Life Insurance Corporation of India
The insurance sector in India dates back to 1818 when first insurance company, The Oriental Life Insurance Company, was established, at Calcutta. Thereafter, Bombay Life Assurance Company in 1823 and Madras Equitable Life Assurance Society in 1829 were established.
In 1912, the Indian Life Assurance Companies Act was enacted as the first statute to regulate the life insurance business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life insurance businesses. The Insurance Act was subsequently reviewed and a comprehensive legislation was enacted called the Insurance Act, 1938.
The nationalisation of life insurance business took place in 1956 when 245 Indian and foreign insurance and provident societies were first amalgamated and then nationalised. The Life Insurance Corporation of India (LIC) came into existence by an Act of Parliament, viz. LIC act, 1956, with a capital contribution of Rs.5 Crores from the Government of India
General Insurance Corporation Of India
The General insurance business in India started with the establishment of Triton Insurance Company Limited in 1850 at Calcutta .In 1907, the first company, The Mercantile Insurance Ltd. Was set up to transact all classes of general insurance business. General Insurance Council, a wing of the Insurance Association of India in 1957, framed a code of conduct for ensuring fair conduct and sound business practices. In 1968 the Insurance Act was amended to regulate investments and to set minimum solvency margins. In the same year the Tariff Advisory Committee was also set up.
In 1972, The General Insurance Business (Nationalisation) Act was passed to nationalise the general insurance business in India with effect from 1st January 1973. For these 107 insurers was amalgamated and grouped into four company’s viz., the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. And the United India Insurance Company Ltd. General Insurance Corporation of India was incorporated as a company.
Current Scenario In new economic policies formulated since 1991, globalisation, privatisation and liberalisation have become new buzzwords. Under new economic policies, many economic and financial reforms took place. Like liberalising licensing policy, attracting FDI, allowing foreign equity in public sector undertakings. The financial reforms restructured banking sector by allowing entry of new private and foreign banks. They also allowed private sector and commercial banks in mutual funds investment business, rationalising the EXIM policy and so on.
Liberalisation of Insurance markets
Liberalisation of Insurance involves transformation of the industry from a Government monopoly to a competitive environment. Free markets allow for better resource allocation and creation of wealth and prosperity of people and the country. It enables development of health care, education and infrastructure of the country. In a liberalized insurance market, consumers are able to choose from different insurance providers having a wide range of products.
A liberal insurance market is one in which the market determines who should be allowed to sell insurance, what, how and the prices at which these insurance products should be sold. The issues like market access and equality of competitive opportunity and national treatment will decide who will be allowed to sell insurance. Second and fourth items commonly deal with issues such as product, price and market conduct regulation.
There are certain pre-conditions to make liberalisation of insurance effective:
-Sound competition law
-Efficient and reliable regulation
– Phased liberalisation
-Consistency and impartiality between competitors
-Optimum quantum of regulation
-Efficient disclose and dissemination of information to the society.
-Insurance markets in India possess certain imperfections justifying the need for competition as well as regulation.