New private general insurers, in collaboration with large global insurers, started joint ventures in India. Consequently, a significant increase is observed in the general insurance business in India in terms of number of new policies and premiums. The growth is very significant in the case of private players. The segment-wise analysis reveals that the health insurance sector has recorded a remarkable improvement as compared to other sectors. The level of penetration of general insurance, however, is showing a downturn and is far below the world average.

Insurance is recognized as an important area of financial service in the country. It performs a remarkable economic function by transferring risk of loss from one party to another for a price. This is called a premium. Through the medium of insurance, the losses of a small number of persons are compensated out of premium collected from large numbers. Insurance is gaining importance in the modern world because the incidence of risk has increased due to the complexity of the present day economic system. Now, almost all kinds of risk can be the subject matter of the contract of insurance.

Insurance can be broadly classified into life insurance and non-life or general insurance. Life insurance is a contract by which the insurer, in consideration of a certain premium either in lump sum or by other periodical payments agrees to pay to the assured or the nominee, the assured sum of money on the occurrence of a specified event contingent on human life or at the expiry of a certain period. However, general insurance is a means by which the risk of a financial loss, arising from damage to property of the insured is undertaken by the insurer.

The primary purpose of general insurance is to relieve the insured from the financial burden of risk. The general insurance business consists of fire, marine and miscellaneous insurance. Miscellaneous insurance includes all non-fire and non-marine insurance namely, motor insurance, burglary, personal accident, workmen's compensation, aviation, liability, health and engineering insurance.

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