Congress MP Manickam Tagore has written to Finance Minister Nirmala Sitharaman expressing concerns over recent changes in Life Insurance Corporation (LIC) policies, warning that they could negatively impact the livelihoods of around 14 lakh LIC agents and millions of policyholders.
In his letter dated November 5, Tagore said the government’s ambitious goal of insuring India’s entire population by 2047—especially those in rural and economically disadvantaged areas—could be undermined by the policy changes, which went into effect on October 1, 2024.
“I am writing to express the concerns of LIC agents and policyholders following the recent changes in Life Insurance Corporation (LIC) policies, which came into effect on October 1, 2024,” said Tagore, the MP from Virudhunagar, Tamil Nadu.
“These amendments are deeply troubling and have the potential to adversely impact the livelihood of approximately 14 lakh LIC agents and the millions of policyholders who rely on LIC for affordable life insurance.”
Tagore outlined several key issues with the new policies, including an increase in the minimum sum assured to Rs 2 lakh and higher premium rates across the board. He argued that these changes would disproportionately affect rural, lower, and middle-income groups, making insurance less affordable for many.
The Congress leader also noted that while the Insurance Act of 1938 set commission rates for LIC agents, there has been no increase in these rates despite requests from the agents and insurance industry. The Insurance Regulatory and Development Authority of India (IRDAI) had allowed for commission increases in 2013, 2017, and 2020, but LIC has not implemented those changes.
“Despite multiple requests from agents and the insurance industry, there has been no increase in commission rates, even though the IRDAI allowed for increases through gazette notifications in 2013, 2017, and 2020,” Tagore wrote. “However, the LIC has failed to implement these increases, continuing with the same commission structure until September 30, 2024.”
He pointed out that the new policies introduced from Oct. 1, 2024, further reduce commissions, which will harm the livelihoods of millions of agents.
“With these steep premium increases, agents find it extremely challenging to meet sales targets and provide affordable coverage to policyholders,” Tagore said.
In addition, the Congress MP raised concerns about reduced bonuses and benefits, and the lowering of the eligibility age for popular policies to 50 years, which he said would hinder agents’ ability to secure new business. He also criticised the introduction of a “clawback commission” policy, which holds agents responsible for policy surrenders, requiring them to repay the commissions earned.
“This is unfair, as the commission is an integral part of the premium, and agents should not be penalised for policyholders’ decisions to surrender policies, which may be influenced by various external factors beyond the agents’ control,” Tagore said.
Tagore concluded his letter by urging the Finance Minister to intervene and review the changes implemented on October 1, 2024.
“I urge you to reconsider the policies that adversely affect both agents and policyholders and take corrective action to ensure that LIC can continue to fulfil its mandate of providing accessible and affordable life insurance to all sections of society,” the Congress leader added.