Insurance Sector Reforms -The Way Ahead

The financial sector reforms have created metamorphic changes in the Indian insurance sector. With the opening up of the insurance sector to private players in 1999, the insurance market has become more competitive and dynamic.The public sector insurance companies are now actively facing competition. The insurance industry in India was first opened up to the private sector in 1999. In the following decade, total insurance penetration has doubled, rising from 2.3 per cent of the GDP in 2001 to 5.2 per cent of GDP for 2011. India has tremendous economic potential due to its large labor force and rapidly growing middle class. The projected increase in per-capita GDP will correlate with an increased demand for a wide variety of insurance and investment products. Rising income levels, coupled with increased purchasing power, low penetration for most consumer products, availability of financing and changes in lifestyles are likely to boost consumer demand in the future. The paper attempts to examine the current reforms and assess its impact in the Indian insurance sector, in the light of the tremendous potential of insurance penetration in the untapped health,rural and social sectors.