|
|||||||
|
|
||||||
|
|||||||
|
|||||||
|
|||||||
The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalise the insurance business. An Ordinance issued on 19th January, 1956 nationalised the Life Insurance sector and 'LIFE INSURANCE CORPORATION OF INDIA' (L.I.C.) came into existence in the same year. The LIC absorbed 154 Indian, 16 non Indian insurers as also 75 provident societies. Since then LIC has been the only player. Similarly, before November, 1972, a number of Indian and many foreign companies did general insurance business in India and this business was linked with their branches abroad. In addition, this product was also offered by LIC, some mutual companies and cooperative societies. In fact, on the eve of nationalisation, 68 Indian (including LIC)and 45 non-Indian entities carried out insurance business in India. Nationalisation saw the business of all these organisations absorbed by the GENERAL INSURANCE CORPORATION (GIC) with its four subsidiaries. Thus
Life Insurance Corporation of India in the field of life insurance and
General Insurance Corporation of India in the field of general insurance
have enjoyed absolute monopoly . However, the reforms in financial sector
in the early 90s have since touched Insurance also. The Govt of India set
up a committee with Sh. R.N. Malhotra as the Chairaman to recommend
suitable reforms in this sector. As a consequence of the recommendation of
the Malhotra Committee, the Government of India set up an Insurance
Regulatory Authority. On the 2nd December, 1999, Indian Parliament has
passed, Insurance Regulatory and Development Act, throwing open the
Insurance sector to Banks and other private parties. Since then, RBI has
come out with draft
guidelines for entry to this sector. This is seen as a major step in
financial sector reforms, which introduce, for the first time since
nationalisation of the insurance business, an element of competition in
this sector. This should bring competitively priced insurance for the
customer and improve the service available to him. |
copyright
banknetindia.com All rights reserved worldwide. |