This article provides notes on the Life Insurance Corporation of India (LIC).
In India also the concept of insurance remained since the ancient civilizations. Look at the Logo of the Life Insurance Corporation some words in devnagri script (Yagkshema) are written in the logo of LIC. These have been taken from Rig Veda meaning protection of health.
If we read GEETA in 22nd Shaloka of Chapter(Adhaya) 9th of Bhagwat Geeta Shri Krishna had said to Arjun a version in Sanskrit language, The entire version is not relevant here but the version ends with words (Yogkshemam vhamyeham). The meaning of these lasting two verses is I am the one to take care of all the problems of life. In simple words the LIC wishes to covey a word of life security to all those who care for themselves.
Likewise the roots of insurance can be traced in very old Indian “Granthas” Yagvelkya in his writings known as Dharmshatra, Manu in his Manusmriti and Koutalya in his Arthshastra have provided the norms of compensation which with negligible differences were related to subscription of resources by pooling to be used for re-distribution in case of unforeseen losses or damages caused by nature or otherwise.
Calcutta is the city where first formal bank was established which served the banking needs of Europeans. In case of insurance also the first formal Insurance company was also established in Calcutta to take care of Europeans only and Indians were not allowed to seek this facility.
The name of the company was Oriental Life Insurance company which was established in the year of 1818. In the field of Insurance societies the proper society known as Mutual Life Insurance Society was established in Bombay in 1870 which provided life insurance to Indians.
The Swadeshi movement not only had taken initiatives to establish Indian Banks in the pre- independence era but also paved the pathway for opening Indian Insurance companies and during 1905-1907 a number of Indian Insurance companies came to start the business of insurance like National Insurance in Calcutta, United India in Madras, Co-operative Insurance in Lahore, The Indian Mercantile, General Assurance and Swadeshi Life in Bombay.
Prior to 1912 there was no legislation to regulate insurance business. In the year of 1912, the life insurance companies act, and the provident fund act was passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary.
With the result in next 20 years of passing the Act there was a lot of growth in insurance business. As such many fictitious or unsound companies came into existence to take the benefit of insurance. It was therefore necessary to protect the Insurance companies against the loss caused by such insolvent companies.
The government started to protect these companies and therefore an Act known as the Insurance Act 1938 was passed. So far only life insurance was popular but general insurance companies were also in the field.
This was the first legislation that was not only confined to life insurance in the country but also covered the non-life insurance business. In case of life insurance the insurance act 1938 could not solve the problems of disparities between Indian and Foreign companies.
With the result a demand was raised to remove these disparities and Indian companies be brought at par with Foreign companies. Different sections of the society at different time had been raising this demand and the demand reached in its culmination in the year of 1956 when the Government of India decided to nationalize the life insurance in India on 19th January 1956 and Parliament passed the act on 19th June 1956.
But the Life Insurance Corporation was created on 1st September 1956 with the following objectives:
1. Spread life insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost.
2. Maximize mobilization of people’s savings by making insurance -linked savings adequately attractive.
3. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole, the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return.
4. Conduct business with utmost economy and with the full realization that the money belongs to the policyholders.
5. Act as trustees of the insured public in their individual and collective capacities.
6. Meet the various life insurance needs of the community that would arise in the changing social and economic environment.
7. Involve all people working in the Corporation to the best of their capability in the furthering in the in the interest of the insured public by providing efficient service with courtesy.
8. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporation’s objectives.