The Indian insurance market in spite of having a history covering almost two centuries took a turn after the establishment of the Life insurance corporation in India in 1956. From being an open competitive market to being nationalized and then back to a liberalized market again, the insurance sector has witnessed all aspects of contest.
The Indian insurance market conventionally focused around life insurance until recently, a various range of other insurance policies covering sectors like medical, automobile, health and other classes falling under general insurance came up, generally provided by the private companies. The life insurance of India added 4.1% to the GDP of the economy in 2009, an immense growth since 1999, when the gates were opened for the private company in the market.
Policy Change in the Indian Insurance market
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 Indian insurance market conventionally focused around life insurance until recently, a various range of other insurance policies covering sectors like medical, automobile, health and other classes falling under general insurance came up, generally provided by the private companies. The life insurance of India added 4.1% to the GDP of the economy in 2009, an immense growth since 1999, when the gates were opened for the private company in the market.
Policy Change in the Indian Insurance market
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.
Investment policy in the Indian insurance market
A policy known by the name of 'Health plus Life Combi Product', offering life cover along with health insurance has been granted permission by the IRDA act and insurance companies are allowed to provide it now.
The FDI limit in the insurance sector has been capped at 26% for the foreign marketeers but the government is thinking to increase it to 49% and a bill of this offer is pending at the Rajya Sabha
A low cost pension scheme is supposed to be formed by the Pension Fund Regulatory and Developmental Authority (PFRDA) on 1st April, 2010 to provide social security to the the poorer class.
The compulsory ceding by every General Insurance Corporation (GIC), would go on to stay at 10% under current regulations as specified by IRDA.
Future of Indian Insurance Market
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%.
Insurance Companies in India
Registration has been granted to 12 private life insurance companies and 9 general insurance companies so far by the IRDA. Considering the existing public sector companies in the Indian insurance market there are 13 companies functioning in both life and general insurance business respectively.
Some of the major insurance companies in public sector are
Life Insurance Corporation (LIC) of India
National Insurance Company Limited
Oriental Insurance Limited
Some of the major insurance companies in Private sector are
Tata AIG Life
HDFC Standard
Bajaj Allianz
ICICI Prudential
SBI Life
