History in Brief

The entire general insurance business in India was nationalised by General Insurance Business (Nationalisation) Act, 1972 (GIBNA). The Government of India (GOI), through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business. General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of GIBNA. It was incorporated on 22 November 1972 under the Companies Act, 1956 as a private company limited by shares. GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance. As soon as GIC was formed, GOI transferred all the shares it held of the general insurance companies to GIC. Simultaneously, the nationalised undertakings were transferred to Indian insurance companies. After a process of mergers among Indian insurance companies, four companies were left as fully owned subsidiary companies of GIC (1) National Insurance Company Limited, (2) The New India Assurance Company Limited, (3) The Oriental Insurance Company Limited, and (4) United India Insurance Company Limited.

The next landmark happened on 19th April 2000, when the Insurance Regulatory and Development Authority Act, 1999 (IRDAA) came into force. This act also introduced amendment to GIBNA and the Insurance Act, 1938. An amendment to GIBNA removed the exclusive privilege of GIC and its subsidiaries carrying on general insurance in India. In November 2000, GIC is renotified as the Indian Reinsurer and through administrative instruction, its supervisory role over subsidiaries was ended. With the General Insurance Business (Nationalisation) Amendment Act 2002 (40 of 2002) coming into force from March 21, 2003 GIC ceased to be a holding company of its subsidiaries. Their ownership were vested with Government of India.

Balance Sheet 2011-12

Balance Sheet as at 31st March 2012

(Rs.'000) Sources of funds 2011-12 Current Year Share Capital Reserve and Surplus Deferred Tax Liability Fair Value change Account Total Application of funds 17,07,27,874 24,76,32,952 43,00,000 7,26,05,078

2010-11

Previous Year

43,00,000

9,39,02,190

18,81,77,072

28,63,79,262

Investments Loans Fixed Assets Deferred Tax Asset Current Assets: Cash&Bank Balance Advances & Ot Assets Sub total (A) Current Liablities Provisions Sub total (B) Net Current Assest (C )=(A-B)

36,94,60,864 49,91,930 4,94,018 50,500

36,69,24,795

59,53,935

4,48,945

15,160

6,91,43,742 9,31,68,102 16,23,11,844 21,34,47,278 7,62,28,926 28,96,76,204 -12,73,64,360

4,75,66,041

7,63,76,758

12,39,42,799

14,76,64,245

6,32,42,127

21,09,06,372

-8,69,63,573

Total Contingent Liabilties GIC Housing Finance Ltd. - Balance Sheet : Finance Industry Housing BSE Code :511676 NSE Code :GICHSGFIN Business Group LTP (Rs.) ISIN No :INE289B01019 :Joint Holding Face Sector Lot Value/M :10.00/1 : 11.26 : 664.79 Cr

24,76,32,952 1,12,85,470

28,63,79,262

1,09,47,692

P/E Ratio Market Cap

You can view latest 5 years Balance Sheet of GIC Housing Finance Ltd. Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 SOURCES OF FUNDS Owners Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus Loan Funds 53.88 53.85 53.85 53.85 53.85 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

443.32 412.48 333.13 294.29 262.47

Secured Loans Unsecured Loans Total USES OF FUNDS Fixed Assets Gross Block Less : Revaluation Reserve Less : Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Miscellaneous expenses not written

2830.962686.442226.912157.981961.49 335.89 400.00 400.00 320.00 150.00 3664.053552.773013.892826.122427.82

12.19 0.00 5.73 6.46 0.00

8.84 0.00 5.52 3.32 0.00

8.04 0.00 4.94 3.10 0.00

7.09 0.00 4.13 2.96 0.00 1.14

6.41 0.00 3.67 2.74 0.00 1.14

10.35 17.61 49.13

4266.533589.573000.392918.782504.72 619.29 57.73 38.72 96.75 80.78 3647.243531.842961.662822.032423.94 3664.053552.773013.892826.122427.82

Total Note : Book Value of Unquoted Investments Market Value of Quoted Investments Contingent liabilities Number of Equity shares outstanding (in Lacs) 0.00 0.00 0.00 0.00 1.14 0.00 0.28 0.00 1.14 0.00 0.39

10.35 17.61 49.13 0.00 2.70 0.00 1.70 0.00 0.34

538.51 538.51 538.51 538.51 538.51

The General Insurance Act (GIA) of 1972 nationalized the general insurance industry of India in order for government to better serve the country's economic needs and those of its citizens. GIA's passage established the General Insurance Corporation (GIC) to control the general insurance industry, which includes all insurance companies that sell products other than life insurance, which is a separate industry. The GIA combined 107 of the country's insurance companies, which were later separated into four subsidiary companies and located in four different cities in India. Read more: General Insurance Corporation Act | eHow.com http://www.ehow.com/about_6303507_general-insurance-corporationact.html#ixzz2KZ21dfQR
Structure of GIC

GIC's main role is to set broad policies to influence and manage the general insurance industry. It functions as a holding company, not as a subsidiary. This means that GIC doesn't sell insurance products, but maintains control over other companies that do sell insurance products through the four subsidiary companies it formed. The only products the GIC sells are insurance policies to the aviation industry, which was a part of government's share of the general insurance industry prior to the passage of GIA. The four

subsidiary companies are known as the Oriental Insurance Company Limited, United India Insurance Company Limited, National Insurance Company Limited, and New India Assurance Company. In addition to these, GIC also formed the Asset Management Company that's responsible for managing the GIC Mutual Fund, GIC Housing Finance, and Export Credit Guarantee Corporation.
Read more: General Insurance Corporation Act | eHow.com http://www.ehow.com/about_6303507_general-insurance-corporationact.html#ixzz2KZ2Xi5TS
INTRODUCTION

Liberalization is an internal process of economic returns. It brings about the conditions of a free market economy. Its adoption differs from one country to another. The developed countries of the West introduced liberalization both in manufacturing and service sectors. Countries with a regimented form of Government like the East European countries initiated privatization of business to attract foreign investments. India has shown caution and restraint in adopting liberalization, but today we are a part of the global village. Liberalization has removed the license raj.

Government control on every aspect of business is reduced. The disinvestment policy of the present government is a pointer in this direction. By removing many of the entry and growth restrictions, liberalization has brought about sea changes in the private sector. In a marked departure from past practice, the private sector now occupies a dominant role. This paper aims at providing the theoretical background of General Insurance Business in India and the growth prospects vis--vis the world economy. General Insurance With a premium of Rs. 11903.75 Crores in April October

2005, the four State-owned general insurance companies still have 73.47 percent of the market, but looked at from another angle, we see that private players have taken 26.53 percent of the market in just 5 years. The State-owned general insurance companies are likely to focus more on retail business. Slow to respond to competition until now, they will see their biggest test in the next few years. As the competition intensifies, underwriting, customer service and product innovation will be key differentiators. In India, The General Insurance Business (Nationalisation) Act, 1972 nationalized 107 general insurance companies business. Accordingly the General Insurance Corporation of India functioned with the following subsidiaries.

General Insurance Company Ltd. New India Assurance Company Ltd. United India Insurance Company Ltd. & Oriental Insurance Company Ltd.

After the implementation of the Insurance (Amendment) Act 2002, private players have been allowed to conduct insurance business in India. The public sector units in the general insurance industry have a good past performance: they have a reliable profit and dividend paying record accompanied by a steady growth in financial resources. They have contributed enormously to the development of the country by investments in the Government and socially oriented sectors. They are collectively recognized as one of the largest financial institutions in the country. The ventures initiated by the

industry in the area of Mutual Funds and Housing Finance have done exceedingly well in recent years. General Features General Insurance business in India has the following features:

Simple products catering to basic needs Low market penetration More direct business and lesser dependence on intermediaries Ever growing middle class component in population Growth of consumer movement with an increasing demand for better insurance products

Inadequate application of Information Technology for business Government support in the form of tax incentives to the insured Majority of the current demand for general insurance comes from the corporate segment.

The Indian insurance sector has completed a full circle after the opening up for private participation. The sector dominated by General Insurance Corporation of India and its subsidiaries since nationalization has started looking different now. The regulator has issued more than a dozen licenses and some of them are already operational. With the entry of new players, most of them having a joint venture partner from abroad, the methods and practices in dealing with the business are also likely to undergo a vast change. Internet, new distributions

channels would impact the way insurance business is transacted today. The market is large and the untapped potential is very large. Therefore, existing and new players are gearing up to have a larger share in the market. Although the public sector companies dominate the general insurance business, the private players are slowly gaining a foothold. Current Major Issues of the Insurance Sector While the public sector insurers were managing insurance business profitably, there was a certain perceived gap in the areas of professionalism, service, issue of documents etc. On the other hand, the new players are setting high standards in the area of high-grade service. With the rapid computerization of the insurance sector, the existing players

are also trying their best to improve the service. However, some issues facing insurers, old and new alike, are

Convergence of banking and insurance (Bancassurance) Ever-changing Technology Emergence of new distribution channels Slow pace of economic acceleration Underwriting losses Changing customer perception Evolving regulations

Global Trends in Insurance The trends in Global insurance include the following:

Convergence with banking services Mergers and Acquisitions Bank Assurance

E-banking and insurance Emergence of new finance linked products such as derivatives High market penetration Existence of savings linked products Brokers, agents and other intermediaries playing an important role Existence of managed healthcare and pension products

Scope of Insurance Sector in India The Indian insurance scene is going to be drastically different. Things are not static any more. Every day brings in change in the form of opening of a new insurance company, new products, new marketing methods/ channels, mergers etc. A strong regulatory and development authority is in place to

take care of the changes and ensure orderly growth of the market. The insurance sector will experience.

Enhanced awareness through education and publicity Greater use of information technology Better products Better service to customers Benchmarking with global standards

Looking at the substantially low level of insurance penetration, there is great potential for insurance in India. The existing players have been fairly successful in catering to the needs of the organized sector and the general requirements of the economy. However, there appears scope in the personal lines of business. There is also scope for increasing penetration in rural India and the upcoming towns.

Agricultural Insurance also offers opportunities. There is huge scope for savings-linked insurance and pension business. Conclusion The public sector insurance companies are definitely facing challenges as private insurance companies are competing powerfully in corporate segments. With the opening up of the sector, the Indian insurance Industry is becoming more reliant on technology. New products will be developed and intermediaries will play a more meaningful role. And the Indian insurance sector, by strengthening technological improvements, can bridge the gaps in services offered, bring in prudential norms and ultimately help the customer in getting world class products and services. In addition, the

Public Sector companies can venture into untapped rural potential for which they have a very vast network of officers and trained manpower. Insurance needs to be packaged in such a form that it appears acceptable to the rural customer. In the near future, when we see more innovations in agriculture in the form of corporatization, or a more professional approach from farmers, insurance will definitely be one option that the Rural Indian looks at it is his future.