In Ramesh Singh’s Indian Economy, insurance is defined as a measure to reduce risk by providing coverage for life or assets in exchange for fixed premiums. Below is a summary of the sector with mnemonics to help you memorise key concepts, followed by a practice Q&A.
Insurance in India: Key Concepts & Mnemonics
- Evolution & Structure: Life insurance was nationalised in 1956 (forming LIC), and general insurance in 1972 (forming GIC). The sector opened to private players in 2000 following the Malhotra Committee recommendations.
- Regulatory Body: The IRDAI (Insurance Regulatory and Development Authority of India) was established in 2000 to regulate, develop, and supervise the industry.
Mnemonic: R.E.A.D. to grow the sector
Use this to remember the four core areas of insurance discussed by Ramesh Singh:
- R – Reinsurance: Insurance for insurance companies to manage high financial risks.
- E – Evolution: The shift from nationalisation (1956/1972) to liberalisation (2000).
- A – AICIL: Agriculture Insurance Company of India Limited, focusing on farmers and schemes like PMFBY.
- D – Density & Penetration: Benchmarks for measuring growth (Premium/Population and Premium/GDP).
Mnemonic: J.J.K.M. for Social Schemes
To remember major social insurance schemes highlighted in the text:
- J – Jana Shree Bima Yojana: Covers natural and accidental death.
- J – Jald Rahat Yojana: For road accident victims.
- K – Krishi Shramik: Social security for agricultural workers.
- M – Mediclaim: Policies covering medical expenses.
10 Questions & Answers with Mnemonics
1. Q: Who recommended opening the insurance sector to private players?
- A: The Malhotra Committee (1993-94).
- Mnemonic: “Insurance needs a Mal (Money) Hotra (Growth) strategy.”
2. Q: What is the difference between Insurance Penetration and Density?
- A: Penetration is Premium/GDP; Density is Premium/Population.
- Mnemonic: “P-G and D-P” (Penetration-GDP, Density-Population).
3. Q: What is Reinsurance?
- A: When an insurance company buys insurance to cover its own risks.
- Mnemonic: “Safety for the Savior” (Protecting the protector).
4. Q: What is Third-Party Insurance?
- A: Mandatory vehicle insurance covering legal liability for death or damage to others, not the owner.
- Mnemonic: “Me, You, and the Other” (It’s for the ‘Other’).
5. Q: When was LIC nationalised?
- A: 1956.
- Mnemonic: “L-I-C is 56” (Life is 5-6 letters if you count ‘insure’).
6. Q: What is the role of DICGC?
- A: It protects bank depositors if a bank fails.
- Mnemonic: “Bank-D-Safe” (Deposit-Insurance-Credit-Guarantee).
7. Q: What is Micro-insurance?
- A: Small-premium insurance for low-income groups, often tied to micro-finance.
- Mnemonic: “Small Pay, Big Stay” (Small premium for stability).
8. Q: Which scheme provides ₹2 lakh accidental death cover for a ₹20 premium (updated)?
- A: Pradhan Mantri Suraksha Bima Yojana (PMSBY).
- Mnemonic: “Suraksha (Safety) for 20.”
9. Q: What is the purpose of the NEIA?
- A: National Export Insurance Account provides credit insurance to exporters for high-value projects.
- Mnemonic: “Export-Expert” (Helping experts export safely).
10. Q: What are the twin objectives of insurance nationalisation in India?
- A: Social security and mobilising savings for nation-building.
- Mnemonic: “S-S” (Social-Security and Savings).
Would you like more mnemonics for other chapters like Banking or Inflation from Ramesh Singh?
8 sites
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Definition. In economic terms, insurance refers to any measure taken to reduce risk. In everyday language, insurance is provided b…
EduRev
- Ramesh Singh Summary: Insurance in India- 2 – EduRev24 Jan 2024 — Introduction. Insurance plays a pivotal role in mitigating financial risks and fostering economic stability. In the context of Ind…
EduRev
- Ramesh Singh Economics | Lec 15: Insurance | Indian …21 Mar 2025 — देखो दो टाइप टाइप के स्पेशलाइज्ड इंश्योरेंस सर्विस होती है एक है माइक्रो. इंश्योरेंस और एक है. रीइशोरेंस. माइक्रो इंश्योरेंस मतलब …
YouTube·NIRNAY IAS by Testbook
59:36
Show all
Defination
In the context of
Ramesh Singh’s Indian Economy, insurance is defined through two lenses: functional and economic.
The Definition
Insurance is a risk management tool where an individual or entity transfers the risk of a potential loss to an insurance company in exchange for a fee, known as a premium.
- Functionally: It is a contract (policy) that provides financial protection or reimbursement against losses from specific contingencies (like death, accident, or crop failure).
- Economically: It is a process of mobilizing small savings from the public and channeling them into long-term investments for nation-building (infrastructure, etc.).
Mnemonic for the Definition: P.R.I.C.E.
Use this to remember the five pillars of the insurance definition:
- P – Premium: The fixed amount you pay regularly.
- R – Risk Transfer: Moving the “burden of loss” from you to the company.
- I – Indemnity: The promise to compensate for the loss (making you “whole” again).
- C – Contingency: It only pays out if a specific “event” (death, fire, accident) happens.
- E – Entity: The contract between the Insurer (Company) and the Insured (You).
Key Ramesh Singh Fact
Ramesh Singh emphasizes that in India, insurance is not just about “protection” but serves as a vital Financial Intermediary that helps the government fund long-term projects because insurance money is “patient capital” (it stays with the company for 20–30 years).
Would you like the definition of Insurance Penetration vs Insurance Density as well?
yes
In Ramesh Singh’s
Indian Economy, these two benchmarks are used to measure the growth and level of development of the insurance sector.
1. Insurance Penetration
- Definition: The ratio of total insurance premiums collected in a year to the country’s Gross Domestic Product (GDP).
- Formula:
.
- Significance: It reflects the importance of the insurance sector relative to the overall size of the economy. In India, this has risen from roughly 2.7% in 2000 to around 4% in recent years.
2. Insurance Density
- Definition: The ratio of total insurance premiums collected to the total population of the country.
- Formula:
.
- Significance: It represents the average amount spent by each individual on insurance (per capita premium). This is usually measured in USD for international comparisons. India’s density rose from $11.1 in 2001 to approximately $92 by 2022.
Mnemonic for the Difference: P-G and D-P
To never confuse the two again:
- P-G: Penetration is based on GDP.
- D-P: Density is based on Population.
| Metric | Measured Against | Core Question |
|---|---|---|
| Penetration | GDP | How big is insurance compared to the whole economy? |
| Density | Population | How much does an average person spend on insurance? |
Would you like to see how these numbers compare to global averages or other BRICS nations?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
12 sites
- Indian Insurance Market – Policy Holder – IRDAI28 Jan 2026 — Indian Insurance in the Global Scenario * 1 In life insurance business, India is ranked tenth in the world. India’s share in globa…
Policy Holder – IRDAI
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Insurance Penetration and Density * The growth in the insurance sector is internationally measured based on the standard of insura…
EduRev
- Insurance Sector in India – Drishti IAS28 Nov 2024 — * Potential: As per the Insurance Regulatory and Development Authority of India (IRDAI), India will be the 6th largest insurance m…
Drishti IAS
Show all
yes
In Ramesh Singh’s
Indian Economy, these metrics are crucial for assessing the maturity of India’s insurance sector compared to the world.
Comparative Overview (2024-2025 Data)
As of the latest reports, India’s insurance sector shows a significant “coverage gap” compared to global and regional peers.
| Metric | India (FY25) | Global Average (2024) | BRICS/Peers (Approx.) |
|---|---|---|---|
| Total Penetration | 3.7% | 7.3% | China: 4.3%, Brazil: 4.0%+ |
| Total Density | $97 | $943 | China: ~$430, Malaysia: ~$536 |
Key Insights from Ramesh Singh’s Perspective
- Half the Global Average: India’s total penetration (3.7%) is roughly half the global average (7.3%). This indicates that while the economy is growing, insurance is not yet deeply embedded in the financial life of most citizens.
- Life vs. Non-Life Disparity:
- Life Insurance: India’s life insurance penetration (2.7%) is closer to the global average (3.0%).
- Non-Life Insurance: India lags severely here at just 1%, compared to the global average of 4.3%.
- Density Gap: The most striking difference is in Density. While an average global citizen spends $943 on insurance, an average Indian spends only $97. This reflects lower per capita income and a lack of awareness.
- BRICS Comparison: India typically trails peers like China and Brazil in density but often stays ahead of nations like Russia in life insurance specifically.
Mnemonic: The “Double-Half” Rule
- Penetration is Half the world’s (3.7% vs ~7%).
- Density is One-Tenth the world’s (~$97 vs ~$943).
The government’s Insurance for All by 2047 mission aims to bridge this massive gap.
Would you like to explore the specific reasons why non-life insurance (like Health and Motor) remains so low in India?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
14 sites
- India’s Insurance Gap Widens: Penetration Stagnant at Half …31 Dec 2025 — India’s Insurance Gap Widens: Penetration Stagnant at Half Global Average, Density Trails Far Behind! … Insurance penetration in…
Whalesbook
- Insurance penetration remained unchanged in 2025, at about …31 Dec 2025 — Insurance penetration remained unchanged in 2025, at about half of global average. … Indian insurance penetration stays at 3.7 p…
The Economic Times
- Indian Insurance Market – Policy Holder – IRDAI28 Jan 2026 — Indian Insurance in the Global Scenario * In life insurance business, India is ranked tenth in the world. India’s share in global …
Policy Holder – IRDAI
Show all
Insurance industary
The Indian insurance industry is currently undergoing a historic transformation driven by the
“Sabka Bima Sabki Raksha” (Amendment of Insurance Laws) Act, 2025 and the “Insurance for All by 2047” vision.
Latest Market Data (2025-2026)
- Market Position: India is the 10th largest insurance market globally as of 2024, with a market share of 1.8%.
- Penetration & Density: Total insurance penetration stands at 3.7% of GDP (Life: 2.7%, Non-life: 1%), with a density of $97.
- Growth Projections: The sector is expected to grow at an annual rate of 6.9% between 2026 and 2030, making it the fastest-growing major insurance market globally.
- Key Players: LIC remains the market leader with a 56.96% share in new business premiums (FY25), followed by private majors like SBI Life and HDFC Life.
Major Regulatory & Policy Shifts (2025-2026)
- 100% FDI: Parliament passed the 2025 Bill raising the Foreign Direct Investment limit from 74% to 100%. As of February 12, 2026, 100% foreign ownership is officially permitted under the automatic route.
- Bima Trinity: A digital infrastructure push including:
- Bima Sugam: A one-stop digital marketplace for buying, servicing, and claims.
- Bima Vistār: A simplified, bundled product covering life, health, and property in one policy.
- Bima Vahak: A women-centric local distribution force for last-mile rural reach.
- GST Exemption: The removal of the 18% GST on retail life and health insurance in late 2025 has driven a 21% surge in private life insurer sales.
- No Age Cap: Effective April 1, 2024, IRDAI removed the 65-year age limit for buying new health insurance, allowing individuals of any age to obtain coverage.
- Reinsurance Reform: The minimum capital requirement for foreign reinsurers was slashed from ₹5,000 crore to ₹1,000 crore to attract specialized global players.
Sector Snapshot
| Metric | Latest Value (FY25/26) | Source |
|---|---|---|
| Total Insurance Companies | 57 (24 Life, 33 Non-Life) | |
| Life Insurance Penetration | 2.7% | |
| Non-Life Penetration | 1.0% | |
| Claim Settlement Ratio (Private) | ~98.9% (Individual) |
Would you like to know more about how 100% FDI specifically impacts existing joint ventures like Bajaj Allianz or HDFC Life?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
19 sites
- Growth of the Indian Insurance Industry with Market … – IBEF15 Nov 2025 — Indian Insurance Industry Overview & Market Development Analysis * Robust. Demand. *India’s insurance sector has witnessed signifi…
IBEF
- India’s insurance market set to shine as growth forecast …19 Jan 2026 — Article information and share options * Indian insurance premium growth to accelerate to 6.9% over 2026–2030 will outpace China, U…
Swiss Re
- Insurance Companies – ScreenerTable_title: Insurance Companies Table_content: header: | S.No. | Name | CMP Rs. | P/E | Mar Cap Rs.Cr. | Div Yld % | NP Qtr Rs.Cr…
Screener
Show all
Insurance industry ramesh singh with heading and subheading with pnemonics and 10 question and answer with pnemonics
In
Ramesh Singh’s Indian Economy, the insurance sector is treated as a vital pillar of the financial system, acting as an investment institution that mobilises long-term savings for nation-building.
The Insurance Industry: Key Pillars
1. Evolution & Nationalisation
- Life Insurance (1956): Nationalised with the twin goals of spreading social security and mobilising savings.
- General Insurance (1972): Nationalised to protect national assets.
- Liberalisation (2000): Opened to private players based on the Malhotra Committee recommendations.
2. Regulatory Framework (IRDAI)
- Established in 2000 to regulate, develop, and supervise the industry.
- Mnemonic: R.U.L.E. the market
- Regulate the industry.
- Underwrite stability.
- License insurers.
- Enhance policyholder protection.
3. Performance Indicators
- Insurance Penetration: Ratio of premiums to GDP.
- Insurance Density: Per capita premium (in USD).
4. Specialised Institutions
- AICIL: Agriculture Insurance Company of India Limited for crop protection.
- ECGC: Export Credit Guarantee Corporation to promote exports.
- DICGC: Deposit Insurance and Credit Guarantee Corporation to protect bank depositors.
10 Questions & Answers with Mnemonics
1. Q: What were the twin objectives of LIC’s nationalisation?
- A: Social security and mobilising savings for nation-building.
- Mnemonic: “S-N” (Social Security, Nation Building).
2. Q: Which committee recommended opening the sector to private players?
- A: Malhotra Committee (1994).
- Mnemonic: “Insurance needs Mal (Money) Hotra (Growth).”
3. Q: What is the current FDI limit in the insurance sector?
- A: Increased from 49% to 74% in 2021.
- Mnemonic: “Open the Gate (74 looks like a gate) to Foreign Money.”
4. Q: What is the primary role of the DICGC?
- A: To protect bank depositors up to ₹5 lakh in case of bank failure.
- Mnemonic: “B-D-Safe” (Bank Deposits are Safe).
5. Q: Define Insurance Penetration.
- A: Percentage of total premium to total GDP.
- Mnemonic: “P-G” (Penetration-GDP).
6. Q: Define Insurance Density.
- A: Ratio of total premium to total population.
- Mnemonic: “D-P” (Density-Population).
7. Q: What is Reinsurance?
- A: Insurance for insurance companies to spread high risks.
- Mnemonic: “The Safety Net for the Nets.”
8. Q: Which body regulates the insurance sector in India?
- A: IRDAI (Insurance Regulatory and Development Authority of India).
- Mnemonic: “I Really Develop All Insurance.”
9. Q: What is Micro-insurance?
- A: Small-ticket insurance products designed for low-income populations.
- Mnemonic: “Small Pay, Big Stay” (Tiny premiums, lasting protection).
10. Q: Is insurance a State or Union subject?
- A: It is a Union List subject under the Seventh Schedule.
- Mnemonic: “United we insure” (Union List).
Would you like to review the specific reform initiatives like Bima Sugam or Bima Vistār mentioned in recent updates?
20 sites
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Definition. In economic terms, insurance refers to any measure taken to reduce risk. In everyday language, insurance is provided b…
EduRev
- India insurance perspective27 Jul 2017 — These changes will impact the way the industry conducts business and engages with its customers. Demographic factors such as the g…
PwC India
- Ramesh Singh Test : Insurance In India – Bank Exams MCQWhat is the primary purpose of the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India? * A. To provide insurance …
EduRev
Show all
Public sector insurance comapnies
In Ramesh Singh’s
Indian Economy, Public Sector Insurance Companies (PSICs) are highlighted as government-owned institutions that provide social security and mobilise long-term savings for nation-building.
List of Public Sector Insurance Companies
The sector is divided into life, general (non-life), and specialised categories:
1. Life Insurance
- Life Insurance Corporation of India (LIC): Established in 1956, it is the only fully government-owned life insurer in India.
2. General (Non-Life) Insurance
The following four companies were originally subsidiaries of GIC but have been directly owned by the Government of India since March 2003:
- National Insurance Company Ltd. (NICL)
- New India Assurance Company Ltd. (NIACL)
- Oriental Insurance Company Ltd. (OICL)
- United India Insurance Company Ltd. (UIICL)
3. Specialised & Reinsurance
- General Insurance Corporation of India (GIC Re): The sole national reinsurer, which provides insurance to other insurance companies.
- Agriculture Insurance Company of India Ltd. (AICIL): Set up in 2002 specifically to cater to farmers and manage schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY).
- ECGC Limited: Formerly the Export Credit Guarantee Corporation, it provides credit risk insurance for Indian exporters.
Mnemonics for Public Sector Insurance
Mnemonic: L.A.N.G.U.O.
Use this to remember the main service-providing public insurers:
- L – LIC (Life)
- A – AICIL (Agriculture)
- N – National Insurance
- G – GIC Re (Reinsurance)
- U – United India
- O – Oriental Insurance
Mnemonic: 4-G’s for General Insurance
To remember the four non-life PSUs that were once under GIC:
- “New United Oriental National” (N.U.O.N.)
- Tip: They all represent the “National” interest in different regions.
Quick Q&A on Public Sector Insurance
- Q: Which is the only public sector life insurer?
- A: LIC.
- Mnemonic: “Lone Indian Company” for life.
- Q: What happened in March 2003 to the general insurance companies?
- A: They were delinked from GIC and became independent government-owned entities.
- Mnemonic: “Free in ’03” (Three’s a crowd, so they split).
- Q: Who manages crop insurance for the government?
- A: AICIL.
- Mnemonic: “Agri-Insure.”
- Q: What is the role of GIC Re today?
- A: It acts as the National Reinsurer.
- Mnemonic: “Guardian Insuring Companies.”
Would you like a more detailed look at the 100% FDI reform and how it specifically affects these public sector giants?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
13 sites
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Ramesh Singh Summary: Insurance in India- 1 | Indian Economy for UPSC CSE PDF Download * Definition. * Insurance Industry. * LIC. …
EduRev
- Insurance Companies In India – SATHEE – IIT KanpurInsurance Companies In India * Public Sector Insurance Companies in India. Public Sector Insurance Companies in India play a vital…
SATHEE
- General Insurance Corporation of India – WikipediaTable_title: General Insurance Corporation of India Table_content: header: | Company type | Public | row: | Company type: Owner | …
Wikipedia
Show all
IRDA
Quick results from the web:
IRDAI: Home
Mail Here irda@irdai.gov.in · Call Us +91-4020204000; Call Us +91-4039328000. Feed Back FeedBack. Contact Us. IRDAI Regional Offices. Mumbai. Visit Here Insurance Regulatory Development Authority of India (IRDAI), 3rd floor, Indian Globe Chamber, D. N Road Fort, Mumbai 400001 · Mail Here irdamro@irdai.gov.in · Call Us …
IRDAI·https://irdai.gov.in
Insurance Regulatory and Development Authority – Wikipedia
The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous and statutory body under the Ministry of Finance, Government of India. It is tasked with regulating and licensing the insurance and re-insurance industries in India. It was constituted by the Insurance Regulatory and Development …
Wikipedia·https://en.wikipedia.org
In Ramesh Singh’s Indian Economy, the IRDAI (Insurance Regulatory and Development Authority of India) is defined as the apex statutory body responsible for regulating, promoting, and ensuring the orderly growth of the insurance and reinsurance industry.
Latest Industry Reforms (2025–2026)
The IRDAI has recently undergone significant structural and policy changes to achieve its “Insurance for All by 2047” mission.
- 100% FDI: As of February 12, 2026, the government officially notified 100% Foreign Direct Investment in insurance companies via the automatic route.
- Removal of Age Caps: Effective April 2024, IRDAI removed the 65-year upper age limit for purchasing new health insurance, making coverage accessible to all age groups.
- Bima Trinity: Launching in 2025–2026, this digital infrastructure includes:
- Bima Sugam: A one-stop digital marketplace for policy buying and claims.
- Bima Vistār: A bundled, low-cost policy covering life, health, and property.
- Bima Vāhak: A women-led distribution network for rural reach.
Mnemonic for IRDAI Functions: G.U.A.R.D.
Use this to remember the five core responsibilities of the regulator:
- G – Grievance Redressal: Protecting policyholders through mechanisms like the Insurance Ombudsman.
- U – Underwriting Standards: Setting financial reporting and solvency norms.
- A – Approvals: Licensing new companies and approving all insurance products before launch.
- R – Registration: Mandatory registration for insurers, brokers, and agents.
- D – Development: Promoting insurance penetration and awareness, especially in rural areas.
10 Questions & Answers with Mnemonics
1. Q: When was IRDAI established?
- A: It was formed under the IRDA Act, 1999, and incorporated in 2000.
- Mnemonic: “In 99, we started to Design All Insurance.”
2. Q: Where is the headquarters of IRDAI?
- A: Hyderabad, Telangana (moved from Delhi in 2001).
- Mnemonic: “Hyder-Bad insurance companies get punished.”
3. Q: What is the composition of the IRDAI board?
- A: A 10-member body: 1 Chairman, 5 whole-time members, and 4 part-time members.
- Mnemonic: “1-5-4 for a secure door” (Chairman-Whole-Part).
4. Q: What is the new rule for pre-existing disease (PED) waiting periods?
- A: Reduced from 4 years to a maximum of 3 years.
- Mnemonic: “Three years and you are Free” (of PED exclusions).
5. Q: What is the ‘Moratorium Period’ in health insurance?
- A: The period after which an insurer cannot contest a claim (except for fraud). It was reduced from 8 years to 5 years in 2024.
- Mnemonic: “High Five for claim safety.”
6. Q: Can an insurer reject a policy for cancer or heart disease?
- A: No, IRDAI now prohibits summary rejection for severe medical conditions.
- Mnemonic: “Never Deny the needy.”
7. Q: What is the purpose of the ‘Regulatory Sandbox’?
- A: To allow insurers to test innovative products in a controlled environment.
- Mnemonic: “Safe Play with new ideas.”
8. Q: Who is the current Chairperson of IRDAI (as of 2026)?
- A: Ajay Seth (following the recent transition).
9. Q: Is KYC mandatory for buying all insurance now?
- A: Yes, since 2023, KYC is mandatory for every new policy purchase.
- Mnemonic: “Know Your Customer, then the cover.”
10. Q: What is the FDI limit for LIC?
- A: While most insurers allow 100%, LIC remains capped at 20% via the automatic route.
- Mnemonic: “LIC is Limited” (to 20%).
Would you like to examine the latest monthly business figures for public vs. private insurers released by IRDAI?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
29 sites
- Bima Sugam: Unified Digital Marketplace for Insurance18 Sept 2025 — Significance: It is the first step in building Digital Public Infrastructure for insurance, supporting ‘Insurance for All by 2047’
Drishti IAS
- IRDA Meaning | IRDA Full Form – Aditya Birla Sun Life InsuranceWhat is IRDA? The Insurance Regulatory and Development Authority of India (IRDA) is the regulatory body governing the insurance se…
Aditya Birla Sun Life Insurance
- What We Do – IRDAI28 Jan 2026 — What we do. Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament…
IRDAI
Show all
Reinsurance
In
Ramesh Singh’s Indian Economy, Reinsurance is described as the “insurance of insurance companies.” It is a mechanism where an insurer transfers a portion of its risk to another company to protect itself from massive financial losses.
The Industry Overview: Reinsurance
1. The Core Concept
When a primary insurance company (like LIC or NICL) issues many policies, it faces the risk of a “catastrophic event” (like a massive flood or earthquake) that could lead to more claims than it can pay. To stay safe, it pays a premium to a Reinsurer to share that risk.
2. The National Player (GIC Re)
- GIC Re (General Insurance Corporation of India) is the sole national reinsurer.
- Obligatory Cession: By law, Indian insurers must “cede” (give) a specific percentage (currently 4%) of their business to GIC Re to keep the money within the country.
3. Opening to Global Players
- To increase capacity, IRDAI has allowed global giants (like Swiss Re, Munich Re, and Lloyd’s) to open branches in India.
- Reform (2025-26): Capital requirements for foreign branches were lowered from ₹5,000 crore to ₹1,000 crore to encourage more competition.
Mnemonic for Reinsurance: B.A.C.K.
Use this to remember why reinsurance is needed:
- B – Balance Sheet Protection: It keeps the insurance company’s finances stable.
- A – Additional Capacity: Allows companies to take on bigger risks (like insuring a space launch).
- C – Catastrophe Cover: Protects against huge disasters (e.g., COVID-19 or Tsunami).
- K – Knowledge Transfer: Global reinsurers bring expertise in pricing complex risks.
10 Questions & Answers with Mnemonics
1. Q: What is Reinsurance?
- A: A contract where a reinsurer agrees to indemnify an insurer against all or part of a loss.
- Mnemonic: “The Shield’s Shield.“
2. Q: Who is the “National Reinsurer” of India?
- A: General Insurance Corporation of India (GIC Re).
- Mnemonic: “Guardian of Indian Companies.”
3. Q: What is ‘Ceding’?
- A: The process of passing risk from the primary insurer to the reinsurer.
- Mnemonic: “Cede to Succeed” (Giving risk away helps you stay safe).
4. Q: What is the ‘Retention Limit’?
- A: The maximum amount of risk an insurer keeps for itself before passing the rest to a reinsurer.
- Mnemonic: “Keep what you can Reap.“
5. Q: What is ‘Obligatory Cession’?
- A: The legal requirement for Indian insurers to give a portion of their business to GIC Re.
- Mnemonic: “Law of the 4%.”
6. Q: Why did the government lower capital requirements for foreign reinsurers?
- A: To make India a Global Reinsurance Hub.
- Mnemonic: “Low Entry, High Growth.“
7. Q: What is ‘Retrocession’?
- A: When a reinsurer gets insurance from another reinsurer.
- Mnemonic: “Insurance Cubed” (Risk
Insurer
Reinsurer
Retrocessionaire).
8. Q: Does GIC Re do direct business with the public?
- A: No, it only deals with other insurance companies.
- Mnemonic: “B2B, not B2C” (Business to Business).
9. Q: What is ‘Facultative Reinsurance’?
- A: Reinsurance for a single specific high-value risk (like a satellite or a specific factory).
- Mnemonic: “Facultative = Focused.”
10. Q: What is ‘Treaty Reinsurance’?
- A: An agreement to cover a whole block of policies (e.g., all car insurance policies).
- Mnemonic: “Treaty = Total block.”
Would you like to see the current market share of GIC Re compared to the new foreign branches in India?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
Deposite insurance and credit guranctee corporation
In Ramesh Singh’s
Indian Economy, the DICGC (Deposit Insurance and Credit Guarantee Corporation) is defined as a specialized subsidiary of the Reserve Bank of India (RBI). Its primary role is to provide a safety net for bank depositors, thereby maintaining public confidence in the financial system.
The DICGC: Latest Framework (2025–2026)
The corporation has recently shifted from a traditional “flat-rate” system to a more sophisticated, risk-based model to reward well-managed banks.
- Insurance Limit: Each depositor is insured up to ₹5 lakh per bank for both principal and interest.
- Risk-Based Premium (Effective April 1, 2026): The RBI has approved a new framework where banks are categorized (A to D) based on financial health.
- Category A (Safest): Will pay a lower premium of 8 paise per ₹100 of deposits.
- Category D (Riskiest): Will continue at the existing flat rate of 12 paise.
- Time-Bound Payout: Under the 2021 Amendment, depositors must be paid their insured amount within 90 days if a bank is placed under moratorium or liquidation.
Mnemonic for DICGC: S.A.F.E.
Use this to remember the core features of the corporation:
- S – Subsidiary of RBI: Wholly owned and governed by the central bank.
- A – Aggregate Limit: The ₹5 lakh limit applies to all accounts (Savings, FD, RD) in the same bank.
- F – Five Lakh Cover: The maximum protection for your principal + interest.
- E – Exclusions: It does not cover deposits from foreign governments, central/state governments, inter-bank deposits, or NBFCs.
10 Questions & Answers with Mnemonics
1. Q: When was DICGC established?
- A: July 15, 1978, after merging the Deposit Insurance Corporation (1962) and the Credit Guarantee Corporation (1971).
- Mnemonic: “Merged in ’78” (7+8=15, the day it started).
2. Q: Who pays the insurance premium to DICGC?
- A: The Banks pay it; depositors do not pay anything.
- Mnemonic: “Bank Picks the Bill.”
3. Q: Does it cover deposits in NBFCs (Non-Banking Financial Companies)?
- A: No, it only covers commercial, small finance, regional rural, and cooperative banks.
- Mnemonic: “N-B-F-C = No-Bank-For-Cover.”
4. Q: How long does it take for a depositor to get money after a bank moratorium?
- A: Max 90 days (45 days for claim submission + 45 days for verification and payout).
- Mnemonic: “Quarterly Payout” (90 days is one quarter of a year).
5. Q: What is the “Same Right and Same Capacity” rule?
- A: If you have an individual account and a joint account (e.g., with a spouse), they are insured separately up to ₹5 lakh each.
- Mnemonic: “New Name, New Limit.”
6. Q: Are NRI deposits covered?
- A: Yes, NRE, NRO, and FCNR deposits held in insured banks in India are covered.
- Mnemonic: “Global Money, Indian Safety.”
7. Q: Can a bank voluntarily withdraw from DICGC coverage?
- A: No, the scheme is compulsory for all eligible banks.
- Mnemonic: “Mandatory Mission.”
8. Q: What is the new “Vintage Incentive”?
- A: It rewards banks with a long history of no claims with a premium discount of up to 25%.
- Mnemonic: “Old is Gold.”
9. Q: What is the current flat-rate premium (pre-April 2026)?
- A: 12 paise per ₹100 of assessable deposits per year.
- Mnemonic: “Dozen for a Hundred” (12 paise).
10. Q: Is there a proposal to increase the limit beyond ₹5 lakh?
- A: While the government discussed it in 2025, as of February 2026, the limit remains ₹5 lakh to encourage market discipline.
- Mnemonic: “High-Five is the Cap.”
Would you like to see how to mathematically split ₹15 lakh across accounts to ensure the entire amount is insured?
AI responses may include mistakes. For financial advice, consult a professional. Learn more
22 sites
- Deposit Insurance and Credit Guarantee Corporation – GKToday28 Oct 2025 — Deposit Insurance and Credit Guarantee Corporation * The Deposit Insurance and Credit Guarantee Corporation (DICGC) is an institut…
GK Today
- What is DICGC Insurance in FDs? – Ujjivan Small Finance Bank26 Sept 2025 — What is DICGC? The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of the Reserve Bank of India. It pro…
Ujjivan Small Finance Bank
- Deposit Insurance and Credit Guarantee Corporation (DICGC)28 May 2025 — Deposit Insurance and Credit Guarantee Corporation (DICGC) … Context: The Union government is considering increasing the bank de…
C4S Courses
Show all
Export credit gurantee corporation
In
Ramesh Singh’s Indian Economy, the ECGC Limited (formerly Export Credit Guarantee Corporation of India) is defined as a premier Government of India enterprise established in 1957 to promote exports by providing credit risk insurance and related services.
ECGC: Latest Developments (2025–2026)
The corporation is currently at the centre of India’s drive toward a $1 trillion export target.
- Listing & IPO: The government is moving ahead with the Initial Public Offering (IPO) of ECGC in the current financial year (FY26) to unlock market value and mobilise fresh capital.
- Enhanced MSME Support: Effective July 1, 2025, ECGC introduced a Collateral-Free Cover for working capital limits up to ₹10 crore for micro and small enterprises.
- Expansion of Liabilities: ECGC aims to increase its Maximum Liabilities (ML) to ₹2.03 lakh crore by the end of 2025–26, up from ₹1.00 lakh crore.
- Claim Settlement: Procedures for Short-Term (ST)-ECIB claims up to ₹10 crore have been simplified to improve turnaround time for exporters.
Mnemonic for ECGC: E.X.P.O.R.T.
Use this to remember the core functions and mandate of ECGC:
- E – Export Promotion: Improving competitiveness by covering credit risks.
- X – X-factor for Banks: Providing guarantees that encourage banks to lend more to exporters.
- P – Political & Commercial Risk: Protecting against buyer default and foreign government instability.
- O – Overseas Investment Insurance: Covering Indian companies investing in joint ventures abroad.
- R – Risk Mitigation: Handling up to 90% of losses incurred by exporters.
- T – Trust Management: Administering the National Export Insurance Account (NEIA) for strategic project exports.
10 Questions & Answers with Mnemonics
1. Q: What is the primary objective of ECGC?
- A: To promote exports by providing credit insurance against non-payment risks.
- Mnemonic: “Export Protector.”
2. Q: Under which Ministry does ECGC operate?
- A: Ministry of Commerce and Industry.
- Mnemonic: “Commerce Covers Credit.”
3. Q: Does ECGC cover 100% of the loss?
- A: No, it typically covers 80% to 90%; the exporter bears the rest.
- Mnemonic: “Nine out of Ten” (Covering 90%).
4. Q: What is a ‘Commercial Risk’ under ECGC?
- A: Risks like buyer insolvency or protracted default on payment.
- Mnemonic: “Buyer’s Bankruptcy.”
5. Q: What is a ‘Political Risk’ under ECGC?
- A: Risks like war, revolution, or new import/export bans in the buyer’s country.
- Mnemonic: “War or Law” (Political changes).
6. Q: What is the NEIA?
- A: The National Export Insurance Account, managed by ECGC for strategic/high-value project exports.
- Mnemonic: “Strategy Shield.”
7. Q: Does ECGC cover losses due to currency fluctuations?
- A: No, exchange rate losses are explicitly excluded.
- Mnemonic: “Rate is Fate” (You handle the exchange rate).
8. Q: When was ECGC’s name officially changed to its current form?
- A: In August 2014, it was renamed simply to ECGC Limited.
- Mnemonic: “Shortened in Fourteen.”
9. Q: What is the role of ECGC for banks?
- A: It provides Financial Guarantees to banks, making it safer for them to give loans to exporters.
- Mnemonic: “Banker’s Backup.”
10. Q: What is ‘Factoring’ service provided by ECGC?
- A: A package of services including working capital finance and credit risk protection for MSMEs.
- Mnemonic: “MSME Money-Flow.”
Would you like to see how the ₹4,400 crore capital infusion specifically impacts the ECGC IPO valuation?
15 sites
- ECGC – Export Credit Guarantee Corporation of India LimitedECGC: Export Credit Guarantee Corporation of India Limited. ECGC – Export Credit Guarantee Corporation of India Limited. It provid…
Bajaj Finserv
- Export Credit Guarantee Corporation of India Limited8 Nov 2024 — ECGC is essentially an export promotion organisation, seeking to improve the competitiveness of the Indian exports by providing th…
www.commerce.gov.in
- Export Credit Guarantee Corporation of India – WikipediaTable_title: Export Credit Guarantee Corporation of India Table_content: header: | Company type | Government of India Enterprise |
Wikipedia
Show all
National export insurance Account
In
Ramesh Singh’s Indian Economy, the National Export Insurance Account (NEIA) is defined as a dedicated trust established in 2006 to promote medium- and long-term project exports of strategic and national importance. It provides a credit insurance safety net where standard commercial covers from ECGC are unavailable or insufficient.
NEIA: Industry Structure & Functions
- Management & Administration: NEIA is a trust under the Ministry of Commerce & Industry, administered by ECGC Limited and guided by a High-Powered Committee of Directions (COD).
- Strategic Objective: It facilitates high-value exports—such as roads, railways, and power plants—to risky or non-traditional markets where Indian presence is a long-term strategic goal.
- Corpus & Capacity: The government approved a ₹1,650 crore capital infusion into the NEIA Trust for the period FY 2021-22 to FY 2025-26. This enhancement allows it to support project exports worth up to ₹33,000 crore.
Mnemonic for NEIA: S.T.R.A.T.E.G.I.C.
Use this to remember the core features discussed in the text:
- S – Strategic Importance: Only projects of national interest are covered.
- T – Trust Structure: Established in 2006 to maintain and operate funds.
- R – Risk Mitigation: Covers both political and commercial risks for long-term projects.
- A – Administered by ECGC: The corporation processes proposals and settles claims.
- T – Term: Focuses on Medium and Long-Term (MLT) projects (typically 12–15 years).
- E – Exim Bank Collaboration: Facilitates “Buyer’s Credit” tied to projects.
- G – Guarantee Payout: Ensures exporters get paid even if the foreign buyer defaults.
- I – Indian Content: Usually requires 75% of goods and services to be sourced from India.
- C – Corpus Infusion: Ongoing capital support (₹1,650 cr) boosts underwriting capacity.
10 Questions & Answers with Mnemonics
- Q: Who manages the NEIA Trust?
- A: ECGC Limited under the Ministry of Commerce & Industry.
- Mnemonic: “E-Trust” (ECGC manages the Trust).
- Q: What is the primary purpose of NEIA?
- A: To support project exports of national/strategic importance to risky markets.
- Mnemonic: “National Interest First.”
- Q: What is the latest capital infusion amount?
- A: ₹1,650 crore over 5 years (up to FY 2025-26).
- Mnemonic: “Six-Fifty Boost” (1650).
- Q: How much project value can the new corpus support?
- A: Up to ₹33,000 crore.
- Mnemonic: “Twenty-Fold Power” (33,000 is approx. 20x the 1,650 infusion).
- Q: What is the “Buyer’s Credit-NEIA” scheme?
- A: A financing mechanism where Exim Bank provides non-recourse loans to foreign buyers to purchase Indian goods.
- Mnemonic: “Safe Sale.”
- Q: What is the mandatory domestic content requirement for NEIA projects?
- A: Generally 75% Indian content.
- Mnemonic: “Three-Quarters Home.”
- Q: Who approves projects for NEIA support?
- A: The Committee of Directions (COD) under the Department of Commerce.
- Mnemonic: “COD Calls the Shots.”
- Q: What is the typical repayment period for NEIA-supported exports?
- A: Usually up to 12 to 15 years.
- Mnemonic: “A Decade Plus.”
- Q: Does NEIA cover exchange rate fluctuations?
- A: Yes, through specific guarantee mechanisms for Buyer’s Credit.
- Mnemonic: “Currency Calm.”
- Q: Which regions benefit most from NEIA support?
- A: Africa and South Asia.
- Mnemonic: “S-A focus” (South Asia and Africa).
Would you like to examine how NEIA-supported projects compare to those under the standard Export Credit Insurance from ECGC?
14 sites
- National Export Insurance Account (NEIA Trust) – Mcommerce8 Nov 2024 — Ministry of Commerce and Industry. DEPARTMENT OF COMMERCE. … Government of India established the NEIA Trust in 2006 to promote p…
www.commerce.gov.in
- [Solved] The ‘National Export Insurance Account (NEIA)’ comes28 Jul 2025 — Detailed Solution * The National Export Insurance Account (NEIA) is managed by the Ministry of Commerce and Industry, Government o…
Testbook
- About NEIA – ECGC* 1. Objectives. The National Export Insurance Account (NEIA) was set up in 2006 to promote Medium and Long-Term (MLT)/ project ex…
ECGC
Show all
The challege ahead
In the context of Ramesh Singh’s
Indian Economy and the current state of the industry as of February 2026, the “Challenge Ahead” refers to the structural barriers preventing India from reaching its “Insurance for All by 2047” goal.
The Current “Stagnation” Challenge (2025–26)
Recent data from the Economic Survey 2026 highlights a paradoxical situation: while premiums are growing in absolute terms, insurance penetration is stagnant.
- Flat Penetration: Total insurance penetration remained stuck at 3.7% of GDP in FY25, failing to narrow the gap with the global average of ~7%.
- Declining Life Insurance: Life insurance penetration actually dipped from 2.8% to 2.7%, indicating that insurance is not becoming more embedded in the lives of growing middle-class households.
- The “Missing Middle”: A huge section of the population (middle-income and MSMEs) remains uninsured because they are too “rich” for government social schemes but find private insurance too expensive.
Mnemonic for the Challenge Ahead: C.O.S.T.
To remember the four major hurdles identified in recent reforms:
- C – Cost of Distribution: Intermediary commissions and overheads consume a large portion of premiums, making products unaffordable for many.
- O – Opaque Terms: Complex “jargon” and hidden exclusions lead to a massive trust deficit, making insurance a “push” product rather than a voluntary purchase.
- S – Settlement Friction: Delayed or rejected claims, particularly in health insurance, remain the biggest deterrent to wider adoption.
- T – Trust Deficit: The perception that insurers will find reasons to avoid paying claims prevents people from viewing insurance as a reliable safety net.
10 Questions & Answers on “The Challenge Ahead”
1. Q: What is the primary bottleneck identified in the Economic Survey 2026?
- A: High distribution and acquisition costs, which limit insurers’ ability to price products affordably.
Insuranc epenetaration
In Ramesh Singh’s
Indian Economy, the “Challenge Ahead” for the insurance sector focuses on bridging the massive gap between India’s current state and global standards. As of early 2026, despite rapid economic growth, several persistent hurdles remain.
Core Challenges in the Insurance Sector
- Stagnant Penetration: Overall insurance penetration remains flat at 3.7% (FY25), roughly half the global average of 7.3%.
- The “Non-Life” Lag: While life insurance is more established, non-life penetration (health, motor, property) is stuck at a mere 1.0%, compared to the global 4.3%.
- Protection Gap: India faces a mortality protection gap of 83%, meaning most families are severely under-insured relative to their actual needs.
- Trust Deficit: Complex rules, delayed claim settlements, and a lack of transparency continue to deter potential policyholders.
- Rural-Urban Divide: Insurance awareness and accessibility remain concentrated in urban centres, leaving the vast rural population underserved.
Mnemonic for Challenges: L.O.W. E.R.
Use this to remember the primary obstacles for the sector:
- L – Literacy & Awareness: Most people still view insurance as a “waste of money” or a tax-saving tool rather than a risk mitigation necessity.
- O – Operational Complexity: Vague rules and difficult claim processes discourage long-term commitment.
- W – Wealth Disparity: Low disposable income for the masses makes regular premium payments a burden.
- E – Emerging Risks: Inadequate coverage for new threats like cyber fraud and climate change (natural catastrophes).
- R – Rural Reach: Inefficient distribution channels to reach the “hinterlands” of India.
10 Questions & Answers on “The Challenge Ahead”
- Q: What is the primary metric for the sector’s “stagnation”?
- A: Insurance Penetration (Premium/GDP) has stayed at 3.7% for the last few years.
- Mnemonic: “Flat at Three-Point-Seven.”
- Q: What is the target of the “Vision 2047” plan?
- A: Insurance for All by 2047, ensuring every citizen has life, health, and property cover.
- Mnemonic: “All by 47.”
- Q: Why is non-life insurance a major challenge?
- A: It has not become a “household habit,” with penetration stuck at 1%.
- Mnemonic: “Stuck at One.”
- Q: What is the latest reform for senior citizens (2024)?
- A: IRDAI removed the 65-year age cap for buying new health insurance.
- Mnemonic: “Age is No Bar.”
- Q: What digital solution is being launched to simplify buying and claims?
- A: Bima Sugam, a one-stop digital marketplace.
- Mnemonic: “Sugar-coated Sugam” (Easy process).
- Q: What is the “Bima Vahak” initiative?
- A: A women-led local distribution force to improve rural insurance reach.
- Mnemonic: “Women on Wheels.”
- Q: How does the “Mortality Protection Gap” impact the economy?
- A: It leaves families vulnerable to poverty if the breadwinner dies; the gap is estimated at $16.5 trillion.
- Mnemonic: “Thirteen-Trillion-Trouble.”
- Q: What is the role of the “Regulatory Sandbox”?
- A: It allows companies to test innovative, low-cost products in a safe environment.
- Mnemonic: “Play and Learn.”
- Q: What is the impact of 100% FDI in the sector (2026 update)?
- A: It aims to bring in fresh capital, technology, and global expertise to expand coverage.
- Mnemonic: “Full Foreign Flow.”
- Q: What is “Parametric Insurance”?
- A: Insurance that pays out instantly based on a specific trigger (like a high earthquake magnitude) without long claim processes.
- Mnemonic: “Fast-Track Trigger.”
Would you like to explore the new tax benefits or GST reforms proposed in the latest budget to address these challenges?
12 sites
- DFS Secretary Highlights India’s Insurance Growth at IFSCA–IRDAI–GIFT City Global Reinsurance Summit19 Jan 2026 — 02/2025), the Secretary said that after strong performance in 2024, premium growth in the global insurance industry is slowing in …
PIB
- Why Insurance Penetration in India Remains Stagnant12 Feb 2026 — Why insurance penetration in India remains stuck and what must change (Based on IRDAI Annual Report 2024-25) * Introduction: A fam…
Bimabazaar.com
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Reinsurance * The insurance companies offer insurance to its clients, they themselves get exposed to very high financial risks. Re…
EduRev
Show all
Insurance penetaration
In Ramesh Singh’s
Indian Economy, Insurance Penetration is defined as the ratio of total premiums collected (Life and Non-Life) to a country’s Gross Domestic Product (GDP). It measures the importance of the insurance sector relative to the overall size of the economy.
Current Status in India (FY25/2026)
As of February 2026, India’s insurance penetration reflects a “stagnant” trend, broadly keeping pace with GDP growth but failing to expand structurally.
- Overall Penetration: Stands at 3.7% for FY25, unchanged from the previous year.
- Life Insurance Penetration: Slipped marginally from 2.8% to 2.7%.
- Non-Life Penetration: Remained flat at 1.0%.
- Global Comparison: India’s level is approximately half the global average of 7.3%.
Factors Affecting Penetration (Ramesh Singh Focus)
Ramesh Singh identifies several structural and socio-economic hurdles that keep penetration low:
- A – Awareness: Lack of basic insurance literacy among rural masses.
- C – Cost: High distribution and acquisition costs make premiums expensive.
- T – Trust: Perceptions of opaque rules and slow claim settlements.
- I – Income: Low disposable income makes insurance a secondary priority.
- V – Vulnerability: Lack of simple, low-ticket “Micro-insurance” for the poor.
- E – Education: Reluctance to discuss “negative events” like death or illness.
Mnemonic: A.C.T.I.V.E. Challenges
Use this to remember the obstacles to penetration: Awareness, Cost, Trust, Income, Vulnerability, and Education.
Growth Indicators
| Metric | India (FY25/26) | Global Average (2024/25) |
|---|---|---|
| Total Penetration | 3.7% | 7.3% |
| Insurance Density | $97 | $943 |
| Life Share | ~71% | ~40% |
The government’s Insurance for All by 2047 mission aims to double these penetration levels by expanding digital distribution and 100% FDI.
Would you like to see how the recent 100% FDI notification or the Bima Sugam platform is expected to specifically fix the distribution cost challenge?
17 sites
- Why Insurance Penetration in India Remains Stagnant12 Feb 2026 — It is a design and delivery problem-how insurance is packaged, priced, distributed, serviced, and trusted by households and enterp…
Bimabazaar.com
- Ramesh Singh Summary: Insurance in India- 1 – EduRev1 Dec 2020 — Reasons for underdevelopment of insurance : * Complex and delayed claim settlement procedures; * Vague and incomprehensible rules …
EduRev
- India’s Insurance Penetration Stagnates at 3.7% for FY2510 Jan 2026 — India’s Insurance Penetration Stagnates at 3.7% for FY25. … India’s insurance penetration reportedly stayed unchanged at 3.7% in…
Angel One
Show all
Policy intiative
In Ramesh Singh’s
Indian Economy (17th Edition, 2025-26), policy initiatives are described as the strategic efforts by the government and IRDAI to achieve “Insurance for All by 2047”. The sector has entered its most transformative phase with the passage of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
Key Policy Initiatives (2025-2026)
1. Structural Reforms: The 2025 Amendment Act
- 100% FDI: Foreign Direct Investment in insurance companies has been raised from 74% to 100% under the automatic route, allowing full foreign ownership.
- Health as a Separate Class: Health insurance is now codified as a distinct class of business, separate from general insurance.
- Reinsurance Ease: The minimum Net Owned Fund (NOF) for foreign reinsurer branches has been reduced from ₹5,000 crore to ₹1,000 crore to attract global players.
- Enhanced IRDAI Powers: The regulator now has “disgorgement” powers to recover wrongful gains and can supersede an insurer’s board if policyholder interests are at risk.
2. The “Bima Trinity” Framework
This digital-first infrastructure is designed to make insurance as accessible as UPI:
- Bima Sugam: A unified, zero-commission digital marketplace for buying policies, servicing, and settling claims.
- Bima Vistar: A simplified, bundled “all-in-one” product covering life, health, and property with defined benefits for quick payouts.
- Bima Vahak: A women-centric workforce at the Gram Panchayat level to educate and distribute insurance in rural areas.
3. Social & Rural Security Schemes
- Ayushman Bharat (PM-JAY): Expanded in October 2024 to include all senior citizens above 70 years, providing ₹5 lakh annual coverage per family.
- PMJJBY & PMSBY: Collective coverage for life and accidents now reaches over 300 million low-income individuals.
- PMFBY (Crop Insurance): Now covers approximately 25 million farmers annually against yield loss.
Mnemonic for Policy Initiatives: S.P.E.E.D.
Use this to remember the current focus of Indian insurance policy:
- S – Sugam & Vistar: Digital platforms and bundled products for simplicity.
- P – Penetration: Moving towards the goal of 100% adult coverage by 2047.
- E – FDI Ease: 100% foreign ownership to bring in global capital and tech.
- E – Entry Barriers: Lowering capital requirements for reinsurers to ₹1,000 crore.
- D – Digital First: Over 90% of retail policies are now issued digitally.
10 Q&A on Policy Initiatives
- Q: What is the new FDI limit in insurance as per the 2025 Act?
- A: 100% (increased from 74%).
- Q: What is the purpose of “Bima Sugam”?
- A: A one-stop digital marketplace to buy, service, and settle all insurance policies.
- Q: Which age group was recently added to Ayushman Bharat?
- A: All senior citizens aged 70 years and above.
- Q: What is the primary role of “Bima Vahaks”?
- A: Women-led local outreach to promote insurance awareness at the grassroots level.
- Q: How much capital does a foreign reinsurer branch now need to enter India?
- A: ₹1,000 crore (reduced from ₹5,000 crore).
- Q: What is “Bima Vistar”?
- A: A comprehensive, affordable bundled policy for rural areas covering life, health, and property.
- Q: Has the “Composite License” (life + general) been introduced in the 2025 Act?
- A: No, it was omitted from the 2025 Act, though a framework for “new classes of business” exists.
- Q: What is the new penalty limit for insurance law violations?
- A: Up to ₹10 crore (increased from ₹1 crore).
- Q: What is “Parametric Insurance”?
- A: Insurance that pays out automatically based on a predefined trigger (like rainfall levels) rather than actual loss assessment.
- Q: What is the “Insurance for All” target year?
- A: 2047, marking 100 years of India’s independence.
Would you like to examine the latest state-wise targets allotted by IRDAI to insurers to boost rural penetration?
23 sites
- Insurance Bill, 2025 – Key Changes for Insurers and Investors19 Dec 2025 — SEBI proposes to ease the “fit and proper criteria” under SEBI (Intermediaries) Regulations, 2008 for ease of compliance and doing…
Economic Laws Practice
- Insurance Laws Amendment Act, 2025 – S&R Associates29 Jan 2026 — Removal of FDI limits. The Amendments have increased the limit of aggregate holdings of equity shares by foreign investors (which …
S&R Associates
- Insuring India By 2047: New Landscape For Insurance SectorCrop insurance in India: Comprehensive Crop Insurance Scheme (CCIS) in 1985 was the natural outcome of a long and varied chain of …
Assocham India
Show all
New reform intiative
In Ramesh Singh’s
Indian Economy and the current legislative landscape of February 2026, the insurance sector is undergoing its most significant overhaul since the 1999 reforms. The centerpiece of these reforms is the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which came into effect on February 5, 2026.
The “New Era” Reforms (2025–2026)
The latest initiatives are designed to achieve “Insurance for All by 2047” by attracting global capital and simplifying consumer access.
1. 100% Foreign Direct Investment (FDI)
The most transformative change is the removal of the 74% cap on foreign investment.
- Update: As of early 2026, 100% FDI is permitted via the automatic route.
- Mnemonic: “Full Gate Entry” (74% “gate” is now fully open at 100%).
- Impact: Foreign players can now own 100% of an Indian insurance company without needing a local partner, encouraging the entry of global technology and specialized underwriting.
2. Reduced Capital Barriers for Reinsurance
To make India a global reinsurance hub, capital requirements have been slashed.
- Update: The Net Owned Fund (NOF) requirement for foreign reinsurer branches was reduced from ₹5,000 crore to ₹1,000 crore.
- Mnemonic: “One-Fifth Entry” (Requirement is now 1/5th of the old limit).
3. The “Bima Trinity” (Digital Public Infrastructure)
The IRDAI is rolling out a three-pronged digital framework to make insurance as easy as UPI:
- Bima Sugam: A one-stop digital marketplace for buying, servicing, and settling claims.
- Bima Vistar: A simplified, bundled “all-in-one” product for rural areas covering life, health, and property.
- Bima Vahak: A women-led local distribution force at the Gram Panchayat level.
- Mnemonic: “S.V.V. for the Village” (Sugam, Vistar, Vahak).
10 Questions & Answers on New Reforms
1. Q: When did the Sabka Bima Sabki Raksha Act, 2025 come into force?
- A: Most provisions became effective on February 5, 2026.
2. Q: What is the new FDI limit for Indian insurance companies?
- A: 100%, up from the previous 74%.
3. Q: How has the registration for intermediaries (brokers/agents) changed?
- A: It is now a one-time registration in perpetuity, replacing the three-year renewal cycle.
- Mnemonic: “Forever Licensed.”
4. Q: What is the “Policyholders’ Education and Protection Fund”?
- A: A new dedicated fund set up to spread awareness and protect consumer interests, funded through penalties.
5. Q: What is the new threshold for seeking IRDAI approval for share transfers?
- A: Raised from 1% to 5% of paid-up capital to improve the ease of doing business.
6. Q: Can the IRDAI now supersede an insurance company’s board?
- A: Yes, the 2025 Act empowers IRDAI to appoint an administrator to supersede the board if it acts against policyholder interests.
7. Q: What is the new penalty limit for insurance law violations?
- A: Increased tenfold from ₹10 million to ₹100 million (₹10 crore).
8. Q: Is there a change for senior citizens in health insurance?
- A: Yes, as of 2024, IRDAI removed the 65-year age cap for buying new health insurance.
9. Q: How does the Act affect LIC’s operations?
- A: LIC can now open zonal offices without prior government approval, granting it greater operational autonomy.
10. Q: What is the “Disgorgement” power of IRDAI?
- A: The legal right to recover wrongful profits or averted losses from insurers who contravene the law.
- Mnemonic: “Vomit the Gains” (Disgorge).
Would you like to explore how Bima Sugam specifically aims to settle claims within hours rather than days?
AI responses may include mistakes. Information may vary depending on location or individual circumstances. Learn more
17 sites
- India’s insurance sector reforms – key highlights9 Jan 2026 — India’s insurance sector reforms – key highlights. … On December 21, 2025, the Indian government published the Sabka Bima Sabki …
Majmudar & Partners
- Sabka Bima, Sabki Raksha Bill, 2025 – Drishti IAS19 Dec 2025 — Why in News? The Lok Sabha has passed the Sabka Bima, Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, proposing to raise th…
Drishti IAS
- IRDAI Vision 2047 – Drishti IAS29 May 2023 — Why in News? The Insurance Regulatory and Development Authority of India (IRDAI), as part of its Vision Insurance for all’ by 2047…
Drishti IAS
Show all
New insurance schemes
In Ramesh Singh’s
Indian Economy (17th Edition, 2025–26), insurance is highlighted as a critical pillar for financial inclusion. Recent policy updates have introduced several flagship and expanded schemes to achieve “Insurance for All by 2047”.
Top New & Expanded Insurance Schemes (2025–2026)
1. Ayushman Vay Vandana (PM-JAY Expansion)
Originally for the bottom 40% of the population, the government expanded this in October 2024 to include all senior citizens aged 70 and above, regardless of their socio-economic status.
- Coverage: ₹5 lakh per year free health cover.
- Unique Feature: Seniors in families already covered by PM-JAY receive an additional top-up of ₹5 lakh exclusively for themselves.
- Card: Eligible seniors receive a distinct Ayushman Vay Vandana Card.
2. Bima Vistar (The All-in-One Policy)
Conceived as a bundled product to simplify insurance for rural and semi-urban markets.
- Structure: Combines life, health, accident, and property coverage into a single, easy-to-understand contract.
- Status: While technical architecture is being finalised in 2025–26, it is a primary focus for deepening penetration beyond metros.
3. Updated Social Security Schemes (Jansuraksha)
The government launched the Financial Inclusion Saturation Campaign in July 2025 to ensure every eligible citizen is covered under these “Jansuraksha” schemes.
- PMJJBY (Life Insurance): Covers death due to any cause for ages 18–50. Premium is ₹436/year for ₹2 lakh cover.
- PMSBY (Accident Insurance): Covers accidental death/disability for ages 18–70. Premium is ₹20/year for ₹2 lakh cover.
Mnemonic for New Schemes: V.A.S.T.
Use this to remember the current reform focus:
- V – Vay Vandana: Expanding health cover to all 70+ seniors.
- A – Ayushman Bharat: The foundational world’s largest health scheme.
- S – Sugam & Vistar: Digital marketplace (Sugam) and bundled products (Vistar).
- T – Trinity (JAM): Using Jan Dhan, Aadhaar, and Mobile for seamless enrolment.
10 Questions & Answers with Mnemonics
- Q: Who is eligible for the new Ayushman Vay Vandana Card?
- A: All Indian citizens aged 70 years and above, irrespective of income.
- Mnemonic: “Seven-Zero is the new Hero.”
- Q: What is the current premium for PMSBY?
- A: ₹20 per year (updated from ₹12 in 2022).
- Mnemonic: “Twenty for Plenty” (₹20 for ₹2 lakh).
- Q: What is the “Bima Sugam” platform?
- A: A national digital marketplace for buying, servicing, and claiming policies.
- Mnemonic: “Sugam is Simple.”
- Q: Does PMJJBY cover death due to suicide?
- A: Yes, it covers death due to any reason after the initial 30-day lien period.
- Mnemonic: “Any cause, No pause” (after 30 days).
- Q: What is the maximum entry age for PMJJBY?
- A: 50 years (coverage continues until 55).
- Mnemonic: “Half-Century is the limit.”
- Q: How much accidental cover is provided to Jan Dhan account holders?
- A: Up to ₹2 lakh for accounts opened after August 28, 2018 (via RuPay card).
- Mnemonic: “JD-2” (Jan Dhan-2 Lakh).
- Q: What is the “Bima Vahak” initiative?
- A: A women-led distribution force at the Gram Panchayat level to sell insurance.
- Mnemonic: “Women Warriors of Insurance.”
- Q: When is the risk cover activated in PMJJBY for new members?
- A: After a 30-day “lien period” (accidental death is covered from day one).
- Mnemonic: “Wait for Thirty” (except for accidents).
- Q: What is the latest FDI limit in insurance?
- A: 100% under the automatic route (notified in February 2026).
- Mnemonic: “Century FDI” (100%).
- Q: Which scheme protects farmers against crop loss?
- A: Pradhan Mantri Fasal Bima Yojana (PMFBY).
- Mnemonic: “Fasal means Crop.”
