurance markets in many developed economies has made the Indian
market more attractive for international insurance players, according to 'Booming
Insurance Market in India (2008-2011)”. Further, according to the report,
 Total life insurance premium in India is projected to grow US$ 266 billion by 2010-11
 Total non-life insurance premium is expected to increase at a compound annual
growth rate (CAGR) of 25% for the period spanning from 2008-09 to 2010-11
 The home insurance segment is set to achieve a 100% growth as financial
institutions have made home insurance obligatory for housing loan approvals
 In the next three years, health insurance is poised to become the second largest
business for non-life insurers after motor insurance
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33. IRDA was set up by the parliament in 1999. The section 4 of IRDA Act' 1999,
Insurance Regulatory and Development Authority specify the composition of
Authority.
The Authority is a ten-member team consisting of
a. Chairman;
b. Five whole-time members;
c. Four part-time members,
(All these positions are appointed by the Government of India.)
IRDA - Duties,Powers and Functions:
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA..(1) Subject to the provisions of this Act and any other law for the time
being in force, the Authority shall have the duty to regulate, promote and
ensure orderly growth of the insurance business and re-insurance business.
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34.  The Insurance Policy India is regulated by certain acts like the Insurance Act(1938), the Life Insurance Corporation
Act(1956), General Insurance Business (Nationalization) Act(1972), Insurance Regulatory and Development Authority
(IRDA) Act(1999).
 The insurance policy determines the covers against risks, sometime opens investment options with insurance companies
setting high returns and also informs about the tax benefits like the LIC in India. There are two types of insurance covers:
 Life insurance – this sector deals with the risks and the accidents affecting the life of the customer. Alongside, this
insurance policy also offers tax planning and investment returns. There are various types of life Insurance Policy India:
a. Endowment Policy b. Whole Life Policy
c. Term Life Policy d. Money-back Policy
e. Joint Life Policy f. Group Insurance Policy
g. Loan Cover Term Assurance Policy h. Pension Plan or Annuities
i. Unit Linked Insurance Plan
 General Insurance – this sector covers almost everything related to property, vehicle, cash, household goods, health and
also one's liability towards others. The major segments covered under general Insurance Policy India are:
a. Home Insurance b. Health Insurance
c. Motor Insurance d. Travel Insurance
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35.  The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the entry of
private companies in the insurance sector, which was so far the sole prerogative of
the public sector insurance companies. The act was passed to protect the concerns of
holders of insurance policy and also to govern and check the growth of the insurance
sector. This new act allowed the private insurance companies to function in India
under the following circumstances :
 The company should be established and registered under the 1956 company Act.
 The company should only the serve the purpose of life or general insurance or
reinsurance business.
 The minimum paid up equity capital for serving the purpose of reinsurance business
has been decreed at Rs 200 crores.
 The minimum paid up equity capital for serving the purpose of reinsurance business
has been decreed at Rs 100 crores.
 The average holdings of equity shares by a foreign company or its subsidiaries or
nominees should not go above 26% paid up equity capital of the Indian Insurance
company.
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36.  As per the report of 'Booming Insurance
Market in India' (2008-2011), concentration
of insurance markets in many developed
countries of the world has made the Indian
insurance market more magnetic in terms of
international insurance players.
Furthermore, the report says
 Home insurance sector is likely to achieve a
100% growth since home insurance are
made compulsory for housing loan
approvals by the financial institutions.
 In the coming three years Health insurance
sector is all set to become the second largest
business after motor insurance.
 During the period of 2008-09 to 2010-11 the
non life insurance premium is likely to have a
growth of 25%.
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37. The Indian insurance industry churns out large volume of jobs every year. However, some of the specific areas
of expertise in this industry include:
 Agent and Broker: Insurance agents/ brokers are the people who give product advice to the clients in order to
sell company's product.
 Customer Service Agent: the person in-charge of this post needs to interact with the customer on daily basis
in the agency to update policy as well as coverage details.
 Claims Adjuster: the office holder needs to ascertain the range of damage in case of accidents and see if the
insurance policy can cover it. He/ she make way for settlement between the insurance company and its
customers.
 Actuary: this is one of the very crucial insurance jobs. The person in-charge of this office needs to analyze the
risks involved in creating the insurance policies in the areas of business, property or life & death of the person.
To find a job in this area, the aspirant needs to be Mathematics, Econometrics, Statistics or Computer Science
graduate. MBAs in finance can also apply for the post.
 Risk Manager: the person needs to spot the risk and suggest the ways to tackle such risks.
 Service Representatives: this profile demands an individual to act as a medium between the insurance
companies and agents.
 Loss Control Specialist: the office holder needs to look into safety measures so that accidents at the
workplace which can lead to financial losses can be avoided.
 Underwriter: the office holder needs to determine the applicant's chances of risks and whether the policy
chosen by him/ her meets the insurance standard.
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38. Pollution Liability Coverage
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Employee Dishonesty Coverage
Crime Coverage
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39.  IRDA Annual Report 2006 -07 http://irdaindia.org
 Tariff Advisory Committee http://tacindia.org
 IRDA Hand Book http://irdaindia.org
 www.policybazaar.com/life-insurance
 www.easyinsuranceindia.com
 www.india.gov.in/citizen/insurance_companies.php