Market Structure of Government Insurance Company - Before and After Liberalization

Introduction:

The organizational and other characteristic of a market is defined as market structure. We focus on those characteristics which affect the nature of competition and pricing but it is important not to place too much prominence simply on the market share of the existing firms in an industry. We choose Insurance sector to know the impact of Liberalization, Privatization and Globalization in Indian Economy. It is extremely important to study insurance sector because it plays a main role in Indian economy.

Table 1: Characteristics of Market structures

Characteristic Perfect Competition Oligopoly Monopoly

Number of firms Many Few One

Type of product Homogenous Differentiated Limited

Barriers to entry None High High

Pricing Price taker Price maker Price maker

Profit maximization Limited Not always Usually, but not always

Economic efficiency High Low Low

Innovative behavior Weak Very Strong Potentially strong

Executive Summary

The market structure about which impact the market control of Insurance sector such as Privatization, Liberalization and Globalization are discussed in this report .We looked at the market structure prevailed before 1999 and liberalization measures introduces in 1999 to understand the changes in economic system. We have found here various changes and modification in insurance sector which took place after 1999. Contributions of insurance sector in GDP of India before and after liberalization were also discussed in this report. We also talk about various factors that are affecting insurance sector today and also on what trend it can move in future.

After studying we found that that liberalization helped India to bring back economy on track and to attract foreign investors. After privatization many new companies came into the scene in Insurance Sector and ultimately that helped the growth of India.

The Pre-Liberalized Market:

From January 19, 1956 Life insurance in India was completely nationalize through Life...