Almost all are familiar with the word insurance, at least have heard about life insurance and general insurance. But only a few people know about the history of insurance.
Since there are many types of insurance (life insurance, property insurance, auto insurance, health insurance), it is difficult to say that what type of insurance would have started in the beginning. But according to the known information in the period of 3000 BC a type of property insurance was popular among the merchants and investors in China. As the products of the merchants of China, which are taken by ships, were sold in foreign countries, they wanted to ensure that there should not be any loss. Fear of robbery in the way or sinking or loosing of the ship were considered the main reason for this. This idea made the property insurance popular.
Not only in China but the merchants and investors in Babylon also had developed a system such as insurance under which finance was provided to the merchants for their business and in the case of robbery, in return of some extra payment, the amount of finance was forgiven. But this facility was only available to the merchants who make an additional payment in addition to the payment of amount finance along with interest.
In beginning the above systems continued in form of an agreement. This type of systems attracted a lot of the people and as a result insurance was going on developing.
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Following are the insurance companies in India:
- HDFC Standard Life Insurance Company Ltd.
- Max New York Life Insurance Co. Ltd.
- ICICI Prudential Life Insurance Company Ltd.
- Kotak Mahindra Old Mutual Life Insurance Limited
- Birla Sun Life Insurance Company Ltd.
- Tata AIG Life Insurance Company Ltd.
- SBI Life Insurance Company Limited .
- ING Vysya Life Insurance Company Private Limited
- Bajaj Allianz Life Insurance Company Limited
- Metlife India Insurance Company Ltd.
- Future Generali India Life Insurance Company Limited
- IDBI Fortis Life Insurance Company Ltd.
- Royal Sundaram Alliance Insurance Company Limited
- Reliance General Insurance Company Limited.
- IFFCO Tokio General Insurance Co. Ltd
- TATA AIG General Insurance Company Ltd.
- Bajaj Allianz General Insurance Company Limited
- ICICI Lombard General Insurance Company Limited.
- Apollo DKV Insurance Company Limited
- Future Generali India Insurance Company Limited
- Universal Sompo General Insurance Company Ltd.
- Reliance Life Insurance Company Limited.
- Aviva Life Insurance Co. India Pvt. Ltd.
- Cholamandalam General Insurance Company Ltd.
- Export Credit Guarantee Corporation Ltd.
- HDFC-Chubb General Insurance Co. Ltd.
- Sahara India Insurance Company Ltd.
- Shriram Life Insurance Company Ltd.
- Bharti AXA Life Insurance Company Ltd.
- Future Generali India Life Insurance Company Limited
- IDBI Fortis Life Insurance Company Ltd.
- Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
- Aegon Religare Life Insurance Company Ltd.
- DLF Pramerica Life Insurance Company Ltd.
- Bharti Axa General Insurance Company Ltd.
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Life insurance provides a monetary benefit to a decedent’s family or other designated beneficiary, and may specifically provide for income to an insured person’s family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.
Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed.
In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.
In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return
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As per the law and economics Insurance is a form of risk management. Insurance is defined as the equitable transfer of the risk of a loss, from one unit to another, in exchange for a premium, and can be thought of a guaranteed small loss to prevent a large, possibly overwhelming loss.
The company selling the insurance is called insurer.
The amount charged for a certain amount of insurance coverage is called premium.
Types of insurance
Auto insurance
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: (1) Property coverage pays for damage to or theft of your car. (2) Liability coverage pays for your legal responsibility to others for bodily injury or property damage and (3) Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.
Home insurance
Home insurance provides compensation for damage or destruction of a home from disasters. In some geographical areas, the standard insurances excludes certain types of disasters, such as flood and earthquakes, that require additional coverage. Maintenance-related problems are the homeowners’ responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets.
Health insurance
Health insurance policies will cover the cost of medical treatments
Apart from the above there are many other types of insurance like car insurance, general insurance, travel insurance etc.
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Oriental Life Insurance Company, the first insurance company of India, was started by Europeans in Kolkata in 1818. The purpose of this company was to cater to the needs of European community. There was discrimination among the life of Europeans in the pre-independent era in India. Higher premiums were charged for lives of Indians in comparison with the lives of foreigners. Later in 1870 Bombay Mutual Life Assurance Society, the first Indian insurance company was established who covered Indian lives at normal rates.
As soon as the twentieth century started, insurance companies started growing up like mushrooms. For the first time the insurance business was regulated in the year 1912 as the Life Insurance Companies Act, and the Provident Fund Act were passed in that year. According to the Life Insurance Companies Act, 1912, it became necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary.
National Insurance Company Ltd., founded in 1906, is still in existence and doing business today. There were only two type of insurance viz. The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance Corporation of India (GIC).
General Insurance Company had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from parent company and made as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
Life Insurance and General Insurance in India are still a growing sector with huge potential. The Insurance sector in India has gone through a number of phases and changes, particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance sector is considered as a booming market with every other global insurance company wanting to have a lion’s share. Currently, the largest life insurance company in India is still owned by the government.
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