Public Sector General Insurance Companies in India: Performance Trends

Abstract

A robust system of financial intermediaries has always been perceived as an indispensable requirement of for economic development of underdeveloped countries.  A comprehensive network of such intermediaries has been developed in India since it gained independence. The General Insurance Corporation of India is one such financial intermediary. In the year 1972 the general insurance business was brought under the control of government of India. The General insurance corporation was established as a government company with its four subsidiaries namely the National Insurance Company, the New India Assurance Company, the Oriental Insurance Company and the United India Assurance Company. In December 1999 the sector was opened up to private participation. While in March 2003 the subsidiaries were delinked from GIC. Whether the increased competition from private players has improved the performance of these companies or still there is a lot more to be desired is what has been analysed in this paper.

The performance of public sector general insurance companies has been studied in terms of (i) incurred claims ratio, (ii) solvency ratio and (iii) insurance penetration and density during the period of eight years from 2013-14 to 2020-21.  Results showed that New India is performing better than the other three public general insurance companies. United and National are having large volumes while Oriental despite being lower in volume is showing higher growth rates of majority of the variables under study. The steps that have been taken during the reform period have been able to achieve the objective to a certain extent but still there is a scope for a lot of improvement as these companies are still behind the private sector insurance players and very far behind the world average.