BREIF HISTORY OF INSURANCE

Insurance has been known to exist in some form or other since 3000 BC. The Chinese traders, traveling treacherous river rapids would distribute their goods among several vessels, so that the loss from any one vessel being lost would be partial and shared, and not total. The Babylonian traders would agree to pay additional sums to lenders, as the price for within off the loans, in case of the shipment being stolen. The inhabitants of Rhodes adopted the principle of 'general average', whereby, if goods are shipped together, the owners would bear the losses in proportion, if loss occurs, due to jettisoning during distress.(Captains of ships caught in storms, would throw away some of the cargo to reduce the weight and restore balance. Such throwing away is called jettisoning) The Greeks had started benevolent societies in the late 7th century AD, to take care of the funeral and families of members who died. The friendly societies of England were similarly constituted. The Great Fire of London in 1666, in which more than 13000 houses were lost, gave a boost to insurance and the first fire insurance company, called the Fire Office, was started in 1680.

The origins of insurance business as in vogue at present, is traced to the Lloyd’s Coffee House in London. Traders, who used to gather in the Lloyd’s coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. In India, insurance began in 1818 with life insurance being transacted by an English company was the Bombay Mutual Assurance Society Ltd, formed in 1870 in Mumbai. This was followed by the Bharat Insurance Co. in 1896 in Delhi, the Empire of India in 1897 in Mumbai, the United India in Chennai, the National, the National Indian and the Hindustan Cooperative in Kolkata.

Later, were established the Cooperative Assurance in Lahore, the Bombay Life(originally called the Swadeshi Life),the Indian Mercantile, the New India and the Jupiter in Mumbai and the Lakshmi in New Delhi. These were all Indian companies started as a result of the swadeshi movement in the early 1900s.By the year 1956, when the life insurance business was nationalised and the Life Insurance Corporation of India (LIC) was formed on 1st September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business in India. After the amendments to the relevant laws in 1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.8.2007, sixteen life insurers had been registered and were transacting life insurance business in India.