1 Role of Chartered Accountants in Boo mi ng I nsur ance Sector in India 1 In the nine years since the Insurance sector was opened up in the year2000, Insura nce indust ry has witness ed a business growt h of more thanfive times, from Rs. 4470 5 crore in 2000-01 t o Rs. 253272 cro re in 2008-09. Eve r since , ther e has bee n paradi gm shi ft in t he mean ing andrelevanc e of 'Insur ance' to th e common man. This gro wth proce ss in thesector has p ioneere d abundant opport uniti es in terms of employeegenerat ion. In this scena rio, Chartere d Account ants (CAs) are thrust wi thresponsibility to authenticate various information submitted to the Regulatorby an insuran ce compan y. Whil e insuranc e compan ies need ex perts topresent th eir performance meani ngfull y to the public, stakeh olders needprofessi onal advice s for a meaningful in terpret ation of the same. Role ofCAs, therefore, comes to the forefront in such a scenario. Recent dev elopments h ave conclu sively proved tha t the growth o f a nation' s economy is depende nt on the stability of its financial secto r. To ensure soundness o f the financial systems across the worl d, the International Monetary Fund (IMF) and the World Bank do carry out assessmen ts to identify the strengths and vuln erabilities of the financial system and to suggest measures tow ards the sector's dev elopmental needs and to help prioritize pol icy formulations. As a result, regulatory i ntervention (wheneve r necessary) an d measures to wards liberalization of the sector follow b ased on such assess ments in a proper sequence. The economic re forms of the ea rly 1990s hav e impacted the g rowth of the finan cial sector of India significantly . Indian financial sector has ex perienced GDP growth a s high as 9%+ for three yea rs runn ing, a nd ha s see n a decade o f 7%+ g rowth. Even in the mid st of ec onomic crisis faced by the global economy, India ha s register ed an impressive 6.7 per cent grow th in fiscal 2008-09. Booming Insurance Sector As an integral par t of the financial se ctor reforms, In surance S ector wa s opene d up b ased on the recommenda tions of S hri R.N. Ma lhotra Committee i n March 20 00. The p assage o f the Insurance R egulatory and Deve lopment Authority (IRDA) Bill lifted all entry rest rictions for priv ate play ers and allowed forei gn play ers to enter the market with some limits on direct fore ign ownership. The basic objective of openi ng up was to tap the tremendou s potential of the insurance secto r in terms of increase i n the number of insurance products in a ddition to play ers. It was aimed at throwing ope n more options for consumers in terms of produc ts, price benefits and procedure s. It was also aimed at generating long-te rm funds for giving a real push to the infrastructure secto r. While fulfilling the obje ctives for which the sector was opened up , post-liberalizati on insurance sector joined the stream of service indu stry which exp erienced a boom in its growth. In a matter of nin e year s, the in dust ry has bro ught abou t para digm sh ift in th e mean ing and re lev ance of 1 The article was published in the July, 2009 issue of The Chartered Accountant Journal
