The business of insurance was opened up in India in 2000 for participation of new companies with the establishment of the new regulator IRDAI. Has this development in your assessment resulted in the growth of business an

In past years, India had insurance companies doing life and non-life business exclusively in the private sector. Due to complaints that emanated on the non-performance of these companies, misfeasance, fraud and mismanagement, the life insurance companies were nationalised and a single corporation called LIC came into being in 1956. The non-life companies were nationalised in 1971 by formation of a holding company called GIC and four companies carrying on general business. The assessment of the performance of the nationalised insurance companies was made by a committee headed by Shri R. N. Malhtora which recommended the broad based of the insurance business and throwing open of the sector for private participation. The suggestion to appoint an independent regulator for the sector was also made. The IRDAI was set up in 2000 and the process of admission of new companies in a continuous process started from then. We now have companies carrying an insurance business in India - both in the public and private sectors. Broad basing of the industry was done broadly with a view to analyse the capital Market to find resources for investment in long term projects and also to develop amongst the public an awareness to adopt risk protection and risk management practices. India was and still continues to be a market where the penetration of insurance consciousness is at a very low level. Though we have improved in this area from a mere 1% to a somewhat good looking 3% or a little more. This progress is still very low compared to developed counties where percentages are often found in the range of 7% to 11%. Hence concerted efforts are necessary to spread the knowledge of insurance in the country. There must be a systematic approach to the market / people to enlighten it on the different aspects on an insurance cover i.e. risk allocation, capital development, replacement of capital at vulnerable times, Investment build-up, progress of the industry to provide it with replacement capital and above all to a sustained industrial and economic development. Till the industry was exclusively in the hands of the public sector, very little development was attempted in this area. Companies was owned and regulated by the government with the result that these worked only to do the minimum business to keep them going. Lacked initiatives in the development of the new product and markets. Only living for today with no forecast for tomorrow. Skill development in the areas was totally lacking and products available in the market were general. Each of the four companies doing general insurance business in the country was offering same product - the only difference to the customer being the quickness of the settlement of a claim or the others. The element of competition amongst them, an element that will successfully result in growth of new product and practice was significantly lacking. Growth of the insurance business in India is built on the following factor: Choice- for the customers chooses from a basket. Competition- not an administered rate or tariff but the pricing of a product on scientific lines. Customer Service- not only to generate a market demand but also educate the market on the availability and reach of the products, settlement of claims etc. Coverage extension of the concept of insurance to new areas not stick to traditional lines an offer. Publicity and development - the growth of the market, including the market penetration factor, education of the public to the necessity of insurance covers, risks management process etc. Development of Capital Resources - to participate in the market development etc. Having recognised the need to develop and grow the insurance business to new and newer heights, the market performance, even after the admission of new player, there are at least 100 companies under different risk underwriting business, the actual performance is significantly lacking. Though we have representative of the various developed countries participating in the growth of the new insurance, by becoming co-investor in new companies, the growth of the market as such is somewhat muted. This may be due to the following. The existing insurer leaning to the public sector companies are highly reluctant to sink money in the development of the market which yield significant results. The LIC's activities in this regard are not totally lacking but are significantly misused. This may be due to lack of foresight and vision planning because these institutions have been brought up in a culture of 'inactivity'. Though the coverage of the market in the highly developed urban areas in somewhat visible, there does not seem to be any inclination to develop the rural and the non-urban sector where significant opportunities exist. Education on the concept of insurance and its role in the development of business, capital and the citizens is totally missing. Lack of professionalism in the distribution channels especially the Agency channel has made insurance business not so popular in India. This is primarily due to the minimum educational standards preferred by LIC. Mere 10th class pass was the eligibility criteria for a person to become an Agent. This has also resulted in a not so respectable image for the LIC Agency force India. Today the private companies are recruiting Agency as Advisors and are looking for educated youth and professional to become their business and channel partners. The concept of insurance is a rather difficult piece of activity, not commonly known to our people. Even the most educated person in India, sometimes belonging to the financial sector does not know that insurance cover can act as additional capital. This is also called as insurance illiteracy. The spread of business outside the cities in India has came about due to the fact that till now, a large number of policies sold belong to person in cities and urban centres and insurance is bought only under a compulsion - where a government scheme / loan by a bank dictates that the product must have an insurance cover for the period of loan. In the case of life products, only two lines of thought i.e. payment of life premium will result in a tax relief and the death cover under a policy might give money to the member of a family as an instant social relief. The above fact lead to the conclusion that for the growth of the insurance business in India, life and non-life, systematic measures to recognize, build and develop a market is necessary. The public sector company do not venture into this area. The new insurers all in the private sector, all of them may like to remain also runs and top only the distinct market in the periphery. Additionally the creation of a demand / market require significant amount to be spent on marketing in the rural areas where not only large number of people reside but also due to the fact that large quantum of investment are made in rural area for various reasons. The insurance companies newly set up with foreign participation in equity till now had been financed mostly by Indian partners while the foreign investor were retained to 26% / 49% / 74% at different parts of time. This in the background of a clear working capital of ₹100 core per insurer shut the doors on the development of the markets. Hence we should look for development elsewhere, where else can we go to except the IRDAI whose primary responsibility is not only to regulate but develop and grow the market. IRDAI collects an annual fee from each of the insurer and has under its contract significant amounts of money that could utilised in the growth of the market by actively moving into the areas where education on the merits of an insurance cover can be spread - by shot films, actual presence in the market of aids that can carry a message on the utility and advantage of a life or non-life cover etc. IRDAI possibly in association with the films division can carry on this in a good measure. In the absence of any pro-activity from the insurer, the activity has to come from the regulators. In fact even at the time of framing of the Act leading to the establishment of IRDAI, its primary role in the development of insurance in India - in the social, rural, agriculture, non-traditional sector were recognised and accepted as part of its charter. Since the present phase of development of the concepts of insurance in India is not commensurate with the market possibilities, it should be the IRDAI who must move into this area on a priority basis. In this connection, one must motive the presence of the postal life insurance in India. The organization is handled by the Indian postal system having outlets in India including the non-urban areas which we would like to target and a significant progress could be foreseen if a combination of both these institutions is planned and executed. Insurance ultimately should be available, accessible and affordable if the penetration is to increase in India.