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Report No. 190 Malhotra Committee Report 1.3.2 In the backdrop of new industrial policy, the Government of India set up in 1993 a high-powered committee headed by Mr. R. N. Malhotra to examine the structure of the insurance industry, to assess its strength and weaknesses in terms of the objective of providing high quality services to the public and serving as an effective instrument for mobilization of financial resources for development, to review the then existing structure of regulation and supervision of insurance sector and to suggest reforms for strengthening and modernizing regulatory system in tune with the changing economic environment. 1.3.3 The Malhotra Committee submitted its report in 1994. Some of the major recommendations made by it were as under: (a) the establishment of an independent regulatory authority (akin to Securities and Exchange Board of India); (b) allowing private sector to enter the insurance field; (c) improvement of the commission structure for agents to make it an effective instrument for procuring business specially rural, personal and nonobligatory lines of business; (d) insurance plans for economically backward sections and appointment of institutional agents; (e) setting up of an institution of professional surveyors/loss assessors; (f) functioning of Tariff Advisory Committee (TAC) as a separate statutory body; (g) investment on the pattern laid down in section 27 of the Act; (h) marketing of life insurance to relatively weaker sections of the society and specified proportion of business in rural areas; (i) provisions for co-operative societies for transacting life insurance business in States; (j) the requirement of specified proportion of the general business as rural nontraditional business to be undertaken by the new entrants; (k) welfare oriented schemes of general insurance; (l) technology driven operation of General Insurance Corporation of India (GIC); GIC to exclusively function as a reinsurer and to cease to be the holding company; (m) introduction of unit-linked pension plans by the insurance companies; and (n) restructuring of insurance industry.    |
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