The Story of Insurance

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security.

Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.

Life Insurance in India

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company, started by Europeans in Calcutta, was the first life insurance company on Indian soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of the European community, and Indian natives were not being insured by these companies.

However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives, and heavy extra premiums were being charged on them. The Bombay Mutual Life Assurance Society heralded the birth of the first Indian life insurance company in the year 1870, covering Indian lives at normal rates. Starting as Indian enterprises with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society.

The Bharat Insurance Company (1896) was also one such company inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies like The United India in Madras, National Indian and National Insurance in Calcutta, and the Co-operative Assurance at Lahore. In 1907, the Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta.

Prior to 1912, India had no legislation to regulate the insurance business. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912, made it necessary for premium rate tables and periodical valuations of companies to be certified by an actuary. However, the Act discriminated between foreign and Indian companies, putting Indian companies at a disadvantage.

Milestones in Life Insurance

• 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil, started functioning.
• 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company, started its business.
• 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate life insurance business.
• 1938: Earlier legislation consolidated and amended by the Insurance Act to protect the interests of the insuring public.
• 1956: Life insurance was nationalized, and the Life Insurance Corporation of India (LIC) was established.

General Insurance in India

The general insurance business in India can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in 1850 in Calcutta by the British.

• 1907: The Indian Mercantile Insurance Ltd. was set up, the first company to transact all classes of general insurance business.
• 1957: The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.
• 1972: The General Insurance Business (Nationalisation) Act nationalized the general insurance business in India.