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.