Historical evolution of General Insurance in India
General Insurance in India was nationalized with the General Insurance Business Act of 1972. By this process of nationalization the government of India took charge of about 55 insurance companies in India and about 52 insurers who were in the General Insurance Business.
The general insurance corporation of India saw its inception from Section 9(1) of GIBNA. The main function of the General Insurance Corporation of India was basically supervising and managing the general insurance business in India.
With the formation of the general insurance corporation, all the government shares related to the general insurance was transferred to it. The merger of the general insurance companies led to the formation of the four subsidiaries under the general insurance company of India. They were the National Insurance Company Limited,the New India Assurance Company Limited, The Oriental Insurance Company Limited, United India Insurance Company Limited.
Another turning point in the history of general insurance in India was the the setting up of the Insurance Regulatory and Development Authority Act, 1999 (IRDAA).
The different business activities of the General Insurance Company in India can be detailed under the following heads:
Domestic Reinsurance Business
The General Insurance Company is the only provider of reinsurance in India. It offers reinsurance to the major insurance companies in India. On every policy that is issued the GIC receives a 20% statutory cession. The treaty and facilitative programs of many companies are led by the General Insurance Corporation of India.
International Reinsurance Business
The general insurance company if India has begun to spread its tentacles the world over. They have started to provide reinsurance solutions to the SAARC countries, South East Asia, Middle East and Africa.
Investment and Fund Management
The investments that are made through the General Insurance Corporation of India abide by the Insurance Act and the IRDA Act.
IRDA Regulations on Investment
According to the IRDA regulations the insurer under the General Insurance Corporation should invest his money in the following way:
1.20% of the investments should get channelized into Central Government Securities.
2.30% of the investments should be in state government and other guaranteed securities.
3.5% investment should be made in the housing sector and state government loans.
4.10% of the investment should be channelized to the infrastructure and the social sector.
For further information on General Insurance India, the relevant sites are gicofindia.in, indiastat.com, banknetindia.com, shilpabichitra.com etc.