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History of Insurance
BY – Aparchit Exam Warriors
What is Insurance?
Insurance is a promise of compensation for specific potential future losses in
exchange for a periodic payment. It is designed to protect the financial well-
being of an individual, company or other entity in the case of unexpected loss.
History of Insurance in India
In India, insurance began formally in the 18th century. The following are
some of the early companies who started operating in India.
1818 -1st life insurance company – Oriental Life Insurance Company was
established in Kolkata.
1829 - Madras Equitable was established in Madras (Chennai) Presidency.
1850 - 1st non-life insurance company - Triton Insurance Company
Limited.
1870 - Bombay Mutual was started in Mumbai.
1874 - Oriental was started in Mumbai.
1896 - Bharat Insurance Company Limited was started in Delhi.
1897 - Empire of India was started in Mumbai.
1907 - The Indian Mercantile Insurance Ltd was set up. It was the first
company to transact all classes of general insurance business.
1912 - The Indian Life Assurance Companies Act, 1912 was the first
statutory measure to regulate life business.
1928 - The Indian Insurance Companies Act was enacted to enable the
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Government to collect statistical information about both life and non-life
business transacted in India by Indian and foreign insurers including
provident insurance societies.
1938 –The Insurance Act amended with a view to protecting the interest of
the Insurance public with comprehensive provisions for effective control
over the activities of insurers.
1956 - Nationalising of the Life Insurance sector.
1957 - General Insurance Council framed 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 was set up.
The first methods of transferring or distributing risk in a monetary
economy, were practised by Chinese and Babylonian traders in the 3rd
and 2nd millennia BC, respectively.
The first life insurance policies were taken out in the early 18th century.
The first company to offer life insurance was the Amicable Society for a
Perpetual Assurance Office, founded in London in 1706 by William Talbot
and Sir Thomas Allen.
Insurance Reforms
In 1993, the Government set up a committee under the chairmanship of
RN Malhotra, former Governor of RBI, to propose recommendations for
reforms in the insurance sector.
In 1994, the committee submitted its report. The suggestions given by
the committee were:
The private sector be permitted to enter the insurance industry.
Foreign companies be allowed to enter by floating Indian companies,
preferably a joint venture with Indian partners.
Following the recommendations of the committee, in 1999, the Insurance
Regulatory and Development Authority was constituted as an
autonomous body to regulate and develop the insurance industry.
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Life Insurance Corporation of India (LIC): In 1956, the life insurance
business in India was nationalised and the Life Insurance Corporation of
India (LIC) was formed on 1st September 1956.
General Insurance Corporation (GIC): In 1973, general insurance
business was nationalised in India and the General Insurance
Corporation of India (GIC) and the four subsidiaries; National Insurance
Company Limited, The New India Assurance Company Limited, The
Oriental Insurance Company Limited and United India Insurance
Company Limited were formed. As part of the nationalisation process,
the funds of all existing companies were merged with the four
subsidiaries of the GIC.
✓ Life Insurance Corporation of India (LIC)
✓ Founded : 1956
✓ Headquarters : Mumbai
✓ Chairman : M. R. Kumar
✓ Managing Director : 4 ( Mini Ipe, BC Patnaik,
Siddhartha Mohanty, & Raj Kumar)
✓ Owner : Government of India (96.5%)
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History of Insurance MCQs
Q.Which of the following is the first Indian Life Insurance Company established
in India?
A) Oriental Life Insurance Company
B) Bombay Mutual Life Assurance Company
C) Life Insurance Corporation
D) Empire of India
Answer:B
Explanation: In 1818, Oriental Life Insurance Company was started however it
was started by Europeans. First Indian Life Insurance Company was Bombay
Mutual Life Assurance company in 1870
Q.Life Insurance Companies Act was passed in which year?
A) 1818
B) 1918
C) 1912
D) 1945
Answer:C
Explanation: 1912 The Life Insurance Companies Act, 1912 made it necessary
that the premium rate tables and periodical valuations of companies should be
certified by an actuary.
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Q. Which of the following is the first legislation governing both Life Insurance
and Non-life insurance?
A) Life Insurance Companies Act, 1912
B) Life Insurance Companies Act, 1920
C) The Insurance Act, 1938
D) Life Insurance Corporation Act, 1956
Answer:C
Explanation: The Insurance Act 1938 was the first legislation governing not only
life insurance but also non-life insurance to provide strict state control over
insurance business.
Q. General Insurance business was nationalized in India in which year?
A) 1956
B) 1945
C) 1970
D) 1973
Answer:D
Explanation: 1973
Q.In which year IRDA Act was passed?
A) 1988
B) 1999
C) 2001
D) 1938
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Answer:B
Explanation: 1999
Q. Life Insurance in India was nationalized in which year?
A) 1945
B) 1950
C) 1956
D) 1972
Answer:C
Explanation: On 19th of January, 1956, that life insurance in India was
nationalized. About 154 Indian insurance companies, 16 non-Indian companies
and 75 provident were operating in India at the time of nationalization.
Nationalization was accomplished in two stages; initially the management of the
companies was taken over by means of an Ordinance, and later, the ownership
too by means of a comprehensive bill.
Q.Which committee was formed in 1993 to propose recommendation for
initiation and implementation of reforms in the Indian Insurance Sector?
A) A.C. Shah Commitee
B) R.N. Malhotra Committee
C) AK Bhuchar Committee
D) CE Kamath Committee
Answer:B
Explanation: R.N. Malhotra Committee
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Q.In which year was The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non -life
insurance businesses?
A) 1912
B) 1918
C) 1928
D) 1945
Answer:C
Explanation: Indian Insurance Companies Act , 1928
Q.In which year General Insurance Corporation of India(GIC) notified as the
Indian Reinsurer?
A) 1972
B) 1999
C) 2000
D) 2004
Answer:C
Explanation: In November 2000, GIC was renotified as the Indian Reinsurer and
through administrative instruction, its supervisory role over the four
subsidiaries was ended.
Q. Life Insurance business started in Indian in 1818 with the advent of which of
the following company?
A) Bharat Insurance Company
B) Oriental Life Insurance Company
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C) United India Insurance
D) National Indian Insurance
Answer:B
Explanation: 1818 saw the advent of life insurance business in India with the
establishment of the Oriental Life Insurance Company in Calcutta.
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