India

Principal Legislation

As of 2025, the following key legislation and regulatory frameworks continue to govern and shape the insurance industry in India:

• The Life Assurance Companies Act 1912 which obliged insurers to ensure that all premium rate tables and periodical company valuations were certified by an actuary
• The Insurance Act 1938
• The Marine Insurance Act 1948
• The Life Insurance Corporation Act 1956 which nationalised all life offices, placing their business under the state-owned company, the Life Insurance Corporation of India (LIC)
• Certain provisions of the General Insurance Business (Nationalisation) Act 1972 (which nationalised non-life insurance) still apply, for example to non-admitted insurances.
• The Insurance Regulatory and Development Authority Act 1999 which introduced a private insurance market, ending the monopoly created in 1972 of the nationalised companies.
• The Insurance (Amendment) Act 2002
• The Public Liability Insurance Act 1991 obliging the manufacturers of hazardous materials to insure against the risk of third-party liability arising out of their activities.
• The Motor Vehicles Act 1988 imposing compulsory third-party liability insurance cover on the owners of all types of vehicles which are driven on the public highway.
• The Workmen’s Compensation Act 1923 (renamed in 2009 the Employee’s Compensation Act 1923)
• The Life Insurance Corporation Act (Amendment) Act 2011
• IRDAI regulations introduced between 2023 and 2025 that modernise product design, consumer protection, digital insurance marketplace, governance, cybersecurity, and solvency oversight.

Supervision

The Insurance Regulatory and Development Authority Act 1999 established the Insurance Regulatory and Development Authority of India (IRDAI) as the insurance industry regulator, granting it authority over the supervision of insurance companies, including their registration, approval of policy terms and conditions, and the conduct of insurance business. The IRDAI also supervises insured pensions, annuities, and private medical insurance, ensuring compliance and protecting policyholders.

In 2003, the Pension Fund Regulatory and Development Authority (PFRDA) was created to regulate both public and private pension sectors. The PFRDA became fully operational following the enactment of the Pension Fund Regulatory and Development Authority Act, 2013, and now oversees pension fund regulation, governance, and development across India’s pension landscape.

Admitted/Non-Admitted

Non-admitted insurance is generally prohibited in India unless explicit permission is granted. For general insurance, such permission is issued by the Central Government, while for life insurance, it is granted by the Reserve Bank of India (RBI). An important exception applies to export marine cargo insurance, which may be insured through non-admitted insurers. Currently, there are no mandatory requirements for reinsurance companies to be admitted in India or to maintain deposits or trust funds within the country, allowing foreign reinsurers to operate without establishing a physical presence or local security.

Compulsory Classes

• Motor third party liability.
• Third party liability for manufacturers of hazardous materials.
• Professional indemnity for direct brokers, reinsurance brokers and stockbrokers.
• Aviation carriers’ liability.
• Professional indemnity for mutual fund managers.
• Residential structures in Mumbai.

State Involvement

The independent General Insurance Council, established in 2001, serves as the representative body for the general insurance sector in India. It includes 23 members, comprising the four state-owned composite insurance companies, the Export Credit Guarantee Corporation of India, the Agriculture Insurance Company of India, and 17 private sector insurers. The council’s executive committee consists of all non-life chief executives along with two representatives from the Insurance Regulatory and Development Authority of India (IRDAI), ensuring coordination between the industry and the regulator.

Life insurance companies are represented by the Life Insurance Council, which includes all 24 life insurers registered in India as members. The council acts as a unified voice for the life insurance industry and facilitates dialogue with regulatory authorities and the government.

Tariff Classes

Premium rates for all motor third-party insurance policies—including private cars, two-wheelers, and commercial vehicles—are subject to a mandatory tariff set by the regulator. Terrorism insurance premiums are also regulated under a tariff system.

Premium Taxes and Charges

All non-life insurance classes and life insurance policies are subject to a 12.36% Goods and Services Tax (GST), which replaced the earlier service tax.

Policy Language

Insurance policies are issued in either Hindi or English, depending on the policyholder’s preference or regulatory requirements.

Due to deteriorating underwriting results and a significant decline in original premium rates in the voluntary business over the past three years, General Insurance Corporation of India Re (GIC Re) has tightened reinsurance terms and conditions. These include limiting the amount of coinsurance ceded to treaties, reducing reinsurance commissions, and promoting excess of loss coverage as a replacement for proportional treaty reinsurance. This approach aims to decouple reinsurance pricing from the declining original premium rates and improve overall risk management.

The state reinsurer General Insurance Corporation of India (GIC Re) also operates a life reinsurance division and is actively lobbying the government and regulator to mandate a higher cession from Indian life insurers. Currently, only 10% of LIC’s reinsurance is placed with GIC Re—with one private life insurer doing the same—and industry observers expect this cession to rise, potentially to 20% in future. Meanwhile, GIC Re’s dominance in the non-life segment is being gradually eroded: foreign reinsurers now manage nearly 49% of India’s reinsurance premiums, with projections indicating they will cross 50% in 2025. Despite this, IRDAI maintains a 4% obligatory cession requirement for non-life underwriters in favour of GIC Re for FY 2025–26, reinforcing its role even as private competitors ventures emerge.

With a full range of distribution channels now thriving in India’s insurance sector, IRDAI has registered 683 licensed insurance brokers (including composite and specialist categories such as reinsurance brokers and web aggregators) as of March 2024. Since the first general insurance broker licences were issued in 2003, the total continues to grow, reflecting a maturing intermediary ecosystem.

In life insurance distribution, the Life Insurance Corporation of India (LIC) continues to rely heavily on individual tied agents, who account for 96% of LIC’s individual new business premium, while private life insurers report around 23–24% from individual agents, with the remainder sourced via banks, direct channels, and brokers. Individual agents still dominate life sales overall, contributing about 51% of new individual business premium across the industry, while private insurers lean more on bancassurance (around 52%) and direct sales (approximately 16%).

Most of India is regarded as a low to medium-risk area in terms of natural catastrophe exposure. However, the eastern coastal states and regions bordering the Bay of Bengal are vulnerable to annual cyclones, which often result in widespread damage. These cyclones frequently bring flooding, especially in states such as Odisha, West Bengal, Andhra Pradesh, and Tamil Nadu, where inundation causes significant disruption to infrastructure and livelihoods. Urban flooding is also a recurring concern in major cities during monsoon seasons.