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Panel against withdrawing sovereign guarantee to LIC?

Santosh Patnaik

Recommendation to phase out commission to agents deplored


It will throw 30 lakh agents, including 13 lakh belonging to LIC, out of jobs, says Gajapathi Rao

Despite no job security, agents have been contributing relentlessly for the growth of LIC


VISAKHAPATNAM: LIC agents who are seething with anger over the proposal to withdraw sovereign guarantee to the premier life insurance firm have a point to cheer with the Parliamentary Standing Committee on Finance reportedly favouring retention of the counter-guarantee provision.

LIC Insurance Agents' Federation of India secretary general N. Gajapathi Rao told The Hindu that the committee headed by Murli Manohar Joshi during his deposition stated that the sovereign guarantee was a pre-requisite for LIC to continue to enjoy public trust.

Bills to amend LIC Act of 1956 and Insurance Act of 1938 have been referred to the Parliamentary Standing committee on Finance.

He said they (LIC agents) had also opposed the proposal to insist on LIC management to deposit Rs.100 crore with the government as per Insurance Regulatory and Development Authority (IRDA) stipulation as a life insurance company as required by other players in the market after insurance reforms were introduced.

According to Mr. Rao, LIC could not be equated with other players as it is the country's premier life insurance company and ever since nationalisation and grant of Rs.5 crore as working capital by the Centre in 1956, LIC had been paying heavy dividends to the government after paying bonus to the insured persons and meeting its own expenses. Last year itself, it had paid Rs.750 crore from its profits to the Centre.

Describing as highly deplorable, he said the recommendation of D. Swaroop Committee on Investor Awareness and Protection to phase out commission to agents from the premium by 2011 would throw 30 lakh agents, including 13 lakh belonging to LIC, out of jobs.

Stating that agents had remained backbone of the insurance companies, he said ever since enactment of LIC Act of 1956, the commission percentage of LIC agents had not been enhanced even once. Despite no job security, they had been contributing relentlessly for the growth of the organisation, he pointed out.

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