Indian insurance industry at the cross road of de-tariffing

Abstract

The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. The liberalization of the insurance industry enabled many private and foreign players to enter the insurance market creating healthy competition by curbing the monopoly of public sector giants. Under the watchful eye of IRDA and Strict tariff regime both the life and general insurance industry flourished. But in the due course of time it is apparent that the strict tariff regime is restricting the growth of the industry and becomes hindrance for the insurance companies to do their business profitably. This led to the proposal of de-tariffing of general insurance sector from 01 Jan 2007. Due to this intense preparedness is carried out by the insurers and regulator to face the new challenges in the new environment. What will be the market dynamics and how the insurers will do their business? What should be role of IRDA and how it is guiding the industry? How the underwriting is going to be changed and how the different stakeholder will able to manage a smooth transition? The study is an attempt in this direction to understand the de-tariffing impact on General insurance industry.