The insurance agents of Life Insurance Corporation (LIC) of India held a demonstration in front of all eight zonal offices in Tamil Nadu on Wednesday, October 16. They demanded the union government to withdraw the Goods and Service Tax (GST) levied on LIC policies, stop Foreign Direct Investment (FDI) in insurance sector and fixed minimum wage for the agents.
The demonstration, organised by the LIC Agents Organisation of India (LICAOI), witnessed huge participation of LIC employees, who braved the incessant rain across the state. The association had earlier conducted demonstrations in front of all the branches in the state on September 24.
WITHDRAW GST ON PREMIUM AND LATE FEE
The primary demand of the demonstration was for withdrawal of GST on the premium of LIC policies and late fee. The charges applicable after the introduction of GST are higher than the service tax rates. The tax on term, health and vehicle insurance plans increased by 3% from the earlier 15% while the tax on endowment plan increased to 4.5% from 3.75% for the first year and from 1.88% to 2.25% on renewals.
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M A Kalam, the general secretary of LICAOI Tamil Nadu committee told NewsClick, “The increase in the tax rates on the endowment plans for the first year premium and the renewal premium itself are objectionable. Even if the government claims that the hike was minimal, the decision to impose GST on late fee is unacceptable. The high charge of 18% GST on Children’s Deferred Endowment Assurance (CDA) is highly unacceptable. This will burden the general public and create an aversion towards the LIC.”
STOP FDI IN INSURANCE
Finance Minister Nirmala Sitharaman, in her budget speech, had proposed to permit 100% FDI in insurance intermediaries. She had also said that the government was looking into the possibility of increasing the FDI cap on insurance companies from the present 49%. This will open the gates for the multinational insurance giants to eat into the business of LIC, a public sector undertaking (PSU) which is paying lakhs of crore rupees every year as dividend to the Government of India.
“The plan to permit FDI in insurance is equivalent to killing the LIC. The policy of the second regime of the Modi government in the name of 100 days plan is to hand over even the profit making PSUs to their corporate friends. This will affect the LIC employees, the agents and more importantly the public,” added Kalam.
LIC has a distinction of claim settlement to 98.04% of its customers in 2017-18 as per the data released by the Insurance Regulatory and Development Authority of India (IRDAI). The sum disbursed in the fiscal year stood at Rs. 10, 747.53 crore. The LIC has been known as the most consistent company in settlement of claims over the past several years.
PROTECT INTERESTS OF AGENTS
The insurance agents are vital resource creators of the LIC, but they are deprived of any basic emoluments. They are eligible to commissions based on the number of policies they mobilise and the amount of the policy. There are around 74,200 agents serving in 176 branches and 145 satellite branches of LIC in Tamil Nadu as of 2018.
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The south zone vice president of the All India Insurance Employees Association K Samynathan while addressing the demonstration in Chennai said, “The majority of LIC’s revenue is through the agents while other private firms get revenue through brokerages and banks. But the agents are not provided with the deserved benefits. We urge the LIC administration to implement mediclaim, central provident fund and welfare fund for the agents as done in the state of Kerala and Puducherry.”
FIX MINIMUM PAY FOR AGENTS
The association also demanded to fix Rs 18,000/ as the minimum wage for LIC agents and provide the women agents with paid maternity leave. They also demanded the fixing of commission for enrolled policies as per the recommendations of the IRDAI.
LIC is being used by consecutive governments to infuse funds to save loss-making institutions including the Industrial Development Bank of India (IDBI). The loans given by LIC to different state governments, local bodies and corporates have been categorised as bad loans. And yet, LIC has managed to register a profit of Rs 29,956 crore from investments in 2018-19. The first year premium of LIC also grew by 5.68% to Rs 1.42 lakh crore in the hlast financial year.
However, the Modi government’s inclination is to allow FDI in insurance sector instead of expanding LIC to create employment. With danger looming large on the PSU under the Modi government 2.0, the agents are determined to continue their fight against the government for protecting LIC.
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