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CHAPTER - 1

HISTORY OF INSURANCE IN INDIA

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HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (
Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The
writings talk in terms of pooling of resources that could be re-distributed in times of
calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor
to modern day insurance. Ancient Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and carriers’ contracts. Insurance in India
has evolved over time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of
the Oriental Life Insurance Company in Calcutta. This Company however failed in
1834. In 1829, the Madras Equitable had begun transacting life insurance business in
the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in
the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental
(1874) and Empire of India (1897) were started in the Bombay Residency. This era,
however, was dominated by foreign insurance offices which did good business in
India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe
Insurance and the Indian offices were up for hard competition from the foreign
companies.

In 1914, the Government of India started publishing returns of Insurance

Companies in India. The Indian Life Assurance Companies Act, 1912 was the first
statutory measure to regulate life business. In 1928, the Indian Insurance Companies
Act was enacted to enable the Government to collect statistical information about both
life and non-life business transacted in India by Indian and foreign insurers including
provident insurance societies. In 1938, with a view to protecting the interest of the
Insurance public, the earlier legislation was consolidated and amended by the
Insurance Act, 1938 with comprehensive provisions for effective control over the
activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However,

there were a large number of insurance companies and the level of competition was
high. There were also allegations of unfair trade practices. The Government of India,
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therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance
sector and Life Insurance Corporation came into existence in the same year. The LIC
absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245
Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the
Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the
west and the consequent growth of sea-faring trade and commerce in the 17th century.
It came to India as a legacy of British occupation. General Insurance in India has its
roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in
Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd was set up. This
was the first company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance
Association of India. The General Insurance Council framed a code of conduct for
ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalization) Act,
general insurance business was nationalized with effect from 1st January, 1973. 107
insurers were amalgamated and grouped into four companies, namely National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd and the United India Insurance Company Ltd. The General
Insurance Corporation of India was incorporated as a company in 1971 and it
commence business on January 1sst 1973.

Related Acts:-

The insurance sector went through a full circle of phases from being unregulated to
completely regulate and then currently being partly deregulated. It is governed by a
number of acts, with the first one being the Insurance Act, 1938.

The Insurance Act, 1938

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The Insurance Act, 1938 was the first legislation governing all forms of insurance to
provide strict state control over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19 January 1956,
that life insurance in India was completely nationalized, through a Government
ordinance; the Life Insurance Corporation Act, 1956 effective from 1.9.1956 was
enacted in the same year to, inter-alia, form LIFE INSURANCE CORPORATION after
nationalization of the 245 companies into one entity. There were 245 insurance
companies of both Indian and foreign origin in 1956. Nationalization was accomplished
by the govt. acquisition of the management of the companies. The Life Insurance
Corporation of India was created on 1 September, 1956, as a result and has grown to
be the largest insurance company in India as of 2006.

General Insurance Business (Nationalization) Act, 1972

The General Insurance Business (Nationalization) Act, 1972 was enacted to

nationalize the 100 odd general insurance companies and subsequently merging them
into four companies. All the companies were amalgamated into National Insurance,
New India Assurance, Oriental Insurance, and United India Insurance which were
headquartered in each of the four metropolitan cities.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector.
The Govt. of India then introduced the Insurance Regulatory and Development
Authority Act in 1999, thereby de-regulating the insurance sector and allowing private
companies into the insurance. Further, foreign investment was also allowed and
capped at 26% holding in the Indian insurance companies. In recent years many
private players entered in the Insurance sector of India. Companies with equal
strength competing in the Indian insurance market. Currently, in India only 2 million
people (0.2 % of total population of 1 billion), are covered under Med claim, whereas
in developed nations like USA about 75 % of the total population are covered under
some insurance scheme. With more and more private players in the sector this
scenario may change at a rapid pace.

The business of life insurance in India in its existing form started in India in the year
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1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance

business in India are:

1912 - The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.

1928 - The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance businesses.

1938 - Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.

1956 - 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5 core from the Government of
India.

The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in the
year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance

business in India are:

1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.

1957 - General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business
practices.

1968 - The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
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1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.

CURRENT SCENARIO:-

This millennium has seen insurance come a full circle in a journey extending to
nearly 200 years. The process of re-opening of the sector had begun in the early
1990s and the last decade and more has seen it been opened up substantially. In
1993, the Government set up a committee under the chairmanship of RN Malhotra,
former Governor of RBI, to propose recommendations for reforms in the insurance
sector. The objective was to complement the reforms initiated in the financial
sector. The committee submitted its report in 1994 wherein, among other things, it
recommended that the private sector be permitted to enter the insurance industry.
They stated that foreign companies be allowed to enter by floating Indian companies,
preferably a joint venture with Indian partners.
 7

In December, 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and at the same time GIC was
converted into a national re-insurer. Parliament passed a bill de-linking the four
subsidiaries from GIC in July, 2002.

Today there are 14 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 14 life insurance companies operating
in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-
20%. Together with banking services, insurance services add about 7% to the
country’s GDP. A well-developed and evolved insurance sector is a boon for economic
development as it provides long- term funds for infrastructure development at the
same time strengthening the risk taking ability of the country.

At present GIC is insuring both ways. A whopping increase in foreign insurance

premium at Rs. 600crore has pushed the national re-insurers total premium to over
Rs. 3800crore in 2002-03. GIC is willing to write more risks back home for domestic
insurance companies. The knock on this account has been primarily from the motor
portfolio. GIC apparently does not have much control on its motor, marine or fire
losses as the entire chunk comes from the public and private insurance companies. At
present every public and private general insurance company has to necessarily cede
20% of its risk with GIC. The reinsurer is in talks with a host of companies to increase
their cession limits back home. The quantum of foreign inward premium may be low in
the total premium income but the increase in its share over the last one year is
significant. In 2002-03, the share of foreign premium has been over 15% compared to
just 6% the previous year.

GIC is keen to write more risks back home and looking at picking up a strategic stake
in African reinsurance major East Africa Re. apart from establishing its presence in
London, Moscow and Dubai. Besides, it is examining new Asian markets like China,
Korea and Malaysia. With the existing net worth of about Rs. 2800crore, the capacity
to write business is almost four times. Going by the huge capacity for retention back
home, GIC has approached life insurers to cede 10% of their reinsurance risk.

INTER-COMPETITION AMONG INSURERS:-

Private insurance companies can give a good competition to the PSUs in terms of
customer orientation and quick settlements. There is a big scope for financiers to book
 8

a good fee based income by becoming corporate agents. Before the industry was
opened up, the four public sector insurance companies were underwriting Rs. 14000/-
core premium a year. So far, the eight private insurers had taken away only 14% of
the business. They have an uphill task in taking on the four PSUs which have big
network of officers, market reach and a vast development force. The need for de-
tariffing premium for the sake of removing unfair trade practices has been stressed
upon by all the private players. While there is a big business potential, the regulators,
in a bid to create entry barriers, have forced the promoters to pump over Rs. I00crore
as capital. This will result in longer payback period of six to seven years. The
insurance companies so far have been providing separate insurance cover for each
and every segment but the efforts are on to provide a comprehensive insurance cover
to machines, assets and the people. Attempts are also on to include the health and
accident insurance for the IT companies where the insurers are trying to bundle the
existing services to provide a comprehensive package. Three leading insurance
companies are preparing a blueprint for offering the policy to IT companies. However,
these companies are yet to approach the insurance Regulatory and Development
Authority for seeking approval. IT companies are still major clients for the country’s
budding insurance industry; attempts are on to roll out an exclusive insurance cover
for IT Companies. Insurance broking Companies like India Insure, Helios Insurance
Services and Kadel Insurance Services for IT Companies. Insurance companies are
today looking at different segments where there is business potential and are trying to
customize policies to suit the specific needs of their clients.

WHAT IS GOING ON?

Public Sector Insurance Companies have finally ceased to be the GIC Subsidiaries.
The Rs. 100 Core of equity has been transferred to Government from GIC. The
transfer of equity follows amendments in the General Insurance Business
Nationalization Act, passed by Parliament. The possibility of tapping the capital market
by public sector Insurers cannot be ruled out in future. There are visible signs of
market expansion and therefore, all the insurers are expanding the targets and
concentrating on most profitable personal and health segment. The Commission
structure has been the focus of debate today. The insurance players are trying to
balance the diverse objectives of providing enough incentives upfront to draw full time
agents and at the same time ensuring that commissions are spread over at increased
rates to ensure persistency of service. IRDA cannot of its own notify changes as
commission payments are fixed by law. Any change in commission structures would
 9

require a change in legislation. The insurer’s cup of woes has been similar to that of its
peers In the industry. Third party claims in motor insurance have hit these companies
hard with some companies having to shell out as high as 300% of the motor insurance
premium collected. The new line of thinking is to tap the profitable personal lines of
business. Companies are looking to banc assurance tie-ups. Emphasis also laid upon
recruitment of unemployed graduates as agents. This would also provide some social
stability. Companies have necessary infrastructure in the form of training centers to
provide the mandatory IRDA training. Public Sector insurers expect banks to report
good fee income through referrals to them. The insurance agents are able to earn
15% discount, if the sum assured is less than a crore of rupees, with an investment of
just about Rs. 250/- per annum while the insurance brokers earn 12.5% return after
having invested Rs. 50 lakhs for registering themselves.

Existing Insurance Companies/Corporations:-

1. Bajaj Allianz Life Insurance Company Limited

2. Birla Sun Life Insurance Co. Ltd

3. HDFC Standard life Insurance Co. Ltd

4. ICICI Prudential Life Insurance Co. Ltd.

5. ING Vysya Life Insurance Company Ltd.

6. Life Insurance Corporation of India

7. Max New York Life Insurance Co. Ltd

8. Met Life India Insurance Company Ltd.

9. Kotak Mahindra Old Mutual Life Insurance Limited

10.SBI Life Insurance Co. Ltd

11.Tata AIG Life Insurance Company Limited

12. Reliance Life Insurance Company Limited.

13. Aviva Life Insurance Co. India Pvt. Ltd.

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14. Sahara India Life Insurance Co, Ltd.

15. Shriram Life Insurance Co, Ltd.

16. Bharti AXA Life Insurance Company Ltd.

17. Future Generali Life Insurance Company Ltd.

18. IDBI Fortis Life Insurance Company Ltd.

19.Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd

20. AEGON Religare Life Insurance Company Limited.

21. DLF Pramerica Life Insurance Co. Ltd.

22. Star Union Dai-ichi Life Insurance Comp. Ltd.

23. National Insurance Company Ltd.

TRENDS IN LIFE INSURANCE BUSINESS—UNIT LINKED INSURANCE PLANS

Unit Linked Business (%) Non-linked Business (%)

2005-06 2006-07 2007-08 2005-06 2006-07 2007-08

Private 82.30 88.75 90.33 17.70 11.25 9.67

LIC 29.76 46.31 62.31 70.24 53.69 37.69

Industry 41.77 56.91 70.30 58.23 43.09 29.70

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RESEARCH
OBJECTIVE:-

The main objective of the study through questionnaire was to get the managers point of
view of different insurance companies about the effectiveness of IRDA as a regulator of
Indian insurance sector. The responses given by them was clearly depends on their
knowledge and understanding about IRDA and there is also a comparison of IRDA with
china insurance regulatory commission.

Sample size: - 60 respondent

Duration of study: - 2 months

Area covered: - Dehradun city (Insurance companies)

Methodology: - primary data collection- questionnaire

Secondary data analyses (comparisons with china)

Statistical tools: - ms excel-graphs, charts etc

Limitation:-

1. Time period constrain.

2. Financial constrain.

3. Small sample size because questionnaire can only be filled my senior managers
(area head, branch manager etc).

4. limited area.

5. Sometimes respondent paid little attention while filling the questionnaire.

6. Sometimes respondents do not want to give the internal information about the
company.
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COMPARISON BETWEEN INDIAN INSURANCE MARKET WITH CHINA’S

ANDTHEIR REGULATORS.

SOME FACTS ABOUT THE TWO COUNTRIES: -

FACTORS INDIA CHINA

POPULATION 1,147,995,904 1,330,044,554

LITERACY RATE 61% 90.9%

PER CAPITA RS 29,382 RS 82,510

INCOME

INSURANCE 30 79
COMPANIES

COTRIBUTION 7% 1.7%
OF SECTOR IN
GDP
INSURERS 2.1 TRILLION 3.5 TRILLION
TOTAL ASSETS

INSURANCE 156 BILLION 255 BILLION

PREMIUM
COLLECTED IN
2008
GROWTH RATE 15-20% 40%

INSURANCE 20,00,000 (APP) 25,00,000 (APP)

ADVISORS
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GROWTH RATE 30% 39.1%

OF INSURANCE
PREMIUM

China Insurance Regulatory Commission: -

China Insurance Regulatory Commission, a ministerial institution directly under the

State Council, supervises and manages the insurance market and maintains the legal
and stable operation of insurance operations in the country, in accordance with the
functions of administrative management authorized by the State Council and relevant
laws, rules and regulations.

1. Main functions and responsibilities:

(1) To formulate guidelines and policies for developing insurance business, to draw up
development strategies and plans for the industry; to formulate laws, rules and
regulations for insurance supervision; and to introduce rules and regulations for the
insurance industry;

(2) To examine and approve the establishment of insurance companies and their
subsidiaries, insurance group companies, and insurance holding companies;
together with other departments concerned, to examine and approve the
establishment of insurance assets management companies; to examine and
approve the setup of representative offices of overseas insurance institutions in
China, insurance intermediary institutions such as insurance agencies, broker
companies, appraisal companies and their subsidiaries; to examine and approve
insurance agencies to be established overseas by Chinese insurance and non-
insurance institutions; to examine and approve the merger, split, change and
dissolving of insurance institutions, to decide whether to take over or reallocate
assets; to be involved and organize the bankruptcy and clearance of insurance
companies;

(3) To examine and approve the qualifications of senior managers of various types of
insurance institutions; to formulate basic standards for the qualifications of staff
engaged in insurance;
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(4) To examine and approve the categories of insurance schemes related to public
interests, to impose insurance articles and rates of premium for compulsory
insurance schemes and newly developed life insurance schemes, and to accept
filing for the record of articles and premium rates of other insurance schemes
according to law;

(5) To supervise the payment ability and market conduct of insurance companies; to be
in charge of the management of insurance guarantee fund, supervise insurance
deposit; to formulate regulations according to law and state policies in regard to the
operation of insurance funds and to supervise the operation of funds of insurance
companies according to law;

(6) To supervise policy-oriented insurance and compulsory insurance operations; to

supervise such organizational forms and business operations as special self-
insurance and mutual insurance. To oversee such organizations as insurance trade
associations and societies;

(7) To investigate and mete out punishment against unfair competition and illegal
conduct of insurance institutions and individuals as well as the operations of non-
insurance institutions and disguised insurance operations;

(8) To supervise and oversee organizations stationed overseas by domestic insurance

and non-insurance institutions according to law;

(9) To draw up information standard for the insurance industry; to establish insurance
risk appraisal, forecast and supervision systems, to trace, monitor and forecast
operations in the insurance market, to take charge of compiling data and
statements of the national insurance industry, copy them to the People's Bank of
China and promulgate according to relevant regulations of the state; and
(10) To undertake other jobs delegated by the State Council.

COMPARISION BETWEEN THE REGULATOR: -

INSURANCE REGULATORY AND CHINA INSURANCE REGULATORY

DEVELOPMENT AUTHORITY OF INDIA COMMISSION
IRDA is an autonomous body formed China Insurance Regulatory Commission
under Indian parliament act, 1999. is a ministerial institution directly under
the State Council.

Main aim of IRDA is to protect the interest
of policyholder.
IRDA is an autonomous body.
There is no such help given by IRDA.
There is no compulsory insurance
operation in India.
All the documents and financial
statements are kept in IRDA
There is one office of IRDA IN INDIA
CHAPTER – 6
17
Its main aim is to manage the insurance
market and maintains the legal and stable
operation of insurance operations in the
country.
It also undertakes other jobs delegated by
the State Council.
It examines and approves the setup of
representative offices of overseas
insurance institutions in China.
It supervises policy-oriented insurance
and compulsory insurance operations.
The financial statements and documents
that are collected by the regulator are
deposited in people’s bank of china
China Insurance Regulatory Commission
exercises vertically management of all the
agent offices stationed in various
localities.
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ANALYSIS ON OUESTIONNAIRE

ANALYSIS OF QUESTIONNAIRE
For this questionnaire I had visited ten insurance companies in Dehradun like Tata Aig,
Birla sun life and Religare and asked senior level managers like operations head and
branch managers to fill the questionnaire and following was the response which I have
presented in charts and graphs.

1. Your work experience in insurance sector in years.

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YEARS NUMBERS OF RESPONDENTS

0-5 30
5-10 27
10-15 3
15-20 0
MORE 0

Out of 60 respondents, 30 belonged to the experience group of 0-5 years. 27

respondents belonged to the group of 5-10 years. Only 3 respondents belonged to the
group of 10-15. It was found that in Dehradun city the managers was having experience
between 0 to 15 years and managers who have more than 15 years of experience are
posted to the head offices which are in Delhi or Mumbai.

2. Does IRDA interfere in the adjudication of disputes in your company?

RESPONSE NUMBER OF RESPONDENTS

YES 39

NO 21

In total of 60 responses 39 managers said that IRDA interfere in the adjudication of

disputes in their company while 21 said no. It was evident that those managers who
said no was actually not will to disclose the cases in which IRDA has interfered in past
in their company. It is clear from the responses that IRDA monitor the working of the
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companies closely and interfere timely and protects the interest of the policyholder. I
was also told that there is ombudsmen committee made IRDA that settle the disputes
of policyholders and companies.

3. If yes are you satisfied with the solution/suggestions provided by IRDA?

RESPONSE NUMBER OR RESPONDENTS

YES 39

NO 21

From the total of 60 responses 39 managers said that they were satisfied with the
solution provided by IRDA when it had interfered in the adjudication of disputes in there
company. While other 21 managers said they were not happy with the solution that
IRDA has given them. So it is clear from the response that 66% of managers are
satisfied with solutions that IRDA provides to solve the disputes in their companies.
Ombudsmen committee is setup by IRDA to do the out of court settlements in
disputed cases.

1. Are you satisfied with the working of IRDA as a regulator of insurance

sector in India?
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RESPONSE NUMBER OF RESPONDENTS

YES 45
NO 9
CAN’T SAY 6

From the total of 60 managers 45 says that they are satisfied with working of IRDA as a
regulator of Indian insurance sector. Whereas 9 managers said they are not and 6
managers were not having any answer to this question. So it means that 75% of
managers are happy and satisfied with the working of IRDA. This itself shows the
effectiveness of IRDA in insurance market.

2. Are you satisfied with the working of tariff advisory committee?

RESPONSE NUMBER OF RESPONDENTS

YES 30

NO 21

CAN’T SAY 9
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On this question I got to know that tariff advisory committee was no longer working on
the aim for which it was setup. Actually it was formed to regulate the general
insurance business in India its aim was to decide the discount rate and premiums of
motor vehicles and fire insurance but now companies are giving their own discounts to
their customer. So the response on this question was mixed as 30 of them said they are
satisfied, 21 of them said they are not and 9 of them was not having any answer.

3. Is IRDA providing proper training for intermediaries and agents?

RESPONSE NUMBER OF RESPONDENTS

YES 48

NO 12

It is clear from the manager’s response that IRDA is successful in providing proper
training to agents and intermediaries. 48 managers out of 60 say it which is 80% of the
total response. It was found that IRDA has established INSURANCE INSTITUTE OF
INDIA (III) that provides proper training as per IRDA’S standard.
 23

4. Is IRDA successful in insuring orderly growth of insurance sector India?

RESPONSE NUMBER OF RESPONDENTS

YES 39
NO 9
CAN’T SAY 12

Out of 60 respondent 39 said it is successful in insuring orderly growth of insurance

sector in India, 9 says it does not and 12 had no answer to this question. So 65% of
total managers admit that IRDA is successful in insuring the proper growth of insurance
sector.

5. Do you think that IRDA is successful in putting a check on fraud

companies entering into the market?

RESPONSE NUMBER OF RESPONDENTS

YES 42
NO 9
CAN’T SAY 9
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It is clear from the response that IRDA is successful in putting a check on Fraud
Company entering in the market. As 42 managers out of 60 admits this which is 70% of
the total responses. IRDA has also put the 100cr margin money to be deposited in
IRDA before entering into the market. This money is used to settle the claims if
company is not able to repay to their customers.

CHAPTER – 7

FINDINGS ON IRDA
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FINDING’S ON IRDA ON THE BASES OF QUESTIONNAIRE

6. What are the codes of conducts that are laid by IRDA for you as a manager
and for your company?

A. Every company has to take an approval of the plans that they are launching in the
market.

B. Companies also need approval for setting of offices.

C. Companies need to give proper training 50 hours prescribed by IRDA to their agents
and intermediaries.

D. Anti Money Landings (AML) is banned by IRDA.

E. Every insurance companies need to follow then policy of K.Y.C (know your
customer) before issuing the policy to the customer.

F. IRDA has also given the policy of TEHFE (transparency, ethics, honesty, fair play
and equal opportunities) which companies have to follow strictly.
 26

G. IRDA has regulated that right person should be recruited in the companies like for
insurance agent working in urban areas minimum qualification is graduation and for
rural area it is senior secondary.

H. IRDA has regulated that for insurance companies who had for worked more than 7
years in the market has to collect their insurance premium in following manner. 80%
from the urban area and 20% from the rural area.

I. Generally what companies do is that they split the rural customers like if company is
earning a premium of RS 500 from one customer. What they do is they show 10
customers paying RS 50 as premium. So IRDA has put a check on it.

J. IRDA has also regulated that all charges like mortality rate etc should be given in the
broachers.

K. Photocopy of proposal form should be attached with the policy bond.

L. Signed illustrations should be attached with the proposal.

M. There should be transparency in the product.

FINDING’S ON THE BASES OF COMPARISON’S

1. Despite opening up at roughly the same time in the late nineties, the insurance
sector in China has raced ahead of India.

2. Standard & Poor's latest Asia Insurance review puts the Chinese market ahead of
India due to more positive regulatory environment, higher asset quality and better
performing companies. There are 79 insurance companies in China, compared to
the 30 odd firms in India.

3. Connie Wong, senior analyst, S&P, said, "Compared to China, although regulations
have been proactive, they have been less effective in India, especially on issues like
 27

solvency requirements. As a result, insurance companies in China have better

underwriting and capitalization than India.”

4. Low levels of market sophistication in the life industry and the impending de-tariffing
in general insurance are the reasons for placing India in the high-risk category.
Compared to this, though China is placed as high in terms of economic risk, it is
placed at moderately high in terms of industry risk.

5. Wong said apart from favorable norms on foreign investment, other positive factor
for China was that it had progressed towards risk-based solvency requirement.

6. While all the life insurance companies made losses in fiscal 2005, two companies in
China have reported profits. Indian sector reported much better investment yields at
around 6%.
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CHAPTER – 8

RECOMMENDATIONS

RECOMMENDATIONS
Following are some of the recommendations that were given by the managers of
different insurance companies while filling up the questionnaire.
 29

1. IRDA should intervene in the commission system of insurance companies and

agents should be given salaries with commission.

2. IRDA official should also visit local branches of companies.

3. IRDA should make strong regulations for the documentation of the policy.

RECOMMENDATIONS ON THE BASIS OF THE COMPARISION WITH CHINA

INSURANCE REGULATORY COMMISSION:-

1 In china there is policy oriented insurance and compulsory insurance operations. So

that there is more insurance awareness in china than in India. In India IRDA can
make such operation for insurance awareness.

2 China Insurance Regulatory Commission exercises vertically management of all the

agent offices stationed in various localities.

3 China Insurance Regulatory Commission approves the setup of representative

offices of overseas insurance institutions in China. It can also apply to India.

4 IRDA staff needs training and skills upgrading. Because the insurance industry has
been Government monopoly in the past, most of the staff, despite their background in
the insurance industry or Government agencies, lacks sufficient supervision and
regulatory experience and skills

.
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CHAPTER – 9

CONCLUSION
 31

CONCLUSION
1. IRDA is important to keep a check on private insurance companies and growth of
insurance sector.
By.Deepak Thapliyal
Business manager, Aegon Religare

2. It has been successful in monitoring, nurturing and grooming insurance sector in

India.

Ajay Tyagi, Territory head

Birla sun life

3. If we want the company to work in a proper manner without any problem then we
have to obey the rules of IRDA.

Saurabh Andrews, Agency Development Manager, Bharti Axa

4. Without IRDA all companies are like a car without a driver who can make to run their
Companies without any guidance. So a driver is there to control a car to show car the
right direction and run without harming others. Like driver IRDA also shows all
directions and rules to companies by which they have to run.

Mohit khanduri, sales manager, Aviva life insurance

A. IRDA is successful in opening the insurance market for private and foreign
companies after liberalization, insuring the orderly growth of insurance sector and
protecting the interest of policyholders.
B. The effectiveness of IRDA depends substantially on the ability of its human
resources.
C. Till now IRDA is successful in keeping a check on fraud companies entering into the
insurance market.
D. IRDA in these years is successful in earning the respect of a regulator in the hearts of
managers of insurance companies.
 32

E. After the formation of ombudsmen committee by IRDA is successful in reducing the

grievances of the policyholders.
F. Indian insurance sector in spite being opened at the same time as of china is behind
but it has big opportunity in future and IRDA is working positively towards that
opportunity.

CHAPTER – 10

REFERENCES
 33

REFERENCES
1. www.relegare.com

2. www.Amazon.com

3. www.irdaindia.org

4. IRDA journals

5. IRDA annual report 2006-07

6. Insurance report 2006-07

7. TATA AIG branch office, Dehradun

8. ICFAI publications

9. Report of the KPN committee

10. IRDA to inspect the life insurance (TATA McGraw)

11. http://www.sebi.gov.in
 34

CHAPTER – 11
 35

ANNEXTURE

ANNEXTURE

QUESTIONANAIRE
Dear sir/madam

I am conducting a survey on effectiveness of IRDA as a regulator of Indian

insurance sector. The information is purely for academic purpose only and will be
kept confidential. I hope your kind co-operation.

NAME: -_____________________________________________________________________

DESIGNATION:-
_______________________________________________________________

NAME AND ADDRESS OF ORGANISATION:-

____________________________________________________________________________
____________________________________________________________________________
 36

____________________________________________________________________________
___________________________________________________________________________

E-MAIL:-____________________________________________________________________

PHONE:-____________________________________________________________________

1. YOU’RE WORK EXPERIENCE IN INSURANCE SECTOR IN YEARS.

A. 0 – 5 ( )
B. 5 -10 ( )
C. 10 – 15 ( )
D. 15 – 20 ( )
E. MORE:-________________________

1. DOES IRDA INTERFARE IN ADJUDICATION OF DISPUTES IN YOUR COMPANY?

A. YES ( )
B. NO ( )

1. IF YES ARE YOU SATISFIED WITH THE SOLUTION/SUGESTION PORVIDED BY

IRDA?
A. YES ( )
B. NO ( )

1. ARE YOU SATISFIED WITH THE WORKING OF IRDA AS A REGULATOR OF

INSURANCE SECTOR IN INDIA?
A. YES ( )
B. NO ( )
C. CAN’T SAY ( )
1. ARE YOU SATISFIED WITH THE WORKING OF TARIFF ADVISORY COMMITTEE?
A. YES ( )
B. NO ( )
C. CAN’T SAY ( )

1. IS IRDA PROVIDING PROPER TRAINING FOR INTERMEDIARIES AND AGENTS?

A. YES ( )
B. NO ( )

1. IS IRDA SUCCESSFUL IN INSURING ORDERLY GROWTH OF INSURANCE

SECTOR IN INDIA?
A. YES ( )
B. NO ( )
 37

C. CAN’T SAY ( )

1. DO YOU THINK THAT IRDA IS SUCCESSFUL IN PUTTING A CHECK ON FRAUD

COMPANIES ENTERING INTO THE MARKET?
A. YES ( )
B. NO ( )
C. CAN’T SAY ( )

1. WHAT IS THE CODE OF CONDUCTS THAT ARE LAID BY IRDA FOR YOU AS A
MANAGER AND FOR YOUR COMPANY?
A. ___________________________________________________________________
B. ___________________________________________________________________
C. ___________________________________________________________________
D. ___________________________________________________________________
E. ___________________________________________________________________

1. PLEASE WRITE THE IMPORTANCE OF IRDA AS A REGULATOR OF INSURANCE

SECTOR IN INDIA IN YOUR WORDS.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_____________________________________________________________________

THANKYOU!!!

DATE: - SIGNATURE