Life Insurance Corporation of India (LIC) on Friday strongly rejected the US Trade Representative’s (USTR) assertion that it benefits from undue advantage or preferential treatment by the Indian government compared to private life insurers.
In a statement, the state-run insurer clarified that it is treated on par with other life insurance companies by both the government and regulatory authorities. It also emphasised that the sovereign guarantee associated with its policies has never been invoked or used for promotional purposes.
“The sovereign guarantee on LIC’s insurance policies was provided at the time of its establishment in 1956 as a statutory provision aimed at building public trust in the early years of nationalisation. It has never been invoked or used as a marketing tool or provided any undue advantage to LIC,” the insurer said.
The clarification came in response to a recent USTR report that claimed LIC is not subject to the same legal and “prudential supervision” as private insurers, and benefits from explicit government guarantees. The report argued that such provisions give LIC an unfair edge, as customers are drawn to the implied security of a state-backed institution.
Countering these claims, LIC said the observations were based on a “partial understanding of Indian insurance regulation and LIC’s functioning”. “We urge for a more balanced and factual appreciation of LIC’s role and contribution to financial inclusion and policyholder protection in India,” the statement added.
LIC also highlighted that it operates in a fully competitive market alongside 24 private life insurance companies, and is governed by the same regulatory frameworks enforced by the Insurance Regulatory and Development Authority of India (Irdai) and the Securities and Exchange Board of India (SEBI).
LIC has long maintained its position as India’s largest life insurer, primarily driven by its expansive agency network. The corporation has over 1.4 million agents, compared to 1.61 million agents across all 24 private life insurers. As of February 2025, the life insurance industry’s total new business premium stood at ₹3.35 lakh crore, with LIC commanding a 56% market share, while private insurers shared the remaining 44%.
The USTR report also raised concerns about Indian regulations giving domestic reinsurers a mandatory first order of preference in the reinsurance business. This, it said, results in unequal treatment for foreign reinsurers and concentrates risk in a few domestic players, contrary to global best practices of diversifying risk across jurisdictions.
In India, the state-owned GIC Re has been the sole domestic reinsurer since 1972. Recently, Irdai granted a registration certificate to Valueattics Reinsurance Ltd, paving the way for the country’s first private sector reinsurer.