Thanks to Parliament, millions of Indians still cannot use the stock markets to monitor the activities of the insurance companies that together sit on Rs 3,39,948 crore of their premium (March 2012). None of these companies are listed and none are likely to, till additional foreign direct investment comes into the sector. Parliament has let another session go by without revising the cap for the sector. So the only way someone who pays a premium for any insurance product can know if it is being used best is to rely on the judgement of the insurance regulator, and in turn the time the wise men have, to police the sector.
The premium payer is obviously not a shareholder but if she could have bought a Rs 10 equity in the market it would have allowed her to share in the profit of the company and keep an eye on the best use of her premium too. In its absence the usual quarterly disclosure of accounts is not required for any of these companies nor do they need to appoint minority shareholder directors among other things.
In the same session when Parliament has approved the new Companies Act for listed firms, it has perpetuated a policy that keeps secretive a sector where the most disclosure is required, as none of the 52 insurance firms are listed in the stock market including the public sector ones.
Is it a surprise then, that Indians do not show eagerness to put money in these companies, especially the poorer sections? Insurance penetration in India as per the regulators’ own figures are one of the lowest globally (4.10 per cent o f 2011-12 GDP against global average of 7 per cent) even after more than a decade of opening up of the sector.
Instead one senses that the pension sector, for which Parliament has finally passed the bill to create a regulator, will see more virtuous action soon. In circa 2003 too, the Indian economy had pinned hopes on these two as the economy essayed a J curve recovery from the Asian crisis. They were expected to catalyse long