Evolution and Development of Insurance in India

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The insurance has its origin way back in the days of early civilization when people thought of evolving a distributive manner of bearing losses whereby the society collectively bears the loss/damage to one person/family and minimize the adverse effect that loss. There are several stories where the King provides monetary help to the persons who suffered loss due to natural calamities and this was nothing but an assurance that the State will look after you at the time of any adversity and this assurance is a form of insurance where the money collected from several tax payers has been used to minimize the losses of specific group which suffered loss. With the passing time the concept of insurance had been refined and lead to the introduction of documentation to get the assurance of loss bearing for specified purposes.

The history and evolution of Insurance in India

In Indian scenario the roots of Insurance in India has their origin in the era of Sage Manu (Rishi Manu) and later in Maurya Dynasty in the era of Kautilya ( i.e. Chanakya) who has written the rules of Arthshastra (Economics). “Manav Dharma Shastra” (Laws of Manu) of Manu contained rules for “Sea-Form” contracts which were practised for doing international trade. In Kautilya’s Arthshastra one of the chapters has mentioned about the protection of State to the people against the any natural calamity, theft or any act of Anti-Social-Elements. So, in this way India has the origin of Insurance thousands of years back and later it has evolved in present codified form in the Influence of English Rule which was prevailing all over the world at one point of time.

Development of Laws of Insurance in India

To understand the Development of Insurance in India we have to look into the development of Insurance Laws in India, since its a necessity and compulsion on Business Doers to evolve-conceptualize-amend their policies/strategies in accordance with the Law of the Land to do hassle-free business.

In the following manner the Indian Insurance Scenario has changed gradually-1938 – This is the year when a comprehensive Act called The Insurance Act, 1938 has been introduced.

1939 – In this year the Insurance Rules were framed for effectuating the Insurance Act.

1956 – This year has witnessed a huge change in the Indian Insurance Sector since the Government of India took over all life insurance companies.

1968 – In 1968 The Insurance Act, 1938 was amended to provide for social control, minimum solvency margin and a Tariff Advisory Committee (TAC) has also been established.

1972 – This year witnessed the Nationalization of General Insurance Companies and for this General Insurance Business (Nationalization) Act, 1972 was passed.

1973 – The General Insurance Corporation of India (GIC) came into existence as a Government Company.

1974 – A year later 107 insurers practising General Insurance business were grouped and merged to form four subsidiaries of GICs namely – National Insurance Co. Ltd. The New India Assurance Co. Ltd. The Oriental Insurance Co. Ltd. United India Insurance Co. Ltd.

1991 – The Public Liability Insurance Act 1991 and Public Liability Insurance Rules 1991 were introduced as another milestone in the series of Public Welfare Laws in India.1994 The Malhotra Committee submitted its report in January 1994 (set up by Govt. in 1993 under Chairmanship of Shri R.N. Malhotra, former Governor of RBI, to examine potential reforms that could be undertaken in the insurance sector and complement them with reforms initiated in the other sectors) submitted its report in January 1994 and recommended establishment of a strong and effective insuranceregulatory authority.

1998 – Insurance Ombudsman Redressal of Public Grievances Rules, 1998 were issued to provide Consumers a Forum with minimal formalities to get their grievances resolved.

1999 – This year has the great relevance in the history of Indian InsuranceSector since based on the Malhotra Committee Report the Insurance Regulatory and Development Authority (IRDA) was established to regulate, promote and ensure orderly growth of the insurance and reinsurance business in India.

2001 – The year of 2001 brought another transformation in the Insurance Business of India because in addition to the existing Government insurance companies, Private Sector Companies were also licensed by IRDA to conduct general insurance business in India.

GeneralInsurance Companies in India (Image Credit: www.insurancemags.com)

General Insurance Companies in India (Image Credit: www.insurancemags.com)

2002 General Insurance Business (Nationalization) Amendment Act, 2002 was passed in which the important amendment was that the subsidiaries of GIC were restructured as independent companies and GIC was converted into National Re-insurer.

2003 – This year witnessed the introduction of Broker for first time in Indian Insurance Market to boost up the business in more widened manner.

2015 – The Insurance Laws (Amendment) Act, 2015 was passed toincrease theCeiling of 26% FDI to 49% and in this manner the InsuranceBusiness in India has been widely opened for Foreign Giants of Insurance.

This is the mode by which Indian InsuranceBusiness has transformed and now it is waiting for the Insurers of the World, with widely opened arms, to come up with better ideas of Assuring People that yes in all odd situations we are here to protect.


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  1. Nice Information

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