History of LIC. Beginning to Present debate of LIC IPO
History Of Insurance
The story of insurance is perhaps as old as the story of mankind. The same tendency that says modern businessmen in today’s time want to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fireside and flood and loss of life and were willing to form some kind of sacrifice to realize security. However, the concept of insurance is very important for the development of the recent past, mainly after the economic era.
Life Insurance in its modern form came to India from England within the year 1818. Oriental life assurance Company started by Europeans in Calcutta was the primary life assurance company on Indian Soil. All the insurance companies established during that period were mentioned to take care of the requirements of the European Union and Indian natives weren’t being insured by these companies.
However, later with the efforts of eminent people like Babu Muthyala Seal, the foreign life assurance companies started insuring Indian lives. While Indian lives were always treated as substandard lives and though extra premiums were charged on them. Bombay Mutual life assurance Society heralded the birth of the first Indian life insurance company within the year 1870, and covered Indian lives at normal rates.
Indian enterprises were started to bring highly patriotic motives in the country and then insurance companies came into existence with a motive to spread the message of insurance and Social Security in various sectors with the help of insurance. Bharat insurance firm (1896) was also one among such companies inspired by nationalism.
The Swadeshi movement took place in 1905-1907 and it led to the rise of more insurance companies. United India in Madras, National Indian and social insurance in Calcutta and therefore the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative insurance firm took its birth in one among the rooms of the Jorasanko, house of the good poet Rabindranath Tagore, in Calcutta.
The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were a number of the businesses established during an equivalent period. Before 1912 India had no legislation to manage insurance business. In the year 1912, the life assurance Companies Act, and therefore the Provident Fund Act were passed.
However, The life assurance Companies Act, 1912, made it compulsory and then it was needed that the premium rate tables and periodical valuations of companies should get certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at an obstacle.
The first two decades of the twentieth century witnessed a lot of growth in the insurance business. Almost 44 companies with approx business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore during the year 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably.
The Parliament of India passed the life assurance Corporation Act on the 19th June 1956, and then the life assurance Corporation of India was established on 1st September 1956, with the motive to spread life assurance globally and especially to the agricultural areas to succeed in all insurable persons within the country and by providing them adequate financial cover at affordable price.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in 1956. Since life assurance contracts are meant for future contracts and through the currency of the policy it is necessary to spread the services needed within some years later to expand the operations and establish branch offices at every district headquarter to organise them. Reorganization of LIC happened and many latest branch offices are newly open. As a result, re-organisation service functions were transferred to the various branches, and branches were made with accounting units.
Then the branches did wonders with the performance of the corporation. It may be seen that from about 200.00 crores of latest Business in 1957 the corporation crossed 1000.00 crores only within the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of latest business. But with re-organisation happening within the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.
Today LIC capabilities are computerized and superior with numerous branch places of work, 113 divisional workplaces, 8 zonal workplaces, 1381 satellite offices and the Corporate office. LIC’s is now a Wide Area Network(WAN) which covers 113 divisional offices and connects these branches via a Metro Area Network (MAN). LIC has collaborated with many banks and Service providers so that you can offer on-line top rate collection centres in principal cities.
From then to now, LIC has changed a lot and has crossed many milestones and has set unprecedented performance records to be at this place in various aspects of the life insurance business. It has inspired our forefathers to bring insurance into existence in India so that people can be inspired by LIC to take this message of protection to light the lamps of security in every possible manner and to help the people in providing security to their families.
» Some of the critical milestones inside the lifestyles coverage enterprise in India are:
- 1818: Oriental Life Insurance Company, the first lifestyles coverage company on Indian soil began functioning.
- 1870: Bombay Mutual Life Assurance Society, the first Indian lifestyles insurance corporation began its commercial enterprise.
- 1912: The Indian Life Assurance Companies Act was enacted as the first statute to alter the existence of insurance commercial enterprise.
- 1928: The Indian Insurance Companies Act enacted to allow the government to acquire statistical information approximately both existence and non-life insurance
- 1938: Earlier rules consolidated and amended to using the Insurance Act intending to shield the pursuits of the insured public.
Finance Minister Nirmala Sitharaman said that the authorities will sell some part of its holding in Life Insurance Corporation of India (LIC) through an initial public offering (IPO). The authorities will own 100 consistent with cent of LIC.
The LIC has been diagnosed for an ability to publicly list by using the government. The authorities’ move is a part of efforts that will push themselves through an aggressive disinvestment and asset monetisation programme.
LIC IPO, a big announcement
LIC is one of India’s largest financial institution, and if LIC shares are indexed on stock exchanges, then it will be easier to grow at the country’s top indexed business enterprise in phrases of market place valuation and soon they can overtake the current leader’s Reliance Industries Ltd (RIL) and Tata Consultancy Services.
This is because of the insurer’s financials. On a capital base of Rs five crore, LIC closing suggested a valuation surplus — or profit — of Rs 48,436 crore for FY2018, and assets underneath control.
In the Budget of July 2019, the authorities had announced a proposal to make the minimum public holding of 35 according to cent for indexed organizations. The authorities might have listed the shares of General Insurance Corporation and New India Assurance with the help of IPOs 3 years ago.
The public listing of LIC will result in greater disclosures of funding and mortgage portfolios and higher governance, with extra transparency and accountability.
Milch cow for governments
Governments have shied away from thinking about listing India’s pinnacle insurer, given the institution’s perceived function in helping the markets through buying shares in the course of principal sell-offs and also stocks of state-owned businesses at some point of divestment and whilst investor participation has been weak.
The corporation had invested closely in IPOs and follow-on gives of groups such as ONGC. It turned into also referred to as in to bail out IDBI Bank, which had been significantly hit because of bad loans in 2018. It is also the biggest investor in government securities and stock markets each yr. On an average, LIC invests Rs 55,000 crore to Rs 65,000 crore in inventory markets every year and emerges as the biggest investor in Indian stocks.
The authorities must amend the LIC Act first before taking the Corporation public.
LIC is currently below the supervisory oversight of the Insurance Regulatory Development Authority of India (IRDAI), but it is governed by The LIC Act of 1956 which allows the state-owned insurer to attain a unique dispensation in several regions including higher stakes in companies past the limit set by using the
Under Section 37 of The LIC Act, the authorities have guaranteed the sum confident with bonus in all LIC regulations to ensure the provision of financial protection to the own family of the deceased.