Thanks to the deregulation of the Indian insurance industry, there has been an impressive growth in the insurance business. The poorer section of the society, however, has received little benefit (if any) from the growth of the insurance industry in India. This article discusses the major issues relating to the growth of micro insurance market in India in the light of the various studies on the potential market as well as the initiatives taken by the IRDA regarding the development of micro insurance.

Following the deregulation of the insurance sector in India, there has been a steady growth in the life and general insurance business. Inter alia, the entry of private sector insurers in the life insurance market has facilitated market deepening as measured by the volume of business and the variety of products offered in the market. The total premium collection by the life insurance industry increased from Rs. 34,898 cr in 2000-01 to Rs. 1,56,041 cr in 2006-07. The market share of private sector insurers in the total premium collected increased from less than 1% to over 18% during the period under consideration.

For purposes of international comparison, there are two standard measures for assessing the growth of the insurance market: insurance penetration and insurance density. Insurance penetration is measured as ratio (in %) of premium to GDP while insurance density is measured as ratio (in %) of premium to total population. Table 1 provides a year to year comparison of India's position (in the insurance market) relating to insurance penetration and insurance density vis-à-vis the world.

Financial Inclusion, Micro Insurance, Indian Insurance Sector, Indian Insurance Industry, Insurance Penetration, Insurance density, Credit Functions, Supervisory functions, Rural Credit, Institutional Development, NABARD Act, Development Bank, Board and Management, Organisational Structure.