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Banking and Insurance

Notes international leaders in the insurance sector are trying to venture into the India insurance
industry.

Indian Insurance: History

The history of the Indian insurance sector dates back to 1818, when the Oriental Life Insurance
Company was formed in Kolkata. A new era began in the India insurance sector, with the
passing of the Life Insurance Act of 1912.
The Indian Insurance Companies Act was passed in 1928. This act empowered the government of
India to gather necessary information about the life insurance and non-life insurance
organizations operating in the Indian financial markets.

The Triton Insurance Company Ltd. formed in 1850 and was the first of its kind in the general
insurance sector in India. Established in 1907, Indian Mercantile Insurance Limited was the first
company to handle all forms of India insurance.

Indian Insurance: Sector Reform

The formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance
sector. The aim of the Malhotra Committee was to assess the functionality of the Indian insurance
sector. This committee was also in charge of recommending the future path of insurance in
India.
The Malhotra Committee attempted to improve various aspects of the insurance sector, making
them more appropriate and effective for the Indian market.
The recommendations of the committee put stress on offering operational autonomy to the
insurance service providers and also suggested forming an independent regulatory body.
The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial
policy changes in the insurance sector of India. It led to 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 to
initiate different policy measures to help sustain growth in the Indian insurance sector.
The Authority has notified 27 Regulations on various issues which include Registration of
Insurers, Regulation on insurance agents, Solvency Margin, Reinsurance, Obligation of Insurers
to Rural and Social sector, Investment and Accounting Procedure, Protection of policy holders'
interest etc. Applications were invited by the Authority with effect from 15th August, 2000 for
issue of the Certificate of Registration to both life and non-life insurers. The Authority has its
Head Quarter at Hyderabad. Detailed information on IRDA is available at their web-site
www.irdaindia.org

Protection of the interest of policy holders

IRDA has the responsibility of protecting the interest of insurance policyholders. Towards
achieving this objective, the Authority has taken the following steps:

IRDA has notified Protection of Policyholders Interest Regulations 2001 to provide for: policy
proposal documents in easily understandable language; claims procedure in both life and non-
life; setting up of grievance redressal machinery; speedy settlement of claims; and policyholders'
servicing. The Regulation also provides for payment of interest by insurers for the delay in
settlement of claim.

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