The insurance industry originated in India in the year 1818 with the formation of Life Insurance Corporation in Calcutta. The idea behind starting LIC was to provide insurance coverage for English widows and different premium was charged for the English and for the Indians. In 1870 Bombay Mutual Life Insurance Society established its Insurance business and the same premium was charged for both Indians and English. In 1912 the Insurance sector came under the purview of regulations when the government passed the Life Insurance Companies Act. But it was in the year 1938 when the government came up with the first legislation to bring the insurance sector under state control.
In 1956, the Government of India nationalized insurance companies bringing Indian Insurance sector under the purview of the Government. These state owned Insurance companies became highly inefficient and bureaucratic, had excess manpower and countless delay in settlement of claims but the nation did not have an alternative. Any effort by the government to privatize the industry met with stiff resistance from the trade unions.
Under the recommendation of Malhotra Committee the Insurance Regulatory And Development Authority was set up to monitor and control the Insurance industry .Some of the initiatives taken by the government after Insurance sector reforms are: