Indian Insurance sector in the present context ,

Regulations in the sector & Challenges

 

By K.Viswanathan

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 Insurance in the present context
Types of Insurances available
1. Life Insurance
2. Non- Life Insurance:
 Pension
 Health care
 Personal Accident
 Motor vehicles
 Various Types of Properties
 Miscellaneous:
- Fire
- Marine
- Agricultural & Cattle
- Others
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 Insurance Regulations
Insurance Regulations in India:
Three major Legislations cover Indian Insurance :
1. The Insurance Act- 1938
2. Life Insurance Act 1956
3. The IRDA Act- 1999
There are also other legislations which are
concerned with insurance :
4. Marine Insurance Act 1953
5. Employee’s State Insurance Act 1948 and
other legislations connected with.
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 Insurance Regulations
 Insurance is a federal subject in India.
 For a long time LIC was the only Life Insurance Co.
 With the progress of the reforms process, more private
companies have been able to do insurance business.
 Again foreign companies in collaboration with Indian
companies have been permitted to enter into insurance
business.
 The latest legislation The Insurance Laws (Amendment)
Bill, 2008 is to be introduced to increase the foreign
equity participation to 49%.
 Similarly amendments also have been proposed in the
Life Insurance Corporation ( Amendments ) Bill 2009.

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 Insurance in the present context
Opportunities for insurance in India
India has the largest number of Life insurance
policies
 Business growth is at 15-20%, in the order of Rs.
450 Billion.
 Along with Banking it adds to about 7% of the
country’s GDP.
 Gross premium collection is about 2% of the GDP.
 Funds available with LIC for investments alone are
8% of GDP.

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 Insurance in the present context
Opportunities for insurance in India
80% of India is yet to get life insurance cover.
 Even non-life and health insurance is below
international standards. Health insurance covers
only 1% of the population at present.
 This part of the population also has weak social
security or pension system without any old age
income security.
 The estimate for India’s infrastructural
development in the next 10 years is one trillion
USD.
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 Insurance in the present context
Opportunities for insurance in India
Insurance as a contributor to savings can bring a
major part of it required for development.
 Micro insurance covering the poorer sections of
the society’s insurance needs will contribute to the
growth of insurance.
 With the enactment of reforms, there is ample
potential for growth of insurance sector in India
with the help of foreign direct investment.
 The Insurance Laws (Amendment) Bill, 2008 to be
introduced to increase the foreign equity
participation to 49%
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 Insurance in the present context
Challenges for Insurance in India:
1. Presently Indian Insurance market lags behind in
coverage – 3.1 % as against 10-12% internationally.
2. Insurance cover is 3% of GDP as against 8% global
average.
3. With more foreign companies coming in there will be
better competition, product innovation and consumer
education.
4. Insurance is the only area of investment wherein people
put in their money for 30+ yrs. Thus insurance sector
will fuel long term growth. But the challenge is to attract
such investments.

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 Insurance in the present context
Challenges for Insurance in India:
4. According to a study the health insurance premium is
supposed to touch Rs. 30,000 crores in 2015 from the
existing Rs. 4000 crores. The challenge is to increase its
spread .
5. Presently only 1% of the population is covered by health
insurance. Its spread needs to be increased.
6. To give such impetus the requirement of capital for all
insurance companies is proposed to be brought down
from Rs. 100 crores to Rs. 50 crores.

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 Insurance in the present context
Challenges for Insurance in India:
7. Micro Insurance is another area with huge potential.
Out of total of Rs. 1,00,000 crores rupees of premium
collected in 2007-08, premium on account of micro-
insurance was only Rs. 125 crores. With many NGOs,
MFIs and SHGs recognised as micro insurance agents,
potential is immense.
8. With the advent of more foreign equity and
participation, a mix of new products, new delivery
systems and a greater awareness of risk will generate
growth.
9. Competition will remain intense as private sector
insurers and those about to enter India seek to win
market share from the more established public sector
entities.
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 Indian Insurance sector in the present
context , Regulations in the sector and
Challenges

THANK YOU

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