Privatization of Indian insurance sector

By, Keerthi 1111270 Niteen 1111277

Introduction
More than 195 years old Insurance - Most important for an economies growth and development Provides long term funds funds Introduction of IRDA Foreign companies Gap between service delivered and customer expectation

History of insurance sector

Started with Lloyds of London 300 years ago Major insurers of the world nippon life, zenkyoren,dal-ichi mutual life , companies UAP etc India 19th century oriental life insurance company kolkata Bombay mutual life assurance society The life insurance companies act 1912

LIC
Life Insurance Corporation of India (LIC) is an Indian state-owned insurance group and investment company headquartered in Mumbai. The company was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalised the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life Insurance Corporation.

GIC
The entire general insurance business in India was nationalised by the Government of India (GOI) through the General Insurance Business (Nationalisation) Act (GIBNA) of 1972. 55 Indian insurance companies and 52 other general insurance operations of other companies were nationalized through the act

Growth of general insurance post nationalisation

Growth in premium generation Increase in profit Increase in net worth Establishment of tariff advisory committee Wide product range Creation of job Growth of industry, trade and commerce

Drawbacks of the regulated insurance industry in India

Customers dissatisfaction Profitability negotiation Absence of suitable product range Lack of education to customers Ignorance of retail level business Emphasis on tax planning instrument Low level of insurance awareness Defective health insurance design

Privatisation and challenges before the insurance industry

The uruguay round negotiation May 14 2002 , insurance bill LICs growth 98% in 2000-2001 to 137% in 2001-2002 rural sector would be ignored by private players 5% business in rural areas

Need for reforms in insurance sector

Dependence of public sector undertakings Efficiency and privatisation Loss prevention by GIC Human resource development change from waste to cost Need for re-insurance RID