History of Insurance in India dates back to the writings of Manu (Manusmriti), Kautilya (Arthashastra), and Yagnavalkya (Dharmasastra). History of Insurance is deep-rooted to a couple of centuries ago in the 1800s. Let us learn more about the history of the insurance industry through this article for banking and awareness preparation for UPSC IAS and suchlike exams.
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More such interesting information is elaborated in the following study notes on history of insurance. Banking and finance aspirants are advised to bookmark this page in order to prepare for the general awareness section.
Insurance implies the protection from financial loss. It is one of the forms of risk management, mainly used to hedge against the risk of an unforeseen loss.
Insurance is represented in the form of policy. It is a contract in which an individual or a business seeks financial protection from a firm as a reimbursement from the insurance company for the loss (big or small) caused to their property.
For the insurance transaction to take place, the insurer and the insured enter into a legal contract, called insurance policy. The policy provides financial security from future uncertainties.
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Purchase Now Want to know more about this Super Coaching ? Explore SuperCoaching NowIn India, the history of insurance finds its roots in the mentions of the writings of Manu (Manusmrithi), Kautilya (Arthasastra), and Yagnavalkya (Dharmasastra).
The writings suggest pooling of resources that could be re-distributed in times of calamities like epidemics, floods, fire, famine, etc.
Ancient Indian history has preserved the earliest traces of insurance as in the marine trade loans and carriers’ contracts. In all, the insurance sector in India has taken its shape inspired by the other countries, especially, from England.
The advent of the life insurance business in India was introduced in 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. However, the company failed in 1834. The Madras Equitable had begun transacting life insurance business in the Madras Presidency in 1829.
The enactment of the British Insurance Act took place in 1870. Besides, in the last thirty years of the nineteenth century, the Bombay Mutual (1871), Oriental (1874), and Empire of India (1897) were set up in the Bombay Residency.
However, this period was particularly dominated by the foreign insurance companies like Albert Life Assurance, Liverpool and London Globe Insurance, and Royal Insurance.
The Indian Life Assurance Companies Act of 1912 was the first statutory entity to regulate the life insurance business in the country. The government of India began publishing the returns of the Insurance Companies in India in 1914.
The Indian Insurance Companies Act was enacted in 1928 in order to enable the government to collect statistical data about both life and non life businesses carried out in India by the Indian as well as foreign insurers including the provident insurance societies.
In 1938, the earlier legislation was consolidated and amended by the Insurance Act of 1938 with a view to protect the interest of the insurance public.
The Insurance Amendment Act of 1950 abolished Principal Agencies. Moreover, there were a large number of insurance companies and the level of competition was high as well. Amid allegations of unfair trade practices, the government of India therefore decided to nationalize the insurance business.
