ANNUAL REPORT 2007-08
competitive stance in the market, the Authority had permitted declaration of bonus despite non-availability of actuarial surplus subject to compliance with the conditions imposed by the Authority. This relaxation has now been extended up to a period of seven years from commencement of operations.
in 2006-07. LIC transferred Rs.829.59 crore to the Government of India (Rs.757.81 crore in 2006-07) complying with the provisions of Section 28 of the LIC Act, 1956.
Returns to shareholders
All insurers except for Metlife, transferred funds from the Shareholders’Account to the Policyholders’Account to bridge the deficit in the Policyholders Account (Revenue Account) so as to meet the stipulations of the Authority for declaration of bonus in case of deficit in the Policyholders’Account. During 2007-08, the net losses reported by the private insurers stood at Rs.4324.52 crore (Rs.1950.12 crore in 2006-07). The net profits in the Profit & Loss account of the five insurers, including LIC, stood at Rs.909.19 crore (Rs.786.95 crore in 2006-07). The continued financial support through equity injections reflected the promoters’ commitment towards stabilizing the respective insurer’s operations.
TABLE 13 DIVIDENDS PAID : LIFE INSURERS
LIC traditionally re-insures a small component of its business. During 2007-08, Rs.87.95 crore was ceded as re-insurance premium (Rs.41.67 crore in 2006-07). Similarly, in the case of private insurers, a small component of the business was reinsured, with group business forming the major component of the re-insurance cessions. The private insurers together ceded Rs.231.23 crore (Rs.160.05 crore in 2006-07) as premium towards re-insurance. It may be recalled that the risks pertaining to the investments component of the unit linked insurance products continue to be borne by the policyholders and a significant component of the new business premium underwritten by the industry in 2007-08 was from unit linked products. The re-insurance parameters may also undergo some change because IRDA has stipulated a minimum level of risk cover in respect of unit linked products. (Statement-4)
Analysis of Death Claims
LIC continued to report surplus in the Policyholders’ Account (Revenue Account in 2007-08. Surplus in the said account, adjusted for interim bonus and allocation of bonus to policyholders was Rs.829.59 crore as against Rs.757.81 crore
The life insurance sector has settled 5.53 lakh claims on individual policies, with a total payout of Rs. 4235.00 crore. The number of claims repudiated was 9027 for an amount of Rs. 152.66 crore. The number of pending claims stood at
14548 for an amount of Rs. 206.66 crore. Of the pending claims, 1684 were pending for more than one year and 2454 claims were pending for more than 6 months but less than one year. The details are available at Statement 58.
Claims pending at
end of year
< 3 mths
Private Total LIC * Total
100.00 100.00 100.00
78.93 96.71 95.86
10.17 1.13 1.56
0.01 0.06 0.06
10.88 2.10 2.52
64.84 43.76 48.10
TABLE 14 INDIVIDUAL DEATH CLAIMS
(Figures In percent of policies)
Break up of claims pending
duration wise (Lives)
3 - < 6 mths
6 - <1 yr
*In the Annual Report for FY 2006-07, total individual death claim figures of LIC erroneously included group as well as foreign office business claims also. In the current FY, the figures pertain to individual death claims arising in the Indian operations of LIC.