Gradual tweaks to LIC surplus payouts likely; Finmin exploring a glide path

Finmin exploring a glide path; considering the interests of both policyholders and future shareholders

The government is considering gradual tweaks to surplus distribution of Life Insurance Corporation of India (LIC) to policyholders and shareholders as the insurer looks to list on the stock exchanges.

The finance ministry is exploring the adoption of a glide path for changing the existing surplus distribution from 95:5, so that policyholders do not immediately feel the pinch. The gradual change will aim to move towards the regulator-mandated distribution of surplus.

The Insurance Regulatory and Development Authority (Irdai) currently mandates distribution of surplus by insurers in the 90:10 ratio, where 90 per cent goes to policyholders and the remaining to shareholders.

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