The life insurance business was formally nationalized on 1 September 1956 by the establishment of the Life Insurance Corp. of India (LIC), which absorbed the life insurance business of 245 Indian and foreign companies. LIC also transacts business in certain African and Asian countries where there are large Indian populations. The general insurance business was nationalized as of 1 January 1973, and all nationalized general insurance companies were merged into the General Insurance Corp. (GIC) of India. GIC serves as the parent company for the four operating insurers, the New India Assurance Company, the Oriental Fire and General Insurance Company, the National Insurance Company, and the United India Insurance Company.
In 1997, despite repeated promises to allow private insurers into the industry, an announcement on privatization in the financial services sector was postponed in the face of institutional resistance. The unions and left-wing parties led a struggle to stop an opening up of the insurance sector. They were alarmed by government plans to introduce legislation that would set up an independent Insurance Regulatory and Development Authority (IRA). Under the Insurance Regulatory and Development Authority Act of 1999, the IRA finally gained the power to issue licenses to private insurance companies in 2000 to Indians and foreigners. In India, third-party auto liablity, public liability for hazardous material handling, workers' compensation, and third-party liablity for inland water vessels are all compulsory.