What Is General Insurance
Any non-life insurance including medical, automobile, or a certain piece of
painting, and nowadays even mobile phone insurances come under the ambit of the
General Insurance. Anything that is an asset is insured under the general
insurance contracts so that if it is damaged or lost in the future somebody is
there to take care of that loss and the policyholder is not unduly affected by
the loss/damage caused. Just like Life Insurance, General Insurance is also paid
in the form of a premium.
Importance Of General Insurance
- It protects assets
- The policyholder will have someone to turn to in case of any loss
- All the financial assets you hold dear shall be protected
- It gives a sense of relief to the policyholders
Evolution Of General Insurance In India- History In Brief
General insurance arrived in India as a part of the East India Company's trade
policy. In 1850 with the establishment of the Triton Insurance Company Ltd in
Calcutta., the seeds of the General Insurance business in India were sowed. It
was the first company of its kind to transact in all kinds of general insurance
business in India. Thereafter the major development took place when Indian
Mercantile Insurance Ltd was set up in 1907.
After 10 years of attaining independence in 1957, the General Insurance Council,
a wing of the Indian association of insurance was created. The council framed a
code of conduct to ensure that fair business practices are being carried out in
India in the general insurance sector In 1968, the Insurance Act was amended to
regulate investments and set minimum solvency margins. After that, a tariff
advisory committee was set up.
The General Insurance Business in India was nationalized by the General
Insurance Business (Nationalization) Act in 1972(GIBNA). The Government of India
through the nationalization scheme bought 55 shares of the 55 Indian Insurance
companies along with the undertakings of 52 insurers carrying on general
Insurance business. The National Insurance Company Ltd., the New India Assurance
Company Ltd., the Oriental Insurance Company Ltd., and the United India
Insurance Company Ltd. were formed through the amalgamation of 107 insurers. The
General Insurance Corporation of India (GICI) was founded in 1971 and began
operations on January 1, 1973.
General Insurance Corporation was formed by S.9(1) of the GIBNA and was
incorporated on the 22nd of November 1972 under the Companies Act,1956. It was
declared a private company limited by shares. GIC was established to supervise,
control, and carry out all the work in the general insurance industry. The
Government of India transferred all of its general insurance company shares to
GIC as soon as it was founded. All of the government's nationalized undertakings
were transferred to Indian insurance companies at the same time.
The Insurance Regulatory and Development Authority Act, 1999 (IRDAA) which
came into being on the 19th of April in the year 2000 marked the next major
milestone in the General Insurance sector in India.
GIBNA and the Insurance Act of 1938 were both amended by the introduction of
this Act. The exclusive license of GIC and its subsidiaries to carry on general insurance in India was revoked by an amendment to GIBNA. GIC was renotified as the Indian Reinsurer in November 2000, and its supervisory function over the four subsidiaries was terminated by administrative instruction. It ceased to be a holding company of its subsidiaries on March 21, 2003, when the General Insurance Business (Nationalisation) Amendment Act 2002 (40 of 2002)
came into effect.
Types Of General Insurance Policies In India
- Motor Insurance:
In India, if you are driving a vehicle whether a 2-wheeler
or 4-wheeler, insurance is a must. You will be legally entitled to drive a
vehicle only if your vehicle is insured. There are two types of motor insurance:
- Third Party Liability:
As per the Motor Vehicles Act, it is the minimum
requirement you need to have to drive a vehicle. It covers losses faced in a
situation wherein your vehicle damages any third party such as public property
or any other person's vehicle.
- Comprehensive Package Policy:
A Comprehensive Package Policy covers both
third-party damages and liabilities and damages/losses caused to you and your
vehicle. The losses may arise due to an accident, theft, fire, natural
calamities, and others.
- Health Insurance:
The health insurances cover all kinds of expenses incurred
in the cases of hospitalization which is caused due to an accident or
illness. When it comes to health insurance, one can opt for a standalone health
policy or a family floater plan that offers coverage for all family members.
The Home Insurance policy covers all the losses that can occur to the house and
all the contents in it in case of any made or natural causes that lead to its
perils. It can broadly be classified into 3 categories:
- Structure Insurance- Ensures the structure of the house
- Contents Insurance- Covers the contents of the home for eg. Furniture
- Comprehensive Insurance- Encompasses both the structure and contents
insurances into one policy.
- Travel Insurance:
Travel Insurance covers losses while traveling that may be
caused due to the loss of luggage, trip cancellation, or flight delay. It also
supports cashless hospitalization if you are hospitalized during a trip.
- Commercial Insurance:
Businesses, traders, retail shops, and other sorts
of business enterprises purchase commercial insurance plans to protect
themselves against specific hazards. Commercial insurance comes in a variety of
forms e.g. Fire and burglary Insurance, Group Mediclaim Insurance, etc.
Top Companies In The General Insurance Sector In India
- Digit General Insurance:
It is India's 1st digital insurance company and
covers a range of life insurance products including 2-wheeler. Car, health,
home, travel, and mobile insurances.
- Liberty General Insurance:
Starting in 2013, the insurer is one of the
best insurance companies in India. Industrial, commercial, and retail insurance
solutions are available. Car insurance, two-wheeler insurance, health insurance,
and commercial insurance are among the most sought-after insurance products on
- National General Insurance:
Starting in the year 1906, the oldest
existing general insurance company in India was awarded the best auto insurer in
the year 2017.
- Reliance General Insurance:
Reliance General Insurance is one of India's
most well-known insurance businesses, established at 139 locations with more
than 28,900 intermediaries across the country. The insurer's insurance products
can be classified as health travel, vehicle, house marine, and so on. The
insurer does not stop at insurance and claims; it also encourages customers to
maintain a healthy lifestyle. The company believes that everyone should have
access to an inexpensive insurance.
- SBI General Insurance:
SBI General Insurance was founded in 2010 as a
strategic partnership between two financial behemoths, the State Bank of India
(SBI) and the Insurance Australia Group (IAG). The insurer is one of India's
most well-known insurance businesses, offering a wide range of commercial and
retail insurance products at reasonable costs. Health, motor, personal accident,
vacation, and home insurance are among the many policies available.
Apart from these, there are other big players in the market such as Kotak
Mahindra General Insurance, Edelweiss General Insurance, Bajaj Allianz General
Insurance, Oriental General Insurance, United India General Insurance, Tata AIG
General Insurance. There are also certain specialized Insurance Companies in
India such as the Agricultural Insurance Company of India which is designed to
offer specialized insurance policies to suit the needs of the farmers. As well
as there is Export Credit Guarantee Corporation of India Limited to cover export
credit risks faced by banks, MSMEs, and other financial institutions.
General Insurance In India- Statistics
Life and Non-Life Insurance market penetrations (FY2000-19)
Life insurance penetration in India was around 2.82 percent in 2019, but
non-life insurance penetration was far lower at 0.94 percent. In 2019, the
industry's overall penetration was 3.76 percent.
Until 2009, when it peaked at 5.2 percent in the industry segment, insurance
penetration in the country had been steadily increasing. The 2010 market
meltdown in the industry, as well as stronger restrictions put in place to curb
the problematic Unit Linked Investment Plans, were two important factors in the
precipitous reduction in total penetration (ULIPs).
General Insurance Market Penetration (FY2008-FY2019)
After the financial year 2019, India's insurance penetration rate was 0.9
percent. This appeared to be an improvement over the financial year 2009 when
the country's insurance penetration was around 0.6 percent. However, India's
insurance penetration is substantially lower than the global average of 2.8
percent. The ratio of insurance premiums to the country's gross domestic product
is known as insurance penetration.
Product Wise (FY2019)
In recent years, retail products such as motor insurance and health insurance
have dominated India's general insurance business product mix, accounting for
roughly 35 percent and 25 percent respectively. In the fiscal year 2019, health
insurance accounted for 26% of the whole product mix, while third-party property
damage insurance accounted for 22%.
Private Sector Motor Insurance market share (FY2019)
In the financial year 2019, private sector motor insurance across India had a
market share of 68 percent, compared to 59 percent in the previous financial
year. Compared to public sector insurers in the motor insurance industry,
private insurers saw a greater growth and profitability in the country.
Future Of General Insurance Sector In India
In the future customers would be looking for a solution and convenience along
with the emotional assurance of being protected if something goes wrong
It is true that in the Insurance market, the shift in the future is going to
move to liability insurance and protection of a very different nature. Insurance
companies will need to start providing customer-obsessed solutions. Earlier a
health insurance would trigger when a person fell ill was good.
facilities would include tracking their health with the help of wearable
devices, providing them access to the best doctors, helping them follow a
healthy regime, and also offering them other wellness options. Insurance
companies will need to step up from being someone who just comes into contact
when a disaster happens to someone who is there as a friend and stays in
constant touch throughout the customer's journey.
The insurance companies will
be able to evolve their products as per the customer's needs, and it shall have
the best future for the insurance company if they improve certain value-added
services along with insurance.
Changing the culture from a pure product and transaction-based relationship to
a culture of an emotional connect and customer-obsessed solutions is what is
going to help insurance companies sustain in the future.