Insurance Notes for LIC AAO 2015-16: LIC (Brief Description & History)

Overview:

IRDA (Insurance Regulatory and Development Authority of India) is the key regulator of Insurance Industry in India. One of the major players in the Indian Insurance Industry is the Life Insurance Corporation of India (LIC). LIC is the country’s largest investor and the largest state-owned life insurance Company within the country till date. It is fully owned by the Government of India. It funds almost 24.5% of total expenses made by the Indian Government. LIC is having almost an asset backup of approximately 9.3 trillion INR (206.6 billion US$)

History:

The stepping stone of Insurance Industry in India was held with the formation of The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage. It was established in Calcutta by Bipin Bernard Dasgupta and others in1818. Initially, the primary target of this company was the Europeans settled in India and it charged heavy premiums from Indians. Other major member includes The Bombay Mutual Life Assurance Society, formed in 1870. It was the first native insurance provider. Other establishments within the insurance industry in the pre-independence era included:

• Bharat Insurance Company (1896)
• United India (1906)
• National Indian (1906)
• National Insurance (1906)
• Co-operative Assurance (1906)
• Hindustan Co-operatives (1907)
• Indian Mercantile
• General Assurance
• Swadeshi Life (renamed as Bombay Life)

India’s first 150 years were marked remarkably due to various reasons as India witnessed First War of Independence, effects of the World War I followed by World War II and in between them the period of worldwide economic crises put in a great depression. 

These events cumulatively resulted in the high rate of bankruptcies and liquidation of life insurance companies in India. This liquidated the people’s faith in the utility of obtaining life cover. 

In order to rebuild the people’s faith,Life Insurance Act and the Provident Fund Act were passed in 1912, as the first regulatory mechanisms in the Life Insurance industry. 

The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. 

A similar Insurance Act of 1938 brought larger control over an industry that had seen several financially unsound ventures fail. In 1944, a bill was introduced in the Legislative Assembly to nationalize the Insurance Industry.

The LIC was set up as a result in 1956 as a result of an amalgamation of more than 200 insurance companies and provident societies.

LIC is Headquartered in Mumbai-

The financial and commercial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public.

Keep Reading and Don't forget to Share.