Page 25 - Ebook health insurance IC27

Sashi Publications

finance, as it obviates the need to arrange a large amount of money for
hospitalization, even if reimbursed later. The security of cashless hospitalization
also minimizes the need to keep surplus liquidity or encashable investments to
meet health eventualities.

With increasing awareness of this protective role of health insurance, and with
renewed focus on marketing of health insurance products on the part of insurers in
that de tariffed regime, the health insurance portfolio is now the fastest growing
market segment for non life insurance sector in India. There is tremendous potential
for growth, as only 5% of the population has been covered by commercial health
insurance.

Q4. Trace the early development of Indian Insurance Industry.
Ans. The earliest mention of insurance mechanisms in India can actually be traced to

the writings of Manu, Yagnavalkya and Kautilya, which refer to the pooling of
resources to redistribute them in times of fire, floods, epidemics and famine.
However, formal insurance industry has its origin in 19th century, when both life,
and nonlife insurance companies came to be established in India.

Early years of legislative controls on the sector were consolidated and updated as
the Insurance Act 1938, which, though revised from time to time, still remains at
the core of Insurance laws till date. The regulatory structure, as also the constituents

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