LIC to give $354m as COVID-19 advance to 665,000 agents

Life Insurance Corporation of India (LIC), the sole Indian life insurer in the public sector, will release $354m as advance to its 650,000 agents.

A news report in the Indian financial daily The Hindu BusinessLine quotes Life Insurance Agents Federation of India president Singarapu Srinivas saying, “The corporation has agreed to release $652 as advance commission to each of over 650,000 agents as COVID-19 social advance.”

Agents that have completed five years of service are eligible to receive the advance. Out of the 1.2m agents in the country, over 650,000 agents will benefit by this decision of LIC. The first instalment will be released on 15 April while the remaining $325 will be credited to agents’ accounts on 15 May. The advance will be recovered by October this year without any interest. An additional sum of $70m has also been given to agents as commission bills for the month of March, said Mr Srinivas.

The move is timely because most of the business for LIC agents is in the month of March every year as it is the tax savings season and it is also close of the financial year. While an agent does four to six policies on average per month, in March the number rises to about a dozen. According to chief life insurance adviser V Sudheer Kumar agents could not get any new business during March 2020 due to social distancing currently in force as well as restrictions on physical movement because of the national lockdown.

The media report report quotes a senior official of LIC saying a significant chunk of business for the LIC comes towards the end of the financial year in March. “The lockdown during the period when the sale of tax-saving policies see a spurt, led to the agents unable to get new business,” the LIC official said. As the corporation has extended the closing of books till 14 April 2020 due to operational difficulties, the exact impact on the business for the financial year 2019-20 will be known only later.

After the announcement of the national lockdown last month, LICAF submitted a representation to the Indian prime minister highlighting the plight of agents requesting a separate financial package.

Source: Asia Insurance Review