Examination of the Insurance Sector in India Essay Example

Ltd., Oriental Insurance Company Ltd., and United India Insurance Company Ltd. The nationalization also led to GIC becoming incorporated as a company.

Currently, there are 12 private life insurance companies and 9 general insurance companies authorized by IRDA in India. When considering existing public sector companies, there is a total of 13 life insurance companies and 13 general insurance companies.

For reinsurance purposes within India, the General Insurance Corporation has been approved as the "Indian reinsurer."Ltd. - www.tataaig.comLimited - www.tata-aig.com - Cholamandalam General Insurance Co.Ltd.- www.cholainsurance.com - Export Credit Guarantee Corporation - www.ecgcindia.com - HDFC Chubb General Insurance Co.Ltd.General Insurance Corporation of India is also a reinsurer, and its website can be found at www.gicindia.com.For more information on the history of insurance, you can visit: http://www.licindia.in/images/Left_Line.jpg http://www.licindia.in/images/history_title.jpg

The websites for Limited (www.tata-aig.com), Cholamandalam General Insurance Co.Ltd.(www.cholainsurance.com), Export Credit Guarantee Corporation (www.ecgcindia.com), HDFC Chubb General Insurance Co.Ltd., and General Insurance Corporation of India (found at www.gicindia.com) offer various insurance services.

Insurance has been in existence for thousands of years and originated from the need to protect against loss and catastrophe, similar to how modern business communities do today. Life insurance was introduced to India by Europeans in Calcutta in 1818 through the Oriental Life Insurance Company, which was the first life insurance company in India. At that time, insurance companies primarily catered to the European community and did not provide coverage for Indian citizens. However, influential figures like Babu Muttylal Seal worked towards changing this situation.

Foreign life insurance companies eventually started considering Indian lives but still faced discrimination and charged higher premiums compared to their European counterparts. In 1870, Bombay Mutual Life Assurance Society became the first

Indian life insurance company offering coverage at standard rates.There were insurance companies with a patriotic motive that aimed to raise awareness about insurance and social security in different sectors. Bharat Insurance Company, established in 1896, was one such company inspired by patriotism. The Swadeshi movement from 1905-1907 resulted in the creation of more insurance companies, including United India in Madras, National Indian and National Insurance in Calcutta, and Co-operative Assurance in Lahore - all founded in 1906. Hindustan Co-operative Insurance Company was also established during this time at Jorasanko - the home of renowned poet Rabindranath Tagore - situated in Calcutta. Furthermore, other companies like The Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were set up prior to 1912 when there were no regulations governing insurance companies in India.

In 1912, two acts were introduced: The Life Insurance Companies Act and The Provident Fund Act. The former act required certification of premium rate tables and periodic ratings by an actuary but put Indian companies at a disadvantage compared to foreign ones. During the first two decades of the 20th century, significant growth was observed within the insurance industry as the number of companies increased from 44 to 176 by 1938. However, this period also witnessed the establishment and subsequent failure of financially unstable companies.The Insurance Act was passed in 1938, marking the first legislation to regulate life and non-life insurance in India. This act granted strict state control over the industry. Calls for nationalizing the life insurance industry gained momentum in 1944 with an amendment bill for the Life Insurance Act of 1938. On January 19, 1956, life insurance in India was officially

nationalized. At that time, there were approximately 154 insurance companies operating in India, including 16 non-Indian companies and 75 provident companies. The nationalization process occurred in two phases: initial government regulation and management control followed by comprehensive legislation transferring ownership. As a result of the Indian Parliament passing the Life Insurance Corporation Act on June 19, 1956, the Life Insurance Corporation of India was established on September 1, 1956. Its main objective was to expand life insurance coverage nationwide with a focus on rural areas to provide affordable financial protection for all eligible individuals. Initially, LIC had five zonal offices, thirty-three divisional offices, and two hundred twelve branch offices alongside its corporate headquarters. To meet service requirements for long-term life insurance policies, branch offices were established at each district headquarters through a restructuring process.
The transformation of branches into accounting units has resulted in improved performance and enhanced public service. From 1957 to 1969-70, LIC experienced significant growth in new business, with an increase from ?200 crores to ?1000 crores. It took another decade for LIC to achieve the ?2000 crores milestone. By reorganizing during the early 1880s, LIC surpassed a sum assured of ?7000 crores on new policies by 1985-86.

Currently, LIC operates with fully computerized branch offices (2048), divisional offices (109), zonary offices (8), satellite offices (992), and its corporate office. All these offices are connected through a Wide Area Network (WAN). To offer online premium collection in selected cities, LIC collaborates with banks and service providers. Customer convenience is further enhanced through the introduction of ECS and ATM premium payment facilities. Various cities have established Info Centres, online Kiosks, and IVRS.

To provide efficient servicing

for customers, smaller Satellite Sampark offices equipped with digitalized records have been launched by LIC closer to customers.

Despite being the leader in the liberalized Indian insurance market, LIC continues to surpass its previous records. As of October 15th, 2005, over one crore policies have been issued by LIC - reaching a total of 1,01,32,955 policies. This represents an impressive growth rate of 16.67% compared to the same period last year.
LIC's remarkable performance in various areas of the life insurance industry has played a role in achieving these significant milestones. The history of life insurance in India includes important events such as the establishment of The Oriental Life Insurance Company in 1818 and the Bombay Mutual Life Assurance Society in 1870. In 1912, the Indian Life Assurance Companies Act was enacted, followed by the introduction of the Indian Insurance Companies Act in 1928. These acts were put into place to regulate and gather statistical information on both life and non-life insurance businesses.

The Insurance Act was implemented in 1938 to consolidate and modify previous laws for the purpose of safeguarding public interests. A major development occurred in 1956 when a total of 245 Indian and foreign insurance companies and provident societies were nationalized by the central government. This led to the formation of the Life Insurance Corporation (LIC) through the LIC Act with financial support from the Government of India.

Regarding general insurance business in India, it dates back to British founders establishing Triton Insurance Company Ltd. in Calcutta in 1850. Another significant milestone took place in 1907 with the establishment of Indian Mercantile Insurance Ltd., which became the first company dealing with all categories of general insurance

business.

In order to ensure fair practices within this industry, a code of conduct was created by the General Insurance Council under the umbrella organization named "Insurance Association of India" in 1957.Amendments were made to investment regulations under the Insurance Act in 1968, along with establishing minimum solvency limits. In addition, the Tariff Advisory Committee was formed during this time. The nationalization process for general insurance business occurred through The General Insurance Business (Nationalisation) Act of 1972, which took effect on January 1st, 1973.
This led to the amalgamation of 107 insurance companies and the creation of four entities: National Insurance Company Ltd., New India Assurance Company Ltd., Oriental Insurance Company Ltd., and LIC.
The main goal of United India Insurance Company Ltd.(GIC) is to ensure widespread life insurance coverage, particularly in rural areas and among socially/economically disadvantaged groups. GIC aims to provide affordable financial protection against death for all insurable individuals and encourages savings through attractive insurance-linked plans.
Furthermore, GIC prioritizes policyholders' interests and considers the overall welfare of the community when making investments aligned with national priorities for desirable returns. Recognizing that funds belong to policyholders who depend on them for support, GIC is committed to efficiency.
As legal guardians both collectively and individually for insured individuals, GIC fulfills various life insurance requirements resulting from evolving societal and economic conditions within the community.The Corporation aims to provide efficient and courteous service to promote the interests of the insured public. By involving all individuals within the organization, corporate objectives are achieved, fostering commitment, pride, and job satisfaction among agents and employees as they fulfill their responsibilities. Our mission is to enhance the quality of life for individuals through

financial security by offering products and services of desired quality with competitive returns. Additionally, we aim to provide resources for economic development. Our vision is to become a globally competitive financial conglomerate that is significant to societies and a source of pride for India.

The members on the Board of the Corporation include:
- Shri.T.S. Vijayan (Chairman)
- Shri.D.K. Mehrotra (Managing Director - LIC)
- Shri.Thomas Mathew T.A (Managing Director - LIC)
- Shri.A.K. Dasgupta (Managing Director - LIC)
- Shri.Ashok Chawla (Finance Secretary, Ministry of Finance, Govt.of India)
- Shri.R. Gopalan (Secretary, Department of Financial Services, Ministry of Finance, Govt.of India.)
- Yogesh LohiyaA Chairman cum ManagingA Director of GIC of India
- Shri S.Sridhar Chairman &Managing Director of Central Bank of India
- Shri D.L. Rawal Chairman &Managing Director

of Dena Bank along with Dr.+ [remaining content].

Changes in Life Insurance Marketing Requirements in India

Sooranad Rajashekhran, Shri.Monis R. Kidwai, Lt.General Arvind Mahajan Retd., Shri Anup Prakash GargA, and Shri Sanjay Jain jointly announced that Life Insurance Corp (LIC) will now be subject to the same minimal equity requirement as other private insurance companies. The Cabinet has approved a Bill to be presented in Parliament aiming to increase LIC's paid-up capital from Rs 5 crore to Rs 100 crore. Once passed, LIC will comply with Irda's equity requirements.
This specific Bill solely focuses on increasing LIC's equity and is separate from existing insurance statutes such as the Insurance (amendment) Bill of 2008, the General Insurance Business (nationalization) Act of 1972, and the Insurance Regulatory & Development Authority Act of 1999.
To meet this increased equity requirement, the government will invest Rs 95 crore as shareholder funds in LIC. According to Irda norms, all insurance companies must have a

minimum paid-up capital of Rs 100 crore.
LIC had been operating with a capital of Rs 5 crore for historical reasons. While there were previous pressures for LIC to maintain a solvency margin of 150% like other insurance companies, they stated that they never faced any solvency issues and currently hold a solvency margin of 152%.In 1997, Gary M C Standard, Vice President of Sun Life Canada, announced that they would create products specifically for different Indian consumer segments instead of selling their North American products in the country. Former LIC Chairman G. Krishnamurthy also expressed a commitment to introducing new products by 2000. In response to growing competition in the insurance industry, India's state-owned insurance company LIC launched a new policy called 'Anmol Jeevan' (Priceless Life) in July 2002. This move was necessary because LIC's competitors, ICICI Prudential Life and HDFC Standard Life, had already introduced competitively priced insurance products with innovative policies and riders to attract customers. These private companies started offering group insurance and term-life strategies that LIC hadn't focused on before. Eventually, the private players began launching products that directly competed with LIC's core offerings. Observers noted that LIC seemed to have recognized the need to adapt as its competitors embraced innovative product designs and pricing tactics. Therefore, the introduction of 'Anmol Jeevan' was not entirely unexpected.