Life Insurance in India: Origin, Evolution and the Present State
This chapter traces the origin of Indian life insurance and discusses its evolution in different phases, distinguishing the pre-liberalization era from the post-liberalization phase. The present state of life insurance in India is discussed in terms of in
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Life Insurance in India: Origin, Evolution and the Present State
Abstract This chapter traces the origin of Indian life insurance and discusses its evolution in different phases, distinguishing the pre-liberalization era from the post-liberalization phase. The present state of life insurance in India is discussed in terms of indicators like insurance penetration and density. A comparative picture is drawn with reference to global life insurance. The state of life microinsurance and postal life insurance is briefly discussed followed by the challenges before the future of the industry. Keywords Insurance penetration Insurance density Bancassurance
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INTRODUCTION
In the epic Mahabharata, Yaksha asked Yudhisthira, ‘What is the most wonderful thing in the World’. To this Yudhisthira replied, ‘the most wonderful thing in the World is the sight of men watching the dead being carried to burial ground every day and still imagine that, they are eternal’ (Life Insurance Compendium 1999–2000). Death is a natural phenomenon and a sublime theme of reflection. Therefore, one should not grieve for what is inevitable and unavoidable, exhorts Lord Shri Krishna in Shrimad Bhagwad Geeta (the Song Celestial). In our worldly life, whenever there is uncertainty there is some element of risk involved. The instinct of seeking protection against such risk is one of the basic motivating forces determining human attitudes. It is believed that the © The Author(s) 2017 T.K. Parida, D. Acharya, The Life Insurance Industry in India, DOI 10.1007/978-981-10-2233-3_1
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THE LIFE INSURANCE INDUSTRY IN INDIA
concept of insurance must have originated as a sequel to this instinct. The story of insurance is probably as old as the story of mankind. Insurance also has a deep-rooted history in India, finding mention in writings of Manu (Manusmriti), Yagnavalkya (Dharmasastra) and Kautilya (Arthashastra). The writings speak of pooling of resources that could be redistributed in times of calamities such as floods, fire, epidemics and famine, etc. This was possibly a precursor to modernday insurance. In ancient Indian history, the earliest traces of insurance have been preserved in the form of marine trade loans and through carrier’s contracts. The Sanskrit term Yogakshema (meaning well-being) is found in the Rig Veda and depicts that some kind of commercial insurance was practised by the Aryans in India nearly 3,000 years ago. The Vedic Rishis knew about this and their songs of benevolence contained the term Yogakshemam, an idea which has been shaping the Indian thinking since ancient times. Later, the Indian joint family system too fulfilled the need for security to a large extent. The first plan to form some sort of an insurance organization in India was proposed at the government level. Sir John Child (Governor of Bombay, 1681–1690) was instructed by the court of Director of East India Company to constitute an insurance office in the Bombay Island. However, it is not known about the suggestions (Insurance Times 2000). The rest of the chapter is or
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