BRIEF HISTORY OF INSURANCE


The history of insurance can be traced back to the early civilization. Insurance as civilization progressed, the incidence of losses started increasing. It gave rise to the concept of loss sharing. The Chineese traders, travelling treacherous waters distributed their goods among several vessels, so that the loss from any one vessel being lost, would be partial and shared. The Romans had a Jettison' Law by which the captains of ships caught in storm threw away some of the cargo to reduce the weight and restore balance. The loss was shared by the owners in proportion. The Babylonian traders agreed to pay additional amounts to lenders, as the price for writing off the loans, in case of the shipment being stolen. The Great Fire of London gave a boost to insurance and the fist fire insurance company was started in 1680, with the name Fire Office The origin of insurance business in its modern form, is traced to the Lloyd's Coffee House in London. Traders, who used to gather in the Lloyd's Coffee House, agreed to share the losses to their goods while being carried by ships, The losses were caused by piracy or bad weather spoiling the goods or sinking the ship.

In India, insurance began in 1818, with life insurance being transacted by Oriental Life Insurance Co. Ltd. The Bombay Mutual Assurance Society Ltd, formed in 1870 in Mumbai, was the first Indian insurance company. This was followed by the Bharat Insurance Co. in Delhi, the Empire of India in Mumbai, the United India in Chennai, and the National Indian and the Hindusthan Cooperative in Kolkata As a result of the Swadeshi movement in the early 1900s many other Indian companies were started. In 1956 the life insurance business was nationalized and the Life Insurance Corporation of India (LIC) was formed in 1 September, 1956 Then, there were 170 companies and 75 provident fund societies transacting life insurance business in India. The General Insurance Corporation of India, was formed with effect from 1 January 1973, and all the general insurance companies were amalgamated and grouped into four companies In 1999, the Insurance Reguletory Development Authority Act was passed by which foreign companies were also permitted to do life insurance business in India. Now some sixteen prominent companies are transacting life insurance business in India, other than the LIC. The minimum equity share capital for life and general insurance business as per IRDA Act is 100 crores or one billion. 

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