Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20

per cent annum. Together with banking services, it contributes to about 7 per cent to the country's GDP.
Insurance is a federal subject in India and Insurance industry in India is governed by Insurance Act, 1938,
the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972,
Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts.

The origin of life insurance in India can be traced back to 1818 with the establishment of the Oriental Life
Insurance Company in Calcutta. It was conceived as a means to provide for English Widows. In those days
a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered
riskier for coverage. The Bombay Mutual Life Insurance Society that started its business in 1870 was the
first company to charge same premium for both Indian and non-Indian lives. In 1912, insurance regulation
formally began with the passing of Life Insurance Companies Act and the Provident Fund Act.

By 1938, there were 176 insurance companies in India. But a number of frauds during 1920s and 1930s
tainted the image of insurance industry in India. In 1938, the first comprehensive legislation regarding
insurance was introduced with the passing of Insurance Act of 1938 that provided strict State Control over
insurance business.

Insurance sector in India grew at a faster pace after independence. In 1956, Government of India brought
together 245 Indian and foreign insurers and provident societies under one nationalised monopoly
corporation and formed Life Insurance Corporation (LIC) by an Act of Parliament, viz. LIC Act, 1956, with a
capital contribution of Rs.5 crore.

The (non-life) insurance business/general insurance remained with the private sector till 1972. There were
107 private companies involved in the business of general operations and their operations were restricted to
organised trade and industry in large cities. The General Insurance Business (Nationalisation) Act, 1972
nationalised the general insurance business in India with effect from January 1, 1973. The 107 private
insurance companies were amalgamated and grouped into four companies: National Insurance Company,
New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These
were subsidiaries of the General Insurance Company (GIC).

In 1993, the first step towards insurance sector reforms was initiated with the formation of Malhotra
Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra. The committee was
formed to evaluate the Indian insurance industry and recommend its future direction with the objective of
complementing the reforms initiated in the financial sector.

Key Recommendations of Malhotra Committee

Structure

• Government stake in the insurance Companies to be brought down to 50%.

• Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries
can act as independent corporations.
• All the insurance companies should be given greater freedom to operate.

Competition

• Private Companies with a minimum paid up capital of Rs.1billion should be allowed to enter the
industry.
• No Company should deal in both Life and General Insurance through a single Entity.
• Foreign companies may be allowed to enter the industry in collaboration with the domestic
companies.
• Postal Life Insurance should be allowed to operate in the rural market.
• Only one State Level Life Insurance Company should be allowed to operate in each state.

Regulatory Body

• The Insurance Act should be changed.

• An Insurance Regulatory body should be set up.
• Controller of Insurance should be made independent.

Investments

• Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any company.

Customer Service

• LIC should pay interest on delays in payments beyond 30 days

• Insurance companies must be encouraged to set up unit linked pension plans.
• Computerisation of operations and updating of technology to be carried out in the insurance
industry.

Malhotra Committee also proposed setting up an independent regulatory body - The Insurance Regulatory
and Development Authority (IRDA) to provide greater autonomy to insurance companies in order to improve
their performance and enable them to act as independent companies with economic motives.

Insurance sector in India was liberalized in March 2000 with the passage of the Insurance Regulatory and
Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players
to enter the market with some limits on direct foreign ownership. There is a 26 percent equity cap for foreign
partners in an insurance company. There is a proposal to increase this limit to 49 percent. The opening up of
the insurance sector has led to rapid growth of the sector. Presently, there are 16 life insurance companies
and 15 non-life insurance companies in the market. The potential for growth of insurance industry in India is
immense as nearly 80 per cent of Indian population is without life insurance cover while health insurance
and non-life insurance continues to be well below international standards.
Insurance in India started without any regulations in the nineteenth century. It was a typical story of a
colonial era: a few British insurance companies dominating the market serving mostly large urban centers.
After the independence, the Life Insurance Company was nationalized in 1956, and then the general
insurance business was nationalized in 1972. Only in 1999 private insurance companies were allowed back
into the business of insurance with a maximum of 26 per cent of foreign holding (World Bank Economic
Review 2000). The entry of the State Bank of India with its proposal of bank assurance brings a new
dynamics in the game. On July 14, 2000 Insurance Regulatory and Development Authority bill was passed
to protect the interest of the policyholders from private and foreign players. The following companies are
entitled to do insurance business in India.

The private insurance joint ventures have collected the premium of Rs.1019.09 crore with the investment
of just Rs.3,000 crore in three years of liberalization. The private insurance players have significantly
improving their market share when compared to 50 years Old Corporation (i.e.LIC). As per the figures
compiled by IRDA, the Life Insurance Industry recorded a total premium underwritten of Rs. 10,707.96
crore for the period under review. Of this, private players contributed to Rs.1, 019.09 crore, accounting for
10 percent. Life Insurance Corporation of India (LIC), the public sector giant, continued to lead with a
premium collection of Rs.9,688.87 crore, translating into a market share of 90 per cent. In terms of number
of policies and schemes sold, private sector accounted for only 3.77per cent as compared to 96.23 per cent
share of LIC (The Economic Times, 21 March,2004).
The ICICI Prudential topped among the private players in terms of premium collection. It recorded a
premium of Rs. 364.9 crore and a market share of 25 per cent, followed by Birla SunLife with a premium
under- written Rs.170 crore and a market share of 15 percent, HDFC Standard with 132.7 crore and Max
New York Life with Rs.76.8 crore with a market share of approximately 15 per cent each. Unlike their
counterpart in the life insurance business, private non-life insurance companies have not yet started
addressing the retail market. All is set to change in the coming years. Like in the banking sector, non-life
insurance companies will soon have no choice but to focus on individual buyers.

In case of private non-life insurance players, that their market share rose to 14.13 per cent, recording a
growth of 70.75 per cent on an annual basis, while the market share of public sector stood at 85.87 per
cent, registering a marginal growth of 6.34 per cent. The overall market has recorded a growth of 12.32 per
cent by the end of January 2004. Among the private non-life insurance players, ICICI Lombard topped the
list with a premium collection of Rs.403.62 crore in one year period with a market share of 3.05 per cent
and with an annual 131.6 per cent, followed by Bajaj Allianz with a premium of Rs.385.02 crore and 2.91
per cent market share and Tata AIG with 300.49 crore premium and 2.27 per cent market share with an
annual growth rate of 62.60 per cent.

Among the public sector players, New India garnered a market share of 24.38 per cent, Rs.3,229.49 crore
premium and an annual growth rate of 0.38 per cent, followed by National with a market share of 21.43 per
cent, Rs.2,839.11 crore premium and an annual growth rate of 19.88 per cent, United India with a market
share of 19.47 per cent (Rs.2,578.83 crore premium) and Oriental with a market share of 18.25 per cent,
Rs.2,417.17 crore premium and an annual growth rate of 1.86 per cent. It is significant to note that HDFC
Chubb and Cholamandalam have registered annual growth rates of 4030.26 per cent and 1101.20 per cent
respectively, whereas New India has registered it as 0.38 per cent. If this trend continues, private insurer
would dominate the public sector like New India Insurance Corporation. It is obviously reflect the
insurance sector has facing the challenges with foreign counter parties as well as private counter parties
and lot more opportunities are prevailing to penetrate the insurance business among the uncovered people
and area of India. Further, it leads to economic development of the country. In this regard, it assumes
greater significance to conduct debate among the inter- disciplinary persons.
It is, therefore, an urgent need to explore the challenges and opportunities faced by the insurance sector in
India. Accordingly, the proposed seminar title is INSURANCE SECTOR IN INDIA � CHALLENGES
AND OPPORTUNITIES.

II. OBJECTIVES OF THE SEMINAR

The following objectives have been formed, such as:
1. To discuss the challenges that the insurance sector is facing in India.
2. To focus the opportunities that the insurance sector in India is having.
3. To assess the growth of private insurance sector in India.
4. To discuss on the cost (premium amount) and on the Rate of Return (RoR) on insurance policies.
5. To review the role of the Insurance Regulatory Authority of India (IRDA) in regulating insurance
business in India.
6. To discuss the determinants (Economic, demographic, Risk factor etc.) of the insurance policy holders.
7. To review why the rural people have remained outside the purview of the insurance sector in India.

III. ACADEMIC SIGNIFICANE OF THE PROPOSED SEMINAR

Insurance sector is now receiving serious attention by colleges and universities. Many educational
institutions are offering Post Graduate Diploma in insurance on part time or full time basis or in the
distance mode to cater the needs of the students. Vast literature made available on Insurance in the form of
books, magazines and research papers. However, the existing literature covered by principles, nature and
scope of insurance, documents and marketing of insurance. Thus very few studies attempted to evaluate the
risk factor.

It is, therefore, the proposed seminar would concentrate to deliberate on Rate of Return (RoR), inflation
rates, discount rates, mortality rates, and Net Present Values etc. No adequate debate has been carried out
on the proposed topic of the seminar to the extent that it demands. Hence, the proposed seminar assumes a
greater significance in the academic field.

IV.RELEVANCE TO PRESENT-DAY PROBLEMS/NEEDS OF THE SOCIETY/ COUNTRY

The latest series of bomb attacks, attack on parliament, attack on Ayodya, attacks of the Maoists, nature
calamities like tsunami, floods and drought, ragging are prevailed in the country and need not to say about
the farmer who has been insecure about rains, seeds, crops and suitable price for his crop. In developed
countries, the owners have insured even pet dogs. Whereas in India, about 80 percent of human beings and
major natural resources have not been insured in globalization era.

Based on the above fact, this seminar has quite relevance to the present day problems of life insurance,
non-life insurance, rural health insurance, ragging insurance, natural calamities insurance, pension
insurance and terrorism insurance.
V. RELAVANCE TO NEEDS OF THE SOCIETY/COUNTRY
Insurance sector is a major contributor to the financial savings of the household sector in the country,
which are further channelized into various investment avenues. As per the Annual Report 2003-04 of
IRDA, contribution of insurance funds to the financial savings was 14.9 per cent in 2003-04, viz 2.2 per
cent of the GDP at current market price. The premium underwritten has grown from Rs 45,677.57 crore in
2000-01 to Rs.83,645.11 crore in 2003-04. After liberalization of insurance sector, insurers have
introduced innovative product and tailor made products which are absolutely sit to rural population. Efforts
at increasing consumer awareness and putting the regulatory framework for protection of policyholder�s
interest have been made both the industry and regulatory level. Global market conditions have also resulted
in driving down premium rates/charges in respect of certain products and in improving the quality of
services offered by the insurer. Finally, insurance sector has been penetrating in India, thus the proposed
seminar has quite relevant to the society.
VI.TO WHOM THE SEMINAR IS ATTRACTED
Insurance organizations (Public & Private),
Policyholders,
Insurance Regulatory Authorities (IRDA Officials),
Development Officials,
Educational Institutes (Which are offering PG Diploma in Insurance),
Bankers (who are offering Insurance business),
Financial Institutes (who are offering Insurance business), and
Academicians, Professors and Research Scholars.
VII.TECHNICAL SESSIONS (PRPOSED)
FIRST DAY
Technical Session I: Insurance Business in India : Role of IRDA
Technical Session II: Nature of Risk and Insurance
SECOND DAY
Technical Session III: Evaluation of Insurance schemes
Technical Session IV: Role of private insurers particiption in insurance business : Challenges and
Opportunities
Panel Discussion
In the light of the above discussion, a national seminar is a platform to discuss various issues aforesaid
wherein the eminent professionals, distinguished academicians, regulators, government officials, Insurance
organizations, development Officials, Bankers and Research Scholars from all over the country would
participate in the deliberations.
Additional List of the titles for writing paper:
Information

1. Risk and Insurance

2. Global insurance
3. Penetration of Insurance sector at world level as well as in India.
4. Saving habits of Indian people
5. Liberalisation of Indian Insurance sector
6. Role of the Insurance Regulatory Authority of India (IRDA)
7. Performance of private players in Insurance sector
8. A comparative studies on private and public sector of insurance companies.
9. Performance evaluation of Non-Life insurers (public and Private)
10. Evaluation of General Insurance sector in India
11. Urban and Rural penetration of Insurance sector in India
12. Role of Insurance sector in terms of infrastructure development in India
13. Role of FDI in Insurance sector

14. Detail papers on a) Insurance - Risk analysis

b) Health Insurance
c) Rural Insurance
d) Crop Insurance
e) Reinsurance
f) Student Insurance
g) Terrorism Insurance
h) Travel Insurance
i) Devotees insurance
j) Fire Insurance
k) Theft insurance
l) House Insurance
m) Property insurance

15. De- tariff of Insurance sector and road �map for de-tariff
16. Evaluation of Pension Scheme
17. Evaluation of Provident Funds
18. Evaluation of Postal Life Insurance (PLIC)
19. Study on Unit Link Insurance policies (ULIP)
20. Studies of Private Savings
21. Studies on Premium fixation
22. Studies on maturity of insurance policies.
23. Insurance sector: Challenges and Opportunities
24. Insurance sector : Problems and Suggestions.
Any other titles relevant broad area of savings and Insurance.