Role of IRDA in life insurance sector

Insurance industry in India has come a long way since the time when businesses were tightly regulated and concentrated in the hands of a few public sector insurers. Following the passage of the Insurance Regulatory and Development Authority Act in 1999, India abandoned public sector exclusivity in the insurance industry in favour of market-driven competition. This shift has brought about major changes to the industry. The inauguration of a new era of insurance development has seen the entry of international insurers, the proliferation of innovative products and distribution channels, and the raising of supervisory standards. Insurance has two sub-segments, life insurance and non-life insurance. Total premium collected by the insurance segment for all the life and non-life insurance policies has grown at a CAGR (Compound annual growth rate) of 24.27% over the period 2002 to 2008. LIC is the largest player in the life insurance segment contributing to 74.39% to the total life insurance premium collected. The Indian life insurance market is still under-penetrated and far from maturity. In 2008, it constituted approximately 4% of the country's GDP, as compared to the life insurance penetration rate of around 8%-10% of the GDP in other Asian countries. Therefore this study is taken place to have an over view of the Insurance industry pre and post IRDA, to study the growth in Life insurance sector post liberalization, and to know the role of IRDA in Life insurance industry.