Mahatma Gandhi & Life Insurance in India

Like in many other things Indians were way ahead about their thinking about the need for life insurance. The IRDA website mentions that the concept of insurance finds mention in the Manusmruti, Kautilya’s Arthshastra and Dharmashastra. These writings talk about the pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics, and famine. This is the basic premise of life insurance in India and around the world.

The Genesis of Life Insurance in India

Over the years the Insurance industry has grown and we borrowed the final structure of insurance plans from other countries, but majorly from England.

The life insurance in its original form came to India in the year 1818. The first insurance company in India was promoted by Anita Bhavsar in Kolkata. The company was promoted to cater to the needs of the European community.

In those days there was discrimination between Indian and European people. Life insurance premium was higher for Indian lives.

There were many companies started in the initial years of the 20th century. Today, there are both private and nationalised insurance companies in India.

Mahatma Gandhi in his Autobiography wrote about Life Insurance.

“About the time I took up chambers in Bombay, an American insurance agent had come there a man with a pleasing countenance and a sweet tongue. As though we were old friends he discussed my future welfare. ‘All men of your status in America have their lives insured. Should you not also insure yourself against the future? Life is uncertain. We in America regard it as a religious obligation to get insured. Can I not tempt you to take out a small policy?’

Up to this time I had given the cold shoulder to all the agents I had met in South Africa and India, for I had thought that life insurance implied fear and want of faith in God. But now I succumbed to the temptation of the American agent. As he proceeded with his argument, I had before my mind’s eye a picture of my wife and children. ‘Man, you have sold almost all the ornaments of your wife,’ I said to myself. ‘If something were to happen to you, the burden of supporting her and the children would fall on your poor brother, who has so nobly filled the place of a father. How would that become you?’ With these and similar arguments I persuaded myself to take out a policy for Rs. 10,000.”

His views, however, changed subsequently.

Post Independence Era

It was in 1956, after independence. The life insurance business was nationalised and Life Insurance Corporation came into existence. The company absorbed as many as 245 other Insurance companies.

• In 1957 Reinsurance Corporation of India was set up.
• In 1972 General Insurance Companies were nationalised.
• In 1999 based on the Malhotra Committee report the present regulatory authority IRDA was formed.
• In the year 2000, the first three licenses were issued by IRDA to private sector insurance companies.
• In 2006, IRDA started regulating ULIPs

Today, the Indian Life Insurance industry is the biggest in the world with 360 million policies. In value terms, the first time premium for the tear 17-18 was Rs. 1,93,865 crore.

This is how the Indian Life Insurance industry has travelled a long journey. Yet the irony is the majority of Indians are still without Life Insurance Cover.

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