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The awareness about insurance is quite high today, thanks to the way many of the leading brands in the insurance industry have been promoting the concept and spreading the message. However, it may be surprising to know that the evolution of insurance has taken place not over the past few years or decades, but over the centuries. Insurance in India is far from being a novel concept or a contemporary idea, as we would find out shortly.
Insurance is nothing but saving for a rainy day. What makes it noble is its collective idea. It is not just an individual or a family that is responsible for the future, as a short-sighted view may have it. Rather, the entire society is made responsible when it comes to taking care of an individual or a family, in the event of a desperate development that deserves desperate measures. Insurance is nothing but pooling of resources to help the needy in times of adversity.
The Origins of Insurance: Indian insurance had its origins as deep as the rich cultures and civilizations of this vast nation. Some of the age-old scriptures such as Manusmriti, Dharmashastra, and the famous Arthashastra of Kautilya have recorded the basics of what forms the insurance industry today. This is of particular significance in the context of large scale calamities or destructions on account of natural disasters, where resources are pooled from the general community and are redistributed to those in need and those who are affected – which is insurance, in the current context.
Contemporary Insurance in India: The historical roots apart, Indian insurance has been in place ever since the early 19th century, when in 1818, the Oriental Life Insurance Company was initiated with a keen eye on helping the British occupying forces in India. While Indians were not excluded, the rates and premiums that were charged were heavily skewed in favor of the foreigners. Typically, the Oriental Life Insurance Company could be looked upon as the first step towards contemporary insurance in India. It was only towards the end of the 19th century, that the Bombay Mutual Assurance Society came into the picture. And this was the first insurance company incorporated to look into the needs of Indians, marking the evolution of insurance to be an inclusive entity, catering to Indians. Bombay Mutual Assurance Society is still in operation.
Regulation of Insurance in India: Though the two companies were formed in the insurance industry in the 19th century, it was not well in Indian Independence that the insurance industry was regulated. As the 20th century was born, legislation was passed in 1912, with the Life Insurance Companies Act, regulating insurance in India. With the passing of the ordinance in 1956, the insurance industry was nationalized, paving the way for the largest and the leading brand in Indian insurance, the Life Insurance Corporation of India. This was shortly followed by the nationalization of the General Insurance in India in 1973. This also led to the consolidation of many players in insurance in India, with the formation of National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd.
Privatization and Insurance: Life insurance Corporation of India’s monopoly over the insurance space was broken with the advent of a slew of private insurers, following the privatization of the Indian insurance industry in the 1990’s. And with the dawn of globalization in the 21st century, global partnerships were formed, with many foreign players venturing into the Indian insurance space, marking a fresh phase in the evolution of insurance in India.