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.
The insurance policy is an integrated contract, which includes all forms associated with the agreement
between both the parties i.e. insurer and insured.
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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