Prepared by:

Tausif Baig[01]
Harshad Patel[06]
introduction
 There are several reasons for discussion of
liberalizing India's insurance industry
 First, the possible liberalizing of the
insurance industry would be very much apart
of the ongoing economic reforms.
 Secondly, government decision on
important recommendations in insurance
sector have been withheld pending the
development of national consensus on the
subject.
 Thirdly, to oppose the idea of competition
because it encourages unhealthy & illegal
practice.
Economic reforms
experience
Let us consider first economic reforms experience
which generally aim to deregulated and liberalize
the economy and improve its productivity.
India Inc s stupendous growth can be attributed to
' India Economic Reform ' earnest in July 1991.
Since India's economic reforms were launched in
1991, the Indian economy has sustained an
annual average growth rate of over 6 per cent. In
2003-04, GDP growth is expected to be around
7.5 per cent.
The new technologies (especially information
technology and biotechnology) give new
opportunities for economic and social
development.
' India Economic Report ' can be
summarized as –

• Telecommunications industry
• Insurance industry
• Diesel oil and gas prices have undergone
some increases.
• Few reductions have also been made in
fertilizer and food subsidies.
• The value added tax has undergone
substantial rationalization.
• The economy has registered growth at more
than 6% and with full economic stability.
• And last but not least, Rising incomes have
helped bring down poverty.
Toward reforms of insurance
sector
Insurance business has a positive correlation with
economic development in an economy.
During the past several years, the business of life
insurance has flourished so much that the
insurance business is being considered to be one
of the most rapidly developing area in the
financial sector.
The Government set up a special committee,
known as Malhotra Committee, to recommend
reforms in insurance sector to enable it to meet
the challenge of globalization.
Proposed setting up an independent regulatory
Just like banks, the branches of Life Insurance
Corporation of India (LIC) have now reached
most parts of the country.
Later, in January 1973, 107 non life insurance
were nationalized called general insurance
corporation (GIC).
LIC now has network of 1906 branches, 93
divisions and 7 zonal offices spread all over
the country.
Insurance sector has been opened up for
competition from Indian private insurance
companies with the enactment of Insurance
Regulatory and Development Authority Act,
1999 (IRDA Act).
Under the new dispensation Indian insurance
companies in private sector were permitted to
The mutual funds industry is now regulated
under the SEBI (Mutual Funds) Regulations,
1996
The Unit Trust of India remains easily the
biggest mutual fund controlling a corpus of
nearly Rs.70,000 crores, but its share is going
down.
Foreign companies can only enter joint
ventures with Indian companies, with
participation restricted to 26 per cent of
equity.
The new players will need to bring in
innovative products as well as fresh ideas on
marketing and distribution, in order to
improve the low per capita insurance
Till end of 1999-2000, two state-run insurance
companies, namely, Life Insurance Corporation
(LIC) and General Insurance Corporation (GIC)
were the monopoly insurance providers in India.
Private insurance companies offer many
policies and the premium amount as well as
the maturity period is much competitive as
against those of government insurance
companies.
The private sector insurance players have
started exploring the rural markets in which
until recently, the state owned companies had
the monopoly.
India’s life insurance premium, as a
percentage of GDP is 1.8%
Business potential
INDIA is the 5th largest market in Asia by
premium following Japan, Korea, China and
Taiwan.
The US$ 30 billion insurance business in India is
expected to grow 17 per cent in fiscal 2008-09* if
the country’s economy clocks 7.6 percent GDP.
The Indian insurance sector has a turnover of
around Rs 26,287 crore.
LIC and GIC have limited number of policies to
offer to their subscribers
That’s why, the intense marketing strategies
adopted by private insurance players, the market
share of state owned insurance companies like
GIC, LIC and others have come down to 70% in
last 4-5 years from over 97%.
Conclusion
Insurance affords protection against
uncertainties of life, business and trade.
Life insurance is also an important medium of
long term savings.
The needs of the nation and its people have
finally prevailed and privatization of insurance
is now a reality towards further liberalization
of the Indian economy.
It is essential to liberalize the insurance
industry. The sooner this is done the better.
Bibliography
 Websites:
www.google.co.in
www.scribd.com
www.managementparadise.com
www.networkmagazineindia.com
www.bharatbook.com
 Journals & reference book
Risk management
by: S. B Verma