Introduction and history of insurance in India

Introduction and history of insurance in India

• 1.
  Insurance law Introduction The evolutionof the concept of insurance lies into the existence of risk in all of the spheres of life. As per Hindu philosophy ‘yat bhavti tat nashyati’ Destruction is natural, hence to cover the loss of risk, the concept of insurance came into existence. Professional risk-bearer is called insurer or underwriter.
• 2.
  Destruction-risk-security (insurance) So anagreed amount of money is paid to cover the loss from ‘insurer’ to ‘assured’. A contract of insurance has to fulfill all of the requirements of a valid contract.
• 3.
  Importance of insurance •Provides protection against the loss • Eliminates risk • Co-operative method of sharing the loss • National importance-by capital formation • Provides employment • Medical support
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  Types Two types i. Lifeinsurance ii. Non-life insurance a) Motor vehicle insurance b) Fire insurance c) Health insurance d) Marine insurance e) In addition a number of other types of subjects are being added into the list day by day to cover different types of risks. In others words we can say that the list is not exhaustive.
• 5.
  Purpose of insurance Twofoldpurpose 1. Short term: to give security of loss and individual investment 2. Long term: to accelerate the growth of the nation through capital formation Thus we can say that insurance is one of the means of furthering the object of welfare State
• 6.
  History of insurance Itdates back to the 12th century 1. Marine insurance is the oldest type of insurance-when European countries tried to find out new places for business through sea routes. The need was felt because of the existence of danger or risk in sea voyages. • London Assurance & Royal Exchange Assurance were formed by the charter of 1720 and the monopoly was practiced by these two companies. • Lloyd’s Coffee House was the common meeting place of merchants • Monopoly was destroyed by the Joint Stock Companies Act, 1862
• 7.
  • In Indiathe advent of insurance was of British origin because of British rule. • There were many British offices in India • British law of insurance was introduced with some verifications into the customs of India. • Marine Insurance Act, 1963 is the replica of English Marine Insurance Act, 1906.
• 8.
  2. Fire insurance Aftermarine, fire insurance came into existence. Main causes were: a) Great fire of London 1666 b) Industrial revolution c) Tooley Street fire 1861 In India there was office of The Alliance British & Foreign Fire Insurance Company in Madras. Later on offices were opened in Bombay Calcutta and other Moffusil areas.
• 9.
  3. Life Insurance •Many offices were there which were providing short-term insurance till 17th century. • Vanished by Bubble’s Act, 1720 • Amicable Society survived which was providing full term insurance. • With the advent of mortality table, it became a profitable business. • Towards the end of 17th century it became gambling as the requirement of insurable interest was done away with. • To check this evil LIC Act 1774 came into existence. • In India, Bombay Mutual (1871) & Oriental (1874) were providing life insurance.