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
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.
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
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.
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
1972: The General Insurance Business
(Nationalisation) Act, 1972 nationalised
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.