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ABSTRACT
It is worth interesting to note that the origin of the concept of insurance is v
ery old and dates back almost 4500 years ago in the ancient empire of Babylonia.
This concept prevailed and developed during the medieval period in Europe. The
emphasis of insurance was on traders' merchants and seafarers in marine industri
es at that time to provide them safety in terms of money against certain unseen
risks including death. The concept of insurance has its origin in Indian scriptu
res. The Vedas give the idea of 'Yougkshema' means a promise to provide communit
y insurance to the risk bearers as back as around 1000 B.C., which was practised
by the Aryans.
In 1956 a radical step was taken by the central govt. regarding nationalization
of insurance industries which emerged as the Life Insurance of India the major o
bjective of this corporation was to give maximum benefits to maximum citizens of
India by providing them wide range of benefits against a number of risks. The d
etails of Lick's business during last 5 years are given in the paper, which are
self
explanatory.
INTRODUCTION
Almost 4500 years ago, in the ancient Land of Babylonia, traders used to bear ri
sk of the caravan trade by giving loans that had to be later repaid with interes
t when the goods arrived safely. In 2100 B.C. the code of Hammurabi granted lega
l status to the practice. That perhaps, was how insurance made its beginning.
Life insurance had its origins in ancient Rome, Where citizens formed burial clu
bs that would meet the funeral expenses of its members as well as help survivors
by making some payments.
In 1347, in Genoa, European maritime nations entered into the earliest known ins
urance and decided to accept marine insurance as a practice. Back to the 17th ce
ntury, in 1693, astronomer Edmond Halley constructed the first mortality and com
pound interest. In 1756, Joseph Dodson reworked the table, linking premium rate
to age. The 19th century saw huge developments in the field of insurance, with n
ewer products being devised to meet the growing needs of urbanization and indust
rialization.
LIFE INSURANCE IN INDIA
Insurance in India can be traced back to the Vedas. For instance, Yougkshema, th
e name of Life Insurance Corporation of India's corporate headquarters, is deriv
ed from the Rig Veda. The term suggests that a form of 'community insurance' was
prevalent around 1000 BC and practised by the Aryans.
Bombay Mutual Assurance Society, the first Indian life assurance society, was fo
rmed in 1870. Other companies like Oriental, Bharat and Empire of India were als
o set up in the 1870
90s.
The Insurance Act was passed in 1912, followed by a detailed and amended Insuran
ce Act of 1938 that looked into investments, expenditure and management of these
companies' funds.
By the mid 1950s, there were around 170 insurance companies and 80 provident fun
d societies in the country's life insurance scene. However, in the absence of re
gulatory systems, scams and irregularities were almost a way of life at most of
these companies' funds.
On 1st September 2012, LIC completes 56 years of its glorious and purpose
ful existence. It was on this day in the year 1956, that LIC of India came into
being with the government of India nationalizing the life insurance business thr
ough an ordinance on 19th January 1956. Ever since 1956, LIC has progressed fro
m strength to strength. In the process, it has fulfilled its objectives and has
been immensely contributing to the nation building activities. Today, LIC is an
Institution of national importance and operates at a very large scale and effici
ency. It has created a significant value for its customers and dominates the lif
e insurance industry in our country. LIC has institutionalized a culture of Trus
t within its organization which is the basis for its extraordinary success. LIC
has grown today to be the premiere public sector financial institution and the p
ride of India.
Ever since the opening up of the insurance sector in the year 2000, LIC is perfo
rming marvelously dominating the insurance market. The public sector LIC has sur
prised the critics with a very strong performance.
The Compounded Annual Growth Rate (CAGR) of LIC during the last ten years has ju
mped to 30.24% from 15.23% since inception. LIC s total policies have risen from 1
0.12 Croresin to 34 Crores in conventional business along with 10.45 crores of
customer base in group business. LIC s Life fund has grown from 1.54 lakh crore to
12.83 lakh crore. LIC s asset base has grown from 1.60 lac crore to 14.17 lakh c
rore by September 2012. The new business premium has gone up from Rs.5930 Crore
to Rs. 81515 Crore. Total Premium Income has increased from Rs.27489 Crore to 20
2802.90 Crore. Thus, through this amazing performance, LIC has retained it s domin
ation over the market. It is holding on to a market share of 81 percent in numb
er of policies and 74 percent in new business premium. The LIC has also an impr
essive share of 87.4% in the total assets under management. Insurance is a promi
se which needs to be fulfilled on the happening of an eventuality. LIC settles 9
9.86% of the claims which is a world record. The track record of the private ins
urance companies on settlement of claims is abysmally low. In spite of such a s
trong performance, it is surprising to note that the rating agencies to facilita
te the entry of foreign capital to access the domestic savings of the Indian peo
ple, are trying to arm twist by down grading the investment rating of LIC ironic
ally quoting that LIC is exposed to investments in government securities.