History
of Life Insurance Corporation
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, 113 divisional offices, 8 Zonal offices, 1381 Satellite offices and
the Corporate office. LIC's Wide Area Network covers 113 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.
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.
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.
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Objectives of life insurance corperation
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