Insurance in India refers to the market for insurance in India which covers both public and private sector organizations. It is listed in the Constitution of India in the Seventh Schedule as a Union List subject, meaning it can only be legislated by the Central Government. The insurance sector has gone through many phases by allowing private companies to solicit insurance and also allowing foreign direct investment. India allowed private companies in the insurance sector in 2000, setting a limit on FDI to 26%, which was increased to 49% in 2014.
Since its privatization in 2001, the largest life insurance company in India, Life Insurance Corporation of India has seen its market share slowly slipping to private giants like HDFC Life, ICICI Prudential Life Insurance, and SBI Life Insurance Company.
Insurance in some form is as old as a historical society. So-called bottom contracts were known to merchants of Babylon as early as 4000–3000 BCE. The bottom was also practiced by the Hindus in 600 BCE and was well understood in ancient Greece as early as the 4th century BCE.
Another means of lowering risk was to transfer at least some of that risk to moneylenders. The great Code of Hammurabi allowed the transfer of risk from merchants to moneylenders, so that if their merchandise was lost or abandoned, then their loans to the moneylenders were forgiven. The Phoenicians and Greeks permitted ship-owners and merchants to pledge either the ship or the cargo as collateral for loans so that they can either obtain the loan or get a lower interest rate. Some lenders decided to assume greater risk in exchange for charging a higher interest rate by forgiving the loan if the ship or cargo was lost. Even specialized terminology was used to describe these loans: bottomry loans used the ship as collateral whereas respondent loans used cargo as collateral.
Sometimes the pooling of risk does not involve money. The Amish pooled not money but effort. When a barn of one member of the community is destroyed by fire, many members of the same community help to rebuild the barn. Of course, the pooling of effort in a simple society like Amish society is much easier, where many members have the same capabilities of constructing what they need in life. However, in more complex societies, pooling money is much simpler and more practical. In 1200 BC, Phoenician merchants began transferring some of their risk to the backers of specific voyages, whereby the backers would profit if the voyage was successful but would lose their investment if the cargo was lost at sea, either from natural disasters or from pirates. In exchange for backing a voyage and assuring payment if the voyage was successful, Phoenician law allowed the lenders to confiscate the merchant's ship for nonpayment. This form of the collateralized loan was called bottomry: this term probably arose because the ship's hull was referred to as the bottom. Since substantial resources were required for voyages, and the wealth of these early nations depended heavily on trade, other settlements around the Mediterranean and in Asia also enacted bottomry laws by 400 BC
