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CHAPTER 1 INTRODUCTION TO INSURANCE INDUSTRY Humans have always sought security. This quest for security was an important motivating force in the earliest formations of families, tribes, and other groups. The groups have been the primary source of both emotional and physical security since the beginning of humankind. Humans today continue their quest to achieve security and reduce uncertainty. We still rely on groups for financial stability. With industrialization our physical and economic security has diminished. Mankind is exposed to many serious hazards, which cause stoppage of income. The biggest worry any human  being has is the economic worry. He is always thinking of tomorrow and the days to come and he will be planning to meet the demands of his family, his  business and that of his own needs. The economic worries may arise due to stoppa ge of inc ome . Our inc ome dep end ent , wea lth- acq uir ing lif est yle renders us and our families more vulnerable to environmental and social changes over which we have no control. There may be accidents, sickness disability, or due to premature death of the breadwinner. It is impossible to  prevent such calamities. But it is always possible to provide against the loss of income that may result out of such these perils with the help of the insurance. 1.1 INSURANCE IN INDIA Insurance in India started without any regulation in the Nineteenth Century. It was a typical story of a colonial era: a few British insurance companies dominating the market serving mostly large urban centers. After the independence, it took a dramatic turn. Insurance was nationalized. First, the life insurance companies were nationalized in 1956, and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign h olding. In what f ollows, is described how and why of regulation and deregulation. The entry of the State Bank of India with its proposal o f bank assurance br ings a new dynamics in the game. The collective experience of the other countries in Asia already deregulated their markets and have allowed foreign companies to participate is studied. If the experience of the other countries is any guide, the dominance of the Life

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