Around one lakh employees of four Indian government owned non-life insurers will strike work for two hours March 31, demanding 40 percent pay hike and an option to join pension scheme. They claim they have “done well and the management should reciprocate”.All the unions in the four companies — National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited — called for a two-hour walk-out from work places preceding the lunch recess March 31, the last working day of the current fiscal.
The unions warned of serious action if their demands were not met.
“The four government owned non-life insurers have clocked a gross premium of Rs.18,222 crore up to February 2010 this fiscal, logging a growth of 12.21 percent over the corresponding period of the previous year. On the other hand, leading private non-life insurers have logged negative growth,” J.Gurumurthy, secretary of All India Insurance Employees Association (AIIEA), told IANS Thursday.
He said the wage talks are still at the level of general manager level of the individual companies, steadfast on their offer of 17.5 percent salary hike, made at Kolkata Dec 22 last year.
The Governing Board of General Insurers Public Sector Association (GIPSA) Feb 5 informed the unions that it did not find it possible to improve the offer.
After the rejection of the offer of 15 percent increase, the GIPSA came up with a revised offer of 17.5 percent.
The AIIEA had demanded 40 percent wage hike so that there is pay parity with that of the private sector.
“The chairman and managing directors seem to feel that it is not their responsibility to find a satisfactory solution to the wage demand of the employees and officers in consonance with growth, productivity and competitive environment,” Gurumurthy added.
He said wage talks were resumed in Life Insurance Corporation of India (LIC) after the unions rejected the 17.5 percent hike offered.
Friday, March 26, 2010
Tuesday, March 23, 2010
LIC's new biz grew 23 pc during April-Feb 2009-10
The new busineses of the country's largest insurer Life Insurance Corporation (LIC) grew by over 23 per cent, with Rs 54,320 crore collected in the first eleven months of the current fiscal. During the April-February period of last fiscal, LIC mopped up first year premium of Rs 43,883 crore, sectoral regulator Insurance Regulatory and Development Authority (IRDA) said in its monthly data. Overall, life insurance industry collected premium of Rs 83,891 crore in the first eleven months of this fiscal compared to Rs 72,017 crore in the corresponding period last fiscal, thereby growing by over 16 per cent. The private life insurers grew by 5 per cent during April-February period of the current fiscal. The 22 private players mopped up new businesses of Rs 29,570 crore in the eleven months of the current fiscal compared to Rs 28,133 crore same period last year. The largest private player SBI Life mopped up Rs 5,266 crore during the April-February period compred to 4,348 crore collected in the same period last year
The new busineses of the country's largest insurer Life Insurance Corporation (LIC) grew by over 23 per cent, with Rs 54,320 crore collected in the first eleven months of the current fiscal. During the April-February period of last fiscal, LIC mopped up first year premium of Rs 43,883 crore, sectoral regulator Insurance Regulatory and Development Authority (IRDA) said in its monthly data. Overall, life insurance industry collected premium of Rs 83,891 crore in the first eleven months of this fiscal compared to Rs 72,017 crore in the corresponding period last fiscal, thereby growing by over 16 per cent. The private life insurers grew by 5 per cent during April-February period of the current fiscal. The 22 private players mopped up new businesses of Rs 29,570 crore in the eleven months of the current fiscal compared to Rs 28,133 crore same period last year. The largest private player SBI Life mopped up Rs 5,266 crore during the April-February period compred to 4,348 crore collected in the same period last year
Friday, March 19, 2010
Centre should retain power to decide LIC agents' service conditions: House panel
A Parliamentary panel has opposed a Government proposal to entrust Life Insurance Corporation of India (LIC) with the power to decide on the terms and service conditions of its agents. The Standing Committee on Finance, headed by the BJP leader, Dr Murli Manohar Joshi, in its report on the Life Insurance Corporation (Amendment) Bill 2009 suggested that it would be "preferable to continue with the existing legal provisions relating to the terms and conditions of service of LIC agents". The report was tabled in the Lok Sabha on Friday. The LIC Amendment Bill 2009 has proposed to do away with the existing system of the Centre framing the rules on terms and service conditions of LIC agents. Simultaneously, the Bill sought to confer upon LIC the power to frame regulations on the terms and service conditions of the agents. The Bill also proposes to take away the power of LIC to specify the form and manner in which policies may be issued and the contracts binding on the corporation may be executed. A large section of the LIC agents' community is keen that the power to decide and specify the service conditions should not be vested with LIC. Allowing LIC to frame regulations on the service conditions of the agents would dilute the legal protection that such agents currently enjoyed, sources said. The whole idea behind the proposed amendments is to bring the status of LIC agents on a par with that of agents in any other insurance company that is governed by the Agents' Regulations of the IRDA, sources added. The Insurance Regulatory and Development Authority (IRDA) had in a written submission to the Standing Committee on Finance noted that the responsibility of issuing and renewal of Agents' licences is proposed to be assigned to the insurers, but with checks and balances. Also, the IRDA would regulate the licensing procedure by way of detailed regulations.
A Parliamentary panel has opposed a Government proposal to entrust Life Insurance Corporation of India (LIC) with the power to decide on the terms and service conditions of its agents. The Standing Committee on Finance, headed by the BJP leader, Dr Murli Manohar Joshi, in its report on the Life Insurance Corporation (Amendment) Bill 2009 suggested that it would be "preferable to continue with the existing legal provisions relating to the terms and conditions of service of LIC agents". The report was tabled in the Lok Sabha on Friday. The LIC Amendment Bill 2009 has proposed to do away with the existing system of the Centre framing the rules on terms and service conditions of LIC agents. Simultaneously, the Bill sought to confer upon LIC the power to frame regulations on the terms and service conditions of the agents. The Bill also proposes to take away the power of LIC to specify the form and manner in which policies may be issued and the contracts binding on the corporation may be executed. A large section of the LIC agents' community is keen that the power to decide and specify the service conditions should not be vested with LIC. Allowing LIC to frame regulations on the service conditions of the agents would dilute the legal protection that such agents currently enjoyed, sources said. The whole idea behind the proposed amendments is to bring the status of LIC agents on a par with that of agents in any other insurance company that is governed by the Agents' Regulations of the IRDA, sources added. The Insurance Regulatory and Development Authority (IRDA) had in a written submission to the Standing Committee on Finance noted that the responsibility of issuing and renewal of Agents' licences is proposed to be assigned to the insurers, but with checks and balances. Also, the IRDA would regulate the licensing procedure by way of detailed regulations.
LIC board free to decide on banking licence: official
The Life Insurance Corporation of India's (LIC) board will have to take a decision on its own whether to apply for a banking licence, media reports quoted R Gopalan, secretary, department of financial services, ministry of finance, as saying.
Speaking on the sidelines of a FICCI seminar on microfinance, Gopalan said, "the LIC board will have to decide that first. Let the board decide, discuss and debate whether LIC should get into the banking business or not."
Finance minister Pranab Mukherjee in his Budget speech this year said the government is planning to open up the banking sector, saying that the Reserve Bank of India (RBI) is considering issue of banking licences to private sector players and non-banking financial companies (NBFCs).
Speaking on the sidelines of a FICCI seminar on microfinance, Gopalan said, "the LIC board will have to decide that first. Let the board decide, discuss and debate whether LIC should get into the banking business or not."
Finance minister Pranab Mukherjee in his Budget speech this year said the government is planning to open up the banking sector, saying that the Reserve Bank of India (RBI) is considering issue of banking licences to private sector players and non-banking financial companies (NBFCs).
This is great news for India's prominent industrial houses, including Tatas, Birlas, Anil Ambani-led Reliance group, the Aditya Birla Group, Tata Capital, Anil Ambani-led Reliance Capital, Malvinder Singh-led Religare group, Muthoot Group, Bajaj Group and Shriram Finance as a change in regulatory environment will boost the ambitions of these entities to enter the banking sector (See: Mukherjee to ease banking licence rules).
Many analysts see this as a pleasant surprise as RBI last issued licences to private banks way back in 2002, to Kotak Mahindra Bank and Rabo Bank.
However, RBI is expected to frame new guidelines for companies willing to apply for a banking licence.
Thursday, March 18, 2010
Finmin wants PSBs to exit insurance
The finance ministry has circulated a proposal that aims to ask state-run banks to exit noncore businesses, notably insurance, to force greater capital efficiency and ensure that periodic capital infusion into them goes into increasing the spread of banking rather than propping up money-losing ventures. “The money provided through recapitalisation support is for core banking activities such as increased lending and branch expansion. Banks with interests in other areas may divert the funds, which is not desirable,” a senior finance ministry official told ET. The proposal, which is in the early stages of debate and discussion within the ministry, reasons that noncore businesses such as insurance are highly capital intensive and can take up to 10 years to be profitable. India’s life insurance industry posted a combined net loss of Rs 4,878.49 crore in 2008-09 , up 43% from a year ago. Of 22 life insurers, only four have reported profits, data from insurance regulator Irda shows.
The finance ministry has circulated a proposal that aims to ask state-run banks to exit noncore businesses, notably insurance, to force greater capital efficiency and ensure that periodic capital infusion into them goes into increasing the spread of banking rather than propping up money-losing ventures. “The money provided through recapitalisation support is for core banking activities such as increased lending and branch expansion. Banks with interests in other areas may divert the funds, which is not desirable,” a senior finance ministry official told ET. The proposal, which is in the early stages of debate and discussion within the ministry, reasons that noncore businesses such as insurance are highly capital intensive and can take up to 10 years to be profitable. India’s life insurance industry posted a combined net loss of Rs 4,878.49 crore in 2008-09 , up 43% from a year ago. Of 22 life insurers, only four have reported profits, data from insurance regulator Irda shows.
Govt for level playing field in insurance sector
Union Finance Minister Pranab Mukherjee on Tuesday said in the Rajya Sabha that the UPA Government was providing a level playing field in the insurance sector and informed that private sector insurance companies had more than three times the outstanding number of death claims on individual insurance policies compared to state-owned Life Insurance Corporation (LIC). Replying to a question by Brinda Karat (CPM) and subsequent supplementaries during Question Hour, Mr. Mukherjee said the outstanding number of death claims, as on March 31, 2009, as a percentage of total number of claims intimated to the companies in 2008-09, stood at 7.75 per cent for private firms. The same for LIC was 2.21 per cent, he added. For group policies, private sector companies had 3.93 per cent outstanding claims while LIC had 0.24 per cent. Mr. Mukherjee said private sector insurance companies started operations eight years ago while LIC has been in the business since 1956. “There certainly is a difference (between outstanding claims with private and public sector firms). This difference will have to be looked into but forming a committee for this is not a solution,'' he said. The Finance Minister said the government's role was limited to providing level playing field to private and public sector companies. Minister of State for Finance Namo Narain Meena said there were 23 insurance companies operating in India, of which 22 were private. He said the claim pendency ratio of private firms was higher than LIC but it had come down due to intervention of the Insurance Regulatory and Development Authority. The pendency ratio of private firms was 13.32 per cent in 2006, which came down to 10.88 per cent in 2007 and to 7.75 per cent in 2008-09.
Union Finance Minister Pranab Mukherjee on Tuesday said in the Rajya Sabha that the UPA Government was providing a level playing field in the insurance sector and informed that private sector insurance companies had more than three times the outstanding number of death claims on individual insurance policies compared to state-owned Life Insurance Corporation (LIC). Replying to a question by Brinda Karat (CPM) and subsequent supplementaries during Question Hour, Mr. Mukherjee said the outstanding number of death claims, as on March 31, 2009, as a percentage of total number of claims intimated to the companies in 2008-09, stood at 7.75 per cent for private firms. The same for LIC was 2.21 per cent, he added. For group policies, private sector companies had 3.93 per cent outstanding claims while LIC had 0.24 per cent. Mr. Mukherjee said private sector insurance companies started operations eight years ago while LIC has been in the business since 1956. “There certainly is a difference (between outstanding claims with private and public sector firms). This difference will have to be looked into but forming a committee for this is not a solution,'' he said. The Finance Minister said the government's role was limited to providing level playing field to private and public sector companies. Minister of State for Finance Namo Narain Meena said there were 23 insurance companies operating in India, of which 22 were private. He said the claim pendency ratio of private firms was higher than LIC but it had come down due to intervention of the Insurance Regulatory and Development Authority. The pendency ratio of private firms was 13.32 per cent in 2006, which came down to 10.88 per cent in 2007 and to 7.75 per cent in 2008-09.
Employees protest against amendment in LIC Act
On the call of Northern Zone Insurance Employees Association (NZIEA), employees working in LIC of India, on Saturday, registered their protest against the proposed amendments in insurance law and LIC Act, pending in the Parliament. The employees demanded that Insurance Laws (Amendment) Bill, 2008, was placed in Rajya Sabha on December 22, 2008, and LIC (Amendment) Bill, 2009, was placed in Lok Sabha on December 7, 2009.
They said, "The bills were referred to the standing committee on finance on September 9 and 14, 2009, respectively, and these proposed amendments are detrimental to the interest of policy-holders and national economy." Through Insurance Laws (Amendment) Bill, 2008, the government wants to hike FDI capital in insurance sector from the present limit of 26% to 49%, to amend General Insurance Business Nationalization Act (GIBNA) permitting four public sector general insurance companies to approach the capital market to raise the capital for their business activities. "By LIC (Amendment) Bill, 2009, the government wants to increase the capital of LIC from Rs 5 crore to Rs 100 crore and to dilute the pattern of sovereign guarantee," the employees said. Discussing their demands, Harbans Singh, president of NZIEA said, "The hike in foreign equity will increase the ability of private companies to manipulate and exploit the insurance market. Nearly 50% funds of private companies are invested in equities thus limited funds are available for infrastructural investments. Therefore the government should amend these decisions."
They said, "The bills were referred to the standing committee on finance on September 9 and 14, 2009, respectively, and these proposed amendments are detrimental to the interest of policy-holders and national economy." Through Insurance Laws (Amendment) Bill, 2008, the government wants to hike FDI capital in insurance sector from the present limit of 26% to 49%, to amend General Insurance Business Nationalization Act (GIBNA) permitting four public sector general insurance companies to approach the capital market to raise the capital for their business activities. "By LIC (Amendment) Bill, 2009, the government wants to increase the capital of LIC from Rs 5 crore to Rs 100 crore and to dilute the pattern of sovereign guarantee," the employees said. Discussing their demands, Harbans Singh, president of NZIEA said, "The hike in foreign equity will increase the ability of private companies to manipulate and exploit the insurance market. Nearly 50% funds of private companies are invested in equities thus limited funds are available for infrastructural investments. Therefore the government should amend these decisions."
Tuesday, March 16, 2010
'Pvt insurance firms have more death claims than LIC'
New Delhi, Mar 16 (PTI) Private sector insurance firms have more than three times the outstanding number of death claims on individual insurance policies compared to state-owned LIC, Finance Minister Pranab Mukherjee told the Rajya Sabha today.Replying to supplementaries during Question Hour, he said the outstanding number of death claims, as on March 31, 2009, as a percentage of total number of claims intimated to the companies in 2008-09 stood at 7.75 per cent for private firms.The same for public sector Life Insurance Corporation of India (LIC) was 2.21 per cent, he said.For group policies, private sector companies had 3.93 per cent outstanding claims while LIC had 0.24 per cent.Mukherjee said private sector insurance companies started operations eight years back while LIC has been in business since 1956.
New Delhi, Mar 16 (PTI) Private sector insurance firms have more than three times the outstanding number of death claims on individual insurance policies compared to state-owned LIC, Finance Minister Pranab Mukherjee told the Rajya Sabha today.Replying to supplementaries during Question Hour, he said the outstanding number of death claims, as on March 31, 2009, as a percentage of total number of claims intimated to the companies in 2008-09 stood at 7.75 per cent for private firms.The same for public sector Life Insurance Corporation of India (LIC) was 2.21 per cent, he said.For group policies, private sector companies had 3.93 per cent outstanding claims while LIC had 0.24 per cent.Mukherjee said private sector insurance companies started operations eight years back while LIC has been in business since 1956.
LIC reverses declining trend in market share: FM
New Delhi, Mar 16 (PTI) State-owned Life Insurance Corp has reversed the trend of losing its market share by registering a hefty growth in the current fiscal, Parliament was informed today."In the current fiscal year, up to February 28, 2010, the LIC has increased its market share in terms of first year premium to 65.06 per cent and in terms of policies to 70.79 per cent," Finance Minister Pranab Mukherjee informed Rajya Sabha in a reply.The life insurance behemoth had 61.12 per cent market share in terms of first year premium income and 70.52 per cent in terms of insurance policies in 2008-09, he said.LIC had been losing its market share since the life insurance market was opened up to the private sector in 2000- 01. As on date, there are 22 private insurance companies against one public sector life insurer LIC.
Monday, March 15, 2010
Centre should retain power to decide LIC agents' service conditions: House panel
A Parliamentary panel has opposed a Government proposal to entrust Life Insurance Corporation of India (LIC) with the power to decide on the terms and service conditions of its agents.
The Standing Committee on Finance, headed by the BJP leader, Dr Murli Manohar Joshi, in its report on the Life Insurance Corporation (Amendment) Bill 2009 suggested that it would be “preferable to continue with the existing legal provisions relating to the terms and conditions of service of LIC agents”.
The report was tabled in the Lok Sabha on Friday. The LIC Amendment Bill 2009 has proposed to do away with the existing system of the Centre framing the rules on terms and service conditions of LIC agents. Simultaneously, the Bill sought to confer upon LIC the power to frame regulations on the terms and service conditions of the agents.
The Bill also proposes to take away the power of LIC to specify the form and manner in which policies may be issued and the contracts binding on the corporation may be executed.
A large section of the LIC agents' community is keen that the power to decide and specify the service conditions should not be vested with LIC. Allowing LIC to frame regulations on the service conditions of the agents would dilute the legal protection that such agents currently enjoyed, sources said.
The whole idea behind the proposed amendments is to bring the status of LIC agents on a par with that of agents in any other insurance company that is governed by the Agents' Regulations of the IRDA, sources added.
The Insurance Regulatory and Development Authority (IRDA) had in a written submission to the Standing Committee on Finance noted that the responsibility of issuing and renewal of Agents' licences is proposed to be assigned to the insurers, but with checks and balances. Also, the IRDA would regulate the licensing procedure by way of detailed regulations
The Standing Committee on Finance, headed by the BJP leader, Dr Murli Manohar Joshi, in its report on the Life Insurance Corporation (Amendment) Bill 2009 suggested that it would be “preferable to continue with the existing legal provisions relating to the terms and conditions of service of LIC agents”.
The report was tabled in the Lok Sabha on Friday. The LIC Amendment Bill 2009 has proposed to do away with the existing system of the Centre framing the rules on terms and service conditions of LIC agents. Simultaneously, the Bill sought to confer upon LIC the power to frame regulations on the terms and service conditions of the agents.
The Bill also proposes to take away the power of LIC to specify the form and manner in which policies may be issued and the contracts binding on the corporation may be executed.
A large section of the LIC agents' community is keen that the power to decide and specify the service conditions should not be vested with LIC. Allowing LIC to frame regulations on the service conditions of the agents would dilute the legal protection that such agents currently enjoyed, sources said.
The whole idea behind the proposed amendments is to bring the status of LIC agents on a par with that of agents in any other insurance company that is governed by the Agents' Regulations of the IRDA, sources added.
The Insurance Regulatory and Development Authority (IRDA) had in a written submission to the Standing Committee on Finance noted that the responsibility of issuing and renewal of Agents' licences is proposed to be assigned to the insurers, but with checks and balances. Also, the IRDA would regulate the licensing procedure by way of detailed regulations
Par panel for raising minimum capital of LIC to Rs 100 cr
parliamentary panel has favoured raising the minimum paid-up capital of state-owned Life Insurance Corporation from Rs 5 crore to Rs,100/-crore, a move which will bring it on par with private insurers. The Standing Committee on Finance, however, wanted the government to make it clear that any further increase in the capital beyond Rs 100 crore must also be infused by the government only, instead of the insurer raising it through public offers. It had submitted its report recently in Parliament. At present, private insurers have to maintain a minimum paid up capital of Rs 100 crore before they get licence as per the Insurance Act, 1938. However, LIC's minimum capital requirement is Rs 5 crore, sought to be increased by Rs 95 crore through the amendment to the Life Insurance Corporation (Amendment) Bill, 2009. The panel also asked the government to further amend the bill for allowing LIC to raise money through debt and preferential capital. The amendment in its current form restricts LIC to raise capital only by equity, leaving aside these other forms of generating funds. The committee, headed by BJP MP Murli Manohar Joshi, said, "Raising of the paid-up capital of LIC in line with the provisions of the Insurance Act, 1938 and as applicable to the Life Insurance companies in general may, perhapsbe appropriate."
Employees protest against amendment in LIC Act
On the call of Northern Zone Insurance Employees Association (NZIEA), employees working in LIC of India, on Saturday, registered their protest against the proposed amendments in insurance law and LIC Act, pending in the Parliament. The employees demanded that Insurance Laws (Amendment) Bill, 2008, was placed in Rajya Sabha on December 22, 2008, and LIC (Amendment) Bill, 2009, was placed in Lok Sabha on December 7, 2009. They said, "The bills were referred to the standing committee on finance on September 9 and 14, 2009, respectively, and these proposed amendments are detrimental to the interest of policy-holders and national economy." Through Insurance Laws (Amendment) Bill, 2008, the government wants to hike FDI capital in insurance sector from the present limit of 26% to 49%, to amend General InsuranceBusiness Nationalization Act (GIBNA) permitting four public sector general insurance companies to approach the capital market to raise the capital for their business activities. "By LIC (Amendment) Bill, 2009, the government wants to increase the capital of LIC from Rs 5 crore to Rs 100 crore and to dilute the pattern of sovereign guarantee," the employees said. Discussing their demands, Harbans Singh, president of NZIEA said, "The hike in foreign equity will increase the ability of private companies to manipulate and exploit the insurance market. Nearly 50% funds of private companies are invested in equities thus limited funds are available for infrastructural investments. Therefore the government should amend these decisions."
On the call of Northern Zone Insurance Employees Association (NZIEA), employees working in LIC of India, on Saturday, registered their protest against the proposed amendments in insurance law and LIC Act, pending in the Parliament. The employees demanded that Insurance Laws (Amendment) Bill, 2008, was placed in Rajya Sabha on December 22, 2008, and LIC (Amendment) Bill, 2009, was placed in Lok Sabha on December 7, 2009. They said, "The bills were referred to the standing committee on finance on September 9 and 14, 2009, respectively, and these proposed amendments are detrimental to the interest of policy-holders and national economy." Through Insurance Laws (Amendment) Bill, 2008, the government wants to hike FDI capital in insurance sector from the present limit of 26% to 49%, to amend General InsuranceBusiness Nationalization Act (GIBNA) permitting four public sector general insurance companies to approach the capital market to raise the capital for their business activities. "By LIC (Amendment) Bill, 2009, the government wants to increase the capital of LIC from Rs 5 crore to Rs 100 crore and to dilute the pattern of sovereign guarantee," the employees said. Discussing their demands, Harbans Singh, president of NZIEA said, "The hike in foreign equity will increase the ability of private companies to manipulate and exploit the insurance market. Nearly 50% funds of private companies are invested in equities thus limited funds are available for infrastructural investments. Therefore the government should amend these decisions."
Wednesday, March 10, 2010
Insurance employees protest for immediate rivision of wages
The Insurance Corporation Employees Union (ICEU) under the banner of All India Insurance Employees Association has staged a dharna outside the Life Insurance Corporation of India (LIC) Divisional Office here demanding immediate revision of wages.
Addressing the agitating members yesterday, ICEU general secretary B B Ganesh said wage revision for LIC was long pending since August 2007 and the Corporation was showing a very indifferent attitude on the issue despite its tremendous growth during this period.
The total premium Income of LIC has increased from Rs 1,27,782 crore in 2006-07 to Rs 1,57,186 crore in 2008-09 and the total number of polices has increased from 12.58 crore to 26 crore, he said.
He alleged that the Centre, instead of intervening to solve the issue was creating hurdles by imposing new conditions like new pension scheme for employees joining after April, 2009. These counter conditions are not acceptable to the employees, he added.
The Insurance Corporation Employees Union (ICEU) under the banner of All India Insurance Employees Association has staged a dharna outside the Life Insurance Corporation of India (LIC) Divisional Office here demanding immediate revision of wages.
Addressing the agitating members yesterday, ICEU general secretary B B Ganesh said wage revision for LIC was long pending since August 2007 and the Corporation was showing a very indifferent attitude on the issue despite its tremendous growth during this period.
The total premium Income of LIC has increased from Rs 1,27,782 crore in 2006-07 to Rs 1,57,186 crore in 2008-09 and the total number of polices has increased from 12.58 crore to 26 crore, he said.
He alleged that the Centre, instead of intervening to solve the issue was creating hurdles by imposing new conditions like new pension scheme for employees joining after April, 2009. These counter conditions are not acceptable to the employees, he added.
Friday, March 5, 2010
Union Budget 2010: Hidden gems for policyholders, insurance agents
There are hidden gems for policyholders and insurance agents in the union budget. Last year a provision to impose service tax on all charges levied by life insurers on ulip policyholders has been reworked so that service tax is now applied only on fund management charges. Life insurance agents too can rejoice as the government has now raised the limit for exemption from tax deduction at source to Rs 20,000 from Rs 5,000 earlier. Insurers say that agents will have to bring in insurance premium of over Rs 1,00,000 in a year to come under the TDS. Under the revised limit more than half the life insurance agents will be exempt from tax deducted at source.
According to Gaurang Shah, managing director, Kotak Mahindra Life Insurance the removal of the service tax on other charges will result in an improvement in yield for the policyholder ranging from 20 basis points to 30 basis points depending on the tenure and size of the policy. Two years back the government had decided to tax the life industry under a formula which was brought out by an illustration in the finance bill. In terms of the illustration if the total premium paid for ULIP was Rs 100, and the risk premium (towards life protection) was Rs 10 and the amount actually invested was Rs 85, the balance Rs 5 (Rs 100- Rs 10 - Rs 5) would be subject to service tax. The budget has clarified that service tax will now be imposed only on fund management which is only Rs 1.35 on every Rs 100 invested.
There are hidden gems for policyholders and insurance agents in the union budget. Last year a provision to impose service tax on all charges levied by life insurers on ulip policyholders has been reworked so that service tax is now applied only on fund management charges. Life insurance agents too can rejoice as the government has now raised the limit for exemption from tax deduction at source to Rs 20,000 from Rs 5,000 earlier. Insurers say that agents will have to bring in insurance premium of over Rs 1,00,000 in a year to come under the TDS. Under the revised limit more than half the life insurance agents will be exempt from tax deducted at source.
According to Gaurang Shah, managing director, Kotak Mahindra Life Insurance the removal of the service tax on other charges will result in an improvement in yield for the policyholder ranging from 20 basis points to 30 basis points depending on the tenure and size of the policy. Two years back the government had decided to tax the life industry under a formula which was brought out by an illustration in the finance bill. In terms of the illustration if the total premium paid for ULIP was Rs 100, and the risk premium (towards life protection) was Rs 10 and the amount actually invested was Rs 85, the balance Rs 5 (Rs 100- Rs 10 - Rs 5) would be subject to service tax. The budget has clarified that service tax will now be imposed only on fund management which is only Rs 1.35 on every Rs 100 invested.
LIC officers strike over wage issue
The Federation of LIC class-I officers' Association has gone on a nation-wide strike on Thursday to protest against non-acceptance of their demands on the wage revision by the management of the Life Insurance Corporation.
Some officials had also gone on a hunger strike on Wednesday in Hyderabad and were forced to end it on police intervention.
"Except Mumbai, the strike has been successful in the rest of the country," claimed R Gunasagar, president of the Federation.
Prominent Congress leader Oscar Fernades is the chairman of the federation. Gunasagar said while the government is insisting 17% rise in the wage, the Federation is demanding the same hike as sixth pay commission.
"Our own management is even refusing to send our demands to the ministry of finance and is insisting that we should accept 17% hike like the banking industry did, That is not clearly acceptable to us," he said.
Gunanasagar said LIC only incurred 2.33% as administrative expenses and pays currently pay Rs 1000 crore as dividend to the government on its Rs five crore investment in 1956.
Gunansagar said the the wage package of employees of the LIC cannot be compared with that of the banking industry as latter has been given pension benifits over the 17% salary hike.
Some officials had also gone on a hunger strike on Wednesday in Hyderabad and were forced to end it on police intervention.
"Except Mumbai, the strike has been successful in the rest of the country," claimed R Gunasagar, president of the Federation.
Prominent Congress leader Oscar Fernades is the chairman of the federation. Gunasagar said while the government is insisting 17% rise in the wage, the Federation is demanding the same hike as sixth pay commission.
"Our own management is even refusing to send our demands to the ministry of finance and is insisting that we should accept 17% hike like the banking industry did, That is not clearly acceptable to us," he said.
Gunanasagar said LIC only incurred 2.33% as administrative expenses and pays currently pay Rs 1000 crore as dividend to the government on its Rs five crore investment in 1956.
Gunansagar said the the wage package of employees of the LIC cannot be compared with that of the banking industry as latter has been given pension benifits over the 17% salary hike.
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