An Overview of Indian Insurance Industry | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

Overview

• The insurance sector of India is a very dynamic growth oriented one – and is one of the world’s largest in the insurance scene.
• Even though we are very familiar with the LIC logo – as popular as the McDonald’s logo! – layman knowledge of how the sector is structured in India is quite dubious.
• Being well performing sector – along with banking – it is responsible for improvement in GDP over the recent years – and it is expected to increase its share considerably in the coming few years.
• Such an important and vast sector, here I present how the Insurance business in India is structures:

Insurance Companies in India

• In India we have both the Government and the public sector participating in the Insurance sector.
• It is important to know the names of the PSU companies, as they are not many – so, here’s a list:

Public Sector – Life Insurance Company : Life Insurance Corporation of India ( the one and only PSU life insurance company)

Public Sector – General Insurance Companies

1. Agriculture Insurance Company of India Ltd.
2. National Insurance Company Ltd.
3. New India Assurance Company Ltd.
4. Oriental Insurance Company Ltd.
5. United India Insurance Company Ltd.
6. General Insurance Corporation Of India – India’s sole re-insurer

Private Sector – Life Insurance Companies are many, here are some worth noting:

1. Bajaj- Allianz Life Insurance Company
2. HDFC Standard Life Insurance Company
3. ICICI Prudential Life Insurance Company
4. SBI Life Insurance Company
5. Max New York Life Insurance Company

Private Sector – General Insurance Companies

1. Tata AIG General Insurance Co. Ltd.
2. IFFCO- Tokio General Insurance Company Ltd.
3. SBI General Insurance Co. Ltd.
4. Reliance General Insurance CO. Ltd.
5. ICICI Lombard General Insurance Company and etc.

As per the Department of Finance’s statistics, here are some noteworthy figures:

• Total number of Insurance Companies in India – including both public and private companies = 52
• There is 1 PSU life insurance company (LIC) – and 23 private sector life insurance companies.
• 1 PSU re-insurance company (GIC) and none in private sector.
• 6 PSU general insurance companies and 21 private sector general insurance companies.

Regulatory authority(ies) in India

Important points of the IRDA Act, 1999 and what the IRDA is about are:

• First of all - IRDA provides license and permission for carrying out insurance business in India – and monitors the licensees.
• And most importantly - IRDA is responsible for the regulation, promotion and growth and development of the insurance and re-insurance business in India.
• IRDA also functions to protect the interests of the policy holders in many maters – such as redressal of grievances, protection against frauds, settlement of claims etc. among others.
• It prescribes the code of conduct, duties and procedural compliances for surveyors and loss assessors.
• Also regulates how the insurance companies invest their funds! Look at the picture – all the premiums that an insurance company, like LIC, collects – all that fund needs to be invested properly!
• It is also instrumental in controlling and regulating the rates of insurance premiums.
• Making the interest and protection of the policy holders a priority IRDA hosts a ‘Consumer Education Website’ - http://www.policyholder.gov.in/

Other relevant Acts governing insurance sector are

• General Insurance Business (Nationalization) Act, 1972
  – It is called ‘nationalization’ act, as the general insurance business was nationalized in 1972, with the government taking over 55 insurance companies.

• Insurance Act, 1938
  – provides the meanings and definitions of words and terms unique to the insurance sector, provisions regarding accounting and audit of insurance companies, compliance procedures and penalties on non-compliance etc.

• Life Insurance Corporation Act, 1956
  - it provides for the nationalization of life insurance business in India, and the formation of the Life Insurance Corporation of India. It also provides for the meanings of terms and phrases, and rules and regulations specifically pertaining to the life insurance business.