After the Indian insurance Companies Act, 1938 was passed, there was mushroom growth of insurance companies in India. In spite of mushrooming of many insurance companies per capita insurance in India was merely Rs. 8 in 1944 as against Rs. 2000 and Rs. 600 in US and UK respectively. Even this limited growth is marked by many malpractices, deficiencies and frequent liquidations of insurance companies shaking public confidence and depriving policyholders of their savings and security.