In simple words Insurance is a term in law and economics. It is something people buy to protect themselves from losing money. ... In exchange for this, if something bad happens to the person or thing that is insured, the company that sold the insurance will indemnify to the extent the loss was insured, of course with terms and conditions applying.
Internationally, Insurance though dates back to prehistory period but in relatively modern times it started developing in London in the early decades of 17th Century. As most of the industrial development and activities were happening in Europe during those times, the insurance too initially spread its wings in Europe and later on moved to other parts of the Globe.
In India too Insurance started setting its roots quite early. In the year 1818, Oriental Life Insurance Company was formed in Calcutta catering to European Community. The Bombay Mutual Life Insurance Society in 1870 became the first Indian Insurer.
There were quite a number of private Life and General Insurance Companies doing business in pre independent India. Post few years after independence, Government Of India in the year 1956 nationalized the Life Insurance Sector and Life Insurance Corporation Of India got formed. Similarly with effect from 1st January 1973, the General insurance sector was also nationalized. All the business was brought under four Public Sector General Insurance companies and the General Insurance Corporation Of India was formed.
From 1956 to the year 2000, the Insurance Sector was the monopoly of Public Sector. In the year 1999, with an aim to open the Insurance Industry for Private players, Insurance Regulatory And Development Authority was formed. In the year 2000, IRDA invited application from private players for setting up insurance companies, hence paving way for opening up of the Insurance Sector.
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