Insurance is our safety net, encouraging us to seek the most out of any opportunity in our lives – be it embarking upon a new business, acquiring a new car, securing financial stability for our retirement, or loved ones after our passing, optimising our income after taxes, getting married or having a child.
Informal systems of sharing pooled resources in times of need have existed since recorded history. The year 1818, however, saw the setting up of first dedicated life insurance provider in Calcutta – The Oriental Life Insurance Company. Even though it folded in 1834, companies continued to be formed in the various business centres around the country. This led to the enactment of The Indian Life Assurance Companies Act in 1912, the first measure to regulate the affairs of these various companies. From then on, the sector evolved steadily, undergoing various refinements, to the opening of the sector to private players, both Indian and foreign in the early 90s.
The year 2000 saw the incorporation of the Insurance Regulatory and Development Authority (IRDA) – a statutory, autonomous body to regulate and develop the insurance industry. It has since framed various regulations, ranging from registration of companies for carrying on insurance business, to protection of policyholders’ interests, while ensuring the financial security of the insurance market.
With specific reference to life insurance, the Life Insurance Corporation (LIC) was formed in 1956, with the nationalisation of the insurance sector, by amalgamating 154 Indian, 16 non-Indian insurers, and 75 provident societies – a staggering 245 entities in all. India’s life insurance sector is the biggest in the world, with about 360 million policies which are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per cent over the next five years.
The assurance of life cover is yet to be reaped by thousands of homes in India, as penetration of life insurance still stands at 2.6% in 2015. With approximately 40% of our population still below 30 years of age, the need for life cover and long-term savings will only grow over the years to come. Life insurance today, represents as vital a form of financial protection, as it was in 1956. The difference lies in the range of customisations and simplifying of processes that have taken place from them to now in life insurance products.
An evolution that continues, with the customer at the heart of it all.