2022 A Year Of Firsts For Insurance Space General Insurer Privatisation

2022 A Year Of Firsts For Insurance Space General Insurer Privatisation

MABARSPORT - The government would use the new general insurance law to push for the privatisation of a state-owned general insurer and the massive first share sale of LIC in 2022.

Assertiveness in the planned pioneering measures will materialize necessary budgetary promises even as worries about the pandemic scenario and its likely influence on a recovering economy continue.

Parlement passed and enacted the General Insurance Business (Nationalisation) Amendment Act, 2021 in August this year. National Insurance Company Ltd, New India Assurance Company Ltd, Oriental Insurance Company Ltd, and United India Insurance Company Ltd are all public corporations.

The modified law abolished the requirement that the central government own at least 51% of a selected insurer. It also aims to increase insurance penetration and social protection, among other things.

In her Budget speech, Finance Minister Nirmala Sitharaman announced the sale of two public sector banks and one general insurer.

This year, the government intends to earn Rs 1.75 lakh crore through selling holdings in PSUs and financial institutions.

IPO LIC

As part of its financial sector privatization agenda, the government has decided to list the Life Insurance Corporation of India (LIC) in the current fiscal. The state-owned behemoth's appraisal is taking longer than expected, and preparation work is far from complete.

The scale, product mix, real estate assets, subsidiaries, and profitability sharing structure of LIC make appraisal a difficult procedure. Regulatory processes must be followed after valuation.

The Cabinet Committee on Economic Affairs (CCEA) approved LIC's listing in principle in July. The government has already assigned ten merchant bankers.

The government amended the Life Insurance Corporation Act, 1956, earlier this year to make listing easier. The federal government will retain at least 75% of LIC for the first five years following the IPO, and then at least 51% afterwards.

LIC is now owned 100% by the government.

According to the new law, LIC's authorized share capital is Rs 25,000 crore, split into 2,500 crore Rs 10 shares. Policyholders will be entitled to up to 10% of the LIC IPO. LIC is expected to become one of the most valuable domestic corporations once public, valued at between Rs 8-10 lakh crore.

India is still ranked 10th globally in terms of life insurance. Indian contribution of global life insurance market was 2.90 % in 2020, according to Insurance Regulatory and Development Authority of India annual report (Irdai). In 2020, life insurance premiums in India grew by 0.6% (-1.2%) while worldwide premiums fell by 3.1%. (-4.4 per cent inflation adjusted real growth).

India is ranked 14th globally in non-life insurance, with a market share of 0.77 percent in 2020.

Insurance penetration and density are two indicators typically used to analyze a country's insurance development. Insurance density is the ratio of premium to population, whereas insurance penetration is the proportion of premium to GDP (per capita premium).

The country's insurance penetration climbed from 3.76 percent in to 4.20 percent in, the survey showed.

The country's insurance density remained at USD 78. The insurance density increased from USD 11.50 to USD 64.40 in a year. The life insurance market earned Rs 6.29 lakh crore in premiums, compared to Rs 5.73 lakh crore the previous year, a 9.74 per cent increase. The life insurance business made Rs 8,661 crore profit after tax in vs Rs 7,728 crore in 18 of the 24 active life insurers made money last year.

The general insurance market wrote a total direct premium of Rs 1.99 lakh crore, up from Rs 1.89 lakh crore the year before, a 5.19 per cent increase.

Rakesh Jain, CEO of Reliance General Insurance, says technology will drive corporate change in 2022.

He stated that partnerships with fintech/insurtech companies would be critical to bringing the uninsured into the insurance ecosystem and making insurance available to all Americans. "We must also concentrate on personalised risk solutions to better meet our clients' shifting needs. Customer-centric distribution would make the process simple, easy, and quick "explained

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