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Life Insurance Corporation of India
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The insurance sector in India dates back to 1818 when first insurance company, The
Oriental Life Insurance Company, was established, at Calcutta. Thereafter, Bombay
Life Assurance Company in 1823 and Madras Equitable Life Assurance Society in 1829
were established. |
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In 1912, the Indian Life Assurance Companies Act was enacted as the first statute
to regulate the life insurance business. In 1928, the Indian Insurance Companies
Act was enacted to enable the Government to collect statistical information about
both life and non-life insurance businesses. The Insurance Act was subsequently
reviewed and a comprehensive legislation was enacted called the Insurance Act, 1938. |
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The nationalisation of life insurance business took place in 1956 when 245 Indian
and foreign insurance and provident societies were first amalgamated and then nationalised.
The Life Insurance Corporation of India (LIC) came into existence by an Act of Parliament,
viz. LIC act, 1956, with a capital contribution of Rs.5 Crores from the Government
of India
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General Insurance Corporation Of India
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The General insurance business in India started with the establishment of Triton
Insurance Company Limited in 1850 at Calcutta .In 1907, the first company, The Mercantile
Insurance Ltd. Was set up to transact all classes of general insurance business.
General Insurance Council, a wing of the Insurance Association of India in 1957,
framed a code of conduct for ensuring fair conduct and sound business practices.
In 1968 the Insurance Act was amended to regulate investments and to set minimum
solvency margins. In the same year the Tariff Advisory Committee was also set up.
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In 1972, The General Insurance Business (Nationalisation) Act was passed to nationalise
the general insurance business in India with effect from 1st January 1973. For these
107 insurers was amalgamated and grouped into four company’s viz., the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance
Company Ltd. And the United India Insurance Company Ltd. General Insurance Corporation
of India was incorporated as a company. |
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Current Scenario In new economic policies formulated since 1991, globalisation,
privatisation and liberalisation have become new buzzwords. Under new economic policies,
many economic and financial reforms took place. Like liberalising licensing policy,
attracting FDI, allowing foreign equity in public sector undertakings. The financial
reforms restructured banking sector by allowing entry of new private and foreign
banks. They also allowed private sector and commercial banks in mutual funds investment
business, rationalising the EXIM policy and so on. |
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Liberalisation of Insurance markets |
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Liberalisation of Insurance involves transformation of the industry from a Government
monopoly to a competitive environment. Free markets allow for better resource allocation
and creation of wealth and prosperity of people and the country. It enables development
of health care, education and infrastructure of the country. In a liberalized insurance
market, consumers are able to choose from different insurance providers having a
wide range of products.
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A liberal insurance market is one in which the market determines who should be allowed
to sell insurance, what, how and the prices at which these insurance products should
be sold. The issues like market access and equality of competitive opportunity and
national treatment will decide who will be allowed to sell insurance. Second and
fourth items commonly deal with issues such as product, price and market conduct
regulation.
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There are certain pre-conditions to make liberalisation of insurance effective: |
- -Sound competition law
- -Efficient and reliable regulation
- - Phased liberalisation
- -Consistency and impartiality between competitors
- -Optimum quantum of regulation
- -Efficient disclose and dissemination of information to the society.
- -Insurance markets in India possess certain imperfections justifying the need for
competition as well as regulation.
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