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It is obvious that reforms in financial sector would not be complete if one of the key sub-sectors, viz., insurance sector is not being taken along. Therefore, the Government of India had appointed a Committee on Reforms in the Insurance Sector under the Chairmanship of Late R.N. Malhotra (known as Malhotra Committee) in 1994. There has been significant time lag between reforms in the insurance sector and the rest of the financial sector, mainly in comparison with the banking sector. Incidentally, the experiences with various other countries were also very similar. However, subsequent implementation of Malhotra Committee’s far reaching recommendations, the insurance sector had undergone wide changes during the later 1990s and 2000 onwards and of which only a few developments are projected here. IRDA was recognized in the year 2000 as a restricted Regulatory Authority for the insurance sector through the enactment of IRDA Act, 1999. A number of amendments were brought in different insurance related statutes, viz., Insurance Act, 1938, LIC Act, 1956 and General Insurance Business Nationalisation Act, 1972 (GIBA).
The Progress in the developments as a whole in the insurance sector was quick and more prominent after the establishment of IRDA. The four public sector non-life insurance companies were de-linked from being subsidiary of the General Insurance Company of India. Now they activate independently and compete with each other. The outcome of these developments was the breakage of monopoly by public sector in the insurance sector paving the way for the access of private entities into the insurance market and the era of competition set in with accessibility of wide range of insurance products in the market than ever.