Presenting By: Karansingh. Thakur.

The Governing Law :

The Insurance Act of 1938 was the first legislation governing all forms of insurance in India The Act of 1938 provided strict state control over the insurance sector. The main defect of the Insurance Act of 1938, was that it did not permit foreign re-insurers to function independently in the country .

Foreign insurers were permitted to hold a maximum of 26 per cent stake in a local venture with a minimum paid up capital of Rs 200 crore.

The Insurance Amendment Bill

The Insurance Bill was introduced in the Rajya Sabha in March 2008 under the first UPA government, as part of its financial sector reforms. The Union Cabinet on September 1, 2008, approved the Bill for Comprehensive amendment of insurance laws which proposes to raise the FDI ceiling in insurance sector from 26% to 49 %. The Bill also covers the following; 1. To allow foreign reinsurers like Lloyds of London, to open branches in India. 2. To lower the capital requirement of standalone health insurance companies to Rs. 50 crore from 100 crore. 3. To allow insurance companies to appoint insurance agents, surveyors and loss assessors

Changes in FDI Rules

The Government has decided to review the guidelines for foreign direct investment and has proposed extensive changes in the guidelines. Proposals include;

1. Investment by Indian Companies in which foreign firms have beneficial investment will be counted as direct FDI
2. Investments by companies that are owned and controlled by foreign entities to be considered in calculating indirect foreign investment. 3. Investment by non-resident entities to be counted as FDI.

Interesting Statistics
A well-developed and evolved insurance sector is a boon for economic development as it provides long-term funds for infrastructure development at the same time strengthening the risk taking ability of the country. Nearly 80% of the Indian population is without life, health and non-life insurance The insurance sector in India is a colossal one and is growing at a rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys Gross domestic product (GDP). Insurance Industry in India is worth US$ 30 billion, consisted of Life insurance worth US$ 25 billion and non-life insurance worth US$ 5 billion.

The Indian Insurance market is expected to be around US$ 60 billion by the end of 2011. Investment opportunities exist both in Life and non-life segments as strong economic growth with increase in affluence and rising risk awareness leading to rapid growth in insurance sector.
The expected inflow is likely to create 3 lakh jobs in the sector as more companies are planning to use the additional funds mainly to execute their expansion plans