The
insurance sector India in the beginning was an open competitive market. It got nationalized and again reverted to the policy of liberalization. The life insurance business in India started in the year 1818 with the establishment of Oriental Life Insurance Company in Calcutta. In 1912, Indian Life Assurance Companies Act was the first statute to regulate life insurance business in India. In 1956, 245 Indian and foreign insurance companies were nationalized. In the same year, LIC was formed under the LIC act.
The history of general insurance can be traced back to the Triton Insurance Company Ltd. of Calcutta (1850) which is the first general insurance company to be established in India. In 1907, the Indian Mercantile Insurance Ltd, the first company to transact all classes of general insurance business. In 1972, the General Insurance Business (Nationalization Act) was passed and this nationalized general insurance business in India.
In 1973, 107 insurers amalgamated and grouped into 4 companies: National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company
In 1993, Malhotra Committee was formed to evaluate the Indian insurance industry and create an efficient and competitive financial system. Among the many recommendations chief are :
- Government stake in the insurance companies to be brought down to 50%
- Greater freedom should be given to insurance companies
- Private companies with paid up capital of Rs 1 billion should be allowed to enter the industry.
- Foreign companies can enter the industry but only through collaboration with domestic ones.
- No company should deal with both general and life insurance through the same entity.
- In each state, only one state level life insurance company can operate.
The various forms of life insurance are as follows:
- Endowment policy
- Whole Life Policy
- Term Life Policy
- Money-back Policy
- Joint Life Policy
- Group Insurance Policy
- Loan Cover Term Assurance Policy
- Pension Plans
- Unit Linked Insurance Plan
The major life insurance company in the public sector is LIC. In the private sector, the major players are Aviva Life Insurance, Bajaj Allianz, Birla Sun Life Insurance, HDFC Standard Life Insurance, ICICI Prudential, etc.
General insurance provides protection against accidents, illness, fire, burglary, etc. Major insurance policies covered under this are:
- Home Insurance- Policies Broadly cover building structure and contents inside home.
- Health Insurance- covers for expensive treatments, cashless hospitalization, critical illness
- Motor Insurance- covers against loss and damage of vehicles, protection against legal liabilities
- Travel Insurance- gives security to travels abroad, unforeseen expenses while travelling.
The public sector general insurance providers are :National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited, United India Insurance Company Limited. In the private sector, the major general insurance companies are Bajaj Allianz General Insurance Co. Limited, ICICI Lombard General Insurance Co. Ltd., IFFCO-Tokio General Insurance Co. Ltd, Reliance General Insurance Co. Limited, TATA AIG General Insurance Co. Limited, Export Credit Guarantee Corporation.