Examination of the Insurance Sector in India


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The insurance sector in India has completed all the facets of competition -from being an open competitive market to being nationalized and then getting back to the form of a liberalized market once again. The history of the insurance sector in India reveals that it has witnessed complete dynamism for the past two centuries approximately. 

With the establishment of the Oriental Life Insurance Company in Kolkata, the business of Indian life insurance started in the year 1818. 

Important milestones in the Indian life insurance business

1912: The Indian Life Assurance Companies Act came into force for regulating the life insurance business.

1928: The Indian Insurance Companies Act was enacted for enabling the government to collect statistical information on both life and non-life insurance businesses.

1938: The earlier legislation consolidated the Insurance Act with the aim of safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the central government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that too from the Government of India.

The history of general insurance business in India can be traced back to Triton Insurance Company Ltd. (the first general insurance company) which was formed in the year 1850 in Kolkata by the British. 

Important milestones in the Indian general insurance business

1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of its type to transact all general insurance business.

1957: General Insurance Council, an arm of the Insurance Association of India, framed a code of conduct for guaranteeing fair conduct and sound business patterns.

1968: The Insurance Act improved for regulating investments and set minimal solvency levels and the Tariff Advisory Committee was set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India. It was with effect from 1st January 1973.

107 insurers integrated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a company.

Insurance companies in India

IRDA has till now provided registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are considered then there are presently 13 insurance companies in the life side and 13 companies functioning in general insurance business. General Insurance Corporation has been sanctioned as the "Indian reinsurer" for underwriting only reinsurance business. 

List of Insurance companies in India



Public Sector

Life Insurance Corporation of India


Private Sector

Allianz Bajaj Life Insurance Company Limited


Birla Sun-Life Insurance Company Limited


HDFC Standard Life Insurance Co. Limited


ICICI Prudential Life Insurance Co. Limited


ING Vysya Life Insurance Company Limited


Max New York Life Insurance Co. Limited


MetLife Insurance Company Limited


Om Kotak Mahindra Life Insurance Co. Ltd.


SBI Life Insurance Company Limited


TATA AIG Life Insurance Company Limited


AMP Sanmar Assurance Company Limited


Dabur CGU Life Insurance Co. Pvt. Limited



Public Sector

National Insurance Company Limited


New India Assurance Company Limited


Oriental Insurance Company Limited


United India Insurance Company Limited


Private Sector

Bajaj Allianz General Insurance Co. Limited


ICICI Lombard General Insurance Co. Ltd.


IFFCO-Tokio General Insurance Co. Ltd.


Reliance General Insurance Co. Limited


Royal Sundaram Alliance Insurance Co. Ltd.


TATA AIG General Insurance Co. Limited


Cholamandalam General Insurance Co. Ltd.


Export Credit Guarantee Corporation


HDFC Chubb General Insurance Co. Ltd.



General Insurance Corporation of India





Brief History Of Insurance

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era - past few centuries - yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. 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. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. 

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. 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. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 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. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8 zonal offices, 992 satallite offices and the Corporate office. LIC's Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC's ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect 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: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

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, frames 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 (Nationalisation) Act, 1972 nationalised the

general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd. and the United India Insurance Company

Ltd. GIC incorporated as a company.


Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. 

Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. 

Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. 

Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. 

Act as trustees of the insured public in their individual and collective capacities.

Meet the various life insurance needs of the community that would arise in the changing social and economic environment. 

Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. 

Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.


"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development." 


"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."



Members On The Board Of The Corporation

Shri. T.S. Vijayan (Chairman)

Shri. D.K. Mehrotra (Managing Director - LIC)

Shri. Thomas Mathew T. (Managing Director - LIC)

Shri. A.K. Dasgupta (Managing  Director - LIC)

Shri. Ashok Chawla (Finance Secretary, Ministry of Finance, Govt. of India)

Shri. R. Gopalan (Secretary, Department of Financial Services, Ministry of Finance, Govt. of India.)

Shri. Yogesh Lohiya (Chairman cum Managing  Director, GIC of  India)

Shri S.Sridhar, Chairmain & Managing Director , Central Bank of India

Shri D.L. Rawal (Chairman & Managing Director , Dena Bank) 

Dr. Sooranad Rajashekhran

Shri. Monis R. Kidwai

Lt. General Arvind Mahajan ( Retd.) 

Shri Anup Prakash Garg 

Shri Sanjay Jain

KOLKATA: Life Insurance Corp (LIC) will be in line with all other private insurance companies on the mandatory minimum equity front.

The Cabinet has approved a Bill to be tabled in Parliament, to increase the paid-up capital of the state-run insurer to Rs 100 crore from the present Rs 5 crore. "LIC (Amendment) Bill, 2008 is being tabled," finance minister P Chidambaram said in Delhi on Friday.

Once the Bill is passed, it would make LIC compliant with Insurance Regulatory & Development Authority (Irda) norms on the equity front.

The Bill will be tabled separately from other insurance legislations like the Insurance (amendment) Bill, 2008, the General Insurance Business (nationalisation) Act, 1972 and the Insurance Regulatory & Development Authority Act, 1999.

The increase in equity would mean the government would put in Rs 95 crore as shareholders funds, an LIC source told DNA Money.

Irda norms stipulate that any insurance company must have a minimum paid-up capital of Rs 100 crore. For historical reasons, LIC conducted business with a capital of Rs 5 crore.

Although the company never faced a problem, there was some pressure on it for maintaining a solvency margin of 150% - in line with other insurers - a couple of years back.

The source, however, said, "We never faced a problem on the solvency issue and in fact have a solvency margin of 152% at present. We have an asset base of over Rs 8 lakh crore and a sovereign guarantee."


Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

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"We will design our products specifically for every segment of Indian consumers and not just hawk our North American products in the country."

- Gary M C Standard, Vice President, Sun Life Canada, in 1997.

"We would not lack in our efforts to innovate new products."

- G. Krishnamurthy, former LIC Chairman, in 2000.

The Changing Product Profile

The Changing Product Profile

In July 2002, India's state-owned insurer Life Insurance Corporation of India (LIC) launched a new insurance policy, 'Anmol Jeevan' (Priceless Life). This was seen by industry observers as something LIC 'had' to do in the wake of the increasing competition in the insurance sector. Before the launch of Anmol Jeevan, two of LIC's major competitors, ICICI Prudential Life and HDFC Standard Life had launched similar, competitively priced insurance products. In the newly opened Indian insurance sector, private insurers were coming up with many innovative products, offering riders1 on the policies in order to woo the consumers. LIC, which had been exercising monopoly in the Indian insurance sector, had been offering only 'plain' policies without any riders to its policyholders.

Thus, the new players launched a host of group insurance and term-life schemes, as LIC had not focused intensively on these aspects of insurance. However, the private players soon began to launch products that competed with LIC's 'core products.' With innovative product designing and intelligent pricing methods being adopted by these players, industry observers commented, LIC seemed to have realized that it would have to rapidly adapt itself to the changing market dynamics. The decision to launch 'Anmol Jeevan' was, thus, not entirely unexpected.

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