by Mayukh Chakrabarty
In 1872, Sir Richard Temple, then the Finance Member in Governor-General’s Council, proposed a plan to initiate a state-run life insurance scheme, particularly targeting the ‘native’ population. This was in reaction to the successive failures of two major companies: the Albert and the European in 1869 and 1871, respectively. However, these affected the British population disproportionately more than Indians. There were hardly a hundred Indians who were insured in these companies. On October 30, 1869, the Maitland Mercury and Hunter River General Advertiser reported that total insurance in force at the Indian branch of Albert was £2.5 million, with annual revenue from premiums and interest amounting to £120,000. Given that the Albert began to accept Indian lives only in 1867, the figures suffice to explain why a hundred-odd Indians can be considered insignificant relative to the British clientele resident in India. So, what motivated a separate scheme for Indians, that too under the aegis of the government?
This essay argues that life insurance market in India did not emerge organically as an intersection of supply and demand curves. Rather, active interventions of the colonial rule shaped the market. Since the 1830s, the colonial state repeatedly positioned itself as a key actor – guaranteeing trust, stabilizing market, and inculcating financial discipline. However, it is not a story of top-down imposition or bottom-up resistance. It is a story of negotiation among competing value systems: the economic logic of fair exchange and market ethics, the colonial imperatives of governance, improvement, and extraction, and the social concerns of class, caste, and respectability. These negotiations conditioned what it meant to insure lives, planning for the future, and participating in modern finance, where providence was linked with prudent management and investment of savings.
At the turn of the nineteenth century, British life insurance business underwent an overhaul. The companies were moving towards actuarially sound premium tables and improvising products suited for different age groups, social classes, and investment objectives. Some of them also expanded overseas, particularly in the Caribbean and the Americas – colonies closer to Britain and with significant European settlers. However, these companies did not venture into Asia until much later, dissuaded by the distance between London and Calcutta. Instead, the agency houses of Calcutta built up a life insurance business in India and used it as a launchpad into China and South-East Asia.
They acted as intermediaries between British firms and the Indian market, managing and financing the imports and exports. After the dissolution of the East India Company’s monopoly in 1813, they expanded their activities into a variety of practices including banking and insurance. Alexander & Co. and Palmer & Co. were two of the biggest agency houses in British India until their failure in the financial crisis of the 1830s. In 1834, another agency house, Carr, Tagore & Co., was founded as a partnership between Dwarkanath Tagore and William Carr. It was the first partnership between Indians and Europeans and is considered as the initiator of the managing agency system in India. The system was a partnership among various agency houses, with the initiator taking up the managerial role.
These agency houses ran in-house insurance companies, with their principal agency in Calcutta responsible for conducting the business. They established sub-agencies in other cities to procure business and receive and forward proposals to the principal agency in Calcutta. Under this arrangement, life insurance remained restricted to the mercantile community, which was comprised of British merchants and their wealthy Indian collaborators. The exact dynamics of this period are unclear, but the available sources (such as directories, policy documents, official despatches, and popular narratives) indicate the following:
- The companies offered only short-term policies. Whole life covers were absent.
- Creditors took out life insurance policies as collateral for the loans.
- In the 1820s, Raja Ram Mohan Roy advocated for a pension/insurance fund for Indians to support the widows and the children. He viewed money as a tool to claim dignity in the face of the oppressive customs of the Hindu families and included it as a part of his project of social reform. Although this did not happen, it hints at an antithetical relationship between the market and the family, between the public and the private, in the imagination of the reformers.
- Existing literature on the subject states that Indians were not insured until wealthy Indian merchants like Motilal Seal and Dwarkanath Tagore gained influence within these companies.
The reasons for excluding Indians are unclear. First, ‘Indians’ referred to a negligibly small part of the population that was intimately tied with the British population. Thus, arguments about unknowability of identity, status, or habits are not exactly applicable here. Second, the first joint stock insurance company in India, Oriental Life Insurance Company (later restructured as the New Oriental) had prominent Indian shareholders, as did almost all the major banks during this time. It is difficult to conclude why Indians were deemed fit for a particular debt instrument, and not others. Nevertheless, it appears that the British characterized Indians as morally underdeveloped (or inferior), as a corollary of the broader ideology of colonialism.
However, in the 1830s, there was a credit crash in the Indian market and all the ‘great houses’ collapsed with the partners filing for bankruptcy. Although the British partners protected their social status after the crash, they lost their lines of credit, and their companies wound up. As they receded to Britain, the government stepped in to stabilize the volatile market. In a minute by the Governor-General (dated December 21, 1833), he proposed the establishment of a life insurance fund placed under the management of the government, like the Government Savings Bank established previously.
According to the Governor-General, this would bridge the gap between the Europeans and the Indians. In his view, the European commanded respect and confidence, but they could not hold land in India and sent their accumulated wealth to Europe immediately as remittance. On the other hand, Indians held both land and wealth, “still they have to attain a higher standard of moral character as a body, before they can expect to receive from their countrymen or strangers that credit for punctuality and correctness of dealing, which shall lead to complete confidence.” Thus, he prescribed an institutional intervention to develop credit and confidence in a population deemed unfit for modern financial dealings[i].
Four decades later, the failure of the two big companies reopened the question of the involvement of the state in the market. However, by then, Indian players had receded from the insurance market. These players, such as Dwarkanath Tagore, Motilal Seal, and Rustomji Cowasji, occupied the vacuum in the market following the 1830s crash, and rose to prominence. This lasted until the next crisis of 1847. By then they either passed away or became bankrupt in the crisis. Foreign companies, mostly British, carried out the life insurance business in India. They were extremely skeptical of the Indians, particularly their rituals surround birth and death. Their first complaint was that the Indians almost never knew their exact age. This was exacerbated by the inefficacy of the civil registration process of births and deaths in India. There was no general system of birth and death registration in India until 1886. The existing registration acts concerned themselves with specific municipal towns and sometimes arbitrarily extended to some districts and villages in the Presidencies. Even then, their administration was quite lax, and they proved largely ineffective in producing information on vital statistics. The Births, Deaths and Marriages Registration Act, 1886 enabled voluntary registration, and consequently, it failed to induce the Indians to register births and deaths at any significant scale. Without this legally recognized individual identity, it was impossible to cast an Indian into the familiar tables of the life insurance companies.
The funeral rituals did not alleviate the concerns of these companies. In an article titled ‘Unnatural Deaths in India,’ published in the Post Magazine & Insurance Monitor (January 16, 1869), “Dr. Mair remarks, a man returns, for example, home at night, is given poison, dies in a few hours, and is burnt. No trace of the crime remains, the cause of death being referred to cholera. The burnt body tells no tale.”[ii] The inability to monitor births and deaths, and by extension, to trace people and measure their exact age, made these companies insecure about potential fraud.
But demand for life insurance was developing among the Indian professional class. This class comprised of Indians employed in government service, schools, trading firms, and so on – familiar with English education and values. In his memorandum, Temple claimed that insurance companies were receiving numerous claims from the Indians, which they rejected. Temple’s justifications for a state-run scheme were as follows:
- Indians were not insured by any existing insurance company. So, a government-run scheme would not interfere with the free market ideologies of the British government.
- Since the security provided by the government would be greater than any private company, the premium could be priced higher. So, if any European wished to insure themselves with the government, they would have to pay more. This would ensure that the government would not poach the existing clientele of private companies.
- The security offered by the government would encourage Indians to insure themselves, and inculcate provident habits among them, while fostering beneficial ties among the colonial state and its subject.
Once again, the arguments were explicitly about values. Temple’s emphasis on people of a class “who have acquired English education, and have, to some extent, abandoned their indigenous modes of thought in order to adopt our ideas” indicated the kind of subject the colonial state desired.[iii] Temple found an interlocutor in Dina Nath Sen, a headmaster of the Dhaka Normal School. He wrote a long piece in the Calcutta Review (Volume 58, 1874) supporting Temple’s proposal. Sen reframed life insurance as a tool for preserving social status and navigating the pressures of colonial modernity. He described his class as “descendants of high-caste and respectable families, but of reduced means,” struggling to maintain their respectability in a changing world. Insurance, he argued, would allow them to fulfill their familial obligations while simultaneously asserting their place in a modern economy. An inherent dichotomy between joint family and economic rationality is assumed in this argument. For the British administrators like Richard Temple, joint family “induced men to support … but also their able-bodied and idle male relatives, which is not well. Many a rising man is weighted in his career by listless persons who hang about him, instead of shifting for themselves.” [p.128]
Sen’s reflections, however, reveal a deeper ambivalence. Despite the collapse of Albert, he and his peers continued to insure with British firms, without any way to know if they will follow suit. As he put it, “We insure, because we look more for our comfort while living, from a sense of having done something towards making a provision of our families, than for the certainty of our families getting, after our death, the money that we insured for.” This confession complicates the rationalist narrative of insurance as a calculated investment. For Sen, insurance was a moral performance – a way to fulfill the social role of the patriarch, even in the face of uncertainty. His choice reflects a broader anxiety among the Bengali professional class, who found themselves increasingly unable to meet the expectations of extended kin networks. As colonial economic restructuring marginalized indigenous industries and confined Indians to low-level government jobs, the patriarch’s ability to provide was eroded. In this context, insurance became a symbolic act of care – an attempt to preserve dignity in the face of emasculation.
Sen’s appeal imagined the colonial state as a new patriarch, capable of assuming the responsibilities that the native gentleman could no longer fulfill. He invoked two meanings of “family”: the modern nuclear unit and the Latin root familia, meaning household dependents. The state, he argued, should act as a “ma-bap to his helpless children,” offering “savings under compulsion” to instill financial discipline and build national capital. This was not just a policy proposal – it was a vision of governance as an improvement project. Sen also offered practical suggestions: appointing trustees to verify age in the absence of birth records, including pleaders and small zamindars in the scheme, and discouraging speculative behavior through strict rules on lapses and renewals. His proposals reveal a sophisticated understanding and a shift towards a more technical approach to insurance.
Although a government-run scheme was never actualized, the Oriental Government Security Life Assurance Company Limited was established in Bombay in 1874. It began insuring Indian lives at European rates and eventually emerged as the biggest life insurance company in Asia until it was nationalized in 1956. However, no legislation for insurance companies was undertaken in India in the 1870s. Insurance companies continued to be governed under the Indian Companies Act, although a separate act for insurance companies was enacted in Britain in 1870, noting the inability of a generic Company Act to manage the amalgamations, winding up, and transfer of future risks among insurance companies.
By the early twentieth century, the Indian life insurance market had grown, but it remained fragile. A proliferation of undercapitalized firms and fraudulent practices prompted calls for regulation. The Indian Life Assurance Companies Act of 1912 was the first formal attempt to regulate the sector. But it was not merely technical intervention. It was a continuation of the state’s long-standing effort to shape the market – and the subjects within it.
The Act was shaped by competing pressures. Colonial administrators saw Indian policyholders as “uninstructed” and “ignorant,” requiring protection from “knaves” and “cheats.”[iv] Indian business leaders, meanwhile, demanded a level playing field and protection from foreign competition. Free-market ideologues resisted heavy-handed regulation, arguing for “minimum state control and maximum publicity.”[v] The result was a compromise. The Act required companies to submit actuarial reports and maintain a minimum deposit, but it stopped short of creating a separate insurance department or imposing strict investment guidelines. Trust, thrift, and respectability were now embedded in technical language – deposits, audits, actuarial returns.
The debates surrounding the Act reveal the persistence of earlier tensions. Surendranath Tagore, representing the Hindustan Cooperative Insurance Society, opposed high deposit requirements, arguing that they would stifle competition. Others, like Mr. Mudholkar and Mr. Subba Rao in the Council, pushed for stricter rules to protect Indian policyholders. The colonial state, caught between paternalism and liberalism, opted for a middle path. The result was an Act that failed to meet its aims. But it created the conditions for the collection and publicity of information that would subsume these moral concerns in favor of technical robustness in the Insurance Act of 1938.
Throughout these three moments – 1833, 1872, and 1912 – we see the colonial state stepping in, willingly or otherwise, to shape the life insurance market in India. It viewed Indians as unfit participants in modern finance: ignorant at best, and cheats at worst. The history of Indian life insurance is marked by negotiation between competing aspirations that operated within a universalist discourse of financial rationality. ‘The rationality’ legitimized certain aspirations while marginalizing others often through racial, class, and caste hierarchies, thus defining the ‘values’ of a modern financial subject. This tension between a universalist discourse and concrete socioeconomic realities continues to underscore the present financial institutions, replacing ‘improvement’ with ‘financial inclusion.’
[i] March 17, 1834. Financial Department. No. 7 of 1834. Paras 119-20. IOR/E/4/145: Letters Received from Bengal. British Library, London.
[ii] ‘Unnatural Deaths in India.’ Post Magazine & Insurance Monitor, January 16, 1869.
[iii] ‘Note by the Hon’ble Sir Richard Temple on Life Assurance by the Government in India. October 22, 1872.’ Memorandum on Life Insurance, 1873 in Finance: Civil & General: including, printed report on Rent & Revenue Bill, …. Mss Eur F114/5(20). British Library, London. 2.
[iv] See letter no. D.3756, dated July 24, 1908, from Mr. R. V. Srinivasiar Avargal, Inspector-General of Registration to the Chief Secretary to the Government, Madras. A., Commerce and Trade, November 1910, Pro. No. 23 in Department of Commerce and Industry. “Proposed Legislation for the Better Control of Life Assurance Companies in India”. Commerce and Trade, F. No. A., Pro. Nos. 1 to 26, 1910, Digitized Public Records, Commerce and Industry, National Archives of India. Annexure III to letter no. 811, dated June 18, 1909, from the Government of Madras, Judicial Department to the Government of India, Department of Commerce and Industry. Also see Pro. No. 20 in the same collection. Letter dated July 6, 1908.
[v] ‘Life Assurance Companies Bill. March 13, 1912.’ Abstracts of the Proceedings of the Council of the Governor General of India L (1912): 513.
Mayukh Chakrabarty is a PhD candidate at the School of Oriental and African Studies (Department of History), University of London, supported by the Felix Scholarship. His PhD project offers a comprehensive institutional history of life insurance in India, tracing its evolution from a colonial financial instrument to a post-independence state monopoly. He is particularly interested in how everyday financial practices – such as risk pooling, actuarial classification, and savings – became entangled with broader questions of governance, social hierarchy, and citizenship in the Indian context.
Edited by Rajosmita Roy.
Featured image: Photo by Neeraj Pattath, CC BY-SA 3.0, via Wikimedia Commons.
