Trade Articles

India's insurance sector is zooming to show an unprecedented progressive growth of more than 200% by the period of 2009-09. The Associated Chambers of Commerce and Industry of India has clocked out the fact that during this period, private players in the industry will see a growth of about 140 per cent, owing to the adoption of the aggressive marketing techniques in comparison of the growth rate of 35 per cent-40 per cent achieved by the state owned insurance companies. The chamber is expected to poise the business of insurance to reach at Rs.2000 billions in coming 2 years from the present level of Rs. 500 billion. With the result of adoption of the intense marketing strategies by the private players, the declination has been witnessed in respect of the share of the state owned insurance companies captured in the market. The market share fallout has been noticed in context of such companies like GIC, LIC, which have come down to nearly 70 per cent in the past 4-5 years from the 97 per cent. The experts have fore casted the more severe competition in the insurance sector likely to be occurred in the near future. Till recently, insurance sector was majority driven by the government sector players but now many private sector multinational players have come into the picture. Like HDFC, ICICI, Kotak, Mahindra and Birla Sunlife. Insurance sector has been characterized as the booming sector of the Indian arena, which has shown the growth rate of more than 15 per cent to 20 per cent. Insurance in India is put under the federal subject and is governed by the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business(Nationalization) Act, 1972, Insurance Regulatory and Development Authority(IRDA) Act, 1999 and by various other acts.

The roots of the insurance sector can be tracked down in the year 1818 in the formation of the life insurance Corporation in Calcutta. The idea was to provide means to the English widows. During that time different premiums were charged for the Indian and English people lives. In 1870, the Bombay Mutual Life Insurance Society started its insurance business and it charged the same premium from all people irrespective of whether they were Indian or English. In the year 1912, insurance regulation was started due to the passing of the Life Insurance Companies Act and the Provident Fund Act. By the year of 1938, in India there were total 176 insurance companies. In the year of 1938, with the passing of Insurance Act, 1938 there was the introduction of the first comprehensive legislation. It was passed with the aim of providing the strict state control over the insurance business. After the independence, insurance sector in India grew at a much higher pace. In the year 1956, Indian government combined together 245 Indian and foreign insurers and the provident societies under the name of nationalized monopoly corporation. It was the same period when the life insurance corporation (LIC)came into the existence by the passing of the Act of Parliament and through the contribution of capital around Rs. 5 crore. Till 1972, private sector has enjoyed somehow monopoly in the general insurance sector. There were around 107 private companies in the field. With the effect of the General Insurance Business (Nationalization) Act, 1972, the general insurance business got nationalized in the India. Due to the amalgamation of 107 private insurance companies, 4 new companies, as the subsidiaries of the General Insurance Company, came into effect- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company.

About Associated Chambers of Commerce and Industry (ASSOCHAM)
Since 1920, the Associated Chambers of Commerce and Industry of India is the apex chamber, which is covering the membership of above 2 lakh various companies and professionals in throughout the nation. The chamber was formed co jointly by various promoters chambers from different regions of the country.