Ramesh Singh Test : Insurance In India

The life insurance business/industry in the country was nationalised by the Government of India in 1956 and a fully government-owned company, the Life Insurance Corporation of India (LIC) was set up (at that time 245 Indian and foreign companies were playing in the life segment of insurance). Opening of private life insurance companies was prohibited at that time.

• The LIC was called an investment institution by the government. The nationalisation was motivated by twin objectives—first, to spread the message of life insurance for greater social security and secondly, to mobilise people’s savings (collected as premiums) for nation-building.

• The LIC had been the biggest investor in the government's process of planned development purchasing government securities and equities of the big asset public sector undertakings.

• The public sector insurance company, Agriculture Insurance Company of India Limited (AICIL) was set up by the Government of India in December 2002 (commenced its business in April 2003).

• This is a dedicated agri-insurance company Till the AICIL was not set up, the Agri - insurance responsibility of the government was being looked after by the General Insurance Corporation (GIC).

(i) Decontrolling insurance sector, i.e., allowing Indian as well as foreign private sector insurance companies to enter the sector (the government did it in 1999 passing the IRDA Act).

(ii) Restructuring the LIC and the GIC and cutting down the government's holding in them to 50 per cent

(iii) Delinking GIC and its four subsidiaries (which was done in 2000).

(iv) Discarding the system of licensing of surveyors by the controller of Insurance. (v) Restructuring the Tariff Advisory Committee.

(vi) Setting up a regulatory authority for the insurance industry (the IRDA set up in 2000).

• The Insurance Regulatory and Development Authority (IRDA) was set up in 2000 (the Act was passed in 1999) with one chairman and five members (two as full time and three as part-time members) appointed and nominated by the government.

• Insurance industry of India is presently regulated under the Insurance Laws (Amendment) Act, 2015

• Known as the GIC Re, it remained the only reinsurance company in the country till now.

• Over time, this emerged as a major player in the global reinsurance industry.

• The reinsurance industry is regulated by the IRDA in the country. The reinsurance industry has a very low penetration in India.

• DICGC was set up by merging the Deposit Insurance Corporation (1962) and the Credit Guarantee Corporation (1971) in 1978. While

• With the financial sector reforms undertaken in the 1990s, credit guarantees have been gradually phased and the focus of the Corporation is veering to its core function of Deposit Insurance objective of averting panics, reducing system risk and ensuring financial stability.