Life Insurance

Insurance has been known to exist in some form or other since 3000 BC. The Chinese traders travelling

treacherous rapids would distribute their goods among several vessels, so that the loss from any one vessel being

lost would be partial and shared, and not total. The Babylonian traders would agree to pay additional sums to

lenders, as the price for writing off the loans, in case of the shipment being stolen. The inhabitants of Rhodes

adopted the principle of ‘general average’, whereby if goods are shipped together, the owners would bear the

losses in proportion if loss occurs due to jettisoning during distress (Captains of ships caught in storms, would

throw away some of the cargo to reduce the weight and restore balance. Such throwing away is called

jettisoning). The Greeks had started benevolent societies in the late 7th century AD, to take care of the funeral

and families of members who died. The friendly societies of England were similarly constituted. The Great Fire

of London in 1666, in which more than 13000 houses were lost, gave a boost to insurance and the first fire

insurance company, called the Fire Office, was started in 1680.

The origins of insurance business as in vogue at present, is traced to the Lloyd’s Coffee House in London.

Traders, who used to gather in the Lloyd’s Coffee house in London, agreed to share the losses to their goods

while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because

of bad weather spoiling the goods or sinking the ship. Life insurance, in its present form, came to India from the

United Kingdom (UK) with the establishment of a British firm, Oriental Life Insurance Company in Calcutta in

1818, followed by Bombay Life Assurance Company in 1823, the Madras Equitable Life Insurance Society in

ICOQM-10 June 28-30, 2011

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1829 and Oriental Government Security Life Assurance Company in 1874. Prior to 1871, Indian lives were

treated as sub-standard and...