Introduction
The way the insurance liberalization process in India has been more than seven years. The first major milestone on this path was the passing of Insurance Regulatory and Development Authority Act, 1999 with amendments to the Insurance Act 1983 LIC and GIC Acts paves the way for the entry of private players and possibly the privatization of state monopolies have LIC and GIC. Opening the insurance private sector including foreign participation as a result of the various opportunities and challenges.
The concept Insurance
In everyday life, it is uncertain if there is risk involvement. The instinct against security threats such determination is a fundamental motivators of human behavior. As a sequel to this mission of security, the concept of insurance have been born. The urge to provide and protect against life and property should be promoted people to willingly in order to achieve some kind of sacrifice for the collective security and cooperation. In this sense, the story of the insurance is probably as old as the history of mankind.
Life insurance provides specific protection against the risk of premature mortality in the population earning member. Life insurance can provide protection in modern times the life of other related risks, for example, that a long life (ie the risk of outliving your source of income) and risk disability and disease (health insurance). The products ensure the longevity of pensions and annuities (insurance against old age). Non-life insurance protection from accidents, damage to property, theft and other liabilities. Non-life insurance contracts are typically shorter in duration, such as life insurance contracts. Tying together with the protection and saving individual life insurance. Life insurance provides protection and investment.
insurance is a boon to business concerns. The insurance of short-range and long-term relief. protection of short-term relief directed to loss of property and life, to divide between the loss of a large number of people through the mediation of the professional liability insurance carriers, such as insurance from the insured. This allows a businessman to face an unexpected loss, and therefore, you do not have to worry about the potential loss. The long-term goal is for the economic and industrial growth, massive availability of resources for investment in the country's insurance industry is organized and trade.
nationalization general insurance industry before
General Insurance
Act 1973, the GIC on Parliament in 1971, but entered into force in 1973 were 107 general insurance companies, including branches of foreign companies in the country working after nationalization, these companies are amalgamated and grouped into the following four subsidiaries of GIC as the National Insurance Co.Ltd, Calcutta.; The New India Assurance Co. Ltd, Mumbai; The Oriental Insurance Company, New Delhi, India and the United Insurance Co. Ltd., Chennai and now unmounted.
General insurance business in India is widely distributed marine and other GIC, apart from directly managed by Aviation and reinsurance business managed in accordance with the Comprehensive Crop Insurance Scheme, Personal accident insurance, social security system, etc. GIC and its subsidiaries have the goal of nationalization extended fire, he the message security and breadth of insurance protection for the weaker section of the society, efforts are being made with new flooring and popularize other non-traditional business.
liberalization of insurance
providing comprehensive regulation of business in India has been the effect of the enactment of 1983 attempted to create a strong and powerful supervisory and regulatory authority to control security powers to direct, advise, investigate the Insurance Act register and liquidate insurance, etc. However, due to the nationalization of insurance business, most of the regulatory functions of the control was taken away, and the insurance is in the hands of insurance companies as well. the Indian government, a high-powered committee set up in 1993 RNMalhotra, former Governor, Reserve Bank of India to look into the structure of the insurance industry, and propose amendments in order to be more efficient and more competitive given the structural changes in other financial system in the country.
Commission Recommendation Malhotra
the Committee submitted its report in January 1994, it recommended that private insurers will be allowed to co-exist with the government companies like LIC and GIC companies. This recommendation has been encouraged by a number of factors, such as being greater depth insurance in the economy, and on a much larger scale mobilization of resources in the economy, and on a much larger scale mobilization of economic resources for infrastructure development. Liberalization of the insurance sector, at least in part the need to tap on the large fiscal reserves of savings in the economy. Commission's recommendations were as follows:
o LIC and GIC attention capital base of up to Rs. 200 crores to the Government kept calm and was sold to the public to make reservations for suitable employees.
provided
o private sector in the insurance industry paid-up capital of at least Rs. 100 crores.
o foreign insurance company may float an Indian preferably in a joint venture with Indian partners.
o Steps initiated to set up a strong and effective insurance regulatory law as an autonomous body on the lines of SEBI.
o be made in the sector allows a limited number of private companies. But no firm is allowed in the sector. But no firm can operate in both the insurance industry (life and non-life).
o Tariff Advisory Committee (TAC) is Delinked form an independent body operating under the GIC sculptures for the oversight of the insurance regulatory authority.
oAll insurance companies are treated on a par with and governed by the provisions of the Insurance Act. No special dispensation is given by the government companies.
oSetting a strong and effective regulatory body, independent source of financing, before allowing private companies into sectors.
competition in the government sector
government companies now face competition from the private sector insurers not only to the issuing of insurance products in Korea but also in terms of the different aspects of customer service channel, effective techniques for selling your products etc. privatization of the insurance sector has opened the door to innovation in business can be transacted.
insurers embarking on a new era of new concepts and cost-effective way of doing business transaction. The idea is clearly to cater to the largest businesses avoid the expense. And slowly the time the old norm prevalent in government companies to expand by setting up branches seems lost. Among the techniques that seem to be catching up fast alternative to cater to rural and social sector insurance hub and spoke arrangement. Besides, the participants of non-governmental organizations and self-help groups (SHGs) have made the most sales in the rural and social sector policies.
The biggest challenge to commercial banks, which are huge branch network. In this regard, it is important to note that the LIC signed an agreement with Mutual Benefit Corporations Bank Mangalore-based infrastructure utilized 27 percent of the acquisition of a strategic stake in the insurer monolithic, Corporation Bank has decided to abandon plans to promote life insurance company. The bank will act as a corporate agent of LIC in the future and get a commission through the branches sold policies. LIC branch network of nearly 2100 offices will allow Bank Corporation created the extension centers. ATM or branch stationary premises. Corporation Bank, however, introduce effective Cash Flow Management System for IBM.
IRDA Act, 1999
Preamble IRDA Act 1999 reads "The law is the establishment of a protection authority in the interests of the holders of insurance policies to regulate to promote and ensure orderly growth of the responsibility of the insurance industry and those associated with or incidental.
§ 14 IRDA lays duties, powers and functions of law aa authority. Its powers and functions of the authority. Its powers and functions of the authority is as follows.
o Problem that the applicant a certificate of registration to renew, modify, revoke, suspend or terminate such registration.
in all matters relating to nomination
o protect policyholders in the political, policy surrender value of f ensures interest, settlement of insurance claims, other terms and conditions of insurance contracts.
o grant the necessary qualifications and practical training of insurance intermediaries and agents.
o Enter the code of conduct for surveyors and loss assessors.
o promote the effective conduct of insurance business
o support and regulation of professional regulations related to the insurance and reinsurance business.
o specify the form and manner in which the accounting is maintained and provided reports to insurance companies and insurance brokers.
o Adjudication of disputes between insurers and intermediates.
by the percentage o Enter life insurance and general and general business conducted on the insurance provided for in the rural and social sectors, etc.
§ 25, to the Advisory Committee on Insurance will be set up and consists of not more than 25 members.Section 26 provides that the Authority, in consultation with the Advisory Committee consists of insurance regulations to this Act and the rules made there under, to carry the objective of the first phase in 1938 defined this way Act.Section 29 seeks to modify certain provisions of insurance law. The amendments empower IRDA to effectively regulate, promote and ensure orderly growth of the insurance industry to the Insurance Act as a consequence.
modification 30. §-31seek LIC Act 1956 and GIC Act 1972
liberalization
While the nationalized insurance companies have performed commendable job by extending the opening of the volume of business insurance sector private players is a necessity within the framework of the liberalization of the financial sector. If the traditional semi public goods and infrastructure industries, such as banking, airlines, telecommunications, energy, etc. a significant private sector presence, continued state monopoly of insurance was indefensible, and therefore the privatization of insurance has been previously discussed. The effect has been to create a variety of opportunities and challenges visible form.
to
is first eliminated from the Privatization Insurance monopolistic business Life Insurance Corporation of India. This can help to cover a wide range of general insurance and life insurance risk. It helps to have a new range of products.
2. It may also result in better customer service and improve the variety and the price of insurance products.
3. The entry of new players will accelerate the spread of both life and general insurance. This will increase the insurance penetration and density measure.
4. Admission to the private operators to ensure the mobilization of funds that can be used for the purpose of infrastructure development.
5. Allowing commercial banks to mobilize funds to help the insurance business in rural areas because of the availability of huge branches of the banks.
6. Most important, not least, will create huge employment opportunities in the field of insurance, which is a burning issue today is the presence issues.
current scenario
after
opening of the insurance private sector, leading to various private companies including joint ventures entered into the fields to provide both life and non-life business. Tata – AIG, Birla Sun Life, HDFC Standard Life Insurance, Reliance General Insurance, Royal Sundaram Alliance Insurance, Bajaj Auto Alliance, IFFCO Tokio General Insurance INA Vysya Life Insurance, SBI Life Insurance, Dabur CJU Life Insurance and Max New York Life. SBI Life Insurance has launched three products Sanjeev, Sukhjeevan and Young Sanjeev so far, and has already sold 320 policies within the framework of the plan.
Conclusion
The above discussion leads to the conclusion that it is necessary to the entry of private operators insurance business and is justified in order to enhance the efficiency of operations, greater density and insurance coverage in the country, and greater mobilization of long-term savings, long-gestation infrastructure prefect. New players should not be treated as a rivalry in government companies but also their objective to complement the growth of the insurance business in India.