Insurance Industry in India
In the past few years, the insurance sector in India has experienced significant development. With the advent of technology, internet, several new products and customized plans, the insurance sector has contributed towards the country’s economy as well as provided financial protection to the people by offering insurance coverage amount. The overall insurance sector in India remains low; however, the insurance industry has been expected to reach US$ 280 billion by 2020.
In India, insurance is a well-regulated sector…
The insurance sector is regulated and controlled by the Insurance Regulatory and Development Authority of India (IRDAI).
What is IRDAI, and what it does?
The IRDAI or the Insurance Regulatory and Development Authority of India is a self-governing and legal body that manages and promotes the insurance sector. It is categorically designed and intended to safeguard the interests of the policyholders and keep a check that their rights are not getting violated. The main task of IRDAI is to monitor the entire insurance industry of India. It likewise acts as the protector of the rights of the policyholders. The IRDAI along these lines, thus ensures that all the insurance companies are abiding the rules and regulations laid by the apex body to protect the rights of the residents of India.
Functions of the Insurance Regulatory and Development Authority of India..
As outlined in Section 14 of the IRDAI Act, 1999, the different functions of the IRDAI are listed below–
- Issuing, modifying, renewing, cancelling, or suspending the enrollment of insurance companies.
- Protecting the rights and interests of policyholders.
- Promoting and guaranteeing efficiency in the procedures of insurance providers.
- Imposing necessary charges or changing the fee structure every once in a while.
- Determining the set of accepted rules, qualifications and training for the agents and mediators.
- Listing the codes of conduct for assessors.
- Exploring and investigating insurance companies, operators, agents and other related associations.
- Supervising the Tariff Advisory Committee.
- Determining the structure and way of how the insurance agencies should keep the books of record and maintain the account statements.
- Monitoring rates, terms and conditions and other benefits that are not covered by the Tariff Advisory Committee, even though insurance agencies may give them.
- Regulating the investment funds of the insurance companies
Now let’s know about India’s insurance industry. It is primarily separated into two categories – Life Insurance and General Insurance.
Life insurance: A life insurance policy is an agreement between an insurance company and a policyholder, in which the insurer gives a lump-sum amount or the death benefit amount to the policy nominee after the demise of the policyholder.
General Insurance: This category of insurance does not come under life insurance and is further divided into subcategories – Health insurance, Travel and accident insurance, Motor insurance, Home or property insurance and Fire insurance.
What are the advantages of Insurance in India?
There are multiple benefits of having an insurance policy. The primary one being it provides financial stability to your family as well as to your business during unforeseen situations like deaths, accidents or medical emergencies. It encourages saving money by controlling the expenses, so you are left with significant savings which can be useful for your post-retirement period. Additionally, insurance also enables you to save taxes. By investing in insurance, you get financial assistance for your medical expenses which protects your savings from draining out on hospital bills.
Insurance in a way is a source to assemble substantial funds which can be used for promoting modern development of India while ensuring the country’s economic growth. The significant funds further boost the employment opportunities, thus becoming a great source of capital reserve collection of the nation.
The Future of the Insurance Sector in India
The insurance sector has always been dominated by life insurance as compared to the general Insurance Industry in India. In any case, given the pace of development in the other Non-life coverage divisions, it is assessed that they will equally compete with the Life insurance sector in the years to come. New insurance agencies or insurance aggregators will experience dynamic growth and extension both in the Life as well as General insurance sectors in India. With rising salaries and evolving ways of life, a few patterns will increase in the insurance business of the country, for example, product innovation, better claim settlement, and other administrative models in the Indian market.
The Indian Government has likewise thought of various endeavors to provide insurance to below the poverty line people through different campaigns like Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Rashtriya Swasthya Bima Yojana (RSBY). The introduction of such plans is promising for the citizens of India as it targets helping the lower and lower-middle-income group of the country. This is likewise going to give the vital lift to the nation’s overall economy.