Page 237 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes India is a highly populated country and would continue to be so in the near future. New
players may tend to favour the “creamy” layer of the urban population.

Competition in rural areas tends to be “kinder and gentler” than that in urban areas,
which can easily be termed cutthroat. Identifying the right agents to harness the full
potential of the vibrant and dynamic rural markets will be imperative.

A substantial shift is likely to take place in the distribution of insurance in India. Many of
these changes will echo international trends. Worldwide, insurance products move along
a continuum from pure service products to pure commodity products.
The trend in developed economies where people live longer and retire earlier is now
emerging in India too. With the breakdown of traditional forms of social security like the
joint family system, consumers are now concerned with the need to provide for a
comfortable retirement.

13.6 Keywords

Bancassurance: It is an arrangement in which a bank and an insurance company form a partnership
so that the insurance company can sell its products to the bank’s client base.
Liberalisation: Liberalisation refers to a relaxation of previous government restrictions, usually
in such areas of social and economic policy.
Mass Marketing: Mass marketing is a market coverage strategy in which a firm decides to
ignore market segment differences and appeal the whole market with one offer or one strategy.
Privatisation: It is the process of transferring ownership of a business, enterprise, agency,
public service or public property from the public sector to the private sector, either to a business
that operates for a profit or to a non-profit organisation.
Reinsurance: It is the transfer of insurance business from one insurer to another. Under reinsurance,
the original insurer who has insured a risk insures a part of that risk with another insurer.

13.7 Review Questions

1. Why insurance has always been a politically sensitive subject in India? Explain the role of
Narasimha Rao government in case of privatization of insurance sector.

2. Discuss the reasons due to which many international players are eyeing the vast potential
of the Indian market.
3. Who are the biggest beneficiaries of the liberalization of the insurance sector and why?

4. Discuss that segment of society to which insurance was confined in previous times.
5. Describe the present scenario of insurance industry in India.
6. Discuss the opportunities in insurance sector today.

7. What are the various challenges present in insurance industry?
8. Briefly discuss the future of insurance sector.

Answers: Self Assessment

1. Coalition 2. Tax-deductible
3. Tariff 4. Indian

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