The Indian insurance industry is hugely driven by higher disposable incomes, changing demographics, government efforts, launch of new products, lesser complexities and entry of enormous foreign players. The sector is not only outpacing India's economic growth figures, but is also standing strong as an important financial segment.
Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. Today there are 24 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 23 life insurance companies operating in the country.
In the general insurance industry, there was a growth of 24 per cent in first three quarters of 2011-12 in gross written premium collected. The general insurance industry collected premium of Rs 42,023.3 crore (US$ 8.51 billion) by writing new policies during the period.
The Indian life insurance industry has emerged as the mainstay of entire insurance space with Rs 2.9 trillion (US$ 58.7 billion). With over 35 crore life insurance policies in force, the industry has registered remarkable growth since its privatization in 2000. The 24 life insurance players' premiums collected in April-December 2011 stood at Rs 71, 953.54 crore (US$ 14.59 billion) while the industry sold about 27.24 million policies during the period, according to data collected by the Insurance Regulatory and Development Authority (IRDA).
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, 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.