Page 28 - The Insurance Times August 2025

ten as percentage of GDP is a measure of the maturity of penetration. That fact is exemplified by the establishment
insurance markets across the world. India together has al- of public sector insurance and reinsurance companies. But
most 20 per cent of the world population and an what had been alarming is still the low penetration of in-
underserved insurance market, has a huge growth poten- surance in India.
tial in this sector.
The opening of the sector to private players and subse-
Snapshot of insurance penetration in In- quently allowing of 74% FDI has given a thrust to the indus-
dia vs the world try. The opening of the sector increases the scope for inno-
vation in products, distribution strategies, service param-
Penetration (premium as World India eters and coming of the new players brings in global expe-
percentage of GDP) rience and expertise and best practices. This should bring in
more maturity to the industry in terms of giving more le-
Life 3.31 2.74
verage to the entities operating in the sector. That will help
Non Life 2.78 0.97 in developing a robust industry structure in line with the
Overall 6.09 3.7 global insurance markets.
Source: Swiss Re (2018-19) report Major segments of Non-Life Insurance

Business in India
History of Insurance of India
The major product in non life insurance business in India are
In 1972, General Insurance Industry was nationalized. In
Fire, marine, health, motor, liability, etc. Fire business con-
1973, GIC was set up. In 1993, Malhotra Committee setup stitutes about 7%, marine = 2%, motor - 35%, health - 30%
to explore and to recommend means to reintroduce an el- and the other lines make up remaining 26%.
ement of competition by withdrawing the exclusivity of LIC There are two specialized insurers in India catering to spe-
and GIC. In 1994, Malhotra Committee submits report. In cialized insurance products lines -
1997, Insurance Regulatory Authority (IRA restyled as IRDA) 1. Export Credit Guarantee Corporation of India carrying
established and in the year 2000, the insurance industry in on export credit insurance business in India and they
India was liberalized. First Insurance Licenses in the private
have underwritten a gross direct premium of Rs. 1248
sector was issued to HDFC Standard Life for Life insurance
crore in 2018-19
and Royal Sundaram Alliance (RSA) and Reliance General
Insurance for Non-Life Insurance. 2. Agricultural Insurance Company of India Ltd carrying on
agriculture insurance business in India and they have
Insurance Industry in India underwritten a gross direct premium of Rs. 6901 crore
in 2018-19. AIC is the main insurer under Pradhan
The insurance sector is a colossal one and is growing at a
Mantri Fasal Bima Yojana (PMFBY) and had also been
steady rate of 15-20% annually. Together with banking, in-
insuring farmers under Restructured Weather based
surance services add about 7% to the country's GDP. At the
Crop Insurance Scheme (RWBCIS) and Coconut Palm
end of March 2019, there are 70 insurers operating in In-
dia; of which 24 are life insurers, 27 are general insurers, 7 Insurance Scheme (CPIS) and had also been insuring
are standalone health insurers and 12 are re-insurers includ- crop (apart from the above-mentioned Government
ing foreign reinsurer's branches and Lloyd's India. sponsored schemes).
Insurance Pools - Terrorism Pool
Indian General Insurance Industry -
The Indian Market Terrorism Risk Insurance Pool was formed
Need for the right mix with the initiative of all non-life insurance companies in In-
The insurance Industry is at cross roads. The liberalization dia in April 2002, after terrorism cover was withdrawn by
of Indian economy followed by the same for the general international reinsurers post 9/11 incident. The Pool is ad-
insurance industry has opened a lot of opportunity for ministered by GIC Re.
growth and innovation along with its due share of chal-
lenges. However, it is a fact that the importance of the in- Insurance Pools - Nuclear Pool
dustry is known and appreciated from time immemorial The enactment of Civil Liability for Nuclear Damage Act,
even for a large country like India with such low insurance 2010 following the signing of 123 agreements with USA

The Insurance Times August 2025 25