INSURANCE IN INDIA

-Mr. SriRamKumar,Professor,Sankara Institute of Management Science

What is insurance?

Insurance can be defined, as a system of providing protection against monetary loss caused by unforeseen events.
Insurance may be described as a social device to reduce or eliminate risk of life and property. A large number of people associate themselves by sharing risk, attached to individual through a Insurance plan. The risks which can be insured against include fire, the peril of sea, death, incident & burglary. Any risk upon these may be insured against at a premium commensurate with the risk involved. Insurance is a contract where in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

Indian Insurance Industry

The history of insurance in India dates back to the year 1818, when the Oriental Life Insurance Company was formed in Kolkata. The Life Insurance Act of 1912 marked the beginning of a new era in the insurance sector of India. The Indian Insurance Companies Act was passed in the year 1928. This act empowered the government of India to gather necessary information about the life insurance and non-life insurance organizations operating in Indian financial markets. Reforms in the Indian insurance sector was initiated with the formation of the Malhotra Committee in 1993. The aim of the Malhotra Committee was to assess the functionality of the Indian insurance sector. The Malhotra Committee attempted to improve various aspects of the financial sector, making them more appropriate and effective for the Indian market.

The Insurance Regulatory and Development Authority Act of 1999 brought several crucial policy changes in the insurance sector of India. The IRDA Act was followed by the formation of the Insurance Regulatory and Development Authority (IRDA) in 2000. The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as initiate different policy measures to help sustain growth in the Indian insurance sector.

Insurance Policies in India at a Glance

Life insurance policies in India come in many different forms. The most common types include: term life policies, endowment policies, joint life policies, whole life policies, loan cover term assurance policies, unit-linked insurance plans, group insurance policies, pension plans, and annuities. General insurance plans are also available to cover motors insurance, home insurance, travel insurance and health insurance. Insurance policies provide safeguards to ease risks associated with unexpected accidents, damages or the loss of personal property.