Page 27 - The Insurance Times August 2025

Sector Analysis

The Development

of the General

Insurance Industry

in India Amitava Banik

Assistant Vice President -
Commercial Underwriting
Reliance General Insurance Co Ltd,
Kolkata

A Ab s t r a c t
A Abstractbstract
bstract
Abstract
The insurance sector in India is growing at a steady rate of 15-20% annually. Together with banking, insurance
services add about 7% to the country's GDP. A well-developed and evolved insurance sector is a boon for economic
development as it provides long- term funds for infrastructure development at the same time strengthening the
risk-taking ability of the country.

The Insurance Act in India was passed in 1938. The Life Insurance Corporation & General Insurance Council
were established in 1956. In 1972, General Insurance Industry nationalized. From nationalization of the insurance
industry in 1972 to the present day, in this span of about 50 years, the insurance industry in India has come
a full circle. The insurance industry was liberalized in 2000. At the end of March 2019, there are 70 insurers
operating in India; of which 24 are life insurers, 27 are general insurers, 7 are standalone health insurers and
12 are re-insurers including foreign reinsurer's branches and Lloyd's India. Conventionally, the insurance
companies play a big role in the economic development of the nations. The insurance penetration of a country
which is the premium underwritten as percentage of GDP is a measure of the maturity of insurance markets
across the world. India together has almost 20 per cent of the world population and an underserved insurance
market, has a huge growth potential in this sector. This article is intended to study the development of insurance
industry in India and where it stands at present.

Introduction and families in case of decease of their near and dear ones,
the non-Life or general insurance products are to indemnify
Insurance is an important financial risk transfer tool. The risk
is being transferred from the insured (one who is buying the financial loss to the assets due to an accidental loss.
Worldwide, insurance forms the backbone of the financial
insurance) to the insurer (the company which is selling in-
sector and the economy. The insurance companies are usu-
surance) on the payment of consideration called as the pre-
mium. This is an important financial product and is designed ally cash rich and they hold the funds for investment in the
various sectors of the economy.
to take care of the interests of the insured in case a loss
happens. The loss can be of life, health, assets. There are Conventionally, the insurance companies play a big role in
broadly two branches of insurance - Life and non-Life. While the economic development of the nations. The insurance
the life insurance is to take care of the needs of individuals penetration of a country which is the premium underwrit-

24 August 2025 The Insurance Times