When Insurance Started in India ? : Comprehensive Guide – 2024

The history of insurance in India is a tale of gradual evolution from ancient practices to a well-regulated modern industry. The concept of insurance has its roots in the principles of mutual aid and risk sharing, which have been a part of Indian society for centuries. Over time, these rudimentary forms of insurance evolved into more structured and formalized systems, influenced by both indigenous practices and external influences.

Ancient Practices and Early Forms of Insurance

Insurance, in its most basic form, can be traced back to the Vedic period in ancient India. The principles of pooling resources and mutual aid were evident in the joint family system and guilds of traders and artisans. These early forms of social insurance were designed to provide support during times of need, such as natural disasters, death, or theft.

One of the earliest references to the concept of insurance is found in the writings of Kautilya, also known as Chanakya, in his treatise Arthashastra, dating back to the 3rd century BCE. Kautilya’s Arthashastra discusses the importance of state intervention in providing financial support to individuals and businesses affected by unforeseen events. Although not insurance in the modern sense, these practices laid the groundwork for the development of more formal insurance mechanisms.

Colonial Era and the Introduction of Modern Insurance

The advent of British colonial rule in India marked a significant turning point in the history of insurance. The British brought with them the concept of modern insurance, which was already well-established in Europe. The first half of the 19th century saw the establishment of the earliest insurance companies in India.

The Oriental Life Insurance Company, founded in 1818 in Calcutta (now Kolkata), is widely regarded as the first life insurance company in India. It primarily catered to the needs of European expatriates and provided coverage against death. However, it was not until the establishment of the Bombay Mutual Life Assurance Society in 1870 that life insurance became more accessible to Indian citizens.

The fire insurance segment also saw significant developments during this period. The first general insurance company, Triton Insurance Company Ltd., was established in 1850 in Calcutta. It focused on providing fire and marine insurance, reflecting the needs of the growing trade and commerce in colonial India.

Early 20th Century and Growth of the Insurance Sector

The early 20th century witnessed rapid growth in the insurance sector, driven by the increasing demand for financial security and the expanding Indian economy. Several Indian-owned insurance companies were established during this period, marking the beginning of indigenous participation in the insurance industry.

In 1914, the Government of India passed the Indian Life Assurance Companies Act, which aimed to regulate the life insurance business and protect policyholders’ interests. This was followed by the Insurance Act of 1938, a comprehensive piece of legislation that brought both life and general insurance under regulatory oversight. The Act introduced stringent measures to ensure the solvency and transparency of insurance companies, laying the foundation for a robust regulatory framework.

Post-Independence Era and Nationalization

The period following India’s independence in 1947 was characterized by significant changes in the insurance landscape. The Indian government recognized the importance of insurance in promoting economic stability and social welfare, leading to the nationalization of the insurance sector.

In 1956, the government nationalized the life insurance industry, merging 245 Indian and foreign insurers to form the Life Insurance Corporation of India (LIC). The LIC was established with the objective of extending life insurance coverage to the masses and channeling savings into productive investments for national development. The nationalization of life insurance marked a new era of state-controlled insurance, with the LIC becoming a dominant player in the market.

The general insurance sector followed suit in 1972, with the enactment of the General Insurance Business (Nationalization) Act. This Act consolidated 107 insurers into four subsidiaries under the General Insurance Corporation of India (GIC). The move aimed to ensure the availability of general insurance services across the country and improve the financial health of the industry.

Liberalization and Modernization

The economic liberalization of the 1990s brought about significant reforms in the Indian insurance sector. Recognizing the need for increased competition and efficiency, the Indian government opened up the insurance market to private and foreign players. The Insurance Regulatory and Development Authority (IRDA) was established in 1999 as an autonomous regulatory body to oversee the insurance industry and protect policyholders’ interests.

The entry of private insurers brought innovation, improved customer service, and a wider range of products to the market. Companies like ICICI Prudential, HDFC Standard Life, and Bajaj Allianz emerged as major players, challenging the dominance of state-owned insurers. The liberalization of the insurance sector also led to increased penetration and awareness, with insurance becoming an integral part of financial planning for many Indians.

Current Landscape and Future Prospects

Today, the Indian insurance industry is one of the fastest-growing sectors in the economy. With a large and diverse population, the potential for insurance growth remains immense. The industry has witnessed significant technological advancements, with digital platforms and insurtech innovations transforming the way insurance is bought and sold.

Government initiatives such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Ayushman Bharat have further expanded the reach of insurance, particularly among the underserved and low-income segments of the population. These schemes aim to provide affordable life and health insurance coverage, contributing to financial inclusion and social security.

The future of the Indian insurance industry looks promising, with increasing awareness, rising incomes, and a favorable regulatory environment driving growth. The sector is poised to play a crucial role in supporting the country’s economic development and enhancing the financial resilience of individuals and businesses.


The history of insurance in India is a testament to the country’s ability to adapt and evolve in response to changing needs and circumstances. From ancient practices of mutual aid to a well-regulated modern industry, insurance has come a long way in providing financial protection and promoting economic stability. As India continues to grow and develop, the insurance sector will remain a vital pillar of its economy, ensuring that individuals and businesses are prepared for the uncertainties of the future.

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