Government owned Life Insurance Corporation of India (LIC) was far ahead of the 23-member private life insurer’s club in terms of the number of individual lives covered last month.
On the other hand, the private insurers have insured about 1.81 crore individuals under their group insurance schemes.
According to the Insurance Regulatory and Development Authority of India (IR DAI), LIC had sold 15,37,840 individual policies (84,989 individual single premium and 14,52,851 individual non-single premium policies) last month.
All the 23-private life insurers had covered 5,35,491 individuals (21,396 individual single premium policies, 514,095 individual non-single premium policies) under their individual policies.
In the case of group insurance policies LIC had covered a total of 13,68,169 lives last month while the private insurers have covered a total of about 1.81 crore.
In terms of premium income LIC’s new business premium last month was Rs 13,500.78 crore (Rs 15,548.06 crore in October 2020) while the 23-private insurers have together earned Rs 8,105.46 crore (Rs 7,227.96 crore in October 2020).
Interestingly, in the group business, last month LIC had earned a premium of Rs 8,961.13 crore covering about 13.68 lakh individuals (Rs 8,855.45 crore covering 12,39,827 lives).
On their part, the private life insurers last month earned about Rs 2,841.54 crore covering about 1.81 crore lives (Rs 3,009.7 crore for covering about Rs 1.24 crore).
It should be noted, insurance is a business of large numbers. Larger the base, better for spreading the loss of few over many.
According to a research report by Mkay Global Financial Services Ltd, the new retail policy count remained anemic for most private players barring SBI Life Insurance.
“The reinsurance price increase and tightening of underwriting processes led to lower sales of pure term life policies and this is probably one of the key reasons behind poor policy growth,” Mkay Global said.
The government has proposed to significantly increase the authorized capital of Life Insurance Corporation of India (LIC) to Rs 25,000 crore to facilitate its listing slated for the next fiscal.
Currently, the paid-up capital of the life insurance company with over 29 crore policies is Rs 100 crore. Starting with an initial capital of Rs 5 crore in 1956, LIC has an asset base of Rs 31,96,214.81 crore.
The authorized share capital of LIC shall be Rs 25,000 crore divided into 2,500 crore shares of Rs 10 each, as per the amendments proposed in the Life Insurance Corporation Act, 1956.
The amendments proposed as part of Finance Bill 2021 will lead to the setting up of a board with independent directors in line with listing obligations.
According to one of the 27 proposed amendments, the central government will hold at least 75 per cent of LIC for the first five years post the IPO, and subsequently hold at least 51 per cent at all times after five years of the listing.
Up to 10 per cent of the LIC IPO issue size would be reserved for policyholders, Minister of State for Finance Anurag had said last month.
The government will remain the majority shareholder and will continue to retain management control, safeguarding the interest of policyholders, he had said.
In her Budget Speech 2021, Finance Minister Sitharaman said the initial public offering (IPO) of LIC would be launched in the next financial year, beginning April 1.
Currently, the government owns a 100 per cent stake in LIC. Once listed, it is likely to become the country’s biggest company by market capitalization, with an estimated valuation of Rs 8-10 lakh crore.
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