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IntroductionThe journey of insurance liberalization process in India is now over seven years old. The first major milestone in this journey has been the passing of Insurance Regulatory and Development Authority Act, 1999. This along with amendments to the Insurance Act 1983, LIC and GIC Acts paves the way for the entry of private players and possibly the privatization of the hitherto public monopolies LIC and GIC. Opening up of insurance to private sector including foreign participation has resulted into various opportunities and challenges.Concept of InsuranceIn our daily life, whenever there is uncertainly there is an involvement of risk. The instinct of security against such risk is one of the basic motivating forces for determining human attitudes. As a sequel to this quest for security, the concept of insurance must have been born. The urge to provide insurance or protection against the loss of life and property must have promoted people to make some sort of sacrifice willingly in order to achieve security through collective co-operation. In this sense, the story of insurance is probably as old as the story of mankind.Life insurance in particular provides protection to household against the risk of premature death of its income earning member. Life insurance in modern times also provides protection against other life related risks such as that of longevity (i.e. risk of outliving of source of income) and risk of disabled and sickness (health insurance). The products provide for longevity are pensions and annuities (insurance against old age). Non-life insurance provides protection against accidents, property damage, theft and other liabilities. Non-life insurance contracts are typically shorter in duration as compared to life insurance contracts. The bundling together of risk coverage and saving is peculiar of life insurance. Life insurance provides both protection and investment.Insurance is a boon to business concerns. Insurance provides short range and long range relief. The short-term relief is aimed at protecting the insured from loss of property and life by distributing the loss amongst large number of persons through the medium of professional risk bearers such as insurers. It enables a businessman to face an unforeseen loss and, therefore, he need not worry about the possible loss. The long-range object being the economic and industrial growth of the country by making an investment of huge funds available with insurers in the organized industry and commerce.General InsurancePrior to nationalizations of General insurance industry in 1973 the GIC Act was passed in the Parliament in 1971, but it came into effect in 1973. There was 107 General insurance companies including branches of foreign companies operating in the country upon nationalization, these companies were amalgamated and grouped into the following four subsidiaries of GIC such as National Insurance Co.Ltd., Calcutta; The New India Assurance Co. Ltd., Mumbai; The Oriental Insurance Co. Ltd., New Delhi and United India Insurance Co. Ltd., Chennai and Now delinked.General insurance business in India is broadly divided into fire, marine and miscellaneous GIC apart from directly handling Aviation and Reinsurance business administers the Comprehensive Crop Insurance Scheme, Personal Accident Insurance, Social Security Scheme etc. The GIC and its subsidiaries in keeping with the objective of nationalization to spread the message of insurance far and wide and to provide insurance protection to weaker section of the society are making efforts to design new covers and also to popularize other non-traditional business.Liberalization of InsuranceThe comprehensive regulation of insurance business in India was brought into effect with the enactment of the Insurance Act, 1983. It tried to create a strong and powerful supervision and regulatory authority in the Controller of Insurance with powers to direct, advise, investigate, register and liquidate insurance companies etc. However, consequent upon the nationalization of insurance business, most of the regulatory functions were taken away from the Controller of Insurance and vested in the insurers themselves. The Government of India in 1993 had set up a high powered committee by R.N.Malhotra, former Governor, Reserve Bank of India, to examine the structure of the insurance industry and recommend changes to make it more efficient and competitive keeping in view the structural changes in other parts of the financial system on the country.Malhotra Committee’s RecommendationsThe committee submitted its report in January 1994 recommending that private insurers be allowed to co-exist along with government companies like LIC and GIC companies. This recommendation had been prompted by several factors such as need for greater deeper insurance coverage in the economy, and a much a greater scale of mobilization of funds from the economy, and a much a greater scale of mobilization of funds from the economy for infrastructural development. Liberalization of the insurance sector is at least partly driven by fiscal necessity of tapping the big reserve of savings in the economy. Committee’s recommendations were as follows:o Raising the capital base of LIC and GIC up to Rs. 200 crores, half retained by the government and rest sold to the public at large with suitable reservations for its employees.
o Private sector is granted to enter insurance industry with a minimum paid up capital of Rs. 100 crores.
o Foreign insurance be allowed to enter by floating an Indian company preferably a joint venture with Indian partners.
o Steps are initiated to set up a strong and effective insurance regulatory in the form of a statutory autonomous board on the lines of SEBI.
o Limited number of private companies to be allowed in the sector. But no firm is allowed in the sector. But no firm is allowed to operate in both lines of insurance (life or non-life).
o Tariff Advisory Committee (TAC) is delinked form GIC to function as a separate statuary body under necessary supervision by the insurance regulatory authority.
oAll insurance companies be treated on equal footing and governed by the provisions of insurance Act. No special dispensation is given to government companies.
oSetting up of a strong and effective regulatory body with independent source for financing before allowing private companies into sector.competition to government sector:Government companies have now to face competition to private sector insurance companies not only in issuing various range of insurance products but also in various aspects in terms of customer service, channels of distribution, effective techniques of selling the products etc. privatization of the insurance sector has opened the doors to innovations in the way business can be transacted.New age insurance companies are embarking on new concepts and more cost effective way of transacting business. The idea is clear to cater to the maximum business at the lest cost. And slowly with time, the age-old norm prevalent with government companies to expand by setting up branches seems getting lost. Among the techniques that seem to catching up fast as an alternative to cater to the rural and social sector insurance is hub and spoke arrangement. These along with the participants of NGOs and Self Help Group (SHGs) have done with most of the selling of the rural and social sector policies.The main challenges is from the commercial banks that have vast network of branches. In this regard, it is important to mention here that LIC has entered into an arrangement with Mangalore based Corporations Bank to leverage their infrastructure for mutual benefit with the insurance monolith acquiring a strategic stake 27 per cent, Corporation Bank has decided to abandon its plans of promoting a life insurance company. The bank will act as a corporate agent for LIC in future and receive commission on policies sold through its branches. LIC with its branch network of close to 2100 offices will allow Corporation Bank to set up extension centers. ATMs or branches with in its premises. Corporation Bank would in turn implement an effective Cash Flow Management System for LIC.IRDA Act, 1999Preamble of IRDA Act 1999 reads ‘An Act to provide for the establishment of an authority to protect the interests of holders of insurance policies, to regulate, to promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.Section 14 of IRDA Act, lays the duties, powers and functions of the authority. The powers and functions of the authority. The powers and functions of the Authority shall include the following.o Issue to the applicant a certificate of registration, to renew, modify withdraw, suspend or cancel such registration.
o To protect the interest of policy holders in all matters concerning nomination of policy, surrender value f policy, insurable interest, settlement of insurance claims, other terms and conditions of contract of insurance.
o Specifying requisite qualification and practical training for insurance intermediates and agents.
o Specifying code of conduct for surveyors and loss assessors.
o Promoting efficiency in the conduct of insurance business
o Promoting and regulating professional regulators connected with the insurance and reinsurance business.
o Specifying the form and manner in which books of accounts will be maintained and statement of accounts rendered by insurers and insurance intermediaries.
o Adjudication of disputes between insurers and intermediates.
o Specifying the percentage of life insurance and general and general business to be undertaken by the insurers in rural or social sectors etc.Section 25 provides that Insurance Advisory Committee will be constituted and shall consist of not more than 25 members.Section 26 provides that Authority may in consultation with Insurance Advisory Committee make regulations consists with this Act and the rules made there under to carry the purpose of this Act.Section 29 seeks amendment in certain provisions of Insurance Act, 1938 in the manner as set out in First Schedule. The amendments to the Insurance Act are consequential in order to empower IRDA to effectively regulate, promote, and ensure orderly growth of the Insurance industry.Section 30 & 31seek to amend LIC Act 1956 and GIC Act 1972.Impact of LiberalizationWhile nationalized insurance companies have done a commendable job in extending volume of the business opening up of insurance sector to private players was a necessity in the context of liberalization of financial sector. If traditional infrastructural and semipublic goods industries such as banking, airlines, telecom, power etc. have significant private sector presence, continuing state monopoly in provision of insurance was indefensible and therefore, the privatization of insurance has been done as discussed earlier. Its impact has to be seen in the form of creating various opportunities and challenges.Opportunities1. Privatization if Insurance was eliminated the monopolistic business of Life Insurance Corporation of India. It may help to cover the wide range of risk in general insurance and also in life insurance. It helps to introduce new range of products.
2. It would also result in better customer services and help improve the variety and price of insurance products.
3. The entry of new player would speed up the spread of both life and general insurance. It will increase the insurance penetration and measure of density.
4. Entry of private players will ensure the mobilization of funds that can be utilized for the purpose of infrastructure development.
5. Allowing of commercial banks into insurance business will help to mobilization of funds from the rural areas because of the availability of vast branches of the banks.
6. Most important not the least tremendous employment opportunities will be created in the field of insurance which is a burning problem of the presence day today issues.Current ScenarioAfter opening up of insurance in private sector, various leading private companies including joint ventures have entered the fields of insurance both life and non-life business. Tata – AIG, Birla Sun life, HDFC standard life Insurance, Reliance General Insurance, Royal Sundaram Alliance Insurance, Bajaj Auto Alliance, IFFCO Tokio General Insurance, INA Vysya Life Insurance, SBI Life Insurance, Dabur CJU Life Insurance and Max New York Life. SBI Life insurance has launched three products Sanjeevan, Sukhjeevan and Young Sanjeevan so far and it has already sold 320 policies under its plan.ConclusionFrom the above discussion we can conclude that the entry of private players in insurance business needful and justifiable in order to enhance the efficiency of operations, achieving greater density and insurance coverage in the country and for a greater mobilization of long term savings for long gestation infrastructure prefects. New players should not be treat as rivalries to government companies, but they can supplement in achieving the objective of growth of insurance business in india.

Yes, I ran from network marketing every time I was approached. I thought is was all a scam. My background is in advertising and my thoughts were it is not a good product if they don’t hit the shelves and market the heck out of it. Or maybe it is a good product but they are marking the price way up in order to have the compensation plan that network marketing build it’s business plan on. If I were to join the business how could I feel good about selling a product that is overpriced for my benefit? Last year I received an email from a friend of mine that she had left her successful career of 20 years and after some down time was wanting to do something that would allow her the flexibility to work when she wanted and be truly on her own schedule. She said she was getting started with a network marketing company. My jaw dropped to the floor. This was someone I respected and had a special connection with because she was also in the advertising/marketing business that I was in prior to choosing to stay home with my kids. I was always impressed that she was able to maintain such a demanding job, even working from home, and balancing her home life. I knew what that would take and I just didn’t have the drive for it. When I opened the email she had sent to what seemed to be her entire contact list saying I have joined such and such company and I think you should look at it to, I did. Next I immediately typed in network marketing scam on Google and started looking at all of the reasons she should not be doing this. There are articles on why to do it and why not to do it. There is so much information out there but at the top of the list for most common pros and cons I found are this:#1 Reason not to do Network Marketing: Only 3% of network marketers actually make the big bucks.#1 Reason to do Network Marketing: Flexibility in network marketing allows for more income, more time and more opportunity.That alone was reason for me to close the email and forget about it. Nope, not for me. Only 3% of people make the big bucks coupled with my belief of product mark up I’m out. About a month later I get another email inviting me to come taste the product and hear about the opportunity and then she would leave me alone about it. My reply, NO. I go to the “shopping parties” and buy the stuff like jewelry or dishes to be nice and I do like the stuff but I am not going to be made to feel like I need to start this business because you gave me a little wine and cheese as I listened to your pitch. Another invite, another no. Finally someone else that had recently started doing the business with her dropped off some of the product for me to try and a DVD of what it is all about when she attended my son’s birthday party. You know what I thought…Are you kidding me! Why is she doing it, her husband has a successful career as a periodontist? Why, because they really researched what the product was about and truly believed it was beneficial. OK, I will taste it thanks, here is your goody bag from the party Bye Bye. I tasted it. I liked it. I watched the DVD and was intrigued by what they had. I researched the product and what the benefits were. About a week later I told her I would become a consumer of the product because I do like it, my husband likes it and my kids like it. Don’t count on me to be a distributor/builder whatever. We began using it consistently in mid April. I liked it and did feel like it was a good decision for my family. A few months later I started researching the Internet on how to even have a network marketing business.I think in the beginning I was looking again for all of the reasons I should not do this business even though I liked the product. I do not want to be that girl that people think “Oh no, here she comes, she is going to try to sell us”. I also don’t want to sell my opportunity to someone that can’t handle the initial investment just for the hopes that they might be successful. This business is no winning lottery ticket. The odds are stacked against you though like the lottery if you look at the numbers. I don’t want to ever feel like I have taken advantage of someone by getting them to join under me for my benefit only. I don’t want to ruin a friendship or relationship with someone that decides to do this business and doesn’t succeed. These were my ground rules if I was going to do this.In order to be in the top 3% of the network marketers that make the big bucks you must have a duplicatable system. You must also put in a lot of time and effort. If you start researching how to be successful in network marketing you will come across numerous programs that promise you the answer to creating leads, funnel systems, funded proposals and value. The first thing internet marketers, affiliate systems and lead funnel systems will tell you is to not throw out there what company you are with. Create an attraction to get them to register with you for leads. Then after they register with you tell them about the system you are using to build leads and get them to purchase this system. This gives you “up front cash” for you sell them your product on the “back end”. This creates an attraction that has them hunting you rather then the other way around. Personally, that is not the way I feel comfortable working my biz. It does work for people and there is a proven success in it for some. I do solidly believe in attraction marketing but there is more than one way to do this. Again, I wanted to grow my business on my own terms so while I agree with not pushing my company on every Facebook update, Twitter or conversation I am in I am also not going to hide it or keep it a secret. These systems themselves are an MLM. Do they work? Yes, for some people. Again, 3% of the people that join them will make the big bucks and others have some success. This is where I sat back and thought would it be nice to make $5,000, $10,000+ a month that these systems say they can teach you? Would it be nice to have 30 leads a day an automatic pilot? Yes. Is that the way I want to run my business…Join this system, now buy these affiliate products, now drop the opportunity you are with and join mine and duplicate. Any network marketer will tell you the key to success is duplication. Getting people to agree to all of these steps, purchases, systems and products in addition to your original opportunity is hard to duplicate and get everyone else that you recruit to do the same? I did research the 2 of the best known systems out there. I could not comfortably stand behind either system for my personal business strategy although they do have some training that I did learn some great tips on that I share for free on my blog. It is not the way I want to run my business and I think those pie in the sky numbers are building on a hope that only few will achieve. I am not a pro Internet marketer, there is a lot I don’t know about the Internet marketing business, and it is not the business I wanted to go into. The business I did make up my mind to go into is network marketing and it can be enhanced with the Internet, as can any business. I was going to do this on my own terms. I would avoid all of the don’t wants I mentioned above but no matter what in order to grow my business it was clear whatever I did, everyone that joined me also had to be able to do. If they join working with me I have now taken a responsibility in their success. This business will be about what I can do for them. Their success is up to me.Now, there are people that have purchased the product from me and done the auto ship because, like me, they like the product. They are up front with me that they only want to be consumers and that is great! I tell them if they change their mind let me know and I will help otherwise, enjoy the product and thank you. I also tell them that if at any point they would like to work the business just enough to have their monthly product paid for, no problem, let me know and I will help. If someone signs up and really wants to work the business I talk about what their goals are. Again, “their success is up to me” so I need to know what they consider success. Do they consider making an extra $500 a month a success (A little note from my real estate background. Did you know most of the home foreclosures would be stopped if these people had another $500 in their monthly budget to spend.), $1500 a month a success, $20,000+ a month a success? The 3% number I quoted above means success as a Top Achiever or Rank. However, maybe success to them is just a little bit of additional income. Whatever it is, a plan needs to be established to achieve it. There is an investment. Everyone will achieve breaking even at different rates and earning that added income at different rates. “Their success is up to me” and I will give them the honest answers of how to achieve it with a duplicatable system and help them but they will have to put in the work. Network marketing is a business and it will take work.Are you wondering what changed my mind about network marketing in the first place? I worked briefly with the Red Bull account when I was still in the thick of my advertising career and saw the way they went into markets by mainly using word of mouth and focusing their marketing efforts on that. They were not a Network Marketing company but the concept they had when starting out was to get people talking about it. Frustrating when you work in advertising because you want Big Budgets. Big Budgets means commission and pay to you. Instead they just wanted to spend a little on the marketing budget by getting the radio DJs to talk about Red Bull and then be present out at the Radio Events to have people taste the product. They knew that people talking to other people about their product would create a buzz. It would also pay off to be in front of people as they tasted Red Bull so they could personally be there to answer the questions of the consumers directly. Thinking about this all of a sudden it sort of snapped to me that in network marketing essentially the sales people are the marketing budget. All products have mark-ups. As with anything that you or I purchase at out local Target (I love Target) the product is priced not for what it cost to make. There is a pricing strategy for every product that allows for profitability. This strategy involves a list price, an invoice price, a product price. All of this has to factor in company profits to pay employees, marketing budgets, profit loss from theft and on and on. All of a sudden my theory that the products where needlessly marked up to pay the compensation plan became that all products are priced to pay some sort of compensation plan. Network marketing products are the same. The price I would pay for the products I sell is the same price I would pay if they were in the store.Well, with all of that said still for awhile I was embarrassed to admit I might actually like network marketing. I started meeting other network marketers in the company I work with and you know what I realized… There were all kinds of people in this business. I have met people that run successful companies and in addition have joined network marketing because they like the concept and see the potential. Some of the people I met started because they had no other option due to the economy and unemployment. Others are moms like me that love staying home with their kids but miss having something of their own to build or just the relationships that come with working. One gentlemen I met is a successful Executive and he wanted to start a home business for the tax advantages so he and his wife chose to go into network marketing because of the low cost to start the business. I asked him if he was ever embarrassed of what people might think. The answer, No. He didn’t even say anything else but had this look on his face like I asked him in a foreign language and finished off by squirting milk out of my nose. In other words confused by my question and puzzled. It had never crossed his mind. “OK, thanks…oh, my friend is flagging me down, bye, nice meeting you” as I walked off and thought why is it I embarrassed?