As the government prepares to introduce amendments to the Insurance Act, the All-India LIC Employees Federation (AILEF) has appealed to the Members of Parliament not to raise the foreign direct investment limit in the sector beyond the current 26 per cent.
“We appeal to the honourable members of Parliament not to make indecent haste in thinking of raising FDI to 49 per cent without in-depth examination of the entire issue,” AILEF said.
The federation believes the move will encourage privatisation in the sector, which may be detrimental to the interest of the consumers.
It said claims were turned down on a large scale in the private sector. “While LIC paid 97.73 per cent death claims in 2012-13 (taking the figure to over 99 per cent in 2013-14), repudiating only 1.12 per cent claims, the private companies repudiated 7.85 per cent claims in 2012-13 and showed 3.47 per cent ‘outstanding’,” the appeal stated.
“It is necessary to examine how and for what reasons the claims have been repudiated as, generally speaking, the private companies have gained notoriety for malpractices.”
The appeal pointed out that dissatisfied with the penetration level in the life insurance industry, particularly in the rural sector and among weaker sections, the Malhotra Committee had in 1994 recommended the entry of private companies and allowing up to 26 per cent FDI.
However, the move had not resulted in increased penetration. In fact, there was a continuous decline in penetration level.
