Insurance Law: Introduction and History Rahul Chhoker, Research Scholar, Kurukshetra University, Kurukshetra

1. Insurance law
Introduction
The evolution of the concept of insurance lies
into the existence of risk in all of the spheres of
life.
As per Hindu philosophy ‘yat bhavti tat
nashyati’
Destruction is natural, hence to cover the loss
of risk, the concept of insurance came into
existence.
Professional risk-bearer is called insurer or
underwriter.

2. Destruction-risk-security (insurance)
So an agreed amount of money is paid to cover
the loss from ‘insurer’ to ‘assured’.
A contract of insurance has to fulfill all of the
requirements of a valid contract.

3. Importance of insurance
• Provides protection against the loss
• Eliminates risk
• Co-operative method of sharing the loss
• National importance-by capital formation
• Provides employment
• Medical support

4. Types
Two types
i. Life insurance
ii. Non-life insurance
a) Motor vehicle insurance
b) Fire insurance
c) Health insurance
d) Marine insurance
e) In addition a number of other types of subjects are
being added into the list day by day to cover different
types of risks.
In others words we can say that the list is not exhaustive.

5. Purpose of insurance
Twofold purpose
1. Short term: to give security of loss and
individual investment
2. Long term: to accelerate the growth of the
nation through capital formation
Thus we can say that insurance is one of the
means of furthering the object of welfare
State

6. History of insurance
It dates back to the 12th century
1. Marine insurance is the oldest type of insurance-when
European countries tried to find out new places for
business through sea routes. The need was felt because of
the existence of danger or risk in sea voyages.
• London Assurance & Royal Exchange Assurance were
formed by the charter of 1720 and the monopoly was
practiced by these two companies.
• Lloyd’s Coffee House was the common meeting place of
merchants
• Monopoly was destroyed by the Joint Stock Companies
Act, 1862

7. • In India the advent of insurance was of British
origin because of British rule.
• There were many British offices in India
• British law of insurance was introduced with
some verifications into the customs of India.
• Marine Insurance Act, 1963 is the replica of
English Marine Insurance Act, 1906.

8. 2. Fire insurance
After marine, fire insurance came into existence.
Main causes were:
a) Great fire of London 1666
b) Industrial revolution
c) Tooley Street fire 1861
In India there was office of The Alliance British &
Foreign Fire Insurance Company in Madras.
Later on offices were opened in Bombay Calcutta
and other Moffusil areas.

9. 3. Life Insurance
• Many offices were there which were providing short-term
insurance till 17th century.
• Vanished by Bubble’s Act, 1720
• Amicable Society survived which was providing full term insurance.
• With the advent of mortality table, it became a profitable business.
• Towards the end of 17th century it became gambling as the
requirement of insurable interest was done away with.
• To check this evil LIC Act 1774 came into existence.
• In India, Bombay Mutual (1871) & Oriental (1874) were providing
life insurance.