Whole Life Insurance Comparison Comparison Insurance Life Term Whole

While the title might suggest a comparison of different life insurance types, this article delves into the foundational structure and history of the insurance industry in India. You'll learn about the establishment and evolution of key institutions like the Life Insurance Corporation of India (LIC), the General Insurance Corporation of India (GIC), and the regulatory framework that governs them.

The Origins and Reach of Life Insurance Corporation of India (LIC)

The Life Insurance Corporation of India (LIC) was established on September 1, 1956. Its primary mission was to broaden access to life insurance across the country and to mobilize public savings for national development. Headquartered in Mumbai, LIC operates with a vast network, including several zonal offices in major cities like Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Kanpur, and Bhopal. This extensive reach extends through numerous divisional offices and thousands of branch offices nationwide, supported by hundreds of thousands of active agents.

LIC's influence isn't limited to India; the Corporation also conducts business internationally, with offices in Fiji, Mauritius, and the United Kingdom. Furthermore, LIC has engaged in joint ventures abroad within the insurance sector, including Ken-India Assurance Company Limited in Nairobi, United Oriental Assurance Company Limited in Kuala Lumpur, and Life Insurance Corporation (International), E.C. Bahrain. It has also collaborated with Sun Life (UK) to market unit-linked life insurance and pension policies in the UK.

Supporting Vulnerable Communities: The Social Security Group Scheme

To address the insurance needs of the weaker and more vulnerable segments of society, a Social Security Fund (SSF) was established in the late 1980s, administered by LIC. By the late 1990s, this fund had covered approximately 4.9 million individuals across 24 occupational groups or areas through various social security group schemes. These schemes provided coverage for people aged 18-60 years, offering a specific sum for death due to natural causes and a higher sum for accidental death. The SSF subsidized 50 percent of the premium, with beneficiaries contributing the remaining 50 percent.

Regulating the Insurance Sector: The Insurance Regulatory Authority

Following recommendations from the Malhotra Committee, the Indian government established an interim Insurance Regulatory Authority (IRA). This body was created to activate an essential regulatory apparatus for effectively monitoring and controlling the insurance industry. The IRA is led by a Chairman, who also serves as the Controller of Insurance and Chairman of TBC (the original text does not specify what TBC stands for). The Central Government nominates other members of the IRA, not exceeding seven in number, with a maximum of three serving full-time.

General Insurance in India: The Role of GIC and its Subsidiaries

The general insurance industry in India underwent nationalization, leading to the formation of the General Insurance Corporation of India (GIC) by the Central Government in November 1972. Effective January 1, 1973, the 107 Indian and foreign insurers operating in the country before nationalization were consolidated and grouped into four primary operating companies:

These four subsidiaries of GIC operate nationwide, competing with each other and underwriting various classes of general insurance business. However, certain specialized areas, such as aviation insurance for national airlines and crop insurance, were handled directly by GIC. Starting with hundreds of offices in 1973, the network of these general insurance companies expanded significantly, growing to over 4,200 offices by the late 1990s.