R.N. Malhotra, former RBI Governor.
A COMMITTEE was set up in 1993 under the chairmanship of R.N. Malhotra, former Governor of the Reserve Bank of India, to make recommendations for reforms in the insurance sector. The Malhotra Committee recommended introduction of a concept of “professionalisation” in the insurance sector to make out a strong case for paving the way for foreign capital.
In its report submitted in 1994, the committee recommended, among other things, that:
Private players be included in the insurance sector.
Foreign companies be allowed to enter the insurance sector, preferably through joint ventures with Indian partners.
The Insurance Regulatory and Development Authority (IRDA) be constituted as an autonomous body to regulate and develop the insurance sector.
The key objectives of the IRDA would include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
Brokers representing the customer be brought in as another marketing and distribution channel, a practice prevalent in most developed markets
Raise the level of professional standards in risk management and underwriting and speed up settlement of claims.
Following the recommendations, the IRDA was constituted as an autonomous body in 1999 and incorporated as a statutory body in April 2000. With the coming into force of the IRDA Act, 1999, the insurance industry was opened up to the private sector.