9 (B) Insurance Sector Reforms

Insurance
Sector
Reform
The government's policies since July 2004 have
been to develop and reform the financial sector;
regulate markets and upgrade their organizational
and legislative structures, strengthen capital
structures of financial institutions and protect
investors' rights. The non-bank financial sector
reform program consists of two phases; the first
phase (2005-2008) and the second phase (2009-
2012). The first phase aimed at building financial
institutions, ensuring they are soundly structured
and subjugated to strict supervision in order to
enhance the financial sector's efficiency and
ensure its stability and liquidity.
First: Restructuring State-held
Insurance Companies.
This goal was achieved by:
• Establishing the Insurance Holding
Company.
• Merging public insurance companies.
• Injecting new bloods to achieve efficiency
of management.
Legislative Structure of the
Insurance Sector.
• Implementing the approach of supervision on

the basis of risk assessment and management
and rules of financial adequacy of institutions
operating in the market.
• Supporting financial and administrative

independence of the regulatory authority.
• Enhancing the role of the Insurance Federation

and making its membership obligatory for
insurance companies and associations.
Second: Strengthening
Legislative Structure of the
Insurance Sector.
Achieving specialty of insurance activity by
separating life insurance from property
insurance.
Re-organizing the insurance brokerage
profession, allowing legal entities to perform
this activity and training brokerage staff.
Increasing minimum issued capital to 60
million for life insurance companies and 60
million for general insurance companies and
adjusting existing companies' situations
within five years.
Third: Increasing the
Sector's Contribution to
Economic Activity:
• Reducing the cost of transactions and developing

valuation and pricing mechanisms of insurance
services.
• Developing the accounting framework of

insurance activity in line with international
standards.
• Developing rules and procedures regulating

different insurance services.
The second phase of the
financial reform program
(2009-2012)
1. Focus on insurance of SMEs and micro insurance in co-
operation with expert institutions, benefiting from
experiences of large companies and other countries
including Singapore, S.Korea, Brazil and Malaysia.
2. New legislation to be developed in the insurance sector;

including the issuance of private and optional pension funds
law and medical care companies' law, finalizing a
policyholders’ protection fund, while issuing legislation and
standards necessary for performing micro insurance.
3. The General Authority for Financial Supervision, which

started its mission in July 2009. It was established to
enhance supervision of non-bank financial institutions,
including insurance companies, develop regulatory
coordination and increase efficiency.
The second phase of the
financial reform program
(2009-2012)
4. Developing rules of supervision on insurance
companies operating in the Egyptian market as
well as insurance funds by adopting approaches
of risk assessment and implementing regulatory
procedures and standards accurately.
5. Implementing rules of increasing competition
among existing institutions, to be ensured by the
General Authority for Financial
Supervision.
6. Encourage financial innovation and development

so that the insurance sector delivers its services
using stable instruments, with definite cost and
return, while subject to prudent supervision.
IRDA
Insurance regulatory and development authority of
India.
The bill was retitled as Insurance Regulatory and
Development Authority and introduced again in
1999 along with three schedules containing
amendments to the Insurance act,1938, LIC Act
1956, and GIC Act, 1972, and was passed.
Features :
Act to establish the regulatory authority
Insurance advisory committee
Registration
Renewal of registration
Power of investigation and inspection
Functions of IRDA
 To protect the interest of policy holders/insured as
per the contract of insurance with insurance
companies.
 To formulate code of conduct, qualification and
training of insurance agents etc.
 To specify the code of conduct for surveyors / loss
assessors
 Efficiently conduct of Insurance business.
 To regulate and promote professional organizations
connected with insurance and reinsurance business
 To conduct inspections, inquiries and investigations
including audits of insurer and their intermediaries.
Functions of IRDA
 To regulate the rates, terms and conditions to be
offered by the insurers with full control
 To issue specific instructions and form for the
maintenance of books of accounts and their
statements
 To regulate investment of funds by the insurance
companies
 To control the functioning of tariff advisory
committee
 To promote and specify percentage of life and
general insurance business in the rural segment.
 To issue certificates of Registration, Renew,
Withdraw, suspend or cancel such registration.
1818 – Establishment of Oriental Life Insurance
Company, Calcutta
1906 – Establishment of National Insurance Company
1912 – Indian Insurance Companies Act
1956 – Formation of LIC and passing of L.I.C. Act 1956
1972 – General Insurance Business Act, 1972
1999 – Insurance Regulatory & Development

Authority Act
Life Insurance - Good method to protect the
family financially, in case of death, by providing
funds for the loss of income.
General Insurance - All those insurance

policies which do not covers the life of the
person.
Such as – i) Motor Vehicle Insurance
ii) Fire Insurance
iii) Property Insurance
iv) Health Insurance
Current Growth Rate - (In 2013)
i) Life Insurance – 20 % (CAGR) – $60 billion market
ii) General Insurance – 18% (CAGR) - $13 billion
market
Life Insurance – i) Private Sector – 30% Market Share

ii) Public sector – 70% Market Share
General Insurance - i) Private Sector – 43% Market

Share
ii) Public Sector – 57%
Market Share
Expected Market – $280 billion (By 2020)
World’s 10th largest growing market for

insurance
Untapped Population of India – 70%
FDI allowed in Insurance Sector – 49%
Most Lucrative Insurance Segments – Motor

Vehicle Insurance, Health Insurance, Aviation
Insurance
Increasing awareness level of customers
Customer centric products (Customized Products)
Enhanced service standards
Good communication techniques
Lucrative offers
Adopting customer feedback for improvement

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9 (B) Insurance Sector Reforms

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Insurance

This goal was achieved by:

• Establishing the Insurance Holding

• Merging public insurance companies.

• Injecting new bloods to achieve efficiency

• Implementing the approach of supervision on

• Supporting financial and administrative

• Enhancing the role of the Insurance Federation

This goal was achieved by:

• Reducing the cost of transactions and developing

• Developing the accounting framework of

• Developing rules and procedures regulating

2. New legislation to be developed in the insurance sector;

3. The General Authority for Financial Supervision, which

6. Encourage financial innovation and development

1906 – Establishment of National Insurance Company

1912 – Indian Insurance Companies Act

1956 – Formation of LIC and passing of L.I.C. Act 1956

1972 – General Insurance Business Act, 1972

1999 – Insurance Regulatory & Development

General Insurance - All those insurance

Life Insurance – i) Private Sector – 30% Market Share

General Insurance - i) Private Sector – 43% Market

World’s 10th largest growing market for

Untapped Population of India – 70%

FDI allowed in Insurance Sector – 49%

Most Lucrative Insurance Segments – Motor

Customer centric products (Customized Products)

Enhanced service standards

Good communication techniques

Adopting customer feedback for improvement

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