The Hindu Business Line : LIC Bill seeks to trim pay-out to policy holders

New Delhi, Dec. 22 Amid protest from the Left parties, the Government on Monday introduced a Bill in the Lok Sabha to raise the minimum capital of Life Insurance Corporation to Rs 100 crore from the existing Rs 5 crore. Insurance regulator IRDA requires life insurers to have a minimum capital of Rs 100 crore.

The Bill also seeks to reduce the threshold limit of surplus that may be available to the policyholders of LIC. This implies that LIC policyholders may have to settle for a lesser payout from any of its surplus if the Government was keen on having a larger share of it.

Currently, 95 per cent of the surplus or even higher percentage, as approved by the Centre, is reserved for the policy holders. The remainder is paid to the Centre, after meeting the liabilities of the corporation.

Now, the proposed Bill provides that 90 per cent or more of such surplus, as the Centre may approve, would be reserved for policy-holders.

Of the remaining surplus, a particular percentage as specified by the Centre would be credited to a separate account maintained by LIC. The remainder would be paid as dividend. Also, the Bill seeks to provide sovereign guarantees to the policies of LIC to the extent to be determined by the Centre.

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