History of Insurance

The first methods of transferring or distributing risk in a monetary economy, were practised
by Chinese and Babylonian traders in the 3rd and 2nd millennia BC, respectively.
The first life insurance policies were taken out in the early 18th century. The first company
to offer life insurance was the Amicable Society for a Perpetual Assurance Office, founded in
London in 1706 by William Talbot and Sir Thomas Allen.

In accordance with study books of The Chartered Insurance Institute, there are the following types
of insurance:

Co-insurance risks shared between insurers

Dual insurance risks having two or more policies with same coverage
Self-insurance situations where risk is not transferred to insurance companies and solely
retained by the entities or individuals themselves
Reinsurance situations when Insurer passes some part of or all risks to another Insurer
called Reinsurer

International Association of Insurance Supervisors - Basel, Switzerland

History of Insurance in India

In India, insurance has a deep-rooted history. Insurance in various forms has been
mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra) and
Kautilya (Arthashastra).
The fundamental basis of the historical reference to insurance in these ancient Indian texts is
the same i.e. pooling of resources that could be re-distributed in times of calamities such as
fire, floods, epidemics and famine. The early references to Insurance in these texts have
reference to marine trade loans and carriers' contracts.
Insurance in its current form has its history dating back until 1818, when Oriental Life
Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of
European community.
The pre-independence era in India saw discrimination between the lives of foreigners
(English) and Indians with higher premiums being charged for the latter.
In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer.
At the dawn of the twentieth century, many insurance companies were founded. In the year
1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate
the insurance business.
The Life Insurance Companies Act, 1912 made it necessary that the premium-rate tables and
periodical valuations of companies should be certified by an actuary. However, the disparity

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still existed as discrimination between Indian and foreign companies. The oldest existing
insurance company in India is the National Insurance Company, which was founded in 1906,
and is still in business.
The Government of India issued an Ordinance on 19 January 1956 nationalising the Life
Insurance sector and Life Insurance Corporation came into existence in the same year.
The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75
provident societies245 Indian and foreign insurers in all. In 1972 with the General
Insurance Business (Nationalisation) Act was passed by the Indian Parliament, and
consequently, General Insurance business was nationalized with effect from 1 January 1973.
107 insurers were amalgamated and grouped into four companies, namely National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance
Company Ltd and the United India Insurance Company Ltd.
The General Insurance Corporation of India was incorporated as a company in 1971 and it
commence business on 1 January 1973.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the
private sector. Before that, the industry consisted of only two state insurers: Life Insurers
(Life Insurance Corporation of India, LIC) and General Insurers (General Insurance
Corporation of India, GIC). GIC had four subsidiary companies.
With effect from December 2000, these subsidiaries have been de-linked from the parent
company and were set up as independent insurance companies: Oriental Insurance
Company Limited, New India Assurance Company Limited, National Insurance Company
Limited and United India Insurance Company Limited.

Insurance Education in India

National Insurance Academy, Pune, specialized in teaching, conducting research and

providing consulting services in the insurance sector. NIA offers a two year PGDM program
in insurance. NIA was founded as Ministry of Finance initiative with capital support from the
then public insurance companies, both Life (LIC) and Non-Life (GIC, National, Oriental,
United & New India).
Institute of Insurance and Risk Management, Hyderabad, was established by the regulator
IRDA. The institute offers Postgraduate diploma in Life, General Insurance, Risk Management
and Actuarial Sciences. The institute is a global learning and research center in insurance,
risk management, actuarial sciences. They provide consulting services for the financial
industry.
The Center for Insurance Studies and Research (CISR) started in 2002 and is an education
and training center at the National Law University, Jodhpur. It offers Postgraduate and
Research programs.
The Insurance Institute of India is an insurance education society of professionals
established in 1955 in Mumbai.

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Insurance Regulatory and Development Authority

Headquarters - Hyderabad, Telengana
Chairman - T.S Vijayan

Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory

body which regulates and develops the insurance industry in India. It was constituted by a
Parliament of India act called Insurance Regulatory and Development Authority Act, 1999
and duly passed by the Government of India.
The agency operates from its headquarters at Hyderabad, Telangana where it shifted from
Delhi in 2001.
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra
Committee report (7 jan,1994) which recommended establishment of an independent
regulatory authority for insurance sector in India. Later, It was incorporated as a statutory
body in April, 2000.

Insurance Repository
Insurance Repository means a company formed and registered under the Companies Act, 1956
and which has been granted a certificate of registration by Insurance Regulatory and Development
Authority (IRDA) for maintaining data of insurance policies in electronic form on behalf of Insurers.
To implement the Insurance Repository System, IRDA has granted Certificate of Registration to the
following five entities to act as Insurance Repositories.

NSDL Database Management Limited

Central Insurance Repository Limited
SHCIL Projects Limited
Karvy Insurance Repository Limited
CAMS Repository Services Limited

What is an eIA (e-Insurance Account)?

eIA stands for e-Insurance Account or Electronic Insurance Account which will safeguard the
insurance policy documents of policyholders in electronic format. This e-Insurance Account will

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facilitate the policyholder by providing access to the insurance portfolio at a click of a button
through internet. IRDA has granted the Certificate of Registration to the following five entities to act
as Insurance Repositories that are authorized to open e-Insurance Accounts.

NSDL Database Management Limited

Central Insurance Repository Limited
SHCIL Projects Limited
Karvy Insurance Repository Limited
CAMS Repository Services Limited

Each e-Insurance Account will have a unique Account number and each account holder will be
granted a unique Login ID and Password to access the electronic policies online.

Public Sector Insurance Companies There are 24 life and 28 non-life companies in the country.

General Insurance Corporation of India

CMD - A K Roy
Headquarters - Mumbai, India

GIC of India (GIC Re) is the sole reinsurance company in the Indian insurance market with
over four decades of experience.
GIC Re has its registered office and headquarters in Mumbai.

Life Insurance Corporation of India

Chairman - S.K Roy
Headquarters - Mumbai, India

Life Insurance Corporation of India (LIC) is a state-owned insurance group and investment
company headquartered in Mumbai. It is the largest insurance company in India with an
estimated asset value of Rs.1560482 crore (US$250 billion).
The company was founded in 1956 when the Parliament of India passed the Life Insurance
of India Act that nationalised the private insurance industry in India.

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Surendranath Tagore (son of Satyendranath Tagore) had founded Hindusthan Insurance

Society, which later became Life Insurance Corporation.

United India Insurance Company Limited

CMD - Milind Kharat
Headquarter - Chennai, India

United India Insurance Company Limited was incorporated as a Company on 18 February,

1938.
Notable Insurance Policy: Tsunami Jan Bima Yojana (in 4 states covering 4.59 lakhs of
families).

New India Assurance Company Limited

CMD - G.Srinivasan
Headquarter - Mumbai, Maharashtra

It is the "largest general insurance company of India on the basis of gross premium collection
inclusive of foreign operations". It was founded by Sir Dorabji Tata in 1919, and was
nationalised in 1973.
Previously it was a subsidiary of the General Insurance Corporation of India (GIC). But when
GIC became a re-insurance company as per the IRDA Act 1999, its four primary insurance
subsidiaries New India Assurance, United India Insurance, Oriental Insurance and National
Insurance got autonomy.

National Insurance Company Limited

General Manager & Director - Shri A V Girija Kumar and Shri K P Brahma
Headquarter Kolkata, West Bengal.

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National Insurance Company Limited (NICL) is a fully central government owned general
insurance company based in India.
The company headquartered at Kolkata was established in 1906 and nationalised in 1972.

Oriental Insurance Company Limited

CMD - Dr.A.K.Saxena
Headquarter - New Delhi, India

The Oriental Insurance Company Ltd was incorporated at Bombay on 12th September 1947.
The Company was a wholly owned subsidiary of the Oriental Government Security Life
Assurance Company Ltd and was formed to carry out General Insurance business.
The Company was a subsidiary of Life Insurance Corporation of India from 1956 to 1973 (till
the General Insurance Business was nationalized in the country). In 2003 all shares of our
company held by the General Insurance Corporation of India has been transferred to Central
Government.

Taglines of Insurance Companies

Life Insurance Corporation of India (LIC) Yogakshemam Vahamyaham - Your welfare is our
responsibility
Tata AIA Life Insurance Company Limited You click, we cover
ICICI Prudential Life Insurance Company Limited Zimmedari ka humsafar
HDFC Standard life Insurance Company Limited Sar utha Ke Jiyo
Oriental Insurance Company Limited Prithvi, Agni, Jal, Akash, Sabki Suraksha Hamare Paas
United India Insurance Company Limited Rest Assured with Us
Max Bupa Health Insurance Your Health First
SBI Life Insurance Company Limited With Us, Youre Sure
Birla Sun Life Insurance Company Limited Muskurate Raho
Bajaj Allianz Life Insurance Company Limited Jiyo Befiqar
Kotak Mahindra Old Mutual Life Insurance Limited Faidey ka Insurance
Max New York Life Insurance Company Limited Karo Zyada ka Iraada
Apollo Munich Health Insurance We know Healthcare. We know Insurance
Future Generali Life Insurance Ek Shagun Zindagi Ke Naam
Aviva India Life Insurance Kal par Control
ING Vysya Life Insurance India Company Adding Life to Insurance
MetLife India Insurance Company Limited Have you met life today?

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The Insurance Laws (Amendment) Bill, 2008

Chairman of the Rajya Sabha Select Committee of Insurance Laws (Amendment) Bill, 2008 Chandan Mitra

Aim:

Among other things, the bill would allow foreign investors to own up to 49% in local
insurance companies, up from 26% currently.
It would also create rules that would allow foreign companies to invest in reinsurance
companies, which are basically firms that insure insurance companies.

Why it is important:

Companies in Indias nascent insurance industry are eager to get more foreign capital to
grow their businesses.
India has 24 life insurance companies, and 28 general insurance companies, majority of
whom have a foreign partner.
However, many of these companies, particularly in the life insurance sector, havent made
any money since they were founded seven or eight years ago.
The companies say if they could raise fresh capital from overseas partners and use that to
expand, they could become profitable sooner.

Who it affects?

Insurance companies which have foreign ownership expect to get more foreign capital if the
bill is passed.
Foreign companies such as the U.K.s Standard Life PLC and Prudential PLC, Germanys
Allianz SE and MetLife Inc. of the U.S. are among the companies which operate in India. If
they beefed up their Indian units, it could threaten the dominance of state-run companies in
Indias insurance sector.
At present, Life Insurance Corp of India has more than two-thirds of the life insurance
market, while four state-run firms control more than half the non-life insurance market.
Meanwhile, foreign reinsurers such as Munich Re and Berkeshire Hathaway, which have
liaison offices in India, could consider expanding their business here.

What changes?

The bill would make it easier for insurance companies to raise capital, both from foreign and
domestic investors.
Currently, Indias four state-owned general insurance companies are not allowed to raise
capital from Indias stock market. The bill would allow them do so.

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The bill could also help grow Indias reinsurance industry which currently has only one player
state-owned General Insurance Corp. The bill would allow GIC to raise funds from public
markets.
In addition, the bill could help trigger fresh investments in health insurance. It would
recognize health insurance as a separate business, as opposed to the current practice, where
health insurance is sold as just another product by general insurance companies. This change
could attract new companies, such as health insurer Aetna Group of the U.S., to enter India.

Cabinet approves Insurance Bill

Chairman of the Rajya Sabha Select Committee Chandan Mitra on 11 December, 2014 tabled
the report on the Insurance Laws (Amendment) Bill, 2008, recommending a hike in FDI in
insurance sector from 26 to 49 per cent. The report, carrying dissent notes from four of the
15 members, incorporated Congress partys demand for a composite cap on such
investments.
The dissenting parties include the Samajwadi Party, Trinamool Congress, Communist Party of
India (Marxist) and Janata Dal (United). These parties are opposed to further opening of the
insurance sector to foreign investment.
The Union Cabinet that met late in the evening approved the incorporation of amendments
suggested by a Parliamentary select panel in the Insurance Laws (Amendment) Bill, 2008,
sources said.
Following the Cabinets approval, the Bill is expected to come up for consideration and
passage in the Rajya Sabha next week.
However, it may not have a smooth sailing in a house where the NDA does not have
majority. The Congress party is on board but not keen to pass the Bill in this session before
the arrival of U.S. President Barack Obama, who is the chief guest at the Republic Day
ceremony, highly placed sources told The Hindu.
The report recommends that the composite cap of 49 per cent be inclusive of all forms of
foreign direct investments and foreign portfolio investments. Incremental equity should be
ideally used for expansion of capital base so as to actually strengthen the insurance sector,
it said.
The report also recommended that the composite cap of 49 per cent be inclusive of all forms
of foreign direct investments and foreign portfolio investments.
Incremental equity should be ideally used for expansion of capital base so as to actually
strengthen the insurance sector, it said, adding that the term control in terms of
ownership and control of a company should be defined in the Act itself.
It further recommended that the term control shall include the right to appoint a majority
of the directors or to control the management or policy decisions including by virtue of their
shareholding or management rights or shareholders agreements or voting agreements.
The report modifies the definition of ``re-insurance to bring clarity against the backdrop of
foreign insurers wanting to set up operations in the Indian markets. It suggests that reinsurance may be defined as ``the insurance of part of one insurers risk by another insurer
who accepts the risk for a mutually acceptable premium.

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