Insurance has a deep-rooted history in India. Various forms of writing can be seen in Manusmriti, Dharmasastra, and Arthashastra. This blog unfolds the history of Insurance law and its development in India. It further discusses the regulatory body of Insurance in India, its roles and functions, and powers and responsibilities. We further delve into the different kinds of Insurance Acts that govern India. This blog also discusses the process of licensing and regulation of Insurance companies in India and gives us a glimpse of the different types of insurance, insurance contracts, and policies and key components of insurance contracts. It concludes with recommended Insurance law books and frequently asked questions.

What is Insurance Law?

Insurance laws frame a legal outline to govern the insurance business and its contracts. Insurance is a type of contract of indemnity in which an insurer indemnifies the other party against a loss that happens due to the happening of a contingent event. This segment of law is governed by the IRDAI. It covers various types of risks. Insurance is a contract of indemnity. It works on the principle of Uberrimae Fides which means in utmost good faith. It means that both the insurer and insured must disclose all the material facts about the person or property being insured. An entity that provides insurance is known as an insurer and the entity to which the insurance is provided is known as the insured.

Historical Development of Insurance Law in India

The evolution of Insurance law in India dates back to the year 1818 when India saw the advent of life insurance in India. The returns of insurance companies in India started getting published in 1914. In 1956, the Life Insurance Corporation came into existence. Concerning the General Insurance laws in India, in 1957 general insurance in India was formed and in 1973 it was nationalized. In April 2000, the Insurance Regulatory and Development Authority of India was established as a statutory body and in August 2000 it opened up the market in India.

Insurance Regulatory and Development Authority of India (IRDAI)

IRDAI stands for Insurance Regulatory and Development Authority of India. It was formed in the year 1999 under the IRDA Act. It came into effect on 19th April 1999. The IRDAI is a statutory body of India governing the insurance laws of India. The primary role of IRDAI is to protect and safeguard the interest of the policyholders of India and to focus on the development of the insurance sector in India. IRDAI has its own set of rules and regulations to govern the insurance laws in India. It is also vested with the power to investigate matters that involve malpractice by an insurance company. IRDAI also has the power to pass orders, give directions to other bodies, and make awards. IRDAI also works closely with government bodies like the Reserve Bank of India and the Securities and Exchange Board of India.

Roles and Functions:

It looks after the fair treatment and interest of the insurance holder. It frames regulations to ensure the operation of the industry without any ambiguity.

Powers and Responsibilities:

The major power and responsibility of the IRDAI is to promote and regulate the orderly growth of the insurance and reinsurance business in India. Its key responsibility is to protect the policyholders’ interest and encourage fairness in the insurance industry.

Insurance Laws and Acts in India

After the nationalization of both general and life insurance in India, many acts and legislations came into power to address the various types of insurance. This laid down the Acts to check the functioning of the insurance business in India. Different Acts govern different aspects of the insurance laws in India. Below are a few Acts and laws that govern the insurance sector in India.

The Insurance Act, 1938

The main purpose of this Act is to lay out a legal framework to carry out insurance business in India. This Act is the parent legislation that aims at consolidating and amending the previous insurance laws that existed during British rule. This Act lays down ground rules for the operation of the insurance business in India.