Why is the insurance market very important in India?

Insurance market in India is important for the following reasons: 

1. Insurance has become a highly technical industry where the customer's choice is of primary importance. This industry also produces a huge amount of resources. Hence it is able to encourage the development of infrastructure and overall economy. 

2. Insurance is long term basis business with a long gestation period and requires lot of patience. Insurance business follows ethics and rules of corporate governance. Its recent adoption is "Citizens Charter" which signifies its commitment in insurance industry. 

3. Insurance is a risk financing method and mainly used for paying the losses if any risk occurs. Society cannot neglect risks present around them. The insurance business helps the risks to spread wider by lowering the premium rates which in turn raises the profit rates. 

4. Insurance is very important for savings. In certain countries, there is an absence of state welfare profits. So people living there should make provisions for their fiscal security. Insurance is not only important for tax benefits but for both savings and security. 

5. Insurance and reinsurance play a major role in the market economy of nations and facilitates many economic activities. Insurance companies help to spread the catastrophic fiscal effects of risks to mobilize the savings for better development, productive use and internal and external trade. As insurance distribute the risks worldwide, the effect of catastrophe on group of companies is minimized.