The government is considering a proposal to increase the minimum capital base norm for the Life Insurance Corporation (LIC) to Rs 100 crore or more from the current Rs 5 crore. While all other insurance companies require a minimum capital base of Rs 100 crore, LIC’s minimum capital base is Rs 5 crore, as per the LIC Act.

“We are looking at amending the LIC Act as well. We have decided to go ahead with a comprehensive amendment of the Insurance Act. One of the key amendments would include increasing the capital base norm in order to enable the insurer to keep pace with the huge growth in the segment,” a senior government official said.

The finance ministry has also sought the advice of the Insurance Regulatory and Development Authority (IRDA) on the issue. Officials said that the LIC Act would need to be thoroughly amended to keep in line with the overall amendment of the Insurance Act. It is learnt that a final decision on the issue is yet to be taken. “A concrete decision on this would be taken only after consulting the various stakeholders,” the official said. Irda in its recommendation for the comprehensive amendment to the Insurance Act has remained silent on the issue.

However, the official said that IRDA’s suggestion on this would be critical.

The official added that it is necessary to amend the LIC Act especially in the wake of competition from a host of foreign players. Though LIC’s position has not been challenged by the private sector life insurers, government officials said that the Act would be amended to facilitate the state owned life insurance company to keep up its position.

Meanwhile, the finance ministry has asked Irda to revise its recommendation on the proposed comprehensive amendment to the Insurance Act.

(www.financialexpress.com)