The concept of insurance in India has deep traditional and cultural roots, evolving from informal community-based systems to a formal, regulated industry. Here's an overview of insurance tradition in India, tracing its historic, cultural, and modern aspects:
1. Ancient Roots: Community-Based Risk Sharing
Pre-modern India had informal systems of risk management.
Villagers often practiced mutual aid, where communities came together to support individuals in times of loss—such as fire, death, or crop failure.
This wasn’t called “insurance” in the modern sense, but it reflected the spirit of collective risk-sharing.
In some texts like the Manusmriti and Arthashastra, there are references to financial planning, risk, and protections for traders.
2. Marine Insurance: The First Formal Introduction
18th century (1818): Insurance was formally introduced to India with the establishment of the Oriental Life Insurance Company in Kolkata.
Marine insurance was the earliest form to be regulated, introduced by British traders to protect goods during voyages.
3. Colonial Period: Rise of Life Insurance
The Bombay Mutual Life Assurance Society was the first Indian-owned insurance company (1870).
Insurance became more widespread, but mostly served urban, elite, and colonial interests.
The Insurance Act of 1938 was the first comprehensive legislation governing both life and non-life insurance.
4. Post-Independence Era: Nationalization
1956: The government nationalized life insurance and formed the Life Insurance Corporation of India (LIC).
1972: General insurance was also nationalized under General Insurance Corporation (GIC).
These moves reflected India's approach to socialistic economic planning and were intended to ensure that insurance reached underserved populations.
5. Liberalization and the Modern Insurance Industry
1999: The Insurance Regulatory and Development Authority of India (IRDAI) was established.
Insurance was opened to private players and foreign investment.
This era saw a boom in awareness, products, and coverage, including:
Life insurance
Health insurance
Crop and livestock insurance
Motor and property insurance
New tech-based companies and apps now provide micro-insurance and rural coverage.
6. Traditional Beliefs & Modern Insurance
In many parts of India, cultural beliefs influence insurance adoption.
For example, some families hesitate to buy life insurance, believing it might "invite bad luck."
Others rely on family or religious support instead of formal financial protection.
However, this is gradually changing with increased financial literacy and government schemes.
7. Government Initiatives & Social Insurance
India has launched several mass insurance schemes to protect vulnerable populations:
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) – Life insurance
Pradhan Mantri Suraksha Bima Yojana (PMSBY) – Accident insurance
Ayushman Bharat – Health insurance for the poor
PM Fasal Bima Yojana – Crop insurance for farmers
The tradition of insurance in India blends cultural practices of mutual aid, colonial legacies, state intervention, and modern innovation. From temple inscriptions about community contributions to tech-driven health insurance platforms, India’s journey with insurance is a fascinating reflection of its social evolution and economic growth.