Background and Brief History of
LIFE INSURANCE
The story of insurance is probably as old as the
story of mankind. The same instinct that prompts modern businessmen today to secure themselves
against loss and disaster existed in primitive men also. They too sought to avert the
evil consequences of fire and flood and loss of life and were willing to make some sort of
sacrifice in order to achieve security. Though the concept of insurance is largely a
development of the recent past, particularly after the industrial era – past few centuries – yet
its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from
England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta
was the first life insurance company on Indian Soil. All the insurance companies established
during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with
the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance
companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives
and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society
heralded the birth of first Indian life insurance company in the year 1870, and covered
Indian lives at normal rates.
Some of the important milestones in the life insurance business
in India are:
1818: Oriental Life Insurance Company, the first life
insurance company on Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first
Indian life insurance company started its business.
1912: The Indian Life Assurance Companies Act enacted
as the first statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to
enable the government to collect statistical information about both life and non-life
insurance businesses.
1938: Earlier legislation consolidated and amended to
by the Insurance Act with the objective of protecting the interests of the insuring
public.
1956: 245 Indian and foreign insurers and provident
societies are taken over by the central government and nationalised.
LIC formed by an Act of
Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India. Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8 zonal offices, 992 satellite offices and the
Corporate office. LIC’s Wide Area Network covers 109 divisional offices and connects all the branches
through a Metro Area Network. LIC has tied up with some Banks and Service providers to
offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium payment
facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info
Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad,
Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access
to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are
smaller, leaner and closer to the customer. The digitalized records of the satellite
offices will facilitate anywhere servicing and many other conveniences in the future.
Reforms in the Insurance sector were initiated with the
passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April
2000
has fastidiously stuck to its schedule of framing regulations and registering
the private sector
insurance companies.
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