Twenty two years and we finally seem to be reaching a singularity touch point, to borrow from Ray Kurzweil, in the Insurance industry. In the next couple of years, technology would probably be inseparable from insurance; technology would have affected the way insurance is sold, the way it is serviced and everything in between.
But when did we get here? When was the foundation for insurance laid, and when were the organizations/ bodies that act as the guiding light today incorporated? When were tariffs introduced, and when was the sector de-tariffed.
What’s on this page?
Here’s a timeline of the Indian insurance sector:
| Chronology of Events with regard to Indian Market practices through entry of private players in insurance sector till 2022 | ||
| Year | Events / Milestones | |
| 1955 | Incorporation of Insurance Institute of India, an institution formed for promotion of Insurance Education & Training. | |
| 1968 | Tariff Advisory Committee is set up as a statutory body under Insurance Act 1938; the committee functions till 2002 when it is superseded by IRDA. | |
| Jan-73 | Non-life insurance business is nationalized. | |
| 1979 | Unification of four regional Fire tariffs into All India Fire Tariff. | |
| 1980 | National Insurance Academy is established by MoF / Govt of India, LIC of India, GIC of India and PSU Insurers in Pune. The Institute functions as the pivotal supply of industry informed graduates alongside providing knowledge based learning for senior executives. It also acts as an academic repository and guiding light. | |
| 1994 | Detariffication of Marine Cargo, Aviation, PA, Health; Marine Cargo rates are dropped by 90%. | |
| 1999 | Insurance Regulatory and Development Authority, a statutory regulatory body is formed, in anticipation of the opening up of the Insurance sector to private participation. | |
| 2000 | Indian Insurance sector is opened for setting up private companies (with 26% FDI) | |
| 2001 | IRDA of India (IRADAI) is constituted under the General Insurance Council, in 2001, under section 64C of Insurance Act 1938 | |
| 2001 | Insurance Brokers Association of India is incorporated under section 25 of the Companies Act 1956. | |
| Mar-01 | All India Fire Tariff (AIFT) is amended to a simpler one risk one rate basis. | |
| 2002 | Institute of Insurance and Risk Management (IIRM) is established by IRDAI & Govt of Telengana. | |
| Feb-03 | First set of 11 Insurance Brokers are issued license to operate. | |
| 2005 | Marine Hull is de-tariffed. | |
| 2005 | Indian Institute of Insurance Surveyors and Loss Assessors is established under section 25 of the Companies Act 1956 | |
| 2006 | Institute of Actuaries of India is established under the Actuaries Act 2006; Actuarial Society of India is dissolved. | |
| Jan-07 | Fire, Engineering, Motor (except Motor TPL), Workmen Compensation, Public Liability are de-tariffed. These Lines of Businesses form about 2/3rds of the Gross Premium underwritten in India till then. IRDAI permits upto 49% discount on Fire, Engineering covers and upto 20% on Motor Own Damage (OD). | |
| Rates get dropped by 49% on Fire & Engg and 20% on Motor OD premium, following guidelines. It is a bloodbath as there doesn’t seem to be a bottom to where Insurers can go to acquire business. | ||
| Jan-08 | Ceiling on discount (49% for Fire & Engg & 20% for Motor OD) is removed by IRDAI. | |
| Introduction of File & Use guidelines to apply actuary-certified rates for each Insurer. | ||
| Rates are further dropped and drastically so, upto 90% on Fire and Engineering and about 60% on Motor. | ||
| 2009 | Insurance Information Bureau is established by IRDAI and registered as an independent society in 2012. The body is established as a data repository to collect and store accurate data for the industry. | |
| Apr-11 | IRDAI declares that Motor Third Party (TP) premium would henceforth be amended on an annual basis instead of once in 4/5 years as was the standard practise till then. | |
| TP rates for Motor start rising annually as fixed by IRDAI effective 1st April of subsequent years. | ||
| To counter this rise, Insurers start discounting OD rates even further, sometimes charging just about Rs. 100 as an OD premium for a Sum Insured of Rs. 5 L. | ||
| GI Council announces common minimum policy excess /deductibles for all Property & Engineering policies. | ||
| GI council announces minimum net rates (nil discount basis) for STFI and EQ perils under Fire and Engg policies. | ||
| All Insurers follow these without any violation | ||
| Apr-16 | IRDAI permits Banks to tie up with upto 3 Insurers to solicit life/ non-life & health businesses. | |
| 2016 | IRDAI prohibits Banks from soliciting businesses where Sum Insured is above Rs. 5 Crores; instructs Insurers to stop paying commissions on such policies. | |
| Jul-17 | IRDAI announces IIB Burning cost rates (Loss Cost basis) for Fire insurance rating for 109 occupancies for the Indian market; all Insurers do not follow suit immediately. | |
| Dec-18 | GI Council announces amendments in NATCAT rates (STFI and EQ) with increase in various occupancies; all Insurers follow suit immediately. | |
| Apr-19 | GIC Re imposes Treaty restrictions on 8 high risk occupancies if IIB rates are not charged; the 8 occupancies being Power plants, Chemicals, Rubber goods, Textiles, Steel industries, Warehouses of Transporters and Warehouses for storage of Category III goods ( hazardous and flammable items). | |
| Jan-20 | GIC Re imposes IIB rates as mandatory for cession to Treaty in respect of 291 occupancies; all Insurers with GIC Re as Lead Treaty Reinsurer are forced to follow. | |
| Feb-20 | GIC Re imposes NATCAT rates for high risk occupancies – Roads, Pipelines, Railway tracks and T&D lines – STFI 1.5 ‰ & EQ 0.225 ‰, Cellular network risks – STFI 0.25 ‰ & EQ 0.225 ‰; all Insurers follow suit. | |
| Apr-21 | De-notification / withdrawal of SFSP policy for all Dwellings and all other occupancies below Rs 50 crores Sum Insured & Introduction of new breed of policies – Bharat Griha Raksha – for Home Building & contents, Bharat Sookshma Udyam Suraksha – for all occupancies with Sum Insured below Rs 5 Cr & Bharat Laghu Udyam Suraksha – for occupancies other than above , with SI between Rs 5 Cr ~ Rs 50 Cr. In the absence of any guidelines on rates for the three products, the current market discounting on these stands at around 60-70%. | |
| May-21 | Government increases FDI limit in private insurance companies to 74% from 49% | |
While the growth unto this point has been linear, brace yourself, for the next couple of years’ promise to transform the industry in ways that would make it unrecognizable from the past.
