Saturday, September 1, 2012


56 years of Nation building
LIC the pride of India

On 1st September 2012, LIC completes 56 years of its glorious and purposeful existence. It was on this day in the year 1956, that LIC of India came into being with the government of India nationalizing the life insurance business through an ordinance on 19th January 1956.  Ever since 1956, LIC has progressed from strength to strength. In the process, it has fulfilled its objectives and has been immensely contributing to the nation building activities. Today, LIC is an Institution of national importance and operates at a very large scale and efficiency. It has created a significant value for its customers and dominates the life insurance industry in our country. LIC has institutionalized a culture of Trust within its organization which is the basis for its extraordinary success. LIC has grown today to be the premiere public sector financial institution and the pride of India.





LIC has invested Rs. 8,19,835 crores as on 31.3.2012 in central/state government securities, power generation, road transport, water supply, housing and other social activities. LIC has played a very important role in nation building. LIC’s contribution to the Five Year Plans has been commendable. It contributed  Rs. 184 crore to the second Five Year Plan (1956-61), Rs. 3, 94,779  to tenth Five Year Plan (2002-2007) and Rs.7,04,151  Crores to the eleventh Five Year Plan (2007-2012. The most amazing aspect is that around 25% of internal borrowings of the central government are met by LIC every year.  On an initial investment of Rs.5 crores in the year 1956 by the Union Government, it’s share  of the valuation surplus of 5% for the year 2011-12 worked out to be Rs. 1281.23 Crore. With an investment of just Rs.5 crore, till this fiscal year end, the government received a cumulative dividend of Rs. 11,376.10 Crore which is unimaginable in any other institution. The Government of India has entrusted several social security schemes to LIC. Over 1.63 crore landless households under Aam Aadmi Bima Yojana till date are covered by LIC. Taking up the cause of financial inclusion, over 57.76 lac people have been insured under LIC’s Micro insurance schemes. As a part of Corporate Social Responsibility, the ‘Golden Jubilee Foundation’ has been dedicated to the cause of promoting education, health and to provide relief to the people who are poor. So far LIC has sanctioned more than 140 projects worth Rs.18.06 crores, across the country. LIC Golden Jubilee Scholarship Scheme provides scholarship to economically weaker sections of the society to pursue higher education. Every year 1000 deserving students are given scholarship under this scheme dedicated towards nation building; LIC is one of the strongest pillars of India’s social and economic structure.

Ever since the opening up of the insurance sector in the year 2000, LIC is performing marvelously dominating the insurance market. The public sector LIC has surprised the critics with a very strong performance. 

The Compounded Annual Growth Rate (CAGR) of LIC during the last ten years has jumped to 30.24% from 15.23% since inception. LIC’s total policies have risen from 10.12 Croresin to 34 Crores in conventional business along with 10.45  crores of customer base in group business. LIC’s Life fund has grown from 1.54 lakh crore to 12.83  lakh crore. LIC’s asset base has grown from 1.60 lac crore to 14.17 lakh crore by September 2012. The new business premium has gone up from Rs.5930 Crore to Rs. 81515 Crore. Total Premium Income has increased from Rs.27489 Crore to 202802.90 Crore. Thus, through this amazing performance, LIC has retained it’s domination over the market.  It is holding on to a market share of 81 percent in number of policies and 74 percent in new business premium.  The LIC has also an impressive share of 87.4% in the total assets under management. Insurance is a promise which needs to be fulfilled on the happening of an eventuality. LIC settles 99.86% of the claims which is a world record. The track record of the private insurance companies on settlement of claims is abysmally low.  In spite of such a strong performance, it is surprising to note that the rating agencies to facilitate the entry of foreign capital to access the domestic savings of the Indian people, are trying to arm twist by down grading the investment rating of LIC ironically quoting that LIC is exposed to investments in government securities.

The performance of private insurance companies even after a decade of operation is not encouraging. Out of the 23 private insurance companies, 16 have reported operating losses and majority of them are yet to break even. The private insurance companies sell more than 90% of their policies in ULIPs where the returns are dependent on the vagaries of the volatile stock market. According to the government, the public sector LIC has dominated the investment in infrastructure development by accounting for more than 94% where as the private companies are unable to invest for infrastructure development of our country.

In spite of the sterling performance by the Life Insurance Corporation of India, the government, under pressure from the international finance capital, is making attempts to weaken the public sector. The Insurance Laws (amendment) bill 2008 which seeks to increase the FDI cap in insurance from 26% to 49% is a pointer in this direction. More Over, the hurdles created by IRDA with regard to clearing new plans, in recruitment of agents, suspending group superannuation scheme (P&GS) etc are all the hindrances which LIC is able to successfully overcome till now.

However, the most inspiring and enthusing development during the year was that we could successfully defeat the attempts of the government to privatize LIC of India. The LIC Act Amendment Bill (2009) was passed in the Parliament by amending all the sections/clauses which would have been otherwise detrimental to the interests of LIC and its policy holders. The arguments placed by the AIIEA before the standing committee of parliament were upheld. The bill which originally aimed at disinvestment of LIC and removing the sovereign guarantee of government on premiums etc., was subsequently passed in parliament by dropping all these issues. This is one of the most remarkable achievements of AIIEA to protect the interests of LIC, its customers and the nation’s economic sovereignty. 

The insurance employees organized under the banner of AIIEA are committed to strengthen the public sector insurance industry and to the cause of 44 crore policyholders of LIC of India. We shall take a pledge on this momentous occasion to strengthen LIC on all fronts. Let us rededicate ourselves to this humble and noble cause. Our conscious and sustained campaign from the ‘SEATS TO THE STREETS’ alone will help us in achieving the goals.