PRIVATIZATION OF INSURANCE

Prof. Isha Jaiswal

INTRODUCTION Insurance has always been a politically sensitive

subject in India. Within less than 10 years of independence, the Indian government nationalized private insurance companies in 1956 to bring this vital sector under government control

to raise much needed development funds.

Since then, state-owned insurance companies have grown into monoliths, lumbering and often inefficient but the only alternative. They have been criticized for their huge bureaucracies, but still have millions of policy holders as there is no alternative.

INTRODUCTION LIC of India was formed in 1956 to take

over the insurance business in India. GIC was formed in 1972.

PRIVATIZATION IN INSURANCE

The Narasimha Rao government (1991-96) which unleashed liberal changes in India's rigid economic structure could not handle this political hot potato. Ironically, it is the coalition government in power today which has declared its intention of opening up insurance to the private sector. Ironical because this government is at the mercy of support from the left groups which have been the most vociferous opponents of any such move.

All segments of the financial sector had been opened to private players with better product, services & social objective

International players are eyeing the vast potential of the Indian market and are

already making plans to come in.

LIST OF PRIVATE LIFE INSURANCE COMPANIES IN INDIA1. AEGON Religare Life Insurance2. Aviva Life Insurance Company India Limited3. Bajaj Allianz Life Insurance4. Bharti AXA Life Insurance Company Ltd.5. Birla Sun Life Insurance Co. Ltd6. Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.7. DHFL Pramerica Life Insurance Co. Ltd.8. Edelweiss Tokio Life Insurance Co. Ltd.9. Exide Life Insurance10. Future Generali India Life Insurance Company Limited11. HDFC Standard Life Insurance Company Limited12. ICICI Prudential Life Insurance Co. Ltd13. IDBI Federal Life Insurance Company Ltd14. IndiaFirst Life Insurance Company Limited15. Kotak Mahindra Old Mutual Life Insurance Limited

LIST OF PRIVATE LIFE INSURANCE COMPANIES IN INDIA16. Max Life Insurance Co. Ltd 17. PNB Metlife India Insurance Co. Ltd.18. Alimchandani Life Insurance Company Limited19. Sahara India Life Insurance Co, Ltd. 20. SBI Life Insurance Co. Ltd21. Shriram Life Insurance Co, Ltd.22. Subrin Map Life Insurance Co, Ltd.23. Star Union Dai-ichi Life Insurance24. Tata AIA Life Insurance Company Limited

LIST OF GENERAL INSURANCE COMPANIES IN INDIA1. Agriculture Insurance Co. of India Ltd. 2. Apollo Munich Health Insurance Co. Ltd.3. Bajaj Allianz General Insurance Co. Ltd.4. Bharti Axa General Insurance Co. Ltd.5. Cholamandalam MS General Insurance Co. Ltd.6. Cigna TTK Health Insurance Co. Ltd.7. Export Credit Guarantee Corporation of India Ltd. 8. Future Generali India Insurance Co. Ltd.9. HDFC ERGO General Insurance Co. Ltd.10. ICICI Lombard General Insurance Co. Ltd.11. IFFCO Tokio General Insurance Co. Ltd.12. L&T General Insurance Co. Ltd.13. Liberty Videocon General Insurance Co. Ltd.14. Magma HDI General Insurance Co. Ltd.

LIST OF GENERAL INSURANCE COMPANIES IN INDIA15. Max Bupa Health Insurance Co. Ltd.16. National Insurance Co. Ltd. 17. The New India Assurance Co. Ltd. 18. The Oriental Insurance Co. Ltd.19. Raheja QBE General Insurance Co. Ltd. 20. Reliance General Insurance Co. Ltd.21. Religare Health Insurance Co. Ltd.22. Royal Sundaram Alliance Insurance Co. Ltd. 23. SBI General Insurance Co. Ltd.24. Shriram General Insurance Co. Ltd. 25. Star Health and Allied Insurance Co. Ltd. 26. Tata AIG General Insurance Co. Ltd.27. United India Insurance Co. Ltd.28. Universal Sompo General Insurance Co. Ltd.

OBJECTIVES OF PRIVATIZATION OF INSURANCE To develop the competition in the business of insurance and

to make both the private and public sector to work efficiently in the insurance business.

To create more option on the side of customers to purchase the policies.

To attract more and more people towards the insurance business.

To earn foreign exchange form the non-resident Indians by getting them involved in assuring them.

To raise the capital investment of the people and which can result in improving the economic development of the country.

To create more chances of employment in the insurance business sector.

ADVANTAGES OF PRIVATIZATION OF INSURANCE Privatization of Insurance eliminated the

monopolistic business of Life Insurance Corporation of India. It helps to introduce new range of products which covered wide range of risks.

It resulted in better customer services and help improve the variety and price of insurance products.

The entry of new player has speed up the spread of both life and general insurance.

ADVANTAGES OF PRIVATIZATION OF INSURANCE Entry of private players will ensure the mobilization

of funds that can be utilized for the purpose of infrastructure development.

The participation of commercial banks into insurance business helped to mobilization of funds from the rural areas because of the availability of vast branches of the banks.

Employment opportunities were created in the field of insurance.

The world’s best insurance companies will come forward to involve in insurance business using the global technologies.

DISADVANTAGES/ LIMITATIONS OF PRIVATIZATION OF INSURANCE The private companies try to convince the people much

more but it happens that the insured may not have a capacity to pay the premium after some years and hence the customers have to loose the interest benefits on their investments.

Due to competitions among the insurance companies the companies adopt strategies which may lead to making the customers fools in investing in the insurance.

Company may relieve the employees who are unable to put in getting the minimum target of their expectations. Thus this will create danger against the employee, actually imparting their services in insurance companies.

DISADVANTAGES/ LIMITATIONS OF PRIVATIZATION OF INSURANCE It is possible that the foreign insurance

company may transfer the profit margins to their own country and hence our country will not be benefited by the investment of our people.

People have no trust in non-government companies and hence there seems to be less chances for the development of private insurance business.