National Insurance Awareness Day is annually observed on June 28 to raise awareness about the significance of insurance, a financial product which protects individuals, families, and businesses from financial risks.
- The day encourages people to review their current insurance policies and assess if they need any changes or additional coverage.
About Insurance:
i.Insurance is a legal agreement between the insurer (insurance company) and the insured (individual), governed by specific terms and conditions.
ii.Insurance policies cover predefined events or risks, that are clearly defined in the policy document.
iii.Under an insurance policy, the insured requires to pay a regular amount of premiums to the insurer to maintain the insurance coverage.
Key Benefits of Insurance:
i.Financial Stability: Insurance ensures financial stability, helping families to manage essential expenses such as: education, loans, housing, among others.
ii.Support families in medical emergencies: Health insurance offers financial protection to meet unexpected medical expenses.
iii.Retirement Planning: Life insurance plans offer a combination of life cover, wealth creation, and steady income in retirement.
iv.Tax Advantages: Insurance plans offer attractive tax benefits for instance: life insurance premiums are eligible for deductions up to Rs 1.5 lakh under Section 80C, and death benefits are tax-exempt under Section 10 (10D) of the Income-tax Act, 1961.
Evolution of Insurance in India:
i.Insurance in India traces back to ancient times for instance, the ‘Yogakshema’ system mentioned in the Rigveda, where communities pooled resources to support each other.
ii.In India, the emergence of insurance was witnessed with the establishment of the Oriental Life Insurance Company in 1818, in Calcutta (now Kolkata) in West Bengal (WB).
iii.The Indian Life Assurance Companies Act of 1912 was the first statutory legislation enacted specifically to regulate the life insurance business in India.
iv.The Insurance Amendment Act of 1950 abolished principal agencies, ushered in heightened competition among insurance firms,
v.In January 1956, the Government of India (GoI) introduced an ordinance in Parliament, nationalising the Life Insurance Sector in India.
- This led to the formation of Life Insurance Corporation of India (LIC), absorbing 245 insurers and holding monopoly until the late 1990s.
- The LIC was established under the Life Insurance Corporation Act, 1956. Formed on September 1, 1956, it commenced operations with an initial capital of Rs.5 crore contributed by the GoI.
vi.In early 90s, the GoI opened the insurance sector to private players, allowing foreign companies to enter the insurance market.
vii. GoI constituted the Insurance Regulatory and Development Authority of India (IRDAI) was constituted as an autonomous body to regulate and develop the insurance industry in India, following the recommendations of the Malhotra Committee Report in 1999.
- Later, it was incorporated as a statutory body in April 2000.
vi.According to the IRDAI, as of 2025, the minimum paid-up equity capital to establish an insurance company in India is:
- Rs.100 crore for Life, General, and exclusive Health insurance firms
- Rs.200 crore for Reinsurance companies.
Current Scenario of Insurance Sector in India:
i.India is the world’s 5th largest life insurance market, growing at a rate of 32-34% annually.
ii.India’s insurance sector saw significant growth, with domestic insurance market growing at Compound Annual Growth Rate (CAGR) of 17% over the last 20 years.
- This sector is further projected to reach over Rs 19 lakh crore (USD 22 billion) by Financial Year 2025-26 (FY26).
- Insurance penetration remains low at 3.7%, below the global average of 7%, indicating a significant opportunity for expansion.
iii.As per Mumbai (Maharashtra) based CoverSure, an InsuTech platform, latest survey published in June 2025, 76% of Indian policyholders are uncertain whether their existing insurance is sufficient.
- Among the insurance products, Life insurance continues to be the most widely held product (63%), followed by health insurance (24%) and motor insurance(13%).
iv.In Budget 2025-26, the GoI raised the Foreign Direct Investment (FDI) limit in the insurance sector from 74% to 100%.
