India’s history of life insurance is long and interesting, with roots in ancient practices and centuries of development. It began with risk-sharing customs in ancient times and has since developed into an established industry that insures millions of lives. From its modest origins in the 1800s to its current competitive market, life insurance has been necessary in determining the financial stability of families nationwide.
Origin Of Insurance In India
Over years, insurance beliefs have been a part of Indian culture. It is mentioned in the works of Kautilya (Arthasastra), Yagnavalkya (Dharmasastra), and Manu (Manusmrithi). The first insurance business, Oriental Life Insurance business, was founded in Calcutta (now Kolkata) in 1818 with a focus on life insurance for Europeans, marking the beginning of insurance in India in the early 19th century. It signified the introduction of life insurance to the nation. However, the business suffered and shut down in 1834. At first, foreign corporations controlled the majority of insurance services, and Indian people had little access to them.
Growth In The Late 19th Century
With the formation of many Indian insurance firms, the late 19th century saw significant expansion. In 1870, the British Insurance Act was passed, which encouraged the growth of the insurance industry. Companies like Bombay Mutual (1871), Oriental (1874), and Empire of India (1897) were established in the Bombay Presidency between 1871 and 1897. Foreign organizations like Royal Insurance and Albert Life Assurance controlled the market despite the growth of these Indian companies.
Regulation and Expansion in the Early 20th Century
The first law to govern the life insurance industry in India was the Indian Life Assurance Companies Act, which was passed in 1912. The Indian Insurance Companies Act of 1928 came next, giving the government the ability to gather data on the life and non-life insurance operations of domestic as well as foreign companies. In order to safeguard policyholders’ interests, the 1938 Insurance Act combined earlier laws and added new ones.
The Nationalization Era
The Indian insurance industry saw substantial changes following independence. Differences and unfair procedures resulted from the competition between several businesses. The government responded by passing the Insurance Amendment Act of 1950, which established stricter guidelines and eliminated key agencies. The Indian government made the decision to nationalize the life insurance industry in 1956 in order to protect policyholders’ interests. 245 Indian and international insurance businesses were merged into the newly formed Life Insurance Corporation of India (LIC). LIC controlled the life insurance market in India for the ensuing forty years.
Re-Opening of the Sector in the 1990s
For the insurance industry in India, the 1990s were a turning point. The administration chose to liberalize the insurance sector as a part of broader economic reforms. A committee was established in 1993 to recommend reforms for the industry under the direction of former Reserve Bank of India Governor R. N. Malhotra. According to the committee’s recommendation, the market should be opened to private businesses, including joint ventures with international corporations. These recommendations resulted in important government-run reforms that allowed private companies to enter the market.
Establishment of IRDA and Market Liberalization
In 1999, the Insurance Regulatory and Development Authority (IRDA) was created in response to the Malhotra Committee’s recommendations. The responsibility for overseeing and developing the insurance sector in India fell to this statutory organization. Foreign businesses have the right to own up to 26% of joint ventures with Indian partners after IRDA formally opened the market to private firms in 2000. Policyholders benefited from increased competition, better services, and more options as a result of this move.
Present-Day Life Insurance Landscape
India’s life insurance market has expanded rapidly since privatization. There are currently 24 LI providers, including both state-owned LIC and private enterprises. Innovation, improved customer service, and a wide range of things to meet various consumer needs have all been brought about by the entry of private players. The industry keeps growing, making a substantial economic contribution to India and providing stability and financial security to millions of families nationwide.
