What is insurance and what is its purpose?

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Insurance essentially implies “to protect” someone from unknowns or potential losses caused by another person, company, or government. To put it another way, insurance is a commitment made by one party to protect another party from future risks in exchange for a payment called a premium.

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India’s Insurance History

Insurance has been practiced in India since the time of Kautilya, Manu, and Yagnyaklvaya. During that time, the concept of insurance was founded on pooling resources such as wood, food, clothing, and other items that could be redistributed in a crisis. The concept, which stretches back to our ancestors, has changed over time as a result of learning from other countries’ experiences. In 1818, life insurance was born as a result of this breakthrough in insurance.

Oriental Life Insurance-Calcutta was the first company to offer life insurance. Following this, several Indian and foreign organizations dominated the industry, including Bombay Mutual, Empire of India, Oriental Insurance, and others.

The introduction of the India Life Assurance Act in 1912 began the regulation of insurance in India, allowing the government to collect all necessary statistical information relating to all types of insurance conducted by Indian and foreign organizations. The formation of the Life Corporation of India in 1956 marked the beginning of the nationalization of the life insurance business. The nationalization of general insurance was completed in 1972, when 107 businesses were merged.

Since its foundation, the insurance industry has experienced a paradigm shift in its growth. Several reforms and regulations have been enacted in order to better govern the business and to work in the clients’ interest. The gradual and steady rise of the industry leads to the formation of a commission, chaired by a former governor of the Reserve Bank of India, to supervise and oversee the sector’s reforms. The private sector should be allowed to enter the insurance business, according to a recent development under the tenure of RBI governor in 1993.

The report also suggested that if a foreign corporation wants to do business in India, it must form a joint venture or collaborate with an Indian enterprise.

The former RBI governor committee’s suggestions were favourably received, resulting in the formation of the Insurance Regulatory and Development Body (IRDA), which is now the supreme authority for regulating the insurance business.

Policy of insurance

The insurance policy is a contract between the insurer and the insured, also known as the policyholder, that contains all of the information about the insurance and the legal claim that the insurer is responsible for.

Companies that provide insurance

Throughout the world, insurance has become a very popular industry. Many businesses have sprung up in this industry, and many of them have grown into multinational corporations that operate on a global scale. Their primary source of revenue is premiums received from policyholders, and their primary expenses include claim settlement, agent’s fees, employee salaries, and so on.

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India’s insurance companies

There are numerous companies operating in this industry in India. IRDAI has identified 24 life insurance businesses, 34 non-life insurance companies, and two reinsurance companies, according to a study. They all operate in accordance with the IRDAI’s laws and regulations ( Insurance Regulation and Development Authority of India).

Agents in the insurance industry

Insurance agents are individuals who sell insurance products on behalf of insurance firms in exchange for a commission. Independent and captive or exclusive agents are the two categories of agents. Independent agents work for a variety of companies and are paid a commission based on the number of policies sold, whereas captive or exclusive agents work for a single insurance company and only sell that company’s policies, for which they are paid a commission or a salary as an employee.

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