After the liberalization of the Insurance sector, LIC has
been facing intense competition from the new players. With
the entry of new players, the insurance market is flooded
with many new and innovative products. LIC has remained
the market leader even after the liberalization, but with
a decreased market share. Though a late entrant into the
business of unit-linked plans as compared to many private
insurers, it has been able to reap gains from the new portfolio.
Life insurance in its present form came to India from the
United Kingdom with the establishment of a British firm,
Oriental Life Insurance Company in Calcutta, in 1818, followed
by Bombay Life Assurance Company, in 1823. The Indian Life
Assurance Companies Act, 1912, was the first statutory measure
to regulate life insurance business. In 1938, earlier legislation
was consolidated and amended by the Insurance Act, 1938,
with comprehensive provisions aimed at exercising effective
control over the activities of insurers. The main concern
was to protect the interests of the insuring public. The
act was amended in 1950 resulting in far-reaching changes
in the insurance sector. By 1956, 154 Indian and 16 foreign
insurers and 75 provident societies were carrying on life
insurance business in the country. In January 1956, in keeping
with the then prevailing political and economical philosophy
of socialism, 245 Indian and foreign insurers and provident
societies operating in India were taken over by the Central
Government by an act. The LIC, with a capital of Rs. 5 cr
was set up in September that year.
Since 1956, LIC has worked resolutely towards spreading
life insurance, and in the process has built a wide network
across the length and breadth of the country, consisting
of 2,048 branches, 100 divisional offices, 7 zonal offices
and a corporate office. The number of new policies sold
each year grew from 14.62 lakhs in 1961 to 1.48 cr in 1999,
of which 54.70% are rural. The rural share in 1961 was 36.53%.
Similarly, the annual premium income rose from Rs. 88.65
cr in 1957 to Rs. 22,805.80 cr in 1999. The Life Fund of
the corporation also grew from Rs. 410 cr to Rs. 2,89,895.52
cr in 2003.
The insurance industry in India has gone through a sea
change since its liberalization in 1999. Closed to the forces
of competition for over 40 years, private participation
has ushered in a breath of fresh air into what was considered
a dull industry. Undoubtedly, the erstwhile monopoly, the
Life insurance Corporation of India (LIC), which spanned
the length and breadth of the country, has done a commendable
job in the industry. But, as the government rightly identified
the task of making an essential financial product available
to the masses, it left scope for several more companies
to participate. |
