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Indian Insurance History – Chronology of Events and Insurance Timeline


Summary

chronology - vector image showing graph and standing man next to the plant

Twenty two years and we finally seem to be reaching a singularity touch point, to borrow from Ray Kurzweil, in the Insurance industry. In the next couple of years, technology would probably be inseparable from insurance; technology would have affected the way insurance is sold, the way it is serviced and everything in between.

But when did we get here? When was the foundation for insurance laid, and when were the organizations/ bodies that act as the guiding light today incorporated? When were tariffs introduced, and when was the sector de-tariffed.

Here’s a timeline of the Indian insurance sector:

Chronology of Events with regard to Indian Market practices through entry of private players in insurance sector till 2022
YearEvents / Milestones
1955Incorporation of Insurance Institute of India, an institution formed for promotion of Insurance Education & Training.
1968Tariff Advisory Committee is set up as a statutory body under Insurance Act 1938; the committee functions till 2002 when it is superseded by IRDA.
Jan-73Non-life insurance business is nationalized.
1979Unification of four regional Fire tariffs into All India Fire Tariff.
1980National Insurance Academy is established by MoF / Govt of India, LIC of India, GIC of India and PSU Insurers in Pune. The Institute functions as the pivotal supply of industry informed graduates alongside providing knowledge based learning for senior executives. It also acts as an academic repository and guiding light.
1994Detariffication of Marine Cargo, Aviation, PA, Health; Marine Cargo rates are dropped by 90%.
1999Insurance Regulatory and Development Authority, a statutory regulatory body is formed, in anticipation of the opening up of the Insurance sector to private participation.
2000Indian Insurance sector is opened for setting up private companies (with 26% FDI)
2001IRDA of India (IRADAI) is constituted under the General Insurance Council, in 2001, under section 64C of Insurance Act 1938
2001Insurance Brokers Association of India is incorporated under section 25 of the Companies Act 1956.
Mar-01All India Fire Tariff (AIFT) is amended to a simpler one risk one rate basis.
2002Institute of Insurance and Risk Management (IIRM) is established by IRDAI & Govt of Telengana.
Feb-03First set of 11 Insurance Brokers are issued license to operate.
2005Marine Hull is de-tariffed.
2005Indian Institute of Insurance Surveyors and Loss Assessors is established under section 25 of the Companies Act 1956
2006Institute of Actuaries of India is established under the Actuaries Act 2006; Actuarial Society of India is dissolved.
Jan-07Fire, Engineering, Motor (except Motor TPL), Workmen Compensation, Public Liability are de-tariffed. These Lines of Businesses form about 2/3rds of the Gross Premium underwritten in India till then. IRDAI permits upto 49% discount on Fire, Engineering covers and upto 20% on Motor Own Damage (OD).
Rates get dropped by 49% on Fire & Engg and 20% on Motor OD premium, following guidelines. It is a bloodbath as there doesn’t seem to be a bottom to where Insurers can go to acquire business.
Jan-08Ceiling on discount (49% for Fire & Engg & 20% for Motor OD) is removed by IRDAI.
Introduction of File & Use guidelines to apply actuary-certified rates for each Insurer.
Rates are further dropped and drastically so, upto 90% on Fire and Engineering and about 60% on Motor.
2009Insurance Information Bureau is established by IRDAI and registered as an independent society in 2012. The body is established as a data repository to collect and store accurate data for the industry.
Apr-11IRDAI declares that Motor Third Party (TP) premium would henceforth be amended on an annual basis instead of once in 4/5 years as was the standard practise till then.
TP rates for Motor start rising annually as fixed by IRDAI effective 1st April of subsequent years.
To counter this rise, Insurers start discounting OD rates even further, sometimes charging just about Rs. 100 as an OD premium for a Sum Insured of Rs. 5 L.
GI Council announces common minimum policy excess /deductibles for all Property & Engineering policies.
GI council announces minimum net rates (nil discount basis) for STFI and EQ perils under Fire and Engg policies.
All Insurers follow these without any violation
Apr-16IRDAI permits Banks to tie up with upto 3 Insurers to solicit life/ non-life & health businesses.
2016IRDAI prohibits Banks from soliciting businesses where Sum Insured is above Rs. 5 Crores; instructs Insurers to stop paying commissions on such policies.
Jul-17IRDAI announces IIB Burning cost rates (Loss Cost basis) for Fire insurance rating for 109 occupancies for the Indian market; all Insurers do not follow suit immediately.
Dec-18GI Council announces amendments in NATCAT rates (STFI and EQ) with increase in various occupancies; all Insurers follow suit immediately.
Apr-19GIC Re imposes Treaty restrictions on 8 high risk occupancies if IIB rates are not charged; the 8 occupancies being Power plants, Chemicals, Rubber goods, Textiles, Steel industries, Warehouses of Transporters and Warehouses for storage of Category III goods ( hazardous and flammable items).
Jan-20GIC Re imposes IIB rates as mandatory for cession to Treaty in respect of 291 occupancies; all Insurers with GIC Re as Lead Treaty Reinsurer are forced to follow.
Feb-20GIC Re imposes NATCAT rates for high risk occupancies – Roads, Pipelines, Railway tracks and T&D lines – STFI 1.5 ‰ & EQ 0.225 ‰, Cellular network risks – STFI 0.25 ‰ & EQ 0.225 ‰; all Insurers follow suit.
Apr-21De-notification / withdrawal of SFSP policy for all Dwellings and all other occupancies below Rs 50 crores Sum Insured & Introduction of new breed of policies – Bharat Griha Raksha – for Home Building & contents, Bharat Sookshma Udyam Suraksha – for all occupancies with Sum Insured below Rs 5 Cr & Bharat Laghu Udyam Suraksha – for occupancies other than above , with SI between Rs 5 Cr ~ Rs 50 Cr. In the absence of any guidelines on rates for the three products, the current market discounting on these stands at around 60-70%.
May-21Government increases FDI limit in private insurance companies to 74% from 49%

While the growth unto this point has been linear, brace yourself, for the next couple of years’ promise to transform the industry in ways that would make it unrecognizable from the past.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write mostly on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Marketing Management.