Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent per annum. Together with banking services, it contributes to about 7 per cent to the country’s GDP. Insurance sector in India was liberalized in March
2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill. This lifted entry restrictions for private players and allowed foreign players to enter the market with some limits on direct foreign ownership. There is a 26 percent equity cap for
foreign partners in an insurance company and a proposal to increase this limit to 49 percent. The opening up of the insurance sector has led to rapid growth of the sector. The potential for growth of insurance industry in India is immense as nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be well below international standards.