A Study of Insurance Sector from Indian Perspective

The liberalization and globalization process initiated by the government of India can be considered as the major economic policy change which has taken place during the last decade of 20th century. Hence many financial sector reforms have been introduced. Most of the business activities carried out in an economy is expected to escalate the welfare of the masses and placing them at higher levels of satisfaction on persistent basis. Although different sectors of the economy do not grow in isolation and contribute to each other's development, the service sector proved a prime role with its share in the national income. The financial sector constitutes one of the foremost apparatus of the services sector and within that sector, insurance services assume vital significance. The insurance business grew at a faster pace in 1940s and 1950s after independence. The Indian companies strengthened their hold on this business. But, there were a number of insurers, who declared insolvency. Life Insurance Industry was nationalized in 1956 with the merger of 250 private Life Insurance Companies, and the Life Insurance Corporation (LIC) of India was formed. The non-life insurance business, however, continued to thrive in the private sector till 1972. For the first time liberalization measures in insurance sector to be undertaken by the Government were announced by the Finance Minister, Government of India, Dr. ManMohan Singh in his Central Budget (1993-94) speech. Financial sector reforms were initiated in 1991 and insurance reforms in 1999 by the government of India. In order to improve the quality of insurance services in the country the Malhotra committee (1993) had recommended the comprehensive framework of reform in the insurance sector. The present paper is an attempt to examine the insurance sector from Indian perspective.