IC-33 Chapter 1 : History of Insurance in India

Origin of insurance can be traced to Llyod coffee house ( Marine Insurance); Amicable Society for Perpetual Assurance in 1706 London considered as First Life Insurance company.

Modern insurance in India began in early 1800 began with agencies of foreign companies starting marine insurance business. The first life insurance company in India was an English company the Oriental Life Insurance Co. Ltd. The first non-life insurance company established in India was Triton Insurance Co. Ltd. The first Indian insurance company was formed in 1870 in Mumbai Bombay Mutual Assurance Society Ltd. The oldest insurance company in India was founded in 1906 & still in business is National Insurance Company Ltd.

Insurance Act, 1938 was the first legislation enacted to regulate conduct of insurance companies. Life insurance business was nationalised on 1st September, 1956 and Life Insurance Corporation of India (LIC) was formed ( with merger of 170 life insurance company and 75 provident fund socities). The non-life insurance business was nationalised in 1972, General Insurance Corporation of India (GIC) and its four subsidiaries were set up.Before this 106 non life insurance companies were present.

Human Life value by Prof. HUBENER. It measures the human life based on individuals net future earning (less the amount he would spend).

Typical risks (concerns) faced by ordinary people

  • Dying too early
  • Living too long
  • Living with disability

Mahlothra Committee & IRDA: Mahlothra Committee set up, 1993. Insurance Regulatory and Development Authority came in 1999. Now IRDA has become IRDAI (Insurance Regulatory and Development Authority of India)

Risk Management Techniques:

  • Risk Avoidance( controlling risk by avoiding loss)
  • Risk retention(One decides to bear the risk and its effects)
  • Risk reduction and control (measure to reduce chances of occurrence is called loss prevention and measure to reduce degree of loss is loss reduction.
  • Risk Financing ( provision of funds to meet the loss)

Difference between Insurance and Assurance

Insurance Assurance
Insurance refers to protection against an event that might happen. Assurance refers to protection against an event that will happen.
Insurance provides covers against risk. Assurance provides protection against event that is definite.
 

Assurance policies are associated with life Insurance.