Overview of Indian Insurance Sector : Insurance Awareness notes

Overview of Indian Insurance Sector: Insurance Awareness is one important section of the Mains exam. The notification doesn’t mention Important Topics/ Syllabus – Insurance & Financial Market Awareness. In this article, we are listing important topics of both the Insurance and Financial Market. Aspirants must cover these topics and prepare these topics thoroughly. In this post we are providing you notes on Overview of Indian Insurance Sector.

Overview of Indian Insurance Sector

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). Some of the important milestones in the life insurance business in India are given in the following table.

• 1993 Malhotra Committee established
• 1994 Recommendations of the Malhotra Committee published
• 1995 Mukherjee Committee established
• 1996 Setting up of (interim) Insurance Regulatory Authority (IRA)recommendations of the IRA
• 1997 Mukherjee Committee Report submitted but not made public
• 1997 The government gives greater autonomy to Life Insurance Corporation, General Insurance Corporation, and its subsidiaries with regard to the restructuring of boards and flexibility in investment norms aimed at channeling funds to the infrastructure sector
• 1998 The cabinet decides to allow 40 percent foreign equity in private insurance companies—26 percent to foreign companies and 14 percent to non-resident Indians and Foreign Institutional Investors
• 1999 The Standing Committee headed by Murali Deora decides that foreign equity in private insurance should be limited to 26 percent. The IRA bill is renamed the Insurance Regulatory and Development Authority Bill
• 1999 Cabinet clears Insurance Regulatory and Development Authority Bill
• 2000 President gives assent to the Insurance Regulatory and Development Authority Bill

Though the concept of insurance is largely a development of the recent past, particularly after the industrial era-past few centuries nevertheless its beginning date backs almost 6000 years. In a way there has always been some form of Insurance in informal nature. Joint family system which was the basic unit of Indian society provided the objective of life insurance such as taking care of financial needs of the family in case of the premature death of the principal wage earner, provisions for the old age.

In its modem form, the first insurance company in India was the Oriental Life Insurance Company started in 1818 in Kolkata. This company was owned by the European and it looked after the needs of Europeans only. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives. As for the regulation, it was only in 1912 that the Life Insurance Companies Act was enacted and the comprehensive legislature for regulating and administering Indian industry started.

Prior to this, India had no legislation to regulate insurance business and the Indian insurance companies were governed by the Companies Act of 1866. There were two important Insurance Acts enacted during this phase namely Insurance Act 1912 and Insurance Act 1938.

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