General Insurance

In India General Insurance business started, Marine Insurance started on the later part of the 17th century. Before nationalization in 1947 we have 147 insurance companies, foreign and Indian both. But during there nationalization, in 1973 we have 107 companies that merge into four companies, i.e. taken over by Government.
General Insurance Corporation of India (GIC) was set up in 1973 as a holding company, with four subsidiary operating companies- National Insurance co. Ltd., New India Assurance Co. Ltd., New India Assurance Co. Ltd., oriental Insurance co. Ltd. and United India Insurance Co. Ltd., with a clear cut mission as set out in the Act.

What is the overall scenario in the insurance market in India after nationalisation?

GIC and its subsidiaries function through a vast country - wide network of around 4100 offices spread across the length and breadth of the country, GIC has taken the benefit of insurance to almost every district, across hilly terrain and often inaccessible areas of the country. The customer- interface is made easy through a network of agents, development officers and employees at Branch, Divisional and Regional offices as well as at the corporate level.
The GIC and its subsidiaries have a workforce of approximately 86,000 in 1973 tainted at various levels through in house training institutions. Now the total number of employees went up. The industry has also promoted the National Insurance Academy (NIA), which is the premier training institute in insurance , catering not only to Indian nationals but also to select foreign nationals. The industry issues around 23 million documents and settles 2 million claims every year. Country wide computerization in the recently past has made the task of policy - holder's servicing easier and rapid. At the same time, profitable lines and premium components increases, and we became a investment company.

Where does Indian Insurance sector stand compared to International Insurance Sector?

Technologically, Indian insurance sector is quiet comparable with the international sector. Our vast resources of skilled and technical manpower, huge market potentiality and technical know-how - all are comparable with the international market. But lacking in the process of computerization and in pricing (premium rate) are also seen. In product, we have demand in less because lack of awareness for adequate insurance cover in India with insuring public. Our marketing strategy are not very modern. But we are trying to rectify both these (Technology and Marketing) areas.

What are the problems faced by Indian Insurance Sector today?

The main problems are-

Lack of awareness for insurance needs.
Lack of penetration due to inadequate marketing/delivery system.
Total computerization still in the process of implementation.
Sophisticated covers do not have adequate demands because of general attitude to insurance in India.

What about the schemes?

Recognizing its organizational strengths, the Govt. of India has also entrusted the corporation with the administration of various schemes for social amelioration and public welfare. Social security schemes benefiting millions of citizens below the poverty line. Personal Accident Insurance and Hut Insurance are operated all over the country for which the premiums are paid by the Government .The GIC administers on behalf of Government, the crop Insurance scheme for areas and crops notified under the crop Insurance Scheme. Various low cost mass insurance policies have been evolved over a period of time, e.g. `Jan Arogya Bima Policy'.

What role General Insurance Industry is playing in the growth of economy of the country?

The General Insurance Industry has an enviable track record among public sector units. It has a consistent profit and dividend paying record accompanied by a steady growth in its financial resources. Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nation's development. The industry is recognised as one of the largest financial Institutions in the country. The ventures initiated by the industry in the areas of Mutual Fund, Housing Finance have done exceedingly well in recent years.
To protect the country's foreign exchange reserves, the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders. The GIC'S inwards reinsurance wing, called the SWIFT, maximizes the foreign exchange balance by acting as an international insurer accepting risks from all over the globe.

What about GIC'S international operation?

GIC'S international operations span over 31 countries around the globe. The reinsurance expertise built over a long period has made the Indian Insurance Industry a globally acknowledged reinsurer of repute GIC'S risk management skill has been backed by specialists with a vast insurance experience. Thus, the technical and underwriting skills have been acknowledged in the international market. The corporation operates in 17 countries through branches and agencies, whereas in another 14 countries, it has subsidiaries and associate companies. The GIC has a subsidiary company known as `India Internation Pvt. Ltd.', operating in Singapore and a joint-venture company, `Kenindia Insurance co. Ltd. in Kenya.

What is the impact of liberalisation of economy in the activities of GIC?

With the liberalisation of economy, General Insurance in India is poised for a quantum jump, both in quality and quantity.

What is your vision for the future?

In the projected vision for 2001, it is estimated that the industry will outstrip the present rate of growth and reach a premium value of over Rs.1,20,000 millions by taking advantage of the extra-large mega-risks and social awareness of insurance in general, even as a developing country turns into a developed country. The task before the industry to service the growing number of policy-holders would equally see a quantum jump in issuance of documents and settlement of claims. Matching reserves and consequent investment will be a natural corollary. It is expected that the investment portfolio will touch around Rs. 2,50,000 millions by the end of the next decade, with the strength built up over the years since nationalisation, GIC new looks to the future with confidence and optimism, takes on global challenge with its high standard of service, innovative initiative and a compelling social perspective.

Does GIC have any plan to enter in the new business areas?

The two new areas that GIC is getting into are the areas of health care and crop insurance. For the health care business, the corporation has received permission to set up a separate management services company. GIC has plans to increase the scope of cover in health care, personal accident and crop insurance and will require expertise in pricing the products.

What about the Research & Development activities?

We have just started to do something in these areas and for the coming five years we are investing approximately 500 crores. GIC'S R & D cell is created backed up market research data.

Is the subsidiaries are becoming an autonomous body?

Yes.

Privatisation in the insurance sector of India- Is it in the right direction?

It's purely a government decision but if it is opened, the nationalised sector will be ready to face the challenge. We will survive well and preparing our subsidiaries for the stiff competition.