A Brief History of Insurance in India

History of Insurance in India dates back to 4^th century B.C. to the period of Chandragupta Maurya’s regime. It was mentioned in the writings of Kautilya (Arthashastra), Manu (Manusmriti) and Yagnavalkya (Dharmashastra). These writings describe Insurance as “pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine”. This was a kind of pre-cursor to modern day Insurance.

India saw advent of Life Insurance business in 1818 with the establishment of Oriental Life Insurance Company in Calcutta thought it was failed in 1834. British Insurance Act was enacted in 1870 as a result Bombay Mutual(1871), Oriental(1874) and Empire of India(1897) were established in Bombay Residency in last 3 decades of 19^th century, this era, however was dominated by foreign  offices. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. An Ordinance was issued on 19^th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation, state owned body, came into existence in the same year. Though National Insurance Company established in 1906 is the oldest existing in India, LIC enjoyed monopoly till late 90s when Insurance sector was opened to private investors.

In 1994 a committee under the chairmanship of RN Malhotra, former RBI Governor recommended that private sector be allowed to enter into Insurance industry forming joint ventures with Indian partners. As a result, Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body in 1999 to regulate and develop the insurance industry. Initially foreign companies were allowed to hold stakes up to 26%, which was increased to 49% in 2014. Now, with a growth rate of 15-20% Indian Insurance industry provides a great prospects for many domestic and foreign Insurance companies.

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