Well this is not about Animal farm. It is about the state of the life insurance industry in India. Let us see the imaginary conversation between the LIC and Ministry of Finance.

LIC: Good morning sir. Here is a cheque for the IPO Government Nonsense Ltd.’s public issue for Rs. 8000 crores. I hope the issue will go through.

MoF: Yes of course, the issue is for Rs. 10,000 crores, so it will go through.

LIC: Sir life is become very difficult with IRDA saying there has to be a level playing field.

MoF: What level playing field are you worried about? The expenses?

LIC: No sir. Expenses the industry has taken care of by increasing the mortality rates and rider rates

MoF: Oh! Then what are you talking about?

LIC: Sir IRDA has suggested to the government that clause providing Government guarantees for LiC policy is unfair, because the others are not allowed to do it, or cannot do it.

MoF: Do people believe that SBI has government guarantees?

LIC: Not sure sir, maybe maybe…that is why they are able to sell so many policies perhaps..

MoF: what do you want us to do?

LIC: Sir just clarify in the press..that the guarantee still stands.

MoF: Of course we will be able to clarify…but tell me one thing..you sell more ULIPs these days, and ulips cannot be guaranteed, no?

LIC: Of course sir, you and I know that ULIPs cannot be guaranteed, but the public will not know

MoF: How does it still help, I did not understand.

LiC: Sir, our agents will tell the client …Sir the Sum Assured is Rs. 10 lakhs, and the premium is Rs. 25,000 per annum. If you pay for 3 years…you will get Rs. 10 lakhs.

MoF: Will people believe this?

LiC: Sir our agents are well trained. They will explain …see ‘Sum Assured’ means LIC is assuring you the sum of Rs. 10 lakhs. We will then also attach this news item of policies being government guaranteed.

MoF: That is brilliant, but I hope you are selling enough of the classic endowment plans. The next year’s borrowing program is on my table and we are likely to be in the market for Rs. 200,000 crores (unless the Supreme Court allows us to open all the vaults in all the temples and keep the money with the government). We need your support.

LiC: Of course sir. We will subscribe. Classic endowment is still a 30% commission product, so sales is easier to achieve. Sir what about IRDA’s level playing field?

MoF: Do not forget the old adage ‘the regulator speaks the language of the strongest player’. So that will continue.

LiC: What if other life insurance companies also ask for the same facility from the government?

MoF: We have been considering that. When we offered it to a private sector life insurance company, they asked for our balance sheet. What cheek!

LiC: Then what happened sir?

MoF: They removed the LiC market value from our balance sheet, and the net-worth turned negative!

LiC: what did they say sir?

MoF: so cruel, they asked ‘Should LIC be asking for the government’s guarantee or should the government be asking for LiC’s guarantee? Such cheap people! I was wondering whether we should renew their license!!

—–end of conversation———

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  1. Sarcastic but true.
    Once our domestic help asked me a loan of Rs. 500 urgently. On prodding I came to know that it was for paying LIC premium. I was aghast to know that she has taken some LIC policy for her daughter who is 5 yrs old and paying monthly Rs.500. Her monthly income Ra.5000.
    I did not dare to explain anything about insurance and all that to her, just asked her to let me know in case she is going to take a new policy so that I can take one for my kid!

  2. Loved reading that but too sad to know where Indian Govt is heading. Full of cheats, full of daylight robbers. What will happen to the country and the generations to come. Shame Shame Shame.

  3. “Sum Assured’ means LIC is assuring you the sum of Rs….”.Heard the same tag told by one of my friend (an LIC agent from my village) trying to sell me 1 LIC product.After some questions from my end I end of meeting some official person from LIC. After 30 mins discussion with the person from LIC he told the below sentences to my friend.
    (I don’t think he is going to buy the product as he has some basic knowledge about finance and already investing in SIP & Teram Insurance.Try emotionally (using your friendship) if you can sell him the product.)

  4. First of all I am not speaking on behalf or for any institution or individual, I speak for my self and what I feel as an Indian citizen.

    Sovereignty of this nation has started fading away, look at the state of retail. 51% of it is now going to be FDI. Planning commission deputy chair person Montek Singh is proposing 100% FDI in Pharma, and this guy is a civil servant although not a member of Indian Civil Services who just happens to be a member of a powerful US financial advisory committee and a co-incidentally a past employee in US and European Mega Fraud Institutions like the World Bank and IMF and after all that jazz the guy gets awarded with a friggin padma vibhushan. So days of honesty in any sphere of govt or society is now fading.

    And about the insurance business, the foreign players are also trying to get in there, earlier this year the Oracle of Omaha tried to promote the 51/49 split proposal from the 74/26 in the insurance industry and now there are professionals writing satires in order to promote the expansion of big foreign MNCs insurance companies who risk everything in toxic derivative products like CDOs and MBSs and various other debt and equity investments and provide no benefits in the long run.

    Either way we common masses and simple folks are all doomed. But don’t take us as idiots because we all understand how the dirty bureaucracy, divide and rule and politics works. People are waking up.

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