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The issue involving a show-cause notice being sent to Life Insurance Corporation (LIC) of India by the insurance regulator had already been resolved, said officials privy to this development. Insurance Regulatory and Development Authority (Irda) sources said the case had been closed long ago.
In November last year, Irda had sought a clarification from LIC for putting up advertisements asking customers to buy products before December 31, 2013. The regulator was of the view that the advertisements were “misleading”, since they did not mention that service tax would be applicable from January this year.
“We were of the view that since they were coming up with an advertisement on a product, they were required to represent all facts fully. Hence, a notice was sent to them, to which they promptly replied,” said a senior Irda official.
The Finance Bill 2012 had said that service tax will be imposed on services given by Irda. This was to be paid by insurance companies and other industry players, which was passed-on to customers.
LIC had kicked-off a massive customer campaign informing customers to buy their popular products before January 1, 2014. The campaign which read, ‘Your favourite products now available till December 31, 2013 only’, mentioned products like Jeevan Tarang, Jeevan Anand, Bima Bachat and Jeevan Saral, which were phased out from January 1 onwards.
Meanwhile, LIC officials also said that the matter is resolved. "We had received a letter and we had justified out stand. The matter is over from our side," said a senior LIC executive.
The new product regime that has made changes in the surrender charges and product structure of traditional policies was enforced from January 1, 2014. These guidelines, which were earlier to be implemented from October 1, 2013 had led to a customer frenzy due to fear of non-availability of the products from October 2013 onwards.
This had resulted in a sharp spike in new policy sale in September for the country's largest insurer. LIC had collected Rs 6,000 crore of new business premium for September.
