INTRODUCTIONAn agreement by which a company or state agrees to provide a guarantee of compensation for specified loss, damage, illness, or death in exchange for the payment of a specified premium. In India, insurance has a deep-rooted history. Mention is found in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings speak in terms of sharing resources that could be redistributed in times of calamities such as fires, floods, epidemics and famines. . This was probably a precursor to modern insurance. The origin of life insurance in India can be traced back to 1818 with the founding of the Oriental Life Insurance Company in Calcutta. The world's major insurance markets are obviously the United States, Europe, Japan and South Korea. Emerging markets are found throughout Asia, particularly in India and China. Over the past decade, global insurance premiums have increased by more than 50%, with annual growth rates between 2 and 10%. In 2004, global insurance premiums were $3.3 trillion. The global insurance market grew by 7.6% in 2007 to reach a value of $3,688.9 billion. In 2012, the global insurance market was worth $4,608.5 billion, an increase of 24.9% from 2007. Life insurance dominates the global insurance market, accounting for 59.7% of the value of market. Europe represents 39.3% of the value of the global insurance market. The top ten global insurance companies are American Intl Group (USA), AXA Group (France), Allianz Worldwide (Germany), Manulife Financial (Japan), General Group (Italy). , Prudential Financial (US), Met Life (US), Aviva (UK) and Aegon (Netherlands). Insurance Regulatory and Development Authority (IRDA) Insurancen...... middle of paper ...... ateInflation is one such major cause of changing scenario of insurance sector. High inflation means that purchasing power will decrease and this will lead to a decrease in savings. Decrease in savings means decrease in surplus money, so people will lose attraction to purchase insurance policies. Interest Rate The insurance industry will see a decline in profits as legislative and regulatory measures come into force. If the interest rate increases, savings will increase. If savings increase, people's monetary surplus will increase. This could lead to investments in the insurance sector.3.5.3. Social FactorPopulationIndia is the second largest country by population in the world. Population growth translates into increased demand. This presents an opportunity for the insurance industry. Let's consider an example: an increase in population leads to an increase in the number of insurers and profits.