History of Insurance in India

1. Insurance began formally in India in the 18th The year 1818 saw the start of
life insurance in India when Oriental Life Insurance Company was established
in Kolkata.
2. The year 1850 saw the establishment of first non-life insurance company,
Triton Insurance Company Limited in Kolkata by the British.
3. The Year 1870 saw the enactment of British Insurance Act
4. Bombay Mutual and Oriental started in Mumbai in the year 1871 and 1874
respectively.
5. The Life Insurance Companies Act, 1912 was enacted as a first statutory
measure to regulate life insurance business.
6. Insurance Act 1938 was enacted to control the activities of the insurance
companies.
7. Life Insurance Corporation of India came into existence in the year 1956.
8. General Insurance Council was formed in the year 1957 which formed a code
of conduct for ensuring fair conduct and sound business practices.
9. The Insurance Act was amended in 1968 to regulate and set minimum
solvency margins. The Tarriff Advisory Committee was also set up.
10. The General Insurance Business was nationalised with effect from 1st Jan
1973, where 107 insurance companies were amalgamated and grouped into 4
companies, namely, National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd and the United
India Insurance Company Ltd.
11. The General Insurance Corporation of India was incorporated as a company in
1971 and started operations on 1st Jan 1973
12. Insurance Regulatory and Development Authority of India (IRDA) was
incorporated as a statutory body in April 2000 to regulate and develop the
insurance industry.
13. The IRDA opened up the Insurance Industry in August 2000 with the
invitation for application for registrations. Foreign companies were allowed
ownership of up to 26%. The Authority has the power to frame regulations
under Section 114A of the Insurance Act, 1938.
 Evolution of insurance in India

In India, insurance has a deep-rooted history. It finds mention in the writings of

Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra).

Advent of life insurance business in India

1818
Advent of life insurance business in India-1818 saw the advent of life insurance
business in India with the establishment of the Oriental Life Insurance Company in
Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had
begun transacting life insurance business in the Madras Presidency. 1870 saw the
enactment of the British Insurance Act and in the last three decades of the nineteenth
century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897)
were started in the Bombay Residency.

This era, however, was dominated by foreign insurance offices which did good
business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and
London Globe Insurance and the Indian offices were up for hard competition from
the foreign companies..

1914
Government of India started publishing returns-In 1914, the Government of India
started publishing returns of Insurance Companies in India. The Indian Life
Assurance Companies Act, 1912 was the first statutory measure to regulate life
business.
In 1928, the Indian Insurance Companies Act was enacted to enable the Government
to collect statistical information about both life and non-life business transacted in
India by Indian and foreign insurers including provident insurance societies.
In 1938, with a view to protecting the interest of the Insurance public, the earlier
legislation was consolidated and amended by the Insurance Act,
1950
The Insurance Amendment Act of 1950 abolished Principal Agencies
The Insurance Amendment Act of 1950 abolished Principal Agencies.
However, there were a large number of insurance companies and the level of
competition was high. There were also allegations of unfair trade practices. The
Government of India, therefore, decided to nationalize insurance business..

1956
Life Insurance Corporation came into existence
An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance
sector and Life Insurance Corporation came into existence in the same year.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to
the private sector.

The history of general insurance -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.

1850
The British establish the Triton Insurance Company Ltd
General Insurance in India has its roots in the establishment of Triton Insurance
Company Ltd., in the year 1850 in Calcutta by the British.

1907
The Indian Mercantile Insurance Ltd, was set up- In 1907, the Indian Mercantile
Insurance Ltd, was set up. This was the first company to transact all classes of
general insurance business.

1957
General Insurance Council is formed- 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.

1968
Insurance Act was amended-In 1968, the Insurance Act was amended to regulate
investments and set minimum solvency margins. The Tariff Advisory Committee
was also set up then.

1973
General insurance business was nationalized
In 1972 with the passing of the General Insurance Business (Nationalisation) Act,
general insurance business was nationalized with effect from 1st January, 1973. 107
insurers were amalgamated and grouped into four companies. The General
Insurance Corporation of India was incorporated as a company in 1971 and it
commence business on January 1st 1973.

The process of re-opening

In 1993, the Government set up a committee under the chairmanship of RN Malhotra,

former Governor of RBI, to propose recommendations for reforms in the insurance
sector.
The objective was to complement the reforms initiated in the financial sector. The
committee submitted its report in 1994 wherein , among other things, it recommended
that the private sector be permitted to enter the insurance industry. They stated that
foreign companies be allowed to enter by floating Indian companies, preferably a
joint venture with Indian partners.

April, 2000
The IRDA was incorporated as a statutory body
Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry.The IRDA was
incorporated as a statutory body in April, 2000.

The key objectives of the IRDA include promotion of competition so as to enhance

customer satisfaction through increased consumer choice and lower premiums,
while ensuring the financial security of the insurance market.

August 2000
The IRDA opened up the market- The IRDA opened up the market in
August 2000 with the invitation for application for registrations. Foreign
companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938

December, 2000
the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies-- In December, 2000, the
 subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was
converted into a national re-insurer.

July, 2002
Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.-
Today there are 34 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 24 life insurance companies
operating in the country.

Conclusion:

Recent amendments to the Insurance Act:

We shall conclude with a note on recent amendments made to the insurance act of
1938.
Firstly, an amendment in 2015- foreign direct investments were tremendously
increased from 26% to 49%,

and companies were allowed to increase their capital through the issuance of shares,

health insurance was separated to form a new category of insurance in India.

The amendments also include the increase in powers and flexibility of IRDAI in
India.

Foreign re-insurances were also permitted.

Lastly, recently in 2021- increased the foreign investment in the Indian Insurance
company from 49% to 74%.