Insurance in India

In economic terms, anything that reduces risk is referred to as insurance. In common parlance, insurance is provided by a company that covers a person’s life (called the life segment) or covers the loss of assets, property, or both (called non-life or general segment). The insurance policies are acquired for a set premium.

Insurance Industry

India has a lengthy history of insurance. It is mentioned in Manu (Manusmrithi), Yagnavalkya (Dharmasastra), and Kautilya’s writings (Arthasastra). The writings discuss the pooling of resources that could be redistributed during disasters such as fire, flood, epidemic, and famine. This was likely an ancestor of modern insurance. In ancient Indian history, marine trade loans and carriers’ contracts represent the earliest traces of insurance. Over time, India’s insurance industry has evolved by drawing heavily from other nations (England in particular).


In 1956, the government of India nationalized the country’s life insurance industry, and the Life Insurance Corporation of India (LIC) was established as a government-owned corporation (at that time 245 Indian and foreign companies were playing in the life segment of insurance). Private life insurance company formation was prohibited at the time. The government called the LIC an investment institution.

First, to promote life insurance for greater social security, and second, to mobilize people’s savings (collected through premiums) for nation-building. The LIC had been the largest investor in the government’s planned development process, purchasing government securities (G-Secs) and shares of the large asset Public Sector Undertakings (PSUs).


In 1971, the government nationalized the private sector companies (107 Indian and foreign companies) operating in the general insurance segment, and in 1972, the General Insurance Corporation of India (GIC) was established as a government-owned insurance company. The GIC began operations with its four holding companies on January 1, 1973:

  1. National Insurance Company Ltd.
  2. New India Assurance Company Ltd.
  3. Oriental Fire and Insurance Company Ltd.
  4. United India Insurance Company Ltd.

In the era of economic reforms, two major changes took place in this area-

  1. In November 2000, the GIC was notified to the Indian Reinsurers (to be known as GIC Re).
  2. In March 2002 the GIC was withdrawn from the holding company status of the four public sector general insurance companies. Now, these four companies are directly owned by the Government of India.


The Government of India established Agriculture Insurance Company of India Limited (AICIL) in December 2002 as a public sector insurance company (commenced its business in April 2003). The mission of this specialized agri-insurance company is “to better serve the needs of farmers and move toward a sustainable actuarial regime.”

The 1999-established National Agriculture Insurance Scheme (NAIS) was administered by this company. Since January 2016, the organization has been responsible for the newly launched PMFBY (Prime Minister Fasal Bima Yojana), which subsumed the existing agri-insurance schemes, the NAIS, and the Modified NAIS (of 2010). Before the AICIL was established, the General Insurance Corporation was in charge of the government’s agri-insurance obligations (GIC).

AICIL is jointly promoted by public sector insurance companies and development financial institutions, with the GIC (35%) and NABARD (30%) holding the majority shares and the four public sector general insurance companies holding 8.75% each.

Public Sector Insurance Companies

There are currently six public insurance companies in India. One is involved in the life segment (LIC), four in the non-life segment (general insurance), and one is a specialized agri-insurer. Other than these firms, there is only one reinsurance company, GIC Re (wholly owned by the GoI).