Page 236 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 13: Insurance Industry: India

Notes
According to sources, key installations like the Paradip Port, Indian Oil refinery, plants of
Essar Steel, among others in Odisha and the Vizag Port in Andhra have not faced much
damage due to the super storm.
Industry officials also point out that penetration of general insurance industry is poor
among individual customers in these regions.
On this, New India Assurance general manager and whole-time director K Sanath Kumar
said the industry is closely watching the event.
“We have a close watch on the event. Not only the domestic general insurance industry is
following the event closely, but the global re-insurers are also having a close tab as many
of the insurance policies are reinsured with them,” Kumar said.
As per reports, Odisha has pegged the initial losses amounting from ‘Phailin’ at ` 1,400
crore.
This is the second major natural disaster in this year after the killer Uttarakhand floods in
June in which more than 5,000 people had lost their lives.

The general insurance industry has witnessed claims worth ` 1,500 crore from the
Uttarakhand disaster.
Question

What do you infer from the above case?
Source: http://articles.economictimes.indiatimes.com/2013-10-13/news/42993148_1_tapan-singhel-k-
sanath-kumar-odisha

13.5 Summary

Insurance has always been a politically sensitive subject in India.

The bigger private players claim that opening up insurance will give policy holders better
products and service; the opponents of privatization argue that in a poor country like
India insurance needs to have social objectives and newcomers will not have that
commitment.
Many international players are eyeing the vast potential of the Indian market and are
already making plans to come in.
Before market liberalisation, LIC sold mostly savings with premiums being tax-deductible
in the hands of the consumers.

The focus of many of the entrants has been to implement multi-channel strategies, including
a significant bancassurance element.

Out of about 150 general insurance schemes on the global level, only 10 per cent of them
are offered by the four subsidiaries of the GIC.
Earlier life insurance was confined mainly to the cities and better-off segments of society.
With a view to spread life insurance to the rural areas, to have control over all the insurance
providers in India and to bring them under one roof the Government of India decided to
nationalize the life insurance business.
The entry of private players and their foreign partners has given domestic players a tough
time, because the opening up of the sector has not brought in only foreign players, but
also professional techniques and technologies.

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