author(s)
Manoranjan Nayak

abstract
The rates, terms and conditions that the insurer could offer for their products were established by the Tariff Advisory Committee (TAC), a statutory body created under the Insurance Act 1938, the major piece of insurance legislation in effect at that time. The premiums were fixed at the same rate for all the companies, products were undifferentiated and coverage was limited in almost every line. The major increase was witnessed in the miscellaneous and marine segments while as the fire segment, which is seen as profitable business continued to remain under strain and all the public sector insurers seem to lose grip on the fire segment. Capital Adequacy is viewed as the key indicator of an insurer‘s financial soundness and prudential standards recognize the importance of adequate capitalization with solvency as key focus area of insurance supervision. The greater risk to the financial stability of an insurer stems from underwriting business that is either too great in volume or too volatile for its capital base or otherwise whose ultimate result is too difficult to determine.