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Monday, July 31, 2017

At Least 57 Lakh Claimants Are Unhappy With LIC

 Following are some data collected from Annual Financial report of Life Insurance Corporation of India (LIC )as at 31.03.2016 and as at 31.03.2015        ( all amount in rupees in crores )

 Particulars                                March 2016                   March 2015

Capital in Crores                                         34847                                     35680

Number of Branches                            11071                                  11030
    
Number of Agents (individual)       20,16 565                      20, 67 856

Number of employees                                  2 47 541                                2 49 221

Total assets                                                   25 29 390                            23 44 228

Equity Investment  Mkt value                 5 95 389                                  7 29 967

Infrastructure                                              3 06 492                                 2 91 332

Renewal Premium                              2 27 796                      2 14 398

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Particulars                     Maturity Claim Settled                                          Not Settled in number                                               

2015-16               205.75 crore  Rs.88 857.45 crore                                                0.25%                                

Death Claim Settled        9.96 crore claims    Rs.12184.20 crores              Not settled 0.45%

It means about 52 lac+ maturity claims are not yet settled by LIC and about 4.5 lac claims related to death claim not yet settled, altogether about 57 lac people are deprived of their claim for some reason or the other. 

57 lac (Fifty Seven Lakh claims) is not a small figure . LIC has been  working with the help of 20 16 565 agents and 2 47 541 employees posted in  11071 branches. It means on an average  515 claims per branch are unsettled inspite of the fact that they have manpower of more than 22 lac to serve LIC which means to serve the clients of LIC. 

If all employees ( including agents ) are allotted only 3 claims to settle , they can settle easily 57 lac pending complaints. It is not a tough task provided there is a will to do it. 

On the contrary , if LIC employees only search loopholes and negative points in any claim lodged with it , they may get hundreds of excuses for not settling a claim. They have to be sensitive to policy holders or claimants . Claimants do not fall from heaven and all are not fake , they ask their money back, nothing else, nothing more.

After all , these employees and agents associated with  LIC only are duty bound to give back money which they mobilise during a period of years and decades.

 I myself a victim of brainless and illogical responses given by LIC staff in not paying me full and final amount of my matured policy for which I invested my hard earned money for 13 years. I am in correspondence with LIC and they have turned deaf ears towards me. And the fact is that even regulators are working as forwarding agents only, they too do not apply their mind . Offices like IRDA are also manned by retired LIC staff in general and hence they have more sympathy to erring LIC staff than suffering claimants. 

I just imagine , what will happen to those illiterates and semi educated persons who buy policies under motivation of agents but who do not know how to write letter to an office in case of indifferent attitude of LIC staff in return of money they are entitled.

. I am embarrassed to visualise a picture which will emerge to nominee of the policy after the death of the policy holders. Claimants sometimes surrender after running from pillar to post , this is called 'Lalphitasahi'. People run from one table to other and from one office to other , but solution seldom come out in some cases. LIC like other PSUs portray its rosy picture only by showing good points and then win the blessings of ministers by applying mostly other modern era techniques.

A policy is sold by an agent or an employee only after he meets and visits a person several times to convince him and hence there is no doubt in it  that the concerned agent knows everything about the person to whom he or she sells a policy. 

To make it more clear , all life policies are sold by an insurance company only after knowing A to Z about the insured. As such if a claim arises either due to maturity or due to death , an agent or an employee can establish the genuinity of claims and settle them easily , or they may seek a guarantee of the other person. No question arises of false claim or LIC failed to establish truth of the claim. If he does not give value to clients, then there are many excuses in his almirah.

If there is a will there is a way. If they have a positive attitude to help the claimant, they can do it in several ways. But on the contrary , if LIC agents and employees are meant only for selling the policy , then policy holders or nominee become helpless. 

LIC is morally bound to give back the money to successor of the deceased to to refund the money to policy holders on maturity .But unfortunately they make so many excuses, demand so many formalities to be completed and ask for several papers and documents that even genuine claimant find it difficult to cope with and finally think it wise to sacrifice  the value instead of wasting precious time behind useless and non-cooperative staff and agents of LIC. In some cases they LIC staff  become too insensitive. Other branches do not help policy holder of different branch. LIC , though hundred year old organisation and dealing in money only ,is not yet online unlike other financial institutes. They still issue policy in manual forms and not in Demat forms. It is really pathetic.

There are lacs of such cases which are not claimed at all. It means policy holder dies without making anyone behind him aware of the policy bought and the benefits which accrue after the death. There are many such cases where there is no claimant at all. Some policy holders die before maturity of policy and even family members are unaware of the premiums deposited by deceased. in some cases , premiums are deposited but number mentioned is wrong. These amount reamin as unclaimed and unsolicited. 

And hundreds and thousands of crores of rupees are with LIC as unclaimed deposits , either in sundry deposit account or in current account . Details of such unclaimed fund is reflected here below. 

In such cases there may be  clearly only two options. One is claimant available and another is absence of any claimant. In case of former cases, LIC must pay the money to claimant , even if it requires to sacrifice some traditional rules and formalities. But in case of the later , it is established that there is no claimant left behind the insured, the amount should be credited to social welfare fund of Government of India . In any way, it is not proper to keep the claims unsettled for years and decades and keep the fund idle . 

LIC and Government of India must come forward voluntarily to give back the money to the person or his successor without any delay. Otherwise LIC will lose the trust of the person. 

There is no doubt in it that at least 57 lac people and their families are abusing and cursing LIC staff for non-receipt of their money , on maturity or on death. In addition to it are those who have not claimed due to ignorance or poor knowledge. It is painful that GOI is silent spectator of this reign of injustice prevailing in LIC. 

Government Considers LIC healthy and growing only if it receives some dividend from it, or if LIC helps the government in investing in sinking banks or PSUs or private companies of the choice of politicians.

After all, LIC is formed not for doing any business or for earning profit out of it, it has been formed with pious intention of serving the person in crisis or person in need of money . LIC has to give maximum advantage to its policyholders and not to distribute all gains among employees and agents only . 

  • There are more than one lac branches of banks in India and more than two lacs ATMs in India , still there do not have so many manpower as LIC have. Total employees in all banks will hardly cross ten lac whereas LIC has 22 lakh manpower to support its business. 

  • LIC has simply to keep accounting of money it receives as premiums and pay the money after maturity or after death to claimant. Whereas bank staff has to undertake several responsibility right from opening a bank account to lending, investment , recovery of money from borrowers, issuance of drafts, managing NEFT etc and so many other functions. Not only this Bank people have also started selling insurance products simultaneously doing their banking work . 

  • Bankers have to take care of  about one crore crore rupees as loan assets whereas total assets of LIC is less than 25 lac crore. Still standard of service extended by LIC is so poor and miserable. 


I therefore appeal to Government of India to look into where are the leakages, why are claims not settled and paid to genuine persons, why so many employees and agents are unable to trace out genuine owner of fund they have with them as unclaimed or unsettled and why LIC management do not take initiative to search the people and pay the money to deserving persons. An agent meet hundred times to sell a policy, make hundreds of calls to search a buyer and to collect premium in time, why can’t they help in payment of maturity value to policy holder and settlement of claim after death. 

I ask a last question, what LIC staff and agents will do when their own claim is not settled on maturity by an insuring company or when their family member do not get insurance value after death of their kith and kin . Such position may arise in their family , not directly with LIC because they treat LIC as their own asset, but with other general insurers or life insurers working in the market. If LIC staff are treated badly by other government departments , they will realise the pain of others. 

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Particulars  Amount spent in crores  in 15-16    Amount spent in Crores in 14-15

Agent Commission                                                15477                                              15092

Employees salary  & other benefits                  14659                                               14523

Other management expenses                              8033                                               7869

Other outgo (tax , transfer to reserve               6644                                               5063

To Central Government 5% valuation  surplus    2497                                          1803

Total  expenses                                                     47310 crore                                      44350

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LIC is spending Rs.47310 crore in doing business every year  which appears to be far more than normal cost of doing business in other sectors.


Particular                                         Current Year                                   Previous year

Sundry Creditors                                          165.14                                           178.54 crore 

Claims outstanding                                    1898.80                                         3157.80 crore

outstanding unclaimed amount                    949.88                                           221.99 crore

Life Department current account               13289.38                                     13072.26 crore



Will government order CAG audit of state of affairs going on in LIC?

Earning profit is one thing and ensuring adequate profitability is different. Giving penny dividend to policy holders is one thing and giving justifying return to investors is different. 

Money deposited in LIC is normally to mitigate the hardship of survivors after the death of policy holders and hence non-return of such money to policy holders in time or to family of policy holders is a sin which God will never forgive.

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