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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
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1818
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Oriental Life Insurance Company, the first life insurance company on Indian soil
was set up by the British.
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1850
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Triton Insurance Company Ltd, the first general insurance company on Indian soil
was set up by the British.
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1870
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Bombay Mutual Life Assurance Society, the first Indian life insurance company started
its business.
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1907
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Indian Mercantile Insurance Ltd, the first Indian general insurance company started
its business.
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1912
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The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.
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1928
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The Indian Insurance Companies Act enacted to enable the government to collect statistical
information about both life and non-life insurance businesses.
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1938
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Enactment of the Insurance Act, 1938, earlier legislation replaced and the law relating
to both life and general insurance consolidated.
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1956
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Nationalization of the life insurance business by enactment of the Life Insurance
Corporation Act, 1956.
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1968
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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.
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1971
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The Central Government took over the management of general insurance companies under
the General Insurance (Emergency provisions) Act, 1971.
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1972
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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.
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1994
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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.
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1999
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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.
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2002
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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.
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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.
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| Sector Watch | | |
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Company
Name
|
NSE
Current
|
NSE
Change (%)
|
NSE
Volume
|
BSE
Current
|
BSE
Change (%)
|
BSE
Volume
|  | | 794.15 | 1.26 |
217,929
| 794.55 | 1.09 |
10,361
| | | | 274.80 | 2.67 |
3,310,412
| 274.65 | 2.62 |
156,457
| | | | 144.95 | 0.38 |
12,007,027
| 144.65 | 0.35 |
3,467,227
| | | | 2,798.30 | -1.77 |
304,403
| 2,803.20 | -1.27 |
19,524
| | | | 705.10 | 0.86 |
1,243,535
| 705.20 | 0.81 |
55,767
| | | | 17,687.80 | 2.29 |
16,081
| 17,705.95 | 2.44 |
1,134
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