27-05-2014, 01:52 PM
FDI and Indian Government policy related to Insurance
FDI and Indian Government .ppt (Size: 495.5 KB / Downloads: 147)
OBJECTIVE OF THE PAPER
India is the third most attractive foreign direct investment destination in the world. The Indian insurance companies offer a comprehensive range of insurance plans. Due to the growing demand for insurance, more and more insurance companies are now emerging in the Indian insurance sector. The present paper aims to study the pattern of FDI in Insurance Sector and the Government regulation in the said sector. The paper studies current trend in Insurance sector, the challenges and the prospects ahead
INSURANCE REGULATION IN INDIA
Insurance in India started without any regulations in the nineteenth century
After the independence, the Life Insurance Company was nationalized in 1956, and then the general insurance business was nationalized in 1972
Only in 1999 private insurance companies were allowed back into the business of insurance with a maximum of 26 per cent of foreign holding (World Bank Economic Review 2000).
Milestones of insurance regulations in the 20th Century
1912 First piece of insurance regulation promulgated – Indian Life Insurance Company Act, 1912
1928 Promulgation of the Indian Insurance Companies Act
1938 Insurance Act introduced, the first comprehensive legislation to regulate insurance business in India
1956 Nationalisation of life insurance business in India
1972 Nationalisation of general insurance business in India
1993 Setting-up of the Malhotra Committee
INSURANCE IN INDIA
Insurance in India remains at an early stage of development
It can be postulated that by 2014 the penetration of life insurance in India will increase to 4.4% and that of non-life insurance to 0.9%
Indian insurance market is the 19th largest globally and ranks 5th in Asia
The public sector Insurance companies have continued to dominate the insurance market
Enjoying over 90 per cent of the market share. In fact, the LIC, which is the only public sector life insurer, enjoys over 98 per cent of the market share in Life insurance
CONCLUSION
On the regulatory side, there are outstanding issues concerning solvency regulations, further liberalizing of investment rules, caps on foreign equity shareholdings5 as well as the enforcement of price tariffs in the non-life insurance sector
The proliferation of bancassurance is rapidly changing the way insurance products are distributed in India. This will also have strong implications on the process of financial convergence and capital market development in India
Health insurance is still underdeveloped in India but offers huge potential, as there will be increasing needs to purchase private health cover to supplement public programmes