On January 19, 1956, the management of life insurance business of two hundred and forty five Indian and foreign insurers and provident societies then operating in India were taken over by the Central Government. The Life Insurance Corporation (“LIC”) was formed in September 1956 by the Life Insurance Corporation Act, 1956 (“LIC Act”) which granted LIC the exclusive privilege to conduct life insurance business in India. However, an exception was made in the case of any company: firm or persons intending to carry on life insurance business in India in respect of the lives of “persons ordinarily resident outside India” provided the approval of the Central Government was obtained. The exception was however not absolute and a curious prohibition existed. Such company, firm or person would not be permitted to insure the life of any “person ordinarily resident outside India”, during any period of their temporary residence in India. However, the LIC Act, 1956 left outside its purview the Post Once Life Insurance Fund, any Family Pension Scheme framed under the Coal Mines Provident Fund, Family Pension and Bonus Schemes Act, 1948 or the Employees’ Provident Funds and the Family Pension Fund Act, 1952.
The general insurance business was also nationalized with effect from January 1, 1973, through the introduction of the General Insurance Business (Nationalization) Act, 1972.Under the provisions of the GIC Act, the shares of the existing Indian general insurance companies and undertakings of other existing insurers were transferred to the General Insurance Corporation to secure the development of the general insurance business in India and for the regulation and control of such business. The GIC was established by the Central Government in accordance with the provisions of the Companies Act. 1956 in November 1972 and it commenced business on January 1, 1973. Prior to 1973, there were a hundred and seven companies, including foreign companies, offering general insurance in India. These companies were amalgamated and grouped into four subsidiary companies of GIC viz. the National Insurance Company Ltd, The New India Assurance Company Ltd. the Oriental Insurance Company Ltd. And the United India Assurance Company Ltd. GIC undertakes mainly re-insurance business apart from aviation insurance. The bulk of the general insurance business of ire, marine, motor and miscellaneous insurance business is under taken by the four subsidiaries. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
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