New Economic Policy and its Impact on Indian Insurance Industry

Insurance business was in India since the 19th century. The life insurance business was growing enormously, there was lot of cut-throat competition and profiteering, which led to unfair trade practices leading to government intervention and nationalisation of life insurance business in the form of Life Insurance Corporation on 1 September 1956. However, government made a paradigm shift in the economic policy by adopting the policy of liberalisation, privatisation and globalisation. Consequently, Insurance Regulatory and Development Authority (IRDA) has been established under IRDA Act, 1999, to regulate the insurance business in the country. As a result, private sector has been allowed entry both in general and life insurance sector in India. Life insurance industry expanded tremendously from 2000 onwards in terms of number of offices, number of agents, new business policies, premium income, etc. Further, many new products (like Unit Linked Insurance Plans (ULIPs), pension plans, etc.) and riders were provided by the life insurers to suit the requirements of various customers.