A Brief History of Life Insurance in India

Protection for your loved ones

As a concept, life insurance is said to have originated in England in 17th century in view of increased economic activity in the pre-Industrial Revolution period, especially that of the deep sea ships. It is said that underwriters used to meet at the Lloyd's Coffee House, to strike deals.

In India, the life insurance companies started surfacing in early 18^th century. However it was only after the enactment of the British Insurance Act in 1870, that the companies like Bombay Mutual, Oriental, Empire of India, Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance etc were seen on the Indian shores.

A series of legislations thereafter shaped up the life insurance business as we see it now. Prominent among them being the nationalisation of the life insurance sector primarily on account of rampant unfair trade practices and a motive to channelise the abundant savings in the economy towards securing goals of nation building. The government established the Life Insurance Corporation of India (LIC) in 1956 by merging 154 Indian and 16 foreign insurers plus 75 provident societies.

The LIC enjoyed a clear monopoly in the next five decades till the pressures of currency devaluation and distorted Balance of Payments position necessitated the measures of liberalisation and privatisation. On recommendation of the Malhotra Committee, in the year 2000, the insurance sector in India was opened to the private players and an independent regulator, Insurance Regulatory and Development Authority (IRDA) was established to oversee the governance and the development of the sector. Currently, there are 24 life insurance companies in India; and many of them are a product of joint venture with foreign insurance giants.