ASSIGNMENT ON BANKING AND INSURANCE

LAW

SUBMITTED BY-

NAME- FAJAL HUSSIEN {1705230003}

NAME- MEGHA MATOLIA {1705230006}
NAME–SUBHAM DEY {1705230010}
NAME- RISHAB KUMAR {1705230013}

COURSE- LL. B (H) [3RD YEAR]

TOPIC- LATEST CHANGES/ADVANCEMENTS IN THE INSURANCE

SECTOR AS PROPOSED BY INDIAN GOVERNMENT
 ACKNOWLEDGEMENT

We would like to express our special thanks of gratitude to our

teacher Prof. SANJANA GUPTA who gave us the opportunity to do
this wonderful project on the topic LATEST CHANGES/
ADVANCEMENTS IN THE INSURANCE SECTOR AS PROPOSED
BY INDIAN GOVERNMENT which also helped me in doing a lot of
Research and we came to know about so many new things we are
really thankful to them.

THANK YOU
Introduction
The insurance industry of India consists of 57 insurance companies of which 24 are in life
insurance business and 33 are non-life insurance. Among the life insureres, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers, General Insurance Corporation of India (GIC) is the sole national re-insurer. Other
stakeholders in Indian Insurance market include agents (individual and corporate), brokers,
surveyors and third party administrators servicing health insurance claims.
The insurance industry in India has also grown along with the country’s economy. Several
insurance companies in the country are expanding their operations, across both the public and
private sector.
History
The history of India’s insurance industry reflects the history of India’s economy. Insurance
companies in India were nationalized during pre-liberalization. This was done to protect the
interests of policyholders. Two state-owned insurance companies were thus created: the Life
Insurance Corporation in 1956, and the General Insurance Corporation in 1972 for the non-
life insurance business.
Post liberalization, the industry was opened up. The Insurance Regulatory and Development
Authority of India (IRDAI) was created in 1999 to regulate the insurance industry in India.
Thus, the insurance sector was opened to private players. This allowed foreign players to
collaborate with Indian entities to enter the sector.
The number of insurance companies in India has increased quickly and continuously, and this
has led to a vibrant insurance sector- with more variety and affordability for the consumer.
Present scenario
There are currently 57 insurance companies in India, of which 46 are from the private sector.
There are 24 life insurance and 33 non-life insurance companies in India. The major names in
the sector are:
Life insurance:
Life Insurance Corporation (LIC)
HDFC Standard Life
SBI Life Insurance
ICICI Prudential Life Insurance

Non-life insurance:
New India Assurance
United India Assurance
National Insurance Company
ICICI Lombard
Oriental Insurance Company
Bajaj Allianz
The market share of private sector players has increased over the years. In the non-life
insurance sector, private companies had a market share of 54.68 % in FY 19 (as of Jan ‘19).
In the life insurance sector, private companies had a market share of 33.74 % in FY 19 (as of
Jan ‘19).
Market size
Gross premiums in India reached Rs. 5.53 trillion in FY 18. Of this number, the split between
life insurance and non-life insurance was as follows:
Life insurance: Rs. 4.58 trillion
Non-life insurance: Rs. 1.51 trillion
In FY19 (up to October 2018), premium from new life insurance business increased 3.66%
year-on-year to Rs 1.09 trillion. In FY19 (up to October 2018), gross direct premiums of non-
life insurers reached Rs 962.05 billion, showing a year-on-year growth rate of 12.40%.
Recent developments in the sector:
The last few years have seen a lot of activity in the sector. This is a testament to the vibrancy
of the industry in India. Here are a few examples from different categories of deals/
developments:
Strategic deals: HDFC ERGO General Insurance Co. is in talks to acquire Apollo Munich
Health Insurance (Reported valuation: Rs. 2,600 crore)
Financial investors: A consortium of private equity firms- Westbridge Capital and Madison
Capital, as well as billionaire investor Rakesh Jhunjhunwala, are in discussions to acquire
over 90% stake in Star Health and Allied Insurance. (Estimated deal size: $ 1 bn)
Initiatives by non-sector players: Indian e-commerce giant Flipkart has tied up with Bajaj
Allianz General Insurance to provide customised insurance products for mobile phones sold
on Flipkart.
New product offerings: HDFC ERGO launched a new product called E@Secure: a cyber
insurance policy to protect individuals and families from cyber-attacks.
Digital Push: Life Insurance companies have already implementing technology on a large
scale in all stages of a life insurance contract. Starting from pre-policy issuance of a
applicant’s proposal to paying out the claim. The digital push by the govt along with a strong
push towards a cashless economy also has provided considerable help in implementing
digitization that has touched every aspect in the life insurance industry.

Future outlook and Growth drivers:

The insurance industry in India is expected to register healthy, consistent growth based on the
following drivers:
1. Low insurance penetration in India: 3.69% (2017), compared to 6.3% globally (2016)
2. Government programs to increase insurance cover: Pradhan Mantri Suraksha Bima
Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Ayushman Bharat etc
3. Strong growth in the automotive industry is expected to boost motor insurance
4. Increasing interest in buying insurance; rising internet usage has contributed to this
increasing interest
5. Innovative products like Unit Linked Insurance Plans (ULIPs) have contributed to the
growth of insurance cover.
6. New distribution channels such as bancassurance, online distribution and NBFCs are
contributing to the growth in insurance cover
Government initiatives / policies
1. Foreign Direct Investment (FDI) limit for the insurance sector increased from 26% to
49%.
2. Life insurance companies operational for 10+ years are now allowed to go public by
IRDA
3. Government plans to divest a significant stake in PSU general insurance companies in
order to execute the steep disinvestment target
4. Several flagship schemes have been launched by the government to boost the insurance
sector.
Flagship schemes:
 Pradhan Mantri Jan Suraksha Bima Yojana: This scheme focuses on providing
affordable insurance to people below the poverty line, in rural areas.
 Pradhan Mantri Jeevan Jyoti Bima Yojana: This initiative provides life insurance
coverage of up to Rs. 2 lakh for people employed in the unorganised sector.
 Atal Pension Yojana: This guarantees pension Coverage to all citizens in the
unorganised sector who join the National Pension System (NPS).
 Ayushman Bharat Yojana: Each beneficiary family will receive medical insurance
cover of INR 5 lakh, which they can use to get treatment at public or private hospitals.
 Pradhan Mantri Fasal Bima Yojana: This scheme focuses on benefitted of farmers.