Dynamics of Private Sector General Insurance in India: A Case Study

The service industry in India has achieved a phenomenal growth in the recent past and among them, insurance is one sector, which has witnessed a high decibel growth thanks to the investor friendly regulator in the name of Insurance Regulatory Development Authority (IRDA). Of particular interest is the period since the year 1999 with the insurance sector undergoing major structural changes with a series of reforms initiated by successive governments. The growth the market has achieved in terms of 18-20% in life insurance and 15- 17% in non-life insurance stands testimony to that. The present study probes deeply into India's general (non-life) insurance sector – the key players, the interrelationships and the causal linkages among these key players, and develops a system dynamic model based on such relationships with a case study of a private sector insurance company of India, the ICICI Lombard General Insurance Company Limited. The model has been run using VENSIM software. Both the causal loop as well as the stock-flow diagrams is presented and model simulation runshave been analyzed. The implications of the study results have been discussed.