THE HISTORY OF INDIAN INSURANCE INDUSTRY Life Insurance In 1818 the British established the first insurance company

in India in Calcutta , the Oriental Life Insurance Company. First attempts at regulation of the indus try were made with the introduction of the Indian Life Assurance Companies Act i n 1912. A number of amendments to this Act were made until the Insurance Act was drawn up in 1938. Noteworthy features in the Act were the power given to the Go vernment to collect statistical information about the insured and the high level of protection the Act gave to the public through regulation and control. When t he Act was changed in 1950, this meant far reaching changes in the industry. The extra requirements included a statutory requirement of a certain level of equit y capital, a ceiling on share holdings in such companies to prevent dominant con trol (to protect the public from any adversarial policies from one single party) , stricter control on investments and, generally, much tighter control. In 1956, the mar et contained 154 Indian and 16 foreign life insurance companies. Busine ss was heavily concentrated in urban areas and targeted the higher echelons of s ociety. Unethical practices adopted by some of the players against the interests of the consumers then led the Indian government to nationalize the industry. In Septe mber 1956, nationalization was completed, merging all these companies into the s o-called Life Insurance Corporation (LIC). It was felt that nationalization has len t the industry fairness, solidity, growth and reach.

Some of the important milestones in the life insurance business in India are: 1912: The Indian Life Assurance Companies Act enacted as the first statute to re gulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to col lect 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: The mar et contained 154 Indian and 16 foreign life insurance companies. General Insurance The General Insurance industry in India dates bac to the Industrial Revolution and the subsequent increase in trade across the oceans in the 17th century. As f or Life Insurance, the British brought General Insurance to India, and a similar path was followed in the development of this industry. A number of private comp anies were in existence for years and years until, in 1971, the Indian Governmen t decided that the public interest would be served by nationalizing the industry , merging all the 107 companies into four companies, depending on the sort of bu siness transacted (Marine, Fire, Miscellaneous). These were the National Insuran ce Company Ltd., the Oriental Insurance Company Ltd., the New India Assurance Co mpany Ltd., and the United India Insurance Company Ltd. located in Calcutta, New Delhi, Bombay and Madras respectively. The General Insurance Corporation (GIC) was set up in 1972 as a holding company, having these four companies as its subsidiari es.

Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact

all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, f rames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalize the general insurance business in India with effect from 1st January 1973. 107 insu rers amalgamated and grouped into four companies viz. the National Insurance Com pany Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.