...THE UNIVERSITY OF NOTTINGHAM Centre for Risk & Insurance Studies Privatization of the Insurance Market in India: From the British Raj to Monopoly Raj to Swaraj Tapen Sinha CRIS Discussion Paper Series – 2002.X Privatization of the Insurance Market in India: From the British Raj to Monopoly Raj to Swaraj by Tapen Sinha, Ph.D. ING Comercial America Chair Professor Instituto Tecnológico Autónomo de México Mexico City, Mexico and Professor, School of Business University of Nottingham, UK tapen@itam.mx, tapen@nottingham.ac.uk Abstract We examine the institution of insurance in India. Over the past century, Indian insurance industry has gone through big changes. It started as a fully private system with no restriction on foreign participation. After the independence, the industry went to the other extreme. It became a state-owned monopoly. In 1991, when rapid changes took place in many parts of the Indian economy, nothing happened to the institutional structure of insurance: it remained a monopoly. Only in 1999, a new legislation came into effect signaling a change in the insurance industry structure. We examine what might happen in the future when the domestic private insurance companies are allowed to compete with some foreign participation. Because of the time dependence of insurance contracts, it is highly unlikely that these erstwhile monopolies are going to disappear. Acknowledgement: I would like to thank Rebecca Benedict and Samik Dasgupta for their input in...
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...ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA Anant Kousadikar and Trivender Kumar Singh* *Jatan Swaroop PostGraduate College, Kayasthwada,Sikandrabad(U.P.), Distt: Bulandshar [Received-05/12/2012, Published-17/01/2013] ABSTRACT Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it for private benefits and run the entity with the aim of profit maximization. In other words, it is a route from public or state ownership to private players or a group. From the other point of view, it is a strategy that provides advantages to a few at the price of many. However, this is always subjected to the circumstances involved. In this paper, the aim is to understand the major advantages and disadvantages of privatization in this country. Index Terms: Privatisation, advantages, Public administration. I. INTRODUCTION Privatization is a managerial approach that has attracted the interest of many categories of peopleacademicians, politicians, government employees, players of the private sector, and public on the whole. As per the opinion by the subject experts, privatization can be advantageous in terms of the higher flexibility and scope of innovation it offers along with cost savings, many a times. However, other specialists defiantly debate that privatization has an adverse impact on the employee morale...
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...Insurance- Introduction Insurance= Protection against Risk • Insurance is a co-operative device of distributing losses, falling on an individual or family over a large number of persons, each bearing a nominal expenditure & feeling secured against heavy loss. • Insurance business has emerged as one of the prominent financial services during recent times, particularly in developing countries where it could not grow before globalization. But it is very difficult to trace exactly when insurance originated. Privatization in insuranceThe Narasimha Rao government (1991-96) which unleashed liberal changesin Indias rigid economic structure could not handle this political hot potato.Ironically, it is the coalition government in power today which has declaredits intention of opening up insurance to the private sector. Ironical becausethis government is at the mercy of support from the left groups which havebeen the most vociferous opponents of any such move.All segments of the financial sector had been opened to private playerswithbetter product, services & social objective International players are eyeing the vast potential of the Indian market and are already making plans to come in. Types of Insurance Privatization has brought in lot of surprises for insurance sector. In India, insurance sector is at the booming stage as only 40% of the population is insured. Private organizations are striving hard and hard to develop the sector. €Government is also supporting the insurance...
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...ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA Anant Kousadikar and Trivender Kumar Singh* *Jatan Swaroop PostGraduate College, Kayasthwada,Sikandrabad(U.P.), Distt: Bulandshar [Received-05/12/2012, Published-17/01/2013] ABSTRACT Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it for private benefits and run the entity with the aim of profit maximization. In other words, it is a route from public or state ownership to private players or a group. From the other point of view, it is a strategy that provides advantages to a few at the price of many. However, this is always subjected to the circumstances involved. In this paper, the aim is to understand the major advantages and disadvantages of privatization in this country. Index Terms: Privatisation, advantages, Public administration. I. INTRODUCTION Privatization is a managerial approach that has attracted the interest of many categories of peopleacademicians, politicians, government employees, players of the private sector, and public on the whole. As per the opinion by the subject experts, privatization can be advantageous in terms of the higher flexibility and scope of innovation it offers along with cost savings, many a times. However, other specialists defiantly debate that privatization has an adverse impact on the employee morale...
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...Privatisation On Life Insurance Corporation Of India Economics Essay With the advent of new players in the field of Life insurance sector, the degree of competition has increased multifold. The private insurance companies are launching new innovative insurance plans for their survival and growth. At the same time, Life Insurance Corporation of India has upgraded their quality of service to retain, maintain and attract new business. An attempt has been made to study the impact of privatization on LIC. The Development Officers were contacted to know their observations about the impact of privatization on their life insurance business and their views as how their life insurance business has been influenced by the opening of the sector. LIC has made a lot of changes in its operation and latest technology is being used to serve the customer. The customer grievances are properly attended and all maturity claims are settled to the entire satisfaction of the policyholders. The privatization of the sector has brought lot of opportunities for all the players. Under such situation, fittest of the fit will survive and the rest will vanish over a period of time. In the year 2000, when the insurance sector was privatized, many companies entered into the insurance sector and as a result competition has increased multifold. Initially, most of the private life insurance companies spent huge amount of money on advertisement. The purpose of the advertisement was to inform the public about their...
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...ADMINISTRATION TOPIC: PRIVATISATION IN THE INDIAN HEALTHCARE SECTOR CONTENTS 1. INTRODUCTION 1.1. PRIVATIZATION 1.2 INDIAN HEALTHCARE INDUSTRY 1.2.1 DRIVERS FOR GROWTH OF HEALTHCARE 1.3 PUBLIC HEALTHCARE IN INDIA 1.4 PRIVATE SECTOR IN THE INDIAN HEALTHCARE DELIVERY SYSTEM 1.4.1 GOVERNMENT POLICIES TO SUPPORT THE GROWTH OF PRIVATE SECTOR 1.4.2 FDI IN THE INDIAN HEALTHCARE 1.4.2.1 STATUS AND PROSPECTS FOR FOREIGN INVESTMENTS IN HOSPITALS IN INDIA 1.4.2.2 CONSTRAINTS TO FOREIGN INVESTMENTS IN HOSPITALS IN INDIA 1.4.2.3 FOREIGN PRESENCE IN HOSPITALS IN INDIA 1.4.2.4 SUMMARY OF PROS AND CONS FOR FINANCING SOURCES OF HOSPITALS OBJECTIVES 2. LITERATURE REVIEW 3. ANALYSIS OF THE IMPACT OF PRIVATIZATION IN THE HEALTHCARE SECTOR 3.1 QUALITY AND PRIVATE HEALTHCARE SERVICES 3.2 IMPACT OF FOREIGN INVESTMENTS IN HOSPITALS IN INDIA 3.3 CONSUMER PERCEPTION OF PRIVATE SECTOR 3.4 EMERGING TRENDS IN HOSPITALS IN INDIA: CHALLENGES AND INTERVENTIONS 4. CONCLUSION 5. ACKNOWLEDGEMENT 6. BIBLIOGRAPHY 1. INTRODUCTION 1.1 PRIVATIZATION Privatization can also be called denationalization or disinvestment. All three terms describe a situation where a government decides to transfer control of a government, and thus...
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...COLLEGE OF COMMERCE & ECONOMICS G. R. KARE ROAD, MARGAO - GOA INSURANCE SECTOR IN INDIA: THE PARADIGM SHIFT Meenakshi Bawa Lecturer, Department of Economics, M.E.S. College of Arts & Commerce, Zuarinagar, Goa The rapidly growing economic scene, the political attitude, cultural patterns, social values and rapid development in the Information Technology sector have brought about a significant transformation in the lifestyles in the urban and rural areas of our economy. These changes have introduced an element of uncertainty in the possible developments in all sectors; at the same time, the insurance sector also cannot remain untouched. In the present era of globalization, insurance companies face a dynamic global business environment. Radical changes are taking place due to the internationalization of activities, the appearance of new risks, new types of covers to match these new risk situations and innovative ideas on customer service. The low growth rates in developed markets, changing customer needs and the highly uncertain economic conditions in the developing world have been exerting pressure on insurers’ resources while testing their ability to survive. The globalization process has opened up new service markets to provide developing nations with opportunities for the expansion of trade and economic growth. Insurance has always been a politically sensitive subject in India. In fact, until 2000, the insurance industry was a government monopoly. But thereafter it has been...
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...Enhancing Competitiveness: The Case of the Indian Life Insurance Industry Shilpa Rastogi* Runa Sarkar*,** Abstract: Insurance industry contributes to the financial sector of an economy and also provides an important social security net in developing countries. The consistent sub-optimal performance of this sector in India from independence through the 1990s has led to different sets of reforms, with each model adopted focusing on distinct competitive strategies. This study identifies the causes and the objectives with which the sector was reformed in 2000 to conclude that only in the last decade, the hybrid model of privatization with regulation adopted by the Government has yielded positive results and the sector has started to look up. The sector in its present form looks promising for the consumers, the insurers and the nation as a whole. Keywords: life insurance, regulation, competitiveness, Governmental reforms Theme: Enhancing Competitiveness Sub-Theme: Strategies for Enhancing Competitiveness of Firms, Industry Sectors and Country Introduction The insurance industry affects money, capital markets and the real sectors in an economy, making insurance facility necessary to ensure the completeness of a market. It is an industry with strategic importance for any country as it contributes to the financial sector (and hence the GDP) as well as confers social benefits on the society. At the micro-level, an insurance policy protects the buyer against financial loss arising from...
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...------------------------------------------------- CHAPTER 2 FORMATION AND GROWTH OF INSURANCE INDUSTRY IN INDIA * INTRODUCTION * NATURE AND CHARACTER OF INSURANCE * NEED FOR INSURANCE * FUNCTIONS OF INSURANCE * HISTORICAL BACKGROUND OF INSURANCE * TYPES OF INSURANCE * HISTORY OF INSURANCE IN INDIA * Formation of Insurance Industry in India * Nationalization of Insurance Business in India * Privatization of Insurance Industry * LEGISLATIONS REGULATING THE INSURANCE SECTOR IN INDIA ------------------------------------------------- CHAPTER 2 FORMATION AND GROWTH OF INSURANCE INDUSTRY IN INDIA INTRODUCTION Insurance is a practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment. Insurance is a social device, to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risks, which can be insured against include fire, the peril of sea, death, incident, & burglary. The aim of insurance is to protect the owner from a variety of risks which he anticipates. Insurance is actually a contract between two parties. A contract of insurance is a contract where one person undertakes to pay another person, a sum of money or its equivalent on the happening of a specified event. And there is an agreed consideration for such undertaking. The person who seeks this protection...
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...2nd Prize Winner – Dr Vinita Rana, NIA, Pune Group Health Insurance Schemes of State Governments Over the last 50 years India has achieved a lot in terms of health improvement. But still India is way behind many fast developing countries such as China, Vietnam and Sri Lanka in health indicators. In case of government funded health care system, the quality and access of services has always remained major concern. The condition of health in a country like India is really bad, generally the expenses are borne by the individuals out of their pocket. The population living below poverty line is very large, and even the APL (Above Poverty Line) population is not able to bear the medical expenses. Below is the data of Indian population based on the economy: India’s Population by Different Expenditure Class, 2004-05 ( NCEUS, Ministry of Labor and Employment, 2009) We have a big poor, marginally poor and vulnerable sector, who are not able to bear their medical expenses.. Most of the low- and middle income economies till recently have relied heavily on Out-Of-Pocket (OOP) payments of households, which are regarded as 1 both inefficient and iniquitous. As a consequence, OOP causes financial catastrophe and impoverishment of vulnerable households. The underlying reasons are that the OOP payments preclude the conditions of prepayment, risk-pooling and cross-subsidization. So, to cater the health related needs of India’s large population we have to have some instrument. Therefore...
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...Q1) How is the insurance market in India changing? Why is india an attractive market for investment Before 2000 the Life Insurance Corporation (LIC) had monopoly in India. The next big company was General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies. The insurance sector went through a lot of phases from being unregulated to completely regulate and then currently being partly deregulated. It is governed by a number of acts. The Insurance Act of 1938 was the first legislation, and then was the General Insurance Business Act of 1972. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited. Indian insurance industry has witnessed an interesting decade when it was open to foreign players for the first time (with a cap of 26%). Prudential, Allianz, Standard Life, New York, AIG and SunLife were some of the earliest entrants, followed by New York Life, Metlife, Aviva, AXA, etc.By 2012 Indian Insurance is a US$41 billion industry. However, only two million people (0.2% of the total population of 1 billion) are covered under Mediclaim...
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...Indian Life Insurance Industry with special reference to LIC of India – Prospects and Challenges Presentation of Pilot Survey To Research Development Committee Kadi Sarva Vishva Vidyalaya Gandhinagar J D Chandrapal 10E0244 - Management Scholar enrolled in PhD program Kadi Sarva Vishva Vidyalaya - Gandhinagar Prof. Dr. A.C. Brahmbhatt – (Guide) Institute of Management - Nirma University, Ahmedabad 382 481, India Mailing Address 7, Krishna flats Opp. Lalbhai Apartment Kiranpark, Nava Vadaj Ahmedabad -380013 Contact Info 9825070933 jdchandrapal@yahoo.com Key words: Life insurance, liberalization, globalization, Competition, Economic Reforms, LIC of India Changing Face of LIC of India in Response to Liberalization Abstract The purpose of this paper is to facilitate the attempts of mapping the change in LIC of India because of liberalization of Indian insurance sector. The insurance sector in India has experienced a 360-degree journey over a period of more than a hundred years. Its transition from an open competitive sector to nationalization and then back to a liberalized market characterizes this phenomenon. Economic reforms have revolutionized insurance sector. The economic reforms started, it leads to liberalization. Liberalization has sparkled a flame of globalization and privatization (LPG). The economic reforms i.e. Liberalization has posed some challenges to LIC of India. In the post liberalization period life insurance business felt...
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...Economic Reforms in India since 1991: Has Gradualism Worked? by Montek S. Ahluwalia* India was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in the wake of an exceptionally severe balance of payments crisis. The need for a policy shift had become evident much earlier, as many countries in east Asia achieved high growth and poverty reduction through policies which emphasized greater export orientation and encouragement of the private sector. India took some steps in this direction in the 1980s, but it was not until 1991 that the government signaled a systemic shift to a more open economy with greater reliance upon market forces, a larger role for the private sector including foreign investment, and a restructuring of the role of government. India’s economic performance in the post-reforms period has many positive features. The average growth rate in the ten year period from 1992-93 to 2001-02 was around 6.0 percent, as shown in Table 1, which puts India among the fastest growing developing countries in the 1990s. This growth record is only slightly better than the annual average of 5.7 percent in the 1980s, but it can be argued that the 1980s growth was unsustainable, fuelled by a buildup of external debt which culminated in the crisis of 1991. In sharp contrast, growth in the 1990s was accompanied by remarkable external stability despite the east Asian crisis. Poverty also declined significantly in the post-reform period, and at a faster...
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...Journal of Economic Perspectives—Volume 16, Number 3—Summer 2002—Pages 67– 88 Economic Reforms in India Since 1991: Has Gradualism Worked? Montek S. Ahluwalia I ndia was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in the wake of an exceptionally severe balance of payments crisis. The need for a policy shift had become evident much earlier, as many countries in east Asia achieved high growth and poverty reduction through policies that emphasized greater export orientation and encouragement of the private sector. India took some steps in this direction in the 1980s, but it was not until 1991 that the government signaled a systemic shift to a more open economy with greater reliance upon market forces, a larger role for the private sector including foreign investment, and a restructuring of the role of government. India’s economic performance in the postreform period has many positive features. The average growth rate in the ten-year period from 1992–1993 to 2001–2002 was around 6.0 percent, as shown in Table 1, which puts India among the fastest growing developing countries in the 1990s. This growth record is only slightly better than the annual average of 5.7 percent in the 1980s, but it can be argued that the 1980s growth was unsustainable, fuelled by a buildup of external debt that culminated in the crisis of 1991. In sharp contrast, growth in the 1990s was accompanied by remarkable external stability despite the east Asian crisis...
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...Research paper on Awareness of Life Insurance In Yeoor Gaon Submitted By Finance- I Roll No: 010103 For the degree of Master of Business Administration Under the guidance of Academic year 2010-2012 Table of Content Sr.no | Topics | Page no | 1 | Executive Summary | 3 | 2 | Introduction | 4 | 3 | Objectives | 6 | 4 | Literature Review | 7 | 5 | Research Methodology | 9 | 6 | Research Outcome | 10 | 7 | Conclusion | 11 | 8 | References | 12 | 9 | Annexure-Questionnaire | 13 | EXECUTIVE SUMMARY The service industry is one the fastest growing sectors in India today. The upcoming sectors which are really showing the graph towards upwards are - Telecom, Banking, and Insurance. These, Sectors have really a lot of responsibility towards the economy. Amongst the above-mentioned areas insurance is one sector, which took a lot of time in positioning itself. The insurance business of non-life insurance companies was not much in problems but the major problem was with life insurance. Life Insurance Corporation, of India had monopoly for more than 45 years, but the picture then was completely different. Previously people felt that “Insurance is only for classes not for masses” but now the picture is vice-versa. This research paper title named “Awareness of Life Insurance Policies is in context of Life Insurance Corporation and its significant presence in the life insurance industry” details, the scope Life Insurance Corporation for which is having...
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