life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firmswere been established in India. Then the central government took over these companies and as a result theLIC was formed. Since then LIC has worked towards spreading life insurance and building a widenetwork across the length and the breath of the country. After the liberalization the entrance of foreign players has added to the competition in the market. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance companyestablished in the year 1850 in Calcutta by the British. In 1957 General Insurance Council, a wing of theInsurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. In 1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the generalinsurance business in India with effect from 1st January 1973. It was after this that 107 insurersamalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New IndiaAssurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance CompanyLtd. GIC incorporated as a company.
1.3 INSURANCE SECTOR REFORMS
In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor wasformed to evaluate the Indian insurance industry and give its recommendations. The committee came upwith the following major provisions
Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter theindustry.
Foreign companies may be allowed to enter the industry in collaboration with the domesticcompanies.
Only one State Level Life Insurance Company should be allowed to operate in each state It wasafter this committee came into affect the regulatory body for insurance sector was formed withthe name of IRDA.
The IRDA since its incorporation as a statutory body has been framing regulationsand registering the private sector insurance companies. IRDA being an independent statutory body has put a framework of globally compatible regulations.