The correct answer is: C. Central Government.
Insurance is legislated by the Central Government of India. The Insurance Act, 1938 is the main legislation governing the insurance sector in India. The Act was enacted to regulate the insurance business and to protect the interests of policyholders. The Act provides for the establishment of the Insurance Regulatory and Development Authority of India (IRDAI), which is the regulator of the insurance sector in India. The IRDAI is responsible for issuing licenses to insurance companies, regulating the activities of insurance companies, and protecting the interests of policyholders.
Option A is incorrect because insurance companies are regulated by the IRDAI, which is a government body.
Option B is incorrect because state governments do not have the authority to legislate on insurance.
Option D is incorrect because the Reserve Bank of India is the central bank of India and does not have the authority to legislate on insurance.