Insurance in India
Insurance has been an important part of the India financial system. Until recently, insurance services were provided by the public sector, i.e., life insurance by the Life Insurance Corporation of India and general insurance by the General Insurance Corporation and its four subsidiaries.
1. Life Insurance Corporation of India ( LIC )
- Established on Sept 1, 1956.
- Head Office : Mumbai; Zonal offices : 7 ( Mumbai, Kolkata, Delhi, Chennai, Kanpur, Hyderabad and Bhopal )
2. General Insurance Corporation ( GIC ) of India
- Established : Jan 1, 1973; It has four subsidiary companies
- National Insurance Company Ltd, Kolkata.
- The New India Assurance Co. Ltd, Mumbai.
- The Oriental Fire and General Insurance Co. Ltd, New Delhi.
- United India Fire and General Insurance Co. Ltd, Chennai.
Reforms in Insurance Sector in India
- Insurance sector constitutes an important segment of financial market in India and plays a predominant role in the formation of capital in the country. The reforms in the insurance sector started with the enactment of Insurance Regulatory and Development Authority Act, 1999. The Act paved-the way for the entry of private insurance companies into the insurance market and also constitution of Insurance Regulatory and Development Authority.
Insurance Regulatory and Development Authority ( IRDA ) India
- IRDA was constituted on 19 April, 2000 to protect the interest of the holders of insurance policies and to regulate, promote and ensure orderly growth of the insurance industry. The authority consists of a Chairperson, three whole-time Members and four part-time Members.
- For regulating the insurance sector, the Authority has been issuing regulations covering almost the entire segment of insurance industry, namely, regulation on insurance agents, solvency margin, re-insurance, registration of insurers, obligation of insurers to rural and social sector, accounting procedure, etc.
Agriculture Insurance Company of India Limited ( AICIL )
A separate organization for Agriculture Insurance called Agriculture Insurance Company of India Ltd.’ has been incorporated under the Companies Act, 1956 on Dec 20, 2002 with the capital participation from General Insurance Corporation of India (GIC), four public sector general insurance companies viz.,
- National Insurance Company Ltd.,
- New India Assurance Company Ltd.,
- Oriental Insurance Company Ltd., and
- United India Insurance Company Ltd. and NABARD.
The promoter’s subscription to the paid-up capital is 35 percent by GIC, 30 percent by NABARD and 8.75 percent each by the four public sector general insurance companies. The authorized capital of the new organization is ₹ 15000 crore, while the initial paid-up capital is ₹ 200 crore.
While the new company would underwrite crop insurance to begin with, it will, in due course, cover other allied rural / agricultural risks also. National Agriculture Insurance Scheme ( NAIS ), which was being implemented by the General Insurance Corporation of India ( GIC ), has since been transferred to the new company named Agricultural Insurance Company of India Ltd. ( AICIL ).
India Insurance FDI Bill
- The government has decided to amend the Insurance Act to raise the ceiling on Foreign Direct Investment ( FDI ) in the insurance sector to 49% from 26%.
- Apart from the Insurance Act of 1938, the government also plans to amend the Life Insurance Corporation of India Act of 1956, the General Insurance Business Nationalization Act of 1972 and the Insurance Regulatory and Development Authority Act of 1999. Since FDI ceiling is part of the Insurance Act, the Act will have to be amended to allow foreign insurers to hold higher stakes in ventures in India.
- The LIC Act would be amended to align the minimum paid-up capital required for LIC with that of private sector companies, which NEED to have a minimum of ₹ 100 crore equity capital. LIC currently has a paid-up equity capital of just ₹ 5 crore.
Application Form Submission 16 Dec 2020 to 16 Jan 2021.