1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta.
This Company however failed in 1834.
In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency.
1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency.
In 1914, the Government of India started publishing returns of Insurance Companies in India.
The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business.
In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies.
In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies.
However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.
Life Insurance Corporation—
An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year.
The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
The Life Insurance Corporation with its Central Office in Mumbai and eight Zonal Offices at Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Kanpur, Bhopal and Patna operates through 109 Divisional Offices including one Salary Savings Scheme (SSS) Division at Mumbai, 2048 Branch Offices and 1004 Satellite Offices as at 31.3.2010.
In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.
The objective was to complement the reforms initiated in the financial sector.
The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be permitted to enter the insurance industry.
They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.
Insurance Regulatory and Development Authority—
Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.
The IRDA was incorporated as a statutory body in April, 2000.
The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.
The IRDA opened up the market in August 2000 with the invitation for application for registrations.
Foreign companies were allowed ownership of up to 26%.
The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests.
In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer.
Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.
There are 53 insurance companies operating in India, of which 24 are in the life insurance business and 29 in general insurance.
“The foreign investment proposals up to 49 per cent of the total paid up equity of the Indian insurance company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India,” said a Government notification.
General Insurance Corporation of India (GIC)—
The entire general insurance business in India was nationalised by General Insurance Business (Nationalisation) Act, 1972 (GIBNA).
The Government of India (GOI), through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business.
It was incorporated on 22 November 1972 under the Companies Act, 1956 as a private company limited by shares.
GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance.
As soon as GIC was formed, Government of India transferred all the shares it held of the general insurance companies to GIC.
Simultaneously, the nationalised undertakings were transferred to Indian insurance companies.
After a process of mergers among Indian insurance companies, four companies were left as fully owned subsidiary companies of GIC
 National Insurance Company Limited.
 The New India Assurance Company Limited.
 The Oriental Insurance Company Limited.
 United India Insurance Company Limited.
The next landmark happened on 19th April 2000, when the Insurance Regulatory and Development Authority Act, 1999 (IRDAA) came into force.
This Act also introduced amendment to GIBNA and the Insurance Act, 1938.
An amendment to GIBNA removed the exclusive privilege of GIC and its subsidiaries carrying on general insurance in India.
In November 2000, GIC was re-notified as the Indian Reinsurer and through administrative instruction, its supervisory role over the four subsidiaries was ended.
With the General Insurance Business (Nationalisation) Amendment Act 2002 (40 of 2002) coming into force from March 21, 2003; GIC ceased to be a holding company of its subsidiaries.
The ownership of the four erstwhile subsidiary companies and also of the General Insurance Corporation of India was vested with Government of India.
GIC Re is a wholly owned company of Government of India.