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About Insurance

The Indian insurance industry originated in the nineteenth century with the first life insurance company being established at Kolkata in 1818. Oriental Life Insurance Company started by Europeans in Kolkata was the first life insurance company on Indian Soil. Subsequently, the first general insurance company commenced operations at Kolkata in 1850. The Life Insurance Corporation Act was passed on the 19.6.1956, and the Life Insurance Corporation of India was created on 1.9.1956, 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.

General Insurance in India began with the establishment of Triton Insurance Company Ltd by the British at Kolkata in 1850. In 1907, the Indian Mercantile Insurance Ltd, the first company was set up to transact all classes of general insurance business in India. The entire general insurance business in India was nationalized by General Insurance Business Nationalization Act, 1972 (GIBNA). Subsequently Government of India through Nationalization took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business. General Insurance Corporation of India (GIC) was incorporated on 22.11.1972 as a private company limited by shares. As soon as GIC was formed, GOI transferred all the shares it held of the general insurance companies to GIC. Simultaneously, the nationalized undertakings were transferred to Indian insurance companies. Finally after a process of mergers among Indian insurance companies, four companies remained as fully owned subsidiaries of GIC (1) National Insurance Company Limited, (2) The New India Assurance Company Limited, (3) The Oriental Insurance Company Limited, and (4) United India Insurance Company Limited. Further in November 2000, GIC was re notified as the Indian Reinsures and its supervisory role over subsidiaries was ended. Subsequently from March 21, 2003 GIC ceased to be a holding company of its subsidiaries. Their ownership was vested with Government of India. Over the years the industry expanded, with numerous entities joining the business in both life and general insurance segments totaling up to 43 companies as on December 2008.

The Insurance Industry comprised of 2 public sector entities as on 1.4.2000 viz.

Life Insurance Corporation of India (LIC) - to handle the Life Insurance segment

General Insurance Corporation of India (GIC) - to handle the General Insurance segment

Insurance in India: Milestones

1818	Oriental Life Insurance Company, the first life insurance company on Indian soil was set up by the British.
1850	Triton Insurance Company Ltd, the first general insurance company on Indian soil was set up by the British.
1870	Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.
1907	Indian Mercantile Insurance Ltd, the first Indian general 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	Enactment of the Insurance Act, 1938, earlier legislation replaced and the law relating to both life and general insurance consolidated.
1956	Nationalization of the life insurance business by enactment of the Life Insurance Corporation Act, 1956.
1968	Amendment of the Insurance Act, 1938 providing for, the establishment of the Tariff Advisory Committee (TAC bold) to fix, control and regulate premium rates and conditions of policies.
1971	The Central Government took over the management of general insurance companies under the General Insurance (Emergency provisions) Act, 1971.
1972	Enactment of the General Insurance Business (Nationalization) Act, 1972, paving the way for the formation of the General Insurance Corporation of India (GIC) along with its four subsidiaries viz. the United India Insurance Company (UIIC), the New India Assurance Company Limited (NIAC), the National Insurance Company Limited (NIC) and the Oriental Insurance Company Limited (OIC). These companies were given the exclusive privilege of carrying on general insurance business in India.
1994	The Committee, headed by Shri R.N. Malhotra, submitted its report on the structure of the insurance industry making significant recommendations like allowing domestic and foreign operators entry into the sector and setting up an independent insurance regulatory authority.
1999	The Insurance Regulatory and Development Authority (IRDA) Act, 1999 was enacted with the objectives of protecting the interests of holders of insurance policies and to regulate, promote and ensure the orderly growth of the insurance industry. The IRDA Act also amended the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972, withdrawing the exclusive privilege of the LIC and GIC and its subsidiaries of carrying on life and general insurance business.
2002	The General Insurance Business (Nationalization) Act, 1972 was amended. Consequently, the four subsidiary companies of GIC became independent companies wholly owned by the Government of India. The role of GIC was restricted to the business of reinsurance.
Classification of Insurance The insurance business is broadly classified into two segments - Life and Non Life. Life insurance products include Term Life policies, which give pure risk coverage of only the death benefit, whereas endowment or money back policies have a risk as well as savings component i.e. death as well as maturity benefit. Also coming under the life insurance umbrella are the Unit - Linked Policies in which there is a risk component and a savings component, which is invested in equity, debt or gilt funds, depending on the insurance company. General insurance is a part of the non-life segment and refers to fire, marine and miscellaneous insurance. The term "miscellaneous insurance" includes engineering, motor vehicle insurance, health insurance, etc. This insurance class deals with all the non-life aspects of an insured like his/her house, health, land, office, cargo, etc which might bring financial loss. Overview Insurance is a big opportunity in a country like India with a large population and untapped potential. The life insurance business (measured in the context of first year premium) registered a growth of 23.88 per cent in 2007-08, (94.96 per cent achieved in 2006-07). The general insurance business (gross direct premium) has registered a growth of 11.72 per cent in 2007-08 (3.52 per cent achieved in 2006-07). Life insurance industry recorded a premium income of Rs. 201351.41 crore during 2007-08 as against Rs. 156075.85 crore in the previous financial year, recording a growth of 29.01 per cent.