Essay on Insurance Regulations and its Impact. The advent of economic reforms in 1991 related to public enterprises, trade and commerce, industry and even tax reforms, created a lot of controversy relating to the Insurance sector. So the R.N. Malhotra Commission was set up to suggest reforms and regulations in this sector, in April 1993.
The Malhotra Committee submitted its report to finance ministry suggesting privatization of insurance service and setting up of a Regulatory Body in January 1994. However the Congress Government and the subsequent Janata Government failed to push through the reformatory Bill, too busy with their own survival. It was finally pushed through by the present incumbent BJP Government.
In India, Insurance had always been a national monopoly. The Life Insurance Corporation was created in 1956 by amalgamating 245 private sector insurance companies and the General Insurance Corporation was crated in 1973. Both were monopolistic bodies when this sector was opened to private players with a minimum capital required of Rs. 200 crores. The money invested in Life Insurance was supposed to be utilized for planned economic development of our nation. This was one of the objectives of nationalization and while investing these public monies which were held in trust, the Corporation was to keep national priorities and reasonable returns as their prime objectives.
The Insurance Regulatory and Development Authority Act of 1999 has notified the IRDA Regulations 2000 and is now the monitoring body to control the entire insurance business similar to the Reserve Bank of India controlling the entire Banking System in our country. The bill was earlier introduced by the Janata Government in the Parliament but was allowed to lapse.
The reason for setting up this body was the numerous complaints received in a service industry like Insurance business where overwhelming importance ought be given to customer service. It was also felt that the policy followed by...