Regulation of Insurance Industry

1.  INTRODUCTION The concept of insurance has been prevalent in India since ancient times amongst Hindus. Overseas traders practised a system of marine insurance. The joint family system, peculiar to India, was a method of social insurance of every member of the family on his life. The law relating to insurance has gradually developed, undergoing several phases from nationalisation of the insurance industry to the recent reforms permitting entry of private players and foreign investment in the insurance industry. The development and growth of the insurance industry in India has gone through three distinct stages. 1.1 Formation of insurance industry in India Insurance law in India had its origins in the nited !ingdom with the establishment of a "ritish firm, the Oriental #ife Insurance $ompany in 1%1% in $alcutta, followed by the "ombay "ombay #ife &ssurance &ssurance $ompany in 1%'(, 1%'(, the )adras *+uitable *+uitable #ife Insurance Insurance ociety in 1%'- and the Oriental Oriental #ife &ssurance &ssurance $ompany in 1%/. However, till the establishmen establishmentt of  the "ombay )utual #ife &ssurance ociety in 1%1, Indians were charged an e0tra premium of up to '2 as compared to the "ritish. The first statutory measure in India to regulate the life insurance business was in 1-1' with the passing of the Indian #ife &ssurance $ompanies &ct, 1-1' 34&ct of 1-1'56 3which was based on the *nglish &ct of 1--6. Other classes of  insurance business were left out of the scope of the &ct of 1-1', as such 7inds of insurance were still in rudimentary form and legislative controls were not considered necessary. 8eneral insurance on the other hand also has its origins in the nited !ingdom. The first general insurance company Triton Insurance $ompany #td. was promoted in 1%9 by "ritish nationals in $alcutta. The first general insurance company established by an Indian was Indian )ercantile Insurance $ompany #td. in "ombay in 1-. *ventually, with the growth of fire, accident and marine insurance, the need was felt to bring such 7inds of insurance within t he purview of the &ct of 1-1'. 1 :hile there were a number of attempts to introduce such legislation over the years, non;life insurance was finally regulated in 1-(% through the passing of the Insurance &ct, 1-(% 34&ct of 1-(%56. The &ct of 1-(% along with various amendments over the years continues till date to be the definitive piece of legislation on insurance and controls both life insurance and general insurance. 1.' an.'. The aim of the &uthority is “t !"t#$t t%# &'t#"#t  %*+#"  I',"-'$# !*&$&# t "#,*-t#/ !"0t# -'+ #',"# "+#"* "t%  I',"-'$# &'+,t"  " 0-tt#" $''#$t#+ t%#"#&t% " &'$&+#'t-* t%#"#t.4 5

6 Fulbag ingh and onia $hawla, 4#ife Insurance Jegulatory Framewor7 in IndiaD Levelopments,

Issues and $oncerns5, The I$F&I >ournal of Insurance #aw, Bol. B, uly ', p.19. 7 4Jegulation of Insurance5 via

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nder this &ct, an authority called IJL& is established which replaces $ontroller of  Insurance under Insurance &ct 1-(%. F#-t,"#  A,t%"&t  $orporate body by the aforesaid name which means it will act as group of persons, called members, who will wor7 jointly not as an individual person li7e $ontroller of Insurance.  Having perpetual succession which means any member may resign or die but the &uthority will wor7.  & common seal with power to enter into a contract by affi0ing a stamp on the documents.  ue or be sued means the &uthority can file a case against any person or organi=ation and vice versa. C0!&t&'  A,t%"&t The &uthority shall consist of nine persons as per details given  belowD.  $hairperson. 