The concept of insurance is intimately related to security. Insurance acts as a protective shield against risk and future uncertainties. Traditionally, a risk-averse behavior has been a characteristic feature of Indians who preferred a “low & certain” disposable income to a “high & uncertain” one.
Hence insurance has become a close associate of Indians since 1818, when Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of their own community. The age was characterized by intense racial discrimination as Indian insurance policy holders were charged higher premiums than their foreign counterparts. The first Indian Insurance Company to cover Indian lives at normal rates was Bombay Mutual Life Assurance Society which was established in the year 1870.
By the dawn of the 20 th century, new insurance companies started mushrooming up. In order to regulate the insurance business in India and to certify the premium rate tables and periodic valuations of the insurance companies, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the Insurance Business in India in 1912. Such statistical estimates made by actuaries revealed the disparity that existed between Indian and foreign companies.
The Indian Insurance Sector went through a full circle of phases from being unregulated to completely regulated and then being partly deregulated which is the present situation. A brief on how the events folded up is discussed as follows:
The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state controls over insurance business.
In 19 th January, 1956, the life insurance in India was completely nationalized through the Life Insurance Corporation Act of 1956. At that time, there were 245 insurance companies of both Indian and foreign origin. Government accomplished its policy of nationalization by acquiring the management of the companies. Bearing this objective in mind, the Life Insurance Corporation (LIC) of India was created on 1 st September, 1956 which has grown in leaps and bounds henceforth, to become the largest insurance company in India.
The General Insurance Business (Nationalization) Act of 1972 was formulated with the objective of nationalizing nearly 100 general insurance companies and subsequently amalgamating them into four basic companies namely National Insurance, New India Assurance, Oriental Insurance and United India Insurance which have their headquarters in four metropolitan cities.
The Insurance Regulatory and Development Authority (IRDA) Act of 1999 deregulated the insurance sector in India and allowed the entry of private companies into the insurance sector. Moreover, the flow of Foreign Direct Investment (FDI) was also restricted to 26 % of the total capital held by the Indian Insurance Companies.
While LIC is the is the sole operator in the public sector,the following is the list of private companies in the Life Insurance Sector in India as on September,2006:
- ICICI Prudential Life Insurance
- HDFC Standard Life
- SBI Life Insurance
- Birla Sunlife
- Bajaj Allianz Life
- Aviva Life Insurance
- Kotak Mahindra Life Insurance
- Tata AIG Life
- Reliance Life Insurance Company Limited (formerly known as AMP Sanmar LIC)
- ING Vyasya Life Insurance
- Metlife India Life Insurance
- Max New York Life Insurance
- Shriram Life Insurance
- Bharti AXA Life Insurance Company Limited
Besides Life Insurance, all the above mentioned companies provide coverage in Medical Insurance, Automobile Insurance, Accident Insurance, Home Insurance and many others. In short the future of insurance companies in India looks bright.
