Insurance in India
An Overview of the Insurance Industry in India
The history of the insurance industry in India dates back in 1818 when the first insurance company was formed.
(Oriental Insurance Company Limited). It has since undergone several reforms in the form of liberalization and nationalization.
In the ensuing discussion, we shall seek to explore the nature of the industry in general.
Regulation And Players In The Industry
This industry is regulated by the Insurance Regulatory & Development Authority (IRDA). It ensures that all policyholders’ interests are protected. IRDA has listed all stakeholders in the industry including corporate agents, brokers, surveyors, insurance councils, state and life insurers and one main reinsurer.
These players in the market are the driving force towards achieving a record 3% of the gross domestic product in the economy in India. The brokers, for example, are assigned the work of distributing the premiums mainly through direct sales. IRDA also offers guidelines with regard to investment in mutual funds, pension, general annuity funds and group schemes.
Services In The Industry
The services rendered by this industry are overshadowed by the industry's history of liberalization and nationalization. Two main sectors exist. They are the public sector and the private sector with the former dominating the market.
Individual company service provision includes such services as life insurance (endowment assurance, money back and miscellaneous services) and general insurance/non life insurance (includes marine insurance, motor insurance which is compulsory in the country, fire insurance etc.).
Future of The Industry
From as early as 1947 to 1972, this industry has gone through dynamic change. With the formation of the regulatory body, passing of the insurance act, and passing of various reforms, this insurance in india has become competitive and continues to attract interest from foreign countries. However, the recent economic recession has greatly affected this industry.
Currently, there is a major credit crisis affecting the industry. A typical example is the collapse of US based AIG Company that has had ripple effects on to India’s TATA-AIG General Insurance Company. Bajaj Allianz, Prudential and ICICI companies have already closed some of their branches.
any players have proposed the merging of the various companies in the sector to be able to caution themselves from the crunch. It is equally important to note that recession is not new to India’s economy. The country has been able to come out of one once and it can do so even now.