There are a few state-owned companies in India that are managed very well. One of them is the general insurance corporation of India. It is a state-owned enterprise. Thus, it is totally managed by the government and its employees.
General Insurance Corporation
Before the Indian market was open to other foreign insurance players, general insurance corporation was the sole reinsurance company in India. Also, this was in late 2016 when companies from Germany, Switzerland, and France were allowed to enter in India. The headquarter and registered office of GIC is in Mumbai, Maharashtra.
History of GIC
It was in 1970 when the government of India decided to nationalized general insurance corporation in India. Also, this was done through the general insurance act. As much as 55 insurance companies of India and 52 different general operations of other companies were nationalized with GIC.
The formation of GIC was done under the pursuance of section 9(1) of GIBNA. Furthermore, it was incorporated on 22nd November 1972 under the companies act. Thus, the main purpose of the formation of GIC was to operate and control the business of general insurance in India.
All the operations and assets of the nationalized insurance companies were transferred to GIC by the government of India.
Also, these assets were transferred to other public sector companies. When the process of merger and consolidation was over, GIC was again reorganized. This time with 4 fully owned subsidiary companies. So, the companies were New India assurance co. ltd., Oriental insurance company, the national insurance company, and United India insurance company.
Emergence of GIC
GIC along with its subsidiaries had a monopoly in the general insurance market of India. This lasted until 1999 when the landmark insurance development authority and the regulatory act came into place. Furthermore, this act amended the insurance act and GINBA act of 1938. This act along with its amendments end the monopoly of GIC and also it’s subsidiaries.
Thus, it had a hand in liberalizing insurance business in India. After this in 2000, GIC was again notified as to the insurer of India. But the supervisory role it held over its subsidiaries was ended.
Also, this was followed by the general insurance amendment act that took place in 2002. This act came into effect in March 2003. Thus, it ended GIC’s role as a holding company over its subsidiaries.
After all this, GIC has now become the sole re-insurer in India. Thus, the company is also called as GIC re. Also, GIC has diversified its operations now. So, it is emerging as the important re-insurer in India as well as SAARC countries. This helps GIC re in building the global footprints it requires to go forward.
As of 2012, GIC was 14th largest insurer in the world. Comparing its financial strength, GIC re has got A- rating. This is considered an excellent rating. It is also assigned nationally ‘AAA’ reliability rating by the Russian national rating agency.
Questions on General Insurance Corporation
Q. Which of the following given companies does not belong to the major company in general insurance in the private sector in India?
A. The oriental insurance company
B. Bajaj Alliance insurance company
C. Reliance general insurance company
D. None of the above
Answer: A. The oriental insurance company