Evolution of Life Insurance Industry in India – Past and Present - An Overview

Abstract

In the early age of human civilization, insurance was not in a form of legal contract. It was practiced in form of custom. Insurance evolved along with the evolution of mankind. History of evolution of life insurance in India can be devided in four parts (1) Vedic and Buddhist Period, (2) British Period (Pre Nationalization Period), (3) Post Nationalization Period (4) Post Liberalization Period. It has passed through many facet and dynamic changes, it has taken paradigm shift. Recommendation of R N Malhotra committee (1994) paved a way for the liberalization. Government of India framed Insurance Regulatory Authority (IRA) in year 1996; later IRA is renamed as Insurance Regulatory and Development Authority (IRDA) in the year 1999 with the approval of bill in parliament. Low penetration and density of life insurance in India could be seen as lucrative opportunity for foreign players to enter in the Indian life insurance industry. There were numerous benefits of the liberalization such as Knowledge Transfer, Product Innovation, Competitive Pricing, Technological Development, Improved Service Quality, Alternative Distribution Channel etc. Journey of life insurance in India, its evolution from custom to contract depicts a story of growth and development of life insurance industry and its key role in the growth of Indian economy.