Insurance Industry in India

India has a deep-rooted history in the field of Insurance. In fact, the principles of insurance finds place, even in Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). Those writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pioneer to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts.

In 1818, the Oriental Life Insurance Company was established in Kolkata. It failed in the year 1834 due to the business of the Madras Equitable life insurance which was started in Madras from the year 1829. The Triton Insurance Company Ltd was formed in 1850 and it was the first general insurance sector in India. The British Insurance Act was enacted in 1870. The Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) insurance companies were started. In 1907, Indian Mercantile Insurance Limited was started, which was the first company to handle all forms of Indian insurance.

A new era began in the Indian insurance sector, by passing of the Life Insurance Act, 1912. The Indian Insurance Companies Act was passed in 1928. This Act empowered the Government of India to gather necessary information about the life insurance and non-life insurance organizations operating in the Indian financial markets. This Act was amended in 1938 with comprehensive provisions for effective control over the activities of insurers to protecting the interest of public. The Principal Agencies system was abolished in the Amendment Act of 1950. On 19th January, 1956 an ordinance was passed for nationalizing the Life Insurance Sector and the Life Insurance Corporation came into existence.

In 1972, with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commenced business on January 1st 1973.