The Purpose of the Act of 1938

• The purpose of the Insurance Act of 1938 was to safeguard the interest of the insured. It also aims at setting the norms for carrying out the business of insurance smoothly, minimizing disputes. The law clearly defines who can be an insurer, what services the insurer will provide service to the insured, who will verify insurance claims, and where matters will be settled. Several amendments have been added through the years.
  
  

Insurance Amendment Act 1950

• There were many private insurance companies in India prior to 1950. They resorted to unfair trade practices despite the presence of the Insurance Act of 1938. This forced the government to bring them under state control. A total of 245 insurers came under the government fold in 1956. The insurance sector in India was completely under state control until 1990, when it was again opened for private companies.
  
  

The Insurance Act of 1968 and 1972

• The act of 1968 regulated investment and mandated the amount of reserves insurance companies needed to maintain. With the act of 1968, the job of insurance surveyor got a legal status in India. The Act of 1972 nationalized general business. Four major nationalized insurance companies were formed after amalgamating 107 insurance companies.
  
  

Insurance Regulatory and Development Authority Act of 1999

• With this ac,t the Indian insurance sector was deregulated. Private insurers were allowed to operate. The Insurance Regulatory and Development Authority (IRDA) was formed to regulate the activities of private insurance companies. This act also allowed foreign companies to provide insurance to Indians.
  
  

Insurance Act in India and the Present Scenario

• Giant insurance companies from the United States and United Kingdom are eyeing the huge untapped insurance market in India. It is incumbent upon the Indian government to provide a level playing field to all insurance companies.
  
  At the same time, many of these companies have histories of misconduct in sales practices and misrepresentation of facts. They have coughed up billions of dollars in lawsuits filed by policyholders.