16-05-2014, 02:33 PM
HISTORY OF INSURANCE
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HISTORY
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvanby giving loans, which were later repaid with interest when the goods arrived safely.
The concept of insurance as we know today took shape in 1688 at a place called Lloyd’s Coffee House in London where risk bearers used to meet to transact business. This coffee house became so popular that Lloyd’s became the one of the first modern insurance companies by the end of the eighteenth century.
Marine insurance companies came into existence by the end of the eighteenth century. These companies were empowered to write fire and life insurance as well as marine. The Great Fire of London in 1966 caused huge loss of property and life. With a view to providing fire insurance facilities,
Dr. Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office.
The early history of insurance in India can be traced back to the Vedas. The Sanskrit term ‘Yogakshema’ (meaning well being), the name of Life Insurance Corporation of India’s corporate headquarters, is found in the Rig Veda. The Aryans practiced some form of ‘community insurance’ around1000 BC.
Life insurance in its modern form came to India from England in 1818. The Oriental Life Insurance Company was the first insurance company to be setup in India to help the widows of European community. The insurance companies, which came into existence between 1818 and 1869, treated
Indian lives as subnormal and charged an extra premium of 15 to 20 percent. The first Indian insurance company, the Bombay Mutual Life Assurance Society, came into existence in 1870 to cover Indian lives abnormal rates.
The Insurance Act, 1938, the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business. This amended insurance Act looked into investments, expenditure and management of these companies.
By the mid- 1950s there were 154 Indian insurers, 16 foreign insurers, and75 provident societies carrying on life insurance business in India.
Insurance business flourished and so did scams, irregularities and dubious investment practices by scores of companies. As a result the government decided to nationalize the life assurance business in India. The Life Insurance Corporation of India (LIC) was set up in 1956. The nationalization of life