Insurance is the oldest concept that was followed back from the year 1750 B.C. with the code of Hammurabi, which barbarians carved into a stone monument and several clay tablets. The code describes a form of bottomry, whereby a ship’s cargo could be pledged in exchange for a loan. Two state-owned insurance companies were thus created: the life insurance corporation in 1956, and the general insurance corporation in 1972  for the non-life insurance business. The Insurance Regulatory and Development Authority of India (IRDAI) was created in the year 1999 to regulate the insurance industry in India. In the history of the Indian insurance industry, the Indian Insurance Act came into force from the year 1938 by the central government it extends throughout the country to regulate the insurance business. It provides a comprehensive framework for the country’s registration, operation, and supervision of insurance companies. This act establishes the Insurance Regulatory and Development Authority of India (IRDAI) as the primary regulatory body responsible for overseeing the insurance sector. 

History Of The Indian Insurance Industry PDF

What is IRDAI?

The full form of IRDAI is the Insurance Regulatory and Development Authority of India. Where this authority the insurance business in India and supervises the functions of the Indian insurance companies. It is the apex body of insurance ensures that frames rules and regulations without any uncertainty and ambiguity towards any insurance company. It is an important authority in the history of the Indian insurance industry.

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Functions of IRDAI

IRDAI is an apex body that ensures the implementation of provisions as mentioned in the Insurance Act in the history of the Indian Insurance Industry. The primary function of IRDAI is to protect policyholders' interests. Some functions of IRDAI are;

• Ensures Policyholder protection
• Creates consumer awareness
• Imposes regulations and conducts supervision
• Monitors financial stability
• New product approval
• Takes an active role in market development
• Cooperates with international regulators

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Ensures Policyholder Protection

• Insurers have been told to strengthen their grievance redress procedures, and consumer complaint resolving procedures where they are found weak.
• Prospects and policyholders must first file their complaints with the respective insurance companies.
• Adopt standard operating procedures to treat the customer fairly including time-frames for policy claims servicing parameters and monitoring implementation.
• Ensure the details of the insurance ombudsman are provided to the policyholders.

Creates Consumer Awareness

• IRDAI conducts various campaigns, publishes educational material, and takes several initiatives to create consumer awareness about insurance policies.
• The IRDAI has a cyber security awareness campaign to help the public and policyholders be aware of cyber security.
•  It creates cyber security awareness campaigns to help the public and policyholders to be aware of cybersecurity.
• To make people aware of the financial instrument called insurance and their benefits.

Imposes Regulations And Conducts Supervision

• IRDAI sets up, enforces, and supervises guidelines and regulations to govern the insurance sectors and its participants.
• The supervision department undertakes onsite inspection/investigation of insurers, intermediaries, and other organizations connected with the insurance business.
• To verify compliance with various regulations and other directions issued by the authority and other applicable legal provisions.
• Forwarding the inspection report and response received from the inspected entities along with analysis of the inspection department to the ‘Enforcement Department.

Monitors Financial Stability

• IRDAI monitors insurance companies' financial health and solvency to ensure their ability to meet policyholder claims and obligations.
• It establishes prudential norms and conducts regular inspections.
• It audits to assess the financial soundness of insurers.
• It is one of the heads of the financial sector regulators in India.

New Product Approval

• The IRDAI has extended the ‘Use and File’ procedure for all the Health Insurance products and almost all the general insurance products.
• This is a stepping stone to improve the insurance business by moving from the current regime.
• It is envisaged that these initiatives will enable the insurance industry to launch suitable products promptly.
• The insurance industry is expected to use this opportunity for the introduction of customized and innovative products.

Takes an active role in market development

• The body encourages innovation and technological development to promote and expand the insurance sector in the country.
• It plays an important role in the history of the Indian insurance industry which states that by protecting policyholders, interest, registering and regulating.
• The IRDAI promotes the development and expansion of the insurance sector in India.
• The authority also facilitates the entry of new players and promotes healthy competition within the industry.

Cooperates with International regulators 

• IRDAI cooperates with international insurance regulators and organizations to exchange knowledge, best practices, and regulatory experiences.
• This cooperation helps harmonize insurance regulations.
• This cooperation addresses cross-border challenges.
• This cooperation addresses promoting global standards within the Indian Insurance Industry.

Insurance Segments And Market Size

• The history of the Indian insurance industry includes both the Public and Private industries in the insurance markets.
• The insurance industry in India includes both private and public industries having 58 insurance industries including 34 non-life insurance companies (25 general insurers, 7 standalone health, and 2 specialised insurers).
• The insurance markets can be divided into two major segments they are;
• Life Insurance Market
• Non-Life Insurance Market

Life Insurance Market

• The modern form of life insurance came to India from England in the year of 1818.
• The life insurance market is at the forefront in helping to protect the risk through various long-term protection and saving products.
• The life insurance penetration accounts for less than 5% of GDP in India.
• The life insurance industry in India is projected to achieve significant growth, with premiums expected to reach ₹24 lakh crore ($317.98 billion) by fiscal year 2030-31.

Top Life Insurance Industries

Some of the Top Life Insurance Industries

1. Life Insurance Corporation of India
2. SBI Life Insurance Co.Ltd
3. Max Life Insurance Co.ltd
4. Aditya Birla Sunlife Insurance
5. Tata AIA Life Insurance Co. Ltd.

Non-Life Insurance Market in India

• Non-life insurance covers property, businesses, and individuals, in some markets this type of insurance is known as Property and Casualty (P&C) insurance.
• It can take care of the compensation to be paid to the third party in case of damage to property or life.
• The insurance industry in India has witnessed an immersive growth rate for the last two decades with the participation of the private sector.
• Over the next five years from 2024-28, the total insurance premiums will grow by 7.1% in real terms.

Top Non-Life Insurance Government Industries

Some of the Top Non-Life Insurance Government Industries

1. National Insurance Company 
2. New India Assurance 
3. SBI General Insurance 
4. The Oriental Insurance Company
5. United India Insurance Company

Top Non-Life Insurance Private Sector Industries

Some of the Top Non-Life Insurance Private Sector Industries

1. Acko General Insurance
2. Aditya Birla Health Insurance
3. Apollo Munich Health Insurance
4. Bajaj Allianz General insurance
5. Bharti AXA General Insurance

Nationalization of life insurance companies in India

• According to Jawaharlal Nehru nationalizing life insurance is an important step towards a socialist society in the history of the Indian insurance Industry.
• In India, the life insurance sector was nationalized in 1956 with the enactment of the Life Insurance Corporation Act.
• LIC absorbed 154 Indian, and 16 Non-Indian insurers as well as 75 provident societies - 245 Indian and foreign insurers in all.
• The LIC had a monopoly till the late 90s when the insurance sector was reopened to the private sector.

Privatization of the Indian Insurance Industry

• Privatization of the Indian Insurance industry from the public sector was due to heavy competition in the Insurance market.
• The government of India introduced the privatization of the insurance industry in the period of (1991-1996) by the Narasimha Rao government.
• All segments of the financial sector have been opened to private players with better products, services, and social objectives.
• Privatization has brought in a lot of surprises for the insurance sector which is at the booming stage with 40% of the population insured.

Liberalization of the Indian Insurance Industry

• The benefits of liberalization in India's insurance sector can be seen in terms of penetration and destiny.
• Opening up of the sector has led to huge growth in the life insurance business and LIC.
• Significant capital flows to the insurance sector due to the earlier FDI limit here.
• To liberalize the sector, the Insurance Regulatory and Development Authority (IRDA) Act 1999 bill was passed by the parliament in December 1999.

Committees Related to Insurance

Indian government regulates the Indian Insurance industry to protect the interests of the policyholders and work for the orderly growth of the industry. The committees and their explanations;

• Insurance Regulatory and Development Authority (IRDA),
• Life Insurance Council,
• Employees State Insurance Health Care.

As A Final Point

In this article, we have seen the history of the Indian insurance industry and its act with its segment and market size. This will be helpful for any person who wants to know information about the Indian Insurance Industry with some additional details of the insurance industry.

History of the Indian Insurance Industry - FAQ

Q.Which is the oldest insurance company in India?

The oldest insurance company in India is The Oriental Life Insurance Company which was established in the year 1818  in Calcutta.

Q.Which is the oldest form of insurance in India?

The oldest form of insurance in India is Marine Trade Loans and Carriers’ contracts.

Q. What are the three most important insurances?

The three most important insurances are;

• Health Insurance,
• Motor Insurance,
• Personal Accident Insurance.

Q. What is the full form of IRDAI?

The full form of IRDAI - Insurance Regulatory and Development Authority of India.

Q. What is the concept of insurance?

Insurance is a legal contract between an insurance company and an individual or business that helps protect against financial losses due to unexpected events.

Q. Who is the father of Policy?

B.R. Ambedkar is known as the Father of the Indian Constitution due to his instrumental role in drafting and framing the Constitution of India.