INSURANCE REFORMS

Under the process of economic reforms an Insurance Reforms Committee (IRC) was set up in April 1993 under the chairmanship of the ex-RBI Governor R. N. Malhotra. The committee handed over its report (January 1994) with the following major suggestions:4

(i) Decontrolling insurance sector, i.e., allowing Indian as well as foreign private sector insurance companies to enter the sector (the government did it in 1999 passing the IRDA Act).

(ii) Restructuring the LIC and the GIC and cutting down the government’s holding in them to 50 per cent (no follow up still, but the private insurance companies demanding it anxiously. The NDA government had taken steps in this area, but the UPA government has no such plans.) Late 2012, the government started sale of the LIC shares but to public sector undertakings—seen as a welcome move.

(iii) Delinking GIC and its four subsidiaries (which was done in 2000).

(iv) Discarding the system of licensing of surveyors by the controller of Insurance.

(v) Restructuring the Tariff Advisory Committee.

(vi) Setting up a regulatory anthority for the insurance industry (the IRDA set up in 2000).