What might change for LIC agents? What will be the impact of the new commission rules proposed by the IRDAI?
The insurance regulator, IRDAI, is preparing to introduce new regulations concerning commission caps and distribution-related expenses. In response, R. Doraiswamy, CEO and Managing Director of LIC, stated that these rules would have a limited impact on the company, as it already operates well within many of the proposed limits. In an exclusive interview with ANI, he indicated that insurance companies with higher distribution costs would face greater pressure once the regulations are finalized.
Why will the impact on LIC be minimal?
According to Doraiswamy, LIC has historically maintained modest distribution expenses. He noted, "Specifically regarding LIC, the company has not spent excessively on distribution; it has long maintained its own internal limits on commissions and other distribution-related costs."
He added, "In many respects, LIC is already largely aligned with the proposals outlined in the regulator’s consultation paper—except certain product lines and specific premium-payment terms for regular-premium plans."
What will be the impact on LIC agents?
For agents, the key question is where these changes might manifest. Doraiswamy explained that LIC might need to modify or re-file certain products to ensure compliance with the new regulations. He stated, "An immediate impact could arise only if the revised rules necessitate the withdrawal, re-filing, or modification of existing products."
He further reassured that the overall impact on LIC would be minor, stating, "The effect on LIC will be minimal. We are already comfortably within many of the limits being proposed by the regulator."
Emphasizing the importance of safeguarding the long-term interests of LIC agents, Doraiswamy described them as "partners in the company's growth." He confirmed that LIC has already submitted its feedback to the regulator. He is confident that the concerns of insurance companies and distribution partners will be taken into account before the regulations are finalized.
Why is the IRDAI introducing new regulations?
According to Doraiswamy, the regulator’s objective is to reduce distribution costs. These costs have risen significantly following the removal of caps on commissions and the shift toward regulations governing 'Expenses of Management' (EoM).
He stated, "Any step taken to improve the economics of life insurance for the benefit of the customer will help the industry move forward."
VNB margin at 22.3%: What are the reasons?
Doraiswamy noted that LIC’s Value of New Business (VNB) margin has risen to 22.3%. This is attributed to an improved product mix, larger policy sizes in non-participating products, and a greater focus on protection and savings-oriented products.
He added, "We are continuously working on improving various aspects related to the VNB margin. The primary focus is the product mix. We are making excellent progress toward an ideal product mix, which consists of a ratio of approximately one-third non-participating (non-par) products to two-thirds participating (par) products."
Focus on specific products for FY27.
In the 2027 fiscal year, LIC will focus on expanding its individual term insurance, savings, annuity, and ULIP (Unit-Linked Insurance Plan) offerings. Additionally, the company intends to strengthen its health-related product portfolio. Doraiswamy highlighted products such as LIC’s 'Health Shield,' 'New Cancer Cover,' and 'Jeevan Raksha.' 'Jeevan Raksha' is a pure term insurance product designed to address the protection needs of the "missing middle"—the segment of the middle class that currently lacks insurance coverage.
Regarding the intensifying competition from private insurance companies, he stated that LIC will strengthen its distribution network, enhance agent productivity, and expand its range of products. LIC aims to have an 'insurance friend' (Bima Sakhi) in every panchayat across the country; so far, approximately 66% of panchayats have been covered under this initiative.
Stock Market Investment and the 2047 Goal
Addressing stock market volatility, Doraiswamy stated that LIC is a long-term investor. "We look for sectors and companies that offer opportunities to create value over the long term, and we invest during market downturns," he said. When the market rises, LIC also books profits to ensure timely payouts to policyholders.
He noted that insurance penetration in India is lower compared to developed nations, leaving significant room for growth. As part of the mission to provide insurance for all by 2047, LIC will place a special focus on rural areas and smaller towns.
Q2 Profit Rises by 20.12%
In the September quarter (Q2 FY27), LIC’s standalone net profit grew by 20.12% year-on-year to ₹12,076.02 crore, up from ₹10,053.39 crore in the previous year. Net premium income increased by 16.24% to reach ₹1,47,018.18 crore. Single premium income rose from ₹50,802.84 crore to ₹68,402.86 crore.
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