Here, in this article we are going to focus on the step-by-step progress bought up in the insurance field. All of this was started with the ancient history and British times where the British companies and some overseas companies were in a very good secure and dominating position.
The insurance business has been running on a very good scale in India since independence. Now, the laws which are regulating the insurance sector came up in India in accordance with the establishment of a British entity, The oriental life insurance company in 1818, in Calcutta.
After a time span the nationalization of the business sector started and in a blink of eye all the insurance companies were conquered by the central government. The exclusive business of life insurance was started with the life insurance corporation act, which was enacted in the year 1956.
Further in 1993, an eight member committee was formed to give recommendations for strengthening the regulatory system.
the Insurance Amendment Act of 1950 Abolished Principal Agencies. However, there were many 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.
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 absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
Modern insurance is a legacy of the British occupation, with the industrial revolution in the West and mainly in England boosting trade and shipping during the 17th century. These factors had largely contributed to the rise of the insurance industry in India, a large country producer of raw materials needed by England.
The life business began in 1818 in Calcutta with the establishment of Oriental Life Insurance Company. The first non-life insurance company was not set up until 32 years later. Its name was Triton Insurance, a company founded by some British in Calcutta.
For over a century, the market had been dominated by representation offices and branches of foreign, mostly, British, insurers. Among these entities are Albert Life Assurance, Royal Insurance and Liverpool & London Globe Insurance, companies which had prospered considerably in India, prompting strong competition with other market players.
The marginalization of local companies pushed the Indian government to nationalize life insurance activities in 1956. For its part, non-life insurance was not nationalized until 1972.
Life Insurance Corporation (LIC) was established in 1956, taking over the portfolio of 245 national and foreign companies. LIC had tapped into life operations monopoly from 1956 to the late 1990s and the opening of the insurance sector to private investors.
Indian insurance dates to the days of ancient India legislation. It was then designed to pool national resources to deal with the occurrence of calamities such as fires, floods, famines and epidemics. The first traces of insurance were found in the form of maritime loans and carrier contracts.
In the non-life insurance, the portfolios of the 107 companies present on the market in 1972 were pooled up into four large national companies whose head offices are based in the four corners of the country:
- National Insurance Company (Calcutta),
- New India Insurance Company (Mumbai),
- Oriental Insurance Company (Delhi),
- United India Insurance Company (Madras).
These four national companies are overseen by General Insurance Corporation (GIC) whose head office is in Bombay. GIC, created in 1972, intervened on the market as a national reinsurer and shareholder of the four direct companies.
The government will not reopen the doors of the Indian insurance market to the private sector until the early 2000s. The entry into activity in 1999 of the Insurance Regulatory and Development Authority (IRDAI) marked the end of State monopoly and the opening of the market to private and foreign investment.
History of Insurance law in India