Basic Details about Insurance

Basic Details about Insurance

Insurance is an agreement of reimbursement against losses between following two parties.

1) Insurer: – A company or an individual, who promises to reimburse.

2) Insured: – A company or an individual who receive the reimbursement.

Aforesaid agreement is enforced by law and itself called an insurance policy. Insured is called a policy

holder or assured. A sum of money is paid by insured usually annually or semiannually for the insurer’s

promise to pay against losses. Aforesaid sum of money called premium.

All the conditions and circumstances are mentioned in insurance Policy under which the insured will be

paid against the losses.

Insurance Policy:

The insurance policy is an integrated contract, which includes all forms associated with the agreement

between both the parties i.e. insurer and insured.

Insurance Claim:

An insurance claim is a formal request to an insurance company asking for a payment based on the

terms of the insurance policy. The insurance company reviews the claim for its validity and then pays out

to the insured or requesting party (on behalf of the insured) once approved.

History of Insurance in India:

India has an ancient history of insurance. Manu, Yagnavalkya and kautilya mentioned insurance in their

writings Manusmrithi, Dharmashastra and Arthashastra respectively. Insurance in India evolved over

time. Oriental Life Insurance Company started life insurance business in India at Calcutta in 1818. In

1834, this company failed. In 1870, British Insurance Act was enacted.  The Indian Life Assurance

Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian

Insurance Companies Act was enacted to enable the Government to collect statistical information about

both life and non-life business transacted in India by Indian and foreign insurers including provident

insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier

legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions

for effective control over the activities of insurers.

The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous,

statutory agency tasked with regulating and promoting the insurance and re-insurance industries in

India. It was constituted by the Insurance Regulatory and Development Authority Act, 1999, an act of

Parliament passed by the government of India.

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