One of the fastest growing industries in the services sector is insurance. With the entry of private players and foreign collaborations, penetration of insurance sector in India has gone up. Introduction of new products and channels of distribution along with the penetration of private insurance companies in hitherto uncovered markets are the major contributing factors for growth. This article describes the various changing trends in the Indian life insurance industry.

In 1818, a British company called Oriental Life Insurance set up the first insurance firm in India followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829. Though all these companies were operating in India, they were meant only for insuring the life of Europeans living in India. Later, some of these companies started providing insurance to Indians with approximately 20% higher premium than Europeans as Indian lives were treated as `substandard' during those days. Bombay Mutual Life Assurance Society was the first company established in 1871 which started selling policies to Indians at a `fair value'.

Insurance business was brought under the Indian Company Act in 1866. There were no specific regulations, but the Swadeshi Movement in 1905 gave birth to dozens of indigenous life insurance and provident fund companies. The year 1937, saw the Government of India setting up a consultative committee which finally gave birth to the Insurance Act, 1938.

In October 2000, the Insurance Regulatory and Development Authority (IRDA) issued license papers to three companies, HDFC Life Standard, Sundaram Royal Alliance Insurance Company and Reliance General Insurance. At the same time, `in-principle approval' was given to Max New York Life, ICICI Prudential Life Insurance Company and IFFCO Tokio General Insurance Company.

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