India: The Door Of Opportunity For Foreign Insurance Companies Is Opening Wider.

• Date: 26 November 2018
• Author: Govind, Har

Life insurance was nationalized in India in 1954 and all life insurance business was taken over by the Life Insurance Corporation of India (LIC), a wholly-owned government undertaking.

Unlike the banking sector, in which Indian private and Government banks and foreign banks operate and compete, the LIC is a monolith. It has it head office in Bombay and branches all over India. These branches do not compete with each other. There are some overseas branches also. General insurance was nationalized in 1974 and the entire business was given to an apex government undertaking, the General Insurance Corporation of India (GIC). It has four subsidiaries with offices in Bombay. Calcutta. Delhi and Madras which compete with one another.

The premium rates of LIC and GIC, for specified categories of insurance coverage, are uniform throughout India. The LIC branches function under unified control and guidelines. Business competition is practically non-existent in the LIC. The GIC subsidiaries have some elbow-room for competition only in regard to services offered to customers. These subsidiaries have their own branches throughout the country.

There is long-standing criticism that the premiums charged by the two corporations are high, the quality of service is indifferent, efficiency is low due to absence of competition and there are delays in settling claims.

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