INSURANCE COMPANIES IN INDIA

In India, Insurance is a national matter, in which life and general insurance is yet a booming
sector with huge possibilities for different global companies, as life insurance premiums
account to 2.5% and general insurance premiums account to 0.65% of India's GDP. The
Indian Insurance sector has gone through several phases and changes, especially after 1999,
when the Govt. of India opened up the insurance sector for private companies to solicit
insurance by passing Insurance Regulatory and Development Authority (IRDA) Bill,
allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a
flourishing market amongst global insurance companies. However, the largest life insurance
company in India is still owned by the government.
The history of Insurance in India dates back to 1818, when Oriental Life Insurance Company
was established by Europeans in Kolkata to cater to their requirements. Nevertheless, there
was discrimination among the life of foreigners and Indians, as higher premiums were
charged from the latter. In 1870, Indians took a sigh of relief when Bombay Mutual Life
Assurance Society, the first Indian insurance company covered Indian lives at normal rates.
Onset of the 20th century brought a drastic change in the Insurance sector.
In 1912, the Govt. of India passed two acts - the Life Insurance Companies Act, and the
Provident Fund Act - to regulate the insurance business. National Insurance Company Ltd,
founded in 1906, is the oldest existing insurance company in India. Earlier, the Insurance
sector had only two state insurers - Life Insurers i.e. Life Insurance Corporation of India
(LIC), and General Insurers i.e. General Insurance Corporation of India (GIC). In December
2000, these subsidiaries were de-linked from parent company and were declared independent
insurance companies: Oriental Insurance Company Limited, New India Assurance Company
Limited, National Insurance Company Limited and United India Insurance Company
Limited.
With an annual growth rate of 15-20% and the largest number of life insurance policies in
force, the potential of the Indian insurance industry is huge. Total value of the Indian
insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion).

The life insurance industry in India grew by an impressive 36%, with premium income from
new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition
from private insurers. This report, "Indian Insurance Industry: New Avenues for Growth
2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in
business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still
not enough to arrest the fall in its market share, as private players grew by 129% to mop up
Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.