HISTORICAL BACKGROUND The concept of life insurance started in England during 16th century. The first policy was issued by Richard Martin on the life of William Gybbon in the year 1536 Earlier life insurance business was undertaken in Joint Stock form but later in parliament act was passed in 1712 which allowed the promotion of companies with the object of Life insurance business. There was a slow pace of development in this sector in Europe. The first company in life insurance business was started in 1806 in Germany. The growth of this business was very slow.

LIFE INSURANCE BUSINESS IN INDIA The ancient Indian writers like Manu and Yajnavalkya mentioned about ancient forms of insurance. But the modern concept of insurance came only with East Indian Company in 18th Century. A number of British insurance companies came to India to insure the lives of Britishers working in this country. These companies used to charge very high rates of premium due to higher mortality rates. The first foreign company which started insurance business in India was Oriental Company in 1818. In 1823 a company named Bombay Life started insurance business, then Madras Equitable Company came into existence in 1829.

Continued.... There were 229 Indian Insurance providers and 16 non-Indian insurers by the year 1956 Life insurance business was nationalised in 1956 and life insurance corporation of Indian was established for undertaking this business. mostly the Indian companies have set up joint ventures with foreign companies for entering life insurance business. Some of these companies are: HDFC, Standard Life Insurance Co. Ltd, Max New York Life Insurance Co. Ltd, ICICI prudential life insurance co. Ltd. These companies are registered with Insurance Regulatory and Development Authority (IRDA).

NATIONALISATION OF GENERAL INSURANCE BUSINESS General insurance business was nationalised in 1971 and General Insurance Business(Nationalisation) Act, 1972 was passed to control general insurance business with effect from Jan 1, 1973. The aim of nationalization was to meet national objectives of growth, equity, resource mobilisation, employment generation etc. There were 106 Companies dealing with general insurance business at the time of nationalisation General insurance corporation of India was formed to superintend, control and carry on the business of general insurance.

PROGRESS OF GENERAL INSURANCE SECTOR POST NATIONALISATION Growth of business Wide product range Tariff Advisory committee Taking up socially desirable projects Growth of trade, commerce and industry Expansion of organization network

DRAWBACKS OF REGULATED INSURANCE SECTOR Dissatisfaction of customers Lack of suitable product range Lack of education to customers Emphasis on tax planning instrument Retail business ignored Tardy claim settlement Less emphasis on health insurance

NEED FOR REFORMS IN INSURANCE SECTOR Bringing efficiency in working Growth and customer oriented approach Avoiding losses of general insurance Professional outlook by surveyors Human resource development Need for regulatory body Mobilizing rural insurance Liberation from government controls

ARGUMENTS AGAINST PRIVITISATION OF INSURANCE SECTOR Surplus funds Scope for competition in present set up Long term solvency needed MNC’s to Benefit more Pricing wars Absence of social obligations Large insurance funds Efficiency not linked to ownership

RATIONALE FOR PRIVATISING INSURANCE BUSINESS Size of the market Enough for all companies Low penetration ratio Growth in economy and insurance business Good prospects for rural and social sector Funds for development of economy The regulatory framework More products required Employment generation.

ADVANTAGES OF PRIVATISATION Boon for financial market More options for customers Innovative strategies Cheaper products Source of employment Increased market size Increase in efficiency and productivity

DISADVANTAGES OF PRIVATISATION Price war Dominance of foreign companies No emphasis on social obligations Inclination towards urban sector Misuse of funds Fulfilling vested interests Unhealthy practices

STRATEGIES FOR BETTERMENT AFTER PRIVATISATION Maximising customer Introducing new techniques Improving promotional mix Updating research and development Strategic approach to fund management Diversification Providing zero defect scheme Minimum government interference

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