General Insurance Corporation of India
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Case Details:
Case Code : BSTR111
Case Length : 31 Pages
Period : 1992 - 2002
Organization : General Insurance Corporation of India
Pub Date : 2002
Teaching Note :Not Available
Countries : India
Industry : Insurance
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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General Insurance in India
The history of general insurance dates back to the
industrial revolution in the western countries and the growth of sea-faring
trade and commerce during the 17th century. The concept of general insurance
came to India during the British rule. General insurers from Britain and other
countries carried out the general insurance business.
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In 1928, the Indian Insurance Companies Act was passed to
enable the government to collect statistical information about both life and
non-life insurance business transacted in India by Indian and foreign insurers
including provident insurance societies.
In 1938, the Indian Insurance Companies Act was consolidated and amended by the
Insurance Act 1938 to protect the interests of the public.
The Insurance Act of 1938 was amended in 1950, which resulted in far-reaching
changes in the insurance sector.
These included a statutory requirement of equity capital for companies carrying
on insurance business, ceiling on share holdings in such companies, stricter
control on investments, submission of periodical returns relating to
investments and such other information to the controller..
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The controller could also call for appointment of administrators and put a ceiling on expenses of management and agency commission for mismanaged companies. By early 1970s, there were about 100 Indian insurers carrying on the general insurance business in India.
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Malpractice and mismanagement had crept into the management of these
companies. Some insurance companies either liquidated, or cheated the policyholders. There were complaints of falsification and denial of claims, interlocking of funds and other malpractices by many insurance companies.
To protect public funds, the government started considering nationalization of the insurance industry. In 1971, as a prelude to the nationalization of the general insurance industry, the GOI took over the management of all private general insurance companies. The main objective of this nationalization was to channelise the insurance funds for the benefit of the community at large. |
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