It is also rated as the third most valued insurance brand worldwide and the fourth most trusted brand in India. Recently the government divested 5 per cent of its shares through an IPO making LIC a listed company.
A fresh controversy emerged recently when The Washington Post reported that LIC was investing in the Adani Group at the behest of the government. This triggered a political storm, as the Adani conglomerate has long been a favourite target of opposition parties due to its alleged proximity to the ruling party. The Adani Group swiftly rejected the report, calling it baseless. LIC also issued a strong clarification, stating that no document or plan existed to divert or channel funds into Adani companies. It emphasised that all investments are made strictly in accordance with regulatory norms and in the interest of policyholders and stakeholders. Notably, LIC’s exposure to the Adani Group accounts for less than 2 per cent of the conglomerate’s total debt.
The employee unions in LIC, many of them affiliated to the CPI(M) have strongly refuted the report, describing it as misleading and intended to advance the interests of American insurance corporations. The party, CPI(M), has not commented on this specific issue, it has consistently called for greater transparency in the management of financial institutions. The central government, meanwhile, has not issued a direct response to the allegations.
Earlier controversies of LIC
LIC was formed in 1956 by the merger of a large number of private insurance companies into a single entity wholly owned by the government. Since then, there has been only one major controversy, which came almost immediately after its formation. This was the Haridas Mundra scandal, which came out in 1957. The government immediately appointed a respected judge, M C Chagla, who investigated and gave a report expeditiously. It gave recommendations on governance and transparency.
Performance over the years
Despite these concerns, LIC’s performance remains robust. It enjoys a brand value of USD 13.6 billion and serves 30 crore policyholders through a network of 13.5 lakh agents. With a market share of 61 per cent, despite competition from 24 private insurers, it continues to dominate the sector. The value of its investments in India’s top 500 companies has increased tenfold since 2014, rising from Rs 1.56 lakh crore to Rs 15.6 lakh crore. As the latest controversy is likely to surface during the upcoming winter session of parliament, it may do well for the government to recheck the procedures and processes so that the faith and trust of millions will remain intact.
