Insurance Essay

10883 Words Sep 18th, 2014 44 Pages
Executive summary

The life insurance industry in India is achieving a growth rate of about 4% annually. It is considered to be one of the fastest growing sectors. The changing socioeconomic demographics and consumer behavior along with increased frequency of natural calamities and disasters have been the main reasons for the growth of this Industry. Its assets as on 31.03.08 were valued at $185 billion with a total of 250 million policies sold and an employee turnover of 113000 and about 1.2 million agents. There are currently 22 life insurance companies with LIC being the only public company having a market share of almost 50%. ICICI comes in second with 10% followed by HDFC at 6%, SBI at 5%, Bajaj at 4%, Reliance at 4%, Birla at 4%,
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* In 1928 the insurance companies enabled the government to gather huge information regarding the statistical information of both life and non life insurance businesses. * In 1938 the legislation which has been consolidated and amended for the insurance act with the pur[pose of protecting the interests of the public who is insured. * In1956 the Life Insurance Corporation has been formed by the parliament through LIC Act with a capital of Rs.5 crore from the Indian government.

REFORMS IN THE INSURANCE SECTOR In 1993 there was a committee formed named as Malhotra Committee organized by the former Finance Secretary and the RBI governor R.N.Malhotrato develop the insurance industry and also to recommend its future direction. The reform was made because they recognized that the insurance can contribute a lot to create a more efficient financial systems.The recommendations include in the committee report are

* Competition * The minimum paid up capital for private firms to enter should be Rs.1billion * The companies should not focus on both life and non life insurance simultaneously from a single entity * Collaboration should be allowed between foreign companies and domestic companies * In rural market the postal life insurance should be allowed * In every state their company State Level Insurance Company only should

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