2003: A year to remember

Venkatachari Jagannathan
08 January 2004

The year 2003 was an eventful year for the domestic insurance industry-life as well as non life. The notable events during the year were:

• The insurance sector got a new regulator, Mr C S Rao.
  
• A new regulatory authority for the pension sector was set up.
  
• The scare created about the solvency of public sector giant Life Insurance Corporation of India (LIC) later proved to be groundless.
  
• The release of a consultation paper on revision of Insurance Act 1938 by the Law Commission of India.
  
• The announcement of draft regulations relating to the actuaries- The Insurance Regulatory and Development Authority (Actuary) Regulations, 2000 and finally,
  
• A C Mukherji committee report on remuneration of general insurance intermediaries.

The concluding two events have become the cause of an intense argument and hectic debating is on. (See and )

Mr. CS Rao assumed office in June 2003 at a time when the issue of the solvency of the Life Insurance Corporation of India (LIC) was being seriously debated in a few newspapers. The new regulator passed the testing phase by clarifying that solvency margin was just a technical requirement and LIC was quite safe.

Finally LIC of India put all doubts to rest on the solvency issue on its 47th anniversary when it provided Rs 12,329 crore till 31 March 2003 to meet the 100-per cent solvency margin norm stipulated by the IRDA. As the regulations stipulate the provision should be 150 per cent of the minimum solvency margin, the corporation wrote to IRDA asking for five years' time to provide for the balance Rs 5,000-odd crore.

Otherwise it was business as usual for life insurers. The sector saw the market for single premium policies going down and retirement products and group policies gaining acceptance. However the fastest growing segment was the unit-linked business.