A brief history of Insurance in India

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History of Insurance in India
Reading Time: 7 minutes

Contrary to popular belief, insurance is not new to the Indian culture. If you look closely, you’ll find that there is a deep-rooted, rich history of insurance in India. Some of our ancient manuscripts, which date as far as 3000 B.C, introduce the idea of helping others in times of a crisis. The whole idea of a “joint family” used to revolve around insurance. If a crisis destroyed a house or a farm, entire families, villages, and regions would work together to restore normalcy.

Insurance, as we know it today, has trickled through different ages into its present avatar. We now have the concept of nuclear families and independent households, which makes having insurance all the more necessary. The insurance sector in India certainly has changed, for better or for worse. Join us on our journey through time to understand the evolution and history of insurance in India

The early ages – 1818 


The first insurance company in India was the Oriental Life Insurance Company, established in 1818 in modern-day Kolkata (then called Calcutta). Though promising, this life insurance company charged a fortune from Indians at that time, as compared to the British. Not many Indians could afford it under British rule, and it had to shut down in 1834.

The subsequent years, 1823 and 1829, saw two more Indian Insurance companies thrive. These were the Bombay Life Insurance company (now Mumbai) and the Madras (now Chennai) Equitable Assurance Company respectively. The Bombay life insurance became the first company to not charge any extra premium from Indians. It thrived, despite fierce competition from other companies at the time.

When we talk about general insurance (other than Life Insurance), it includes insurance for things like your house, car, property, travel, etc. The history of general insurance in India can be traced as far back as the Industrial revolution of the West. The Industrial Revolution led to a boost of trade and manufacturing in the West during the 17th century. When the British came to India to trade their goods, they brought the idea of general insurance into the Indian ecosystem. The Triton Insurance Company was the first general Insurance company, which was established in Calcutta (present-day Kolkata) in the 1850s. General insurance would not see its hay day in India until a century later when the Insurance Act of the 1950s would introduce some uniformity.

This was just the beginning, and a long road of fortune lay ahead for Indian Insurance companies!


By this time, insurance had seeped into India and had actually become quite popular. The idea of securing your life and property was lucrative, especially in the pre-Independence era. However, there was a catch. Insurance was completely unregulated, and the Indian government had zero control over it.

In 1912, the Indian Life Insurance Companies Act came into the picture. This act structured insurance and made it compulsory for insurance companies to be certified by an actuary. By 1938, the business was in full bloom. There were a whopping 176 insurance companies, valued at around 300 crores (at that time!). The Insurance Act was also passed that same year (1938). This act amended the previous legislations and provided greater control to the government to protect the well-being of the general insurers. With a broad legal framework in place, the Indian Insurance companies were now headed towards the right path.

The era of Independence 1940-1970 


When you think about the era of Independence, you think about change. The change was so rampant and so drastic, it affected each and every sector. The insurance industry was no different.

The first major change in this era was the nationalization of life insurance. 1st September 1956 was a historic day for the Indian Insurance industry. Insurance was nationalized under the LIC Act of 1956. LIC (Life Insurance Corporation of India), was given the exclusive rights for life insurance in India, along with 5 crores of funding from the Indian government. The second major change was the Insurance Act of 1968. This act was mainly designed to regulate investments in the insurance sector. The last major change of this era was the formation of a committee to regulate Tariffs.



The history of insurance in India during this period can be hallmarked by the General Insurance Business Nationalization Act of 1972. Under this act, general insurance (apart from life insurance) was brought under a national umbrella. The 106-107 odd companies that existed at the time, were merged to form 4 major subsidiaries –

  • New India Assurance Company.
  • National Insurance Company.
  • Oriental Insurance Company.
  • United India Insurance Company.

The GIC (General Insurance Corporation of India) became a company in 1971 and opened its business to the general public in 1973.



By the 1990s, insurance had evolved. It looked much more similar to how it looks now. Through its journey of more than 200 years in the Indian culture, the people of India finally saw insurance as something necessary. The 1990s and early 2000s saw many reforms in the financial sector. To ensure that the Insurance sector could keep up with these reforms, the Indian government set up a committee. This committee was tasked with suggesting reforms and policies, that would strengthen the pillars of insurance in modern India.

Under the chairmanship of RN Malhotra ( former governor of RBI), this committee submitted its report in 1994. This report highlighted the need for private investment in Insurance. The year 1999 witnessed just that. For the first time since 1956, you could buy life insurance from a company other than LIC! Foreign investors were welcome in the Insurance sector, with the condition that they float an Indian business with a joint partnership.

Another reason why private investments in the insurance sector were so successful, was because of IRDA. IRDA (The insurance development and regulatory authority) was incorporated in April 2000. Since then, this body has worked to increase competition in the insurance sector. This body ensured that you, as a customer, get maximum satisfaction, minimum premiums, and stable financial markets to invest and buy into.

2000-Present (2021)


As we just mentioned, the IRDA had a huge role in the success of modern insurance. Foreign stakeholders were allowed a share of up to 26% with Indian Insurance companies. To date, IRDA is responsible for framing regulations in the insurance sector, under section 114A of the Indian Insurance Act. IRDA has used its authority to mandate many regulations, some of which are –

  • Registration of companies before selling insurance.
  • Protecting policyholders’ interests.

In December 2000, the GIC (General Insurance Corporation of India) was restructured. It now became a re-insurer, and its four subsidiary companies became independent. In July 2002, these 4 companies were de-linked and were free to operate on their own terms.

At present, India has about 34 registered general insurance companies, and about 24 registered life insurance companies.

Over the years, insurance had become a vital part of our Indian economy. Banking and insurance together contribute to about 7% of India’s total GDP, which is a massive proportion considering India’s 1.3 billion people. The insurance industry is growing at a healthy pace of 15-20%, despite the challenges.

Where does the Indian insurance industry stand today?


The Covid pandemic that struck the world in 2020 has fundamentally changed the way people think and perceive insurance. Before 2020, only about 10% of India’s population was keen to get health insurance. The reason? There are many, but a major contributing factor was the sheer cost.

Today, about 70% of India’s population is interested in buying health insurance. The Indian government has also introduced several insurance schemes that cover the poor. To match the rising consumer demand in the past year, the insurance industry has undergone several evolutions. Let’s take a look at some of them –

• Digitization of health insurance

If you’ve brought insurance in the last decade, you’ve probably been at an office, taken a ton of xeroxes, and filled an endless array of forms. Buying insurance this way was expensive, time-consuming, and extremely inconvenient. These factors, together with the travel restrictions in the Covid pandemic, led to the digitization of health insurance in India. The IRDA has taken measures to regulate online insurance. Apart from that, the government has recently announced the NDHM (National Digital Health Mission), which aims to build a complete health ecosystem for Indians.

The digital insurance platform has been streamlined, so it becomes easy and accessible to everyone. You can browse through health plans, file claims, and pay your premiums online with just a click of a button.

• New insurance services

The Indian government, under IRDA, has also introduced several insurance schemes. The Pradhan Mantri Suraksha Bima Yojana (PMSBY) provides a health cover of up to 2 lakh in case of accidental death. IRDA also provides the Corona Rakshak and the Corona Kavach schemes. Both these schemes can be availed as per the needs of citizens. These schemes ensure you can access short-term relief and get the fixed benefits of health insurance services. These insurance services are a boon for people who would be otherwise uninsured and would have to bear the full cost of treatments.

• Increased reserves

The Indian insurance industry has prospered under the umbrella of Indian banking. However, fluctuating interest rates in banks during the Covid pandemic have impacted the insurance industry. Private insurance agencies are now finding it harder to maintain liquid reserves, putting them in unsafe financial positions.

Despite all these factors, there is a massive demand for insurance today. With some incentive for the government and private investment, the Insurance sector can emerge stronger from the pandemic.

Future of Insurance


With the change in time, the industry faces a new set of challenges. While the right insurance products are available for the customers, the penetration in the country is still extremely low. The reasons for this vary from –

  • Low insurance penetration and density rates
  • Low prioritization of general insurance
  • Domestic economy
  • Regulatory and distribution channels
  • Lack of digital infrastructure

We’re building Assurekit to solve these challenges and help businesses adapt to the digital future, quicker. We build a steady infrastructure quickly that democratizes insurance. We at Assurekit, are building the next decade of insurance.



Insurance isn’t new to India, it has a very rich history here. It emerged in India during the British era and has found popularity as India found its independence. The Indian government and the IRDA had a huge role in creating the insurance industry we see today. This is a boon for India’s economic development, as a well-developed insurance sector attracts long-term investments. Not just that, insurance supports India’s liquid reserves and risk-taking ability and strengthens infrastructure.

For consumers, insurance was something that appeared as a daunting and complicated process. It is slowly becoming more approachable, so anyone can understand and opt for insurance. We’re glad that Assurekit plays a small part in doing that. The Internet has also made researching, purchasing, and insurance management easier, for both the company and the consumers. Insurance has evolved from being exclusively available to the rich, to be available and accessible for everyone. We, at Assurekit, work to lead that ahead.

If you’re interested in knowing more about what we do, comment below or reach out to us at hello@assurekit.com

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