New LIC branches may need IRDA nod

KOLKATA: Life Insurance Corporation (LIC) may soon have to take permission from Insurance Regulatory and Development Authority (IRDA) to set up new branches and satellite offices. The LIC Act, in its present form, does not require LIC to seek IRDA approval to open branches and offices. But if IRDA has its way and the government amends the LIC Act of 1956, the insurance major will have to take the regulator’s permission in this regard.

“Just as it is required for all private life insurance companies, we have recommended that LIC should seek IRDA’s permission to open new branches. We want a level-playing field in the life insurance segment,” IRDA chairman CS Rao told ET.

In a bid to expand its presence in rural India, LIC has initiated the process of opening satellite offices for which IRDA approval may be necessary. At present, LIC has 2,048 branches, 100 divisional and seven zonal offices.

Interestingly, IRDA has directed private insurers to open new branches within a year of receiving approval, failing which they will need to apply afresh. Earlier, there was no time-limit to effect expansion plans, but it was later observed that some private insurers were taking too long to open new business branches even after obtaining the nod.

Meanwhile, IRDA also intends to stop LIC from using the funds of policyholders to set up subsidiaries. Private sector insurers are not allowed to set up subsidiaries using policy holders funds. IRDA has also recommended to the Centre that the government guarantee to LIC policies be dispensed with.