Brief History of Insurance
The story of insurance is probably as old as the story of
mankind. The same instinct that prompts modern businessmen
today to secure themselves against loss and disaster existed in
primitive men also. They too sought to avert the evil
consequences of fire and flood and loss of life and were willing
to make some sort of sacrifice in order to achieve security.
Though the concept of insurance is largely a development of
the recent past, particularly after the industrial era – past few
centuries – yet its beginnings date back almost 6000 years.
In India, insurance has a deep-rooted history. It finds mention in
the writings of Manu (Manusmrithi), Yagnavalkya
(Dharmasastra) and Kautilya (Arthasastra). The 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 pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and carriers’
contracts. Insurance in India has evolved over time heavily
drawing from other countries, England in particular.
history of lic
Life Insurance in its modern form came to India from England in
the year 1818. Oriental Life Insurance Company started by
Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that
period were brought up with the purpose of looking after the
needs of European community and Indian natives were not
being insured by these companies. However, later with the
efforts of eminent people like Babu Muttylal Seal, the foreign
life insurance companies started insuring Indian lives. But
Indian lives were being treated as sub-standard lives and heavy
extra premiums were being charged on them. Bombay Mutual
Life Assurance Society heralded the birth of first Indian life
insurance company in the year 1870, and covered Indian lives
at normal rates. Starting as Indian enterprise with highly
patriotic motives, insurance companies came into existence to
carry the message of insurance and social security through
insurance to various sectors of society. Bharat Insurance
Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise
to more insurance companies. The United India in Madras,
National Indian and National Insurance in Calcutta and the Co-
operative Assurance at Lahore were established in 1906. In
1907, Hindustan Co-operative Insurance Company took its birth
in one of the rooms of the Jorasanko, house of the great poet
Rabindranath Tagore, in Calcutta. The Indian Mercantile,
General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period.
Prior to 1912 India had no legislation to regulate insurance
business. In the year 1912, the Life Insurance Companies Act,
and the Provident Fund Act were passed. The Life Insurance
Companies Act, 1912 made it necessary that the premium rate
tables and periodical valuations of companies should be
certified by an actuary. But the Act discriminated between
foreign and Indian companies on many accounts, putting the
Indian companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth
in insurance business. From 44 companies with total business-
in-force as Rs.22.44 crore, it rose to 176 companies with total
business-in-force as Rs.298 crore in 1938. During the
mushrooming of insurance companies many financially
unsound concerns were also floated which failed miserably. The
Insurance Act 1938 was the first legislation governing not only
life insurance but also non-life insurance to provide strict state
control over insurance business. The demand for nationalization
of life insurance industry was made repeatedly in the past but it
gathered momentum in 1944 when a bill to amend the Life
Insurance Act 1938 was introduced in the Legislative Assembly.
However, it was much later on the 19th of January, 1956, that
life insurance in India was nationalized. About 154 Indian
insurance companies, 16 non-Indian companies and 75
provident were operating in India at the time of nationalization.
Nationalization was accomplished in two stages; initially the
management of the companies was taken over by means of an
Ordinance, and later, the ownership too by means of a
comprehensive bill. The Parliament of India passed the Life
Insurance Corporation Act on the 19th of June 1956, and the
Life Insurance Corporation of India was created on 1st
September, 1956, with the objective of spreading life insurance
much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country, providing
them adequate financial cover at a reasonable cost.
Life Insurance Corporation had 5 zonal offices, 33 divisional
offices and 212 branch offices, apart from its corporate office in
the year 1956. Since life insurance contracts are long term
contracts and during the currency of the policy it requires a
variety of services need was felt in the later years to expand
the operations and place a branch office at each district
headquarter. Re-organization of Life Insurance Corporation took
place and large numbers of new branch offices were opened. As
a result of re-organisation servicing functions were transferred
to the branches, and branches were made accounting units. It
worked wonders with the performance of the corporation. It
may be seen that from about 200.00 crores of New Business in
1957 the corporation crossed 1000.00 crores only in the year
1969-70, and it took another 10 years for Life Insurance
Corporation to cross 2000.00 crore mark of new business. But
with re-organisation happening in the early eighties, by 1985-
86 Life Insurance Corporation had already crossed 7000.00
crore Sum Assured on new policies.
Today Life Insurance Corporation functions with 2048 fully
computerized branch offices, 113 divisional offices, 8 zonal
offices, 1381 satallite offices and the Corporate office. Life
Insurance Corporation’s Wide Area Network covers
113divisional offices and connects all the branches through a
Metro Area Network. Life Insurance Corporation has tied up with
some Banks and Service providers to offer on-line premium
collection facility in selected cities. Life Insurance Corporation’s
ECS and ATM premium payment facility is an addition to
customer convenience. Apart from on-line Kiosks and IVRS, Info
Centres have been commissioned at Mumbai, Ahmedabad,
Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and
many other cities. With a vision of providing easy access to its
policyholders, Life Insurance Corporation has launched its
SATELLITE SAMPARK offices. The satellite offices are smaller,
leaner and closer to the customer. The digitalized records of the
satellite offices will facilitate anywhere servicing and many
other conveniences in the future.
Life Insurance Corporation continues to be the dominant life
insurer even in the liberalized scenario of Indian insurance and
is moving fast on a new growth trajectory surpassing its own
past records. Life Insurance Corporation has issued over one
crore policies during the current year. It has crossed the
milestone of issuing 1,01,32,955 new policies by 15th Oct,
2005, posting a healthy growth rate of 16.67% over the
corresponding period of the previous year.
From then to now, Life Insurance Corporation has crossed many
milestones and has set unprecedented performance records in
various aspects of life insurance business. The same motives
which inspired our forefathers to bring insurance into existence
in this country inspire us at Life Insurance Corporation to take
this message of protection to light the lamps of security in as
many homes as possible and to help the people in providing
security to their families.
Some of the important milestones in the life
insurance business in India are: -
1818: Oriental Life Insurance Company, the first life insurance
company on Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian
life insurance company started its business.
1912: The Indian Life Assurance Companies Act enacted as the
first statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable
the government to collect statistical information about both life
and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the
Insurance Act with the objective of protecting the interests of
the insuring public.
1956: 245 Indian and foreign insurers and provident societies
are taken over by the central government and nationalised. Life
Insurance Corporation formed by an Act of Parliament, viz. Life
Insurance Corporation Act, 1956, with a capital contribution of
Rs. 5 crores from the Government of India.
The General insurance business in India, on the other hand, can
trace its roots to the Triton Insurance Company Ltd., the first
general insurance company established in the year 1850 in
Calcutta by the British.
Some of the important milestones in the general
insurance business in India are: -
1907: The Indian Mercantile Insurance Ltd. set up, the first
company to transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance
Association of India, frames a code of conduct for ensuring fair
conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and
set minimum solvency margins and the Tariff Advisory
Committee set up.
1972: The General Insurance Business (Nationalisation) Act,
1972 nationalised the general insurance business in India with
effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies
viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd.
and the United India Insurance Company Ltd. GIC incorporated
as a company.
History of gic
The history of general insurance dates back to the Industrial
Revolution in the west and the consequent growth of sea-faring
trade and commerce in the 17th century. It came to India as a
legacy of British occupation. General Insurance in India has its
roots in the establishment of Triton Insurance Company Ltd., in
the year 1850 in Calcutta by the British. In 1907, the Indian
Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.
1957 saw the formation of the General Insurance Council, a
wing of the Insurance Association of India. The General
Insurance Council framed a code of conduct for ensuring fair
conduct and sound business practices.
The business of general insurance was nationalised through
The General Insurance (Emergency) Provisions Ordinance
promulgated on 13 May 1971 and thereby the business being
carried on by 107 entities was consolidated and restructured
into four companies namely The New India Assurance Company
Limited, Bombay, United India Fire & General Insurance
Company Limited, Madras, Oriental Fire & General Insurance
Company Limited, Bombay and National Insurance Company
Limited, Calcutta (New India Assurance Co. Ltd., United India
Insurance Co. Ltd., The Oriental Insurance Co. Ltd., and
National Insurance Company Co. Ltd. respectively).
The General Insurance Business (Nationalisation) Act, 1972
(GIBNA) that followed paved the way for the Government to
take over ownership of these businesses. Accordingly, GIC was
incorporated on 22 November 1972 as a private company
under Companies Act, 1956 in Bombay and received its
Certificate for Commencement of Business on 1 January 1973.
GIC's stated role was to function as the holding company of the
four companies, and superintend, control and carry on the
business of General insurance on behalf of the Government of
India.
The first Chairman of GIC was A Rajagopalan, an Actuary and
an officer of the Indian Administrative Service (IAS). M K
Venkateshan and S K Desai were appointed the two Managing
Directors of GIC.
On 1 January 1973, GIC was notified as the reinsurer under
Section 101 A of Insurance Act, 1938, making it the Indian
reinsurer for receiving obligatory cessions, a role hitherto
played by two companies called India Reinsurance Corporation
Limited (India Re) and Indian Guarantee and General Insurance
Company Limited (Indian Guarantee).
GIC was reborn as a pure reinsurance company in November,
2000. It was re-notified as 'Indian reinsurer' under Insurance
Act, 1938 and continued to receive obligatory cessions from
direct insurers. It continued writing foreign inward reinsurance
business purely on its own account from 1 April 2002.
With effect from 21 March 2003, its four subsidiaries
(NICL, United India Insurance, Oriental Insurance and New India
Assurance) were delinked from GIC by an administrative order
from the Ministry of Finance and became directly owned by the
Government.
Retaining its name, the company rebranded itself as "GIC Re" to
denote its new identity.
All direct general insurance companies of India are required by
law to cede a mandatory percentage of every policy value to
GIC Re subject to some limitations and exceptions. This
percentage of cession is decided by the IRDAI on an annual
basis.
In April 2020, GIC Re's Operations in Brazil got status upgrade
from 'occasional reinsurer' to 'admitted reinsurer' by the
Brazilian Superintendence of Private Insurance (SUSEP). It was
published in the Brazilian Gazette on 14 April 2020.
On 26 August 1976, Chairman A Rajagopalan in GIC's Board
Minutes signed and approved the motto of GIC Re, Ãpatkãle
Rakshisyãmi. It a Sanskrit phrase that translates into, "I shall
protect you in times of distress." In 1980s, GIC's logo was
modified and the motto was incorporated in Devanagari Script.
[9]
At the time of its creation, GIC was headquartered in the fourth
floor of Industrial Assurance Building owned by LIC.
GIC acquired Jeevan Kendra that belonged to LIC and housed its
Bombay Zonal Office. It was extensively renovated retaining its
curved front and then gilded with panels of reflective glass. It
has a circular atrium running the height of the building.
This building was eventually named as 'Suraksha,' meaning
protection.
Suraksha became the Registered and Head Office of GIC, and
all its departments moved in from their various locations in
March, 1992.
Conclusion
In conclusion, the history of insurance in India is a tale of
evolution shaped by ancient practices, foreign influences, and
governmental reforms. From its roots in ancient texts and early
marine trade contracts, insurance in India gradually grew into a
formal industry with the establishment of life and general
insurance companies in the 19th and 20th centuries.
Nationalization played a pivotal role in shaping the market, but
the liberalization process in the 1990s, driven by the Malhotra
Committee's recommendations, transformed the sector into a
more competitive and customer-centric one. The formation of
the Insurance Regulatory and Development Authority (IRDA) in
2000 and the entry of private and foreign players further
diversified the industry. Today, the Indian insurance sector is
vibrant, with numerous companies providing a wide array of life
and general insurance products, continuing to play a crucial
role in the economic development of the country.
