After Independence, for the purpose of expanding the industry, one after another the life and non- life insurance businesses were nationalised by the government (in 1956 and 1970,respectively),and the public sector insurance companies did serve the better purpose in the areas of providing safety net and nation-building.
In the wake of the process of economic refroms a restructuring of the sector was started and the industry was opened for entry of private players in 1999 and an independent regulator was set up—the IRDA (domestic and foreign with an FDI cap of 49
Since then many private players have entered the industry. Presently, Indian insurance industry consists of one public sector life insurer (LIC) and four public sector general insurers; two specialised public sector insurers (AICIL and ECGC); one public sector re-insurer (GIC) and
37 private insurance companies (in collaboration with established foreign insurers from across the world).
The expansion and penetration
insurance in the country have increased during the reform period, but not as per the expectations of the governments and the experts–several reasons