State-run insurer Life Insurance Corporation of India (LIC) will be paying a special, one-time bonus of up to 6 percent to crores of policyholders, coinciding with its 60th anniversary celebrations this year.
The payment in the range of Rs. 5 to Rs. 60 per thousand rupees of sum assured is also being seen as an attempt to stem the falling market share of the public sector behemoth, which holds about 70 percent market share but has seen as steady erosion over the years to private insurance firms.
The company's market share in terms of new business policies dropped marginally to 76.84 percent in 2015-16 from 77.85 in the preceding financial year. The liberal bonus payout is seen as a move to win customers back since the bonus payment would also cover lapsed insurance policies provided they are renewed.
A PTI report said that LIC's bonus payout would benefit about 29 crore individual policyholders and 12 lakh group policyholders. (According to the company's annual report for 2015-16, there were 27.92 crore individual policyholders).
"We are happy to announce a special one-time bonus to our policyholders as we begin the Diamond Jubilee of our foundation," the news agency quoted LIC Chairman S K Roy as saying in Mumbai on Thursday.
Policies that are in force as of March 31, 2016, and existing on or after Sept. 1, 2016, will be eligible for bonus, PTI said, adding that LIC has fixed March 31, 1986, as the cut-off date for the maximum of Rs. 6,000 per Rs. 1 lakh sum assured and March 31, 2015, as the date for payment of Rs. 500 per Rs. 1 lakh of sum assured.
The LIC Act stipulates the company to pay 95 percent of its profit (surplus) to policyholders and the remaining to the Central government, its sole shareholder. It paid Rs. 34,283 crore as bonus to policyholders and 5 percent valuation surplus of Rs. 2,497.03 crore to the government in 2015-16.
