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No repeal of LIC Act to divest stake: Expert
There is no need to repeal the Life Insurance Corporation (LIC) Act 1956 and convert LIC into a company under the Companies Act, but the sovereign guarantee on the policy holders has outlived its utility and can be cancelled, said experts in insurance law and business.
By
migrator
migrator
Chennai
Industry officials said the sovereign guarantee is not a factor either at the retail level or at the reinsurance of life risks underwritten by LIC.
The issue arose after Finance Minister Nirmala Sitharaman during her 2020-21 budget speech said the government will divest some portion of its stake in the Asian life insurance giant.
The Committee on Reforms in the Insurance Sector had recommended repeal of LICAct and converting the LIC into a company.
“There is no need to repeal the LIC Act and convert that into a company under the Companies Act. The LIC Act is the life insurer’s charter. Further with the amendment to the insurance laws, LIC is now subjected to all the insurance laws like any other private life insurer,” said D Varadarajan, a Supreme Court advocate.
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