UPSC Prelims 2006 Q105: Indian Economy – Banking & Financial Sector
Consider the following statements:
1. Life Insurance Corporation of India is the oldest insurance company in India.
2. National Insurance Company Limited was nationalized in the year 1972 and made a subsidiary
of General Insurance Corporation of India.
3. Headquarters of United India Insurance Company Limited are located at Chennai.
Which of the statements given above are correct?
- (a) 1, 2 and 3
- (b) 1 and 2, only
- (c) 2 and 3, only
- (d) 1 and 3, only
Answer: (c) 2 and 3, only
Explanation
Insurance companies in India
| Statement | Verdict | Reason |
|---|---|---|
| 1. LIC is the oldest insurance company in India | False | Insurance began in India long before LIC (1956); the Oriental Life Insurance Company dates from 1818 |
| 2. National Insurance Company was nationalised in 1972 and made a subsidiary of GIC | True | The General Insurance Business (Nationalisation) Act, 1972 did this |
| 3. United India Insurance's headquarters are at Chennai | True | United India Insurance Company has its head office in Chennai |
Statements 2 and 3 are correct.
Answer: (c) 2 and 3, only.
Why each option is right or wrong
- (a) Incorrect. Statement 1 is false because LIC was formed in 1956, long after older insurers.
- (b) Incorrect. Statement 1 is false, and statement 3 is true.
- (c) CORRECT. National Insurance was nationalised in 1972 and United India is headquartered at Chennai.
- (d) Incorrect. Statement 1 is false, so this option fails.
Key point
LIC was formed in 1956 and is not the oldest insurer; National Insurance was nationalised in 1972 and United India is headquartered in Chennai.
Remember
General insurance was nationalised in 1972; LIC began in 1956.
Common mistakes
- Treating LIC as the oldest insurer because it is the largest.
- Mixing the 1956 life insurance nationalisation with the 1972 general insurance one.
- Not recalling Chennai as United India's head office.
Exam tip
Life insurance nationalised 1956 (LIC); general insurance nationalised 1972 (GIC and four subsidiaries).
Sources
- General Insurance Business (Nationalisation) Act, 1972
- Life Insurance Corporation Act, 1956
- Insurance Regulatory and Development Authority — Annual Report 2005–06