- The Life Insurance Corporation Act, 1956 (the LIC Act) nationalised the life insurance business in India by transferring all life insurance business to a Corporation, namely, the Life Insurance Corporation of India (LIC), established for the purpose. This Act also provided for the regulation and control of the insurance business of the LIC. The Insurance Act, 1938, however, remained as the principal law to regulate and exercise supervision over all entities transacting insurance business in India. With the enactment of the Insurance Regulatory and Development Authority Act, 1999, the insurance business was opened up to the private sector, as a result of which, in addition to LIC, presently twenty private sector companies have started transacting life insurance business in our country.
- The Insurance Regulatory and Development Authority (IRDA) while recommending amendments to the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999 and the General Insurance Business (Nationalisation) Act, 1972 also made recommednations for amendment in the Life Insurance Corporation Act, 1956 in order to bring this Act in consonance with the Insurance Act, 1938. The Government, in consultation with the LIC, finalised amendments to the LIC Act.
- The Life Insurance Corporation (Amendment) Bill, 2008 proposes to amend the LIC Act, inter alia, to:
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- provide for raising of minimum capital of the Life Insurance Corporation of India from five crore of rupees to one hundred crore of rupees which can further be enhanced to such amount as the Central Government may, by notification, determine;
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- provide sovereign guarantee to the policies of LIC to the extent to be determined, by order, by the Central Government from time to time; and allocate ninety per cent. or more of such surplus, as the Central Government may approve, for the life insurance policy-holders of the LIC and to credit such percentage of remaining surplus, as the Central Government may approve, to a separate account maintained by the Corporation, to be utilised for such purpose as the Central Government may determine, and pay the remainder as dividend.
