Explain the Indian Insurance Sector.

The insurance sector of India comprises of 57 insurance agencies of which 24 are in life insurance business and 33 are non-life guarantors. Among the existence of safety net providers, Life Insurance Corporation (LIC) is the sole open segment organization. Aside from that, among the non-life safety net providers there are six open area back up plans. Notwithstanding these, there is sole national re-guarantor, to be specific, General Insurance Corporation of India (GIC Re). Different partners in Indian Insurance advertise incorporate operators (individual and corporate), dealers, surveyors and outsider heads adjusting medical coverage claims.

Government Initiatives

The Government of India has taken various activities to help the Insurance sector. Some of them are as per the following:

• As per Union Budget 2019-20, 100 per cent foreign direct investment (FDI) permitted for insurance intermediaries.
• In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families. The scheme is expected to increase penetration of health insurance in India from 34 per cent to 50 per cent.
• Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18.
• The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering (IPO) guidelines for insurance companies in India, which are to looking to divest equity through the IPO route.
• IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible investors for the banks.

It is a well-known fact that the Indian economy has been amongst the fastest

growing economies of the world. It is triggered by better performances of all the

three sectors i.e., agriculture, industry and services. With an increase in

manufacturing and service sector activities, a directly proportional higher

insurance penetration is the need of the hour.

With the initiation of financial sector reforms, the Indian insurance sector which

was till now under the government control has to set open for competition to

meet the global challenge. The first step taken by the government was to establish

IRDA Act with the objective of streamlining the development process. The Indian

insurance market is a mega market with a huge potential. Since the opening of

the insurance sector in December 1999 the insurance industry is changing

rapidly. Today 13 companies operate in the life and 13 in non-life segment. LIC

of India has dominated the life segment for over four decades although only

25 per cent of the insurable population was insured.

From the year 2000 onwards IRDA started granting licenses to private players.

Thus general insurance sector has seen considerable expansion over the past

few years. The premium income has recorded a growth rate of 20 per cent. A

department wise split shows that in the year 2002-03, 21 per cent of business is

derived from fire, 9 per cent from marine insurance, 39 per cent from motor

insurance, 8 per cent from health schemes, 5 per cent from re-engineering and

remaining 18 per cent from other miscellaneous insurances. Amongst the fastest

growing companies are the National Insurance, Bajaj Allianz, Tata-AIG and ICICI

Lombard. Currently, over 70 per cent of the business underwritten (fire, marine,

motor and engineering) is subject to tariff controls.