National Insurance Awareness Day is annually observed on 28th June to raise awareness about Insurance which offers a layer of protection to guard in various situations and about the benefits of investing in an insurance plan. The day also serves as a reminder to people to check if all their insurance payments (or renewals) are up to date.
About the Insurance
Insurance is a legal agreement (financial tool) between two parties – the insurer (Insurance Company/provider) and the insured (Policy holder), also known as insurance coverage or insurance policy, in which the insurer provides financial coverage for the losses of the insured that s/he may bear under certain circumstances.
Evolution of Insurance in India:
- India witnessed the emergence of life insurance business in 1818 with the establishment of the Oriental Life Insurance Company in Calcutta (Now Kolkata in West Bengal).
- In 1914, the Government of India (GoI) started publishing returns of Insurance Companies in India.
- The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate the life insurance business.
- In 1956, an ordinance was issued nationalising the Life Insurance sector and Life InsuranceCorporation (LIC) came into existence
- The LIC of India was formed by an Act of Parliament (LIC, Act 1956), with a capital contribution of Rs. 5 Crores from GoI.
Note: The minimum paid-up equity capital of insurance companies is Rs.100 Crore. If the application is made for the business of Reinsurance, there must be documentary evidence proving that the paidup capital of the business is at least Rs. 200 crore.
Insurance penetration in India
i. As per the Economic Survey 2022-23 released on January 31, 2023, the Insurance penetration in India has risen from 2.7% (in 2000) to 4.2% (in 2020) and was 3.2% in 2021.
Note: Insurance penetration is measured as the percentage of insurance premiums to Gross Domestic Product (GDP)
ii. In 2021, the total global insurance premiums rose by 3.4% in real terms, with the non-life insurance sector witnessing a 2.6% rise.
iii. In the life insurance segment, global premium growth registered a projection of 4.5%.
Important takeaways for all competitive exams:
- Life Insurance Corporation (LIC) Establishment- 1956;
- Life Insurance Corporation (LIC) Chairperson- Siddhartha Mohanty;
- Life Insurance Corporation (LIC) Headquarters- Mumbai, Maharashtra.