The life insurance business in India has witnessed rapid transformation since 1999, when this sector was thrown open to the private sector. Today, we have 23 companies engaged in this business, many of which are joint ventures involving foreign firms. There is a dramatic change in the numbers and variety of insurance products on offer, and the ways in which they are marketed and distributed.

The life insurance market in India is undergoing tremendous transformation. The market has progressed a great deal from the pre-liberalization era, when there was only one player, the government-run LIC (The Life Insurance Corporation of India Ltd.), to the present situation where there are 23 companies. LIC is the market leader and there are now 22 other companies in the private sector.

During the pre-liberalization era, life insurance grew at a very slow pace - with only one company enjoying monopoly. LIC was a government organization formed in 1956 by merging 256 companies. The purpose was to provide life insurance coverage to the Indian population and design and develop products/policies to suit the needs of Indians, who included a mix of the poor and the rich, with more of the former. LIC has contributed a lot towards building awareness about and developing the life insurance business in India. LIC's efforts were commendable, but it lagged behind international developments and standards, in terms of both products and services. The average penetration of life insurance globally was 3.92% in 1999, whereas in India it was only 1.42%.

All this led the Government of India to rethink about the structure of the life insurance industry and in this context, various committees such as the Malhotra Committee, Mukherjee Committee, etc., were appointed. Going by the recommendations of these committees, the life insurance sector was finally opened up to private companies in 1999. The first private company to commence operations thereafter was HDFC, in a joint venture with Standard Life of the UK. Following thereon, in just about a decade, many other companies have joined the fray to grab a slice of the Indian life insurance market. The growing interest of private companies in India's life insurance business can be gauged by the fact that there are now 22 private players, in addition to the public sector LIC. Most of the private companies are joint ventures of Indian companies with international insurance and financial service business houses, which again brings to fore the immense potential offered by the Indian life insurance market.

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