“brokers are prepared to pay anywhere between Rs 2,000 and Rs 4,000 to LIC policyholders to create demat accounts and rent them for IPO applications in order to control the cheap quota shares market. Because many of these brokers are also LIC agents, they have immediate access to policyholder databases. After the terms of the IPO price range become known, the charge may further climb. Brokers will provide funding for the IPO filing, according to sources …..LIC has around 32 crore policyholders, and brokers plan to access at least 5-10% of this pool, who they estimate have not yet opened a demat account. Large brokers have even begun placing adverts in newspapers to entice LIC policyholders to register demat accounts with them.…Brokers in Mumbai predict that between one and three crore new demat trading accounts would be established by LIC policyholders, even using the most cautious projections. The current flurry of initial public offerings has lifted the total number of demat accounts to almost 8 crore, up from roughly 3.6 crore in 2018-19”
Certainly, this points to a possible fraud committed on the small policyholders in the proposed LIC IPO, a fraud, if established, would amount to a gross breach of the trust that the Parliament has always reposed in the government as a trustee of the policy holders.
“The concept of trusteeship, which should be the cornerstone of life insurance, seemed entirely lacking (in private insurance companies). Indeed, most management had no appreciation of the clear and vital distinction that exists between trust moneys and those which belong to joint stock companies”
“the (insurance) business must be conducted with the utmost economy and with the full realisation that the money belongs to the policyholder. The premium must be no higher than Is warranted by strict actuarial considerations. The fund must be invested so as to secure the maximum yield for the policyholders that it may be possible to secure, consistent with the safety of the capital. It must render a prompt and efficient service to its policyholder and by its service make insurance widely popular. Finally, the management must be conducted in a spirit of trusteeship”
“Insurance is an essential social service which a welfare State must make available to its people and the State must assume responsibility for rendering this service once it is clear beyond reasonable doubt that it cannot be provided in any other manner…. So, while it is the failure of the general run of insurance companies to live up to the high traditions demanded of them that has led the Government to take this step, I would like to emphasise that nationalisation in this field is in itself justifiable. With the profit motive eliminated, and the efficiency of service made the sole criterion under nationalisation, It will be possible to spread the message of insurance as far-and as wide as possible, reaching’ out beyond the more advanced urban areas and into hitherto neglected, namely, rural areas.”
“The investments would be made, it is needless to say, primarily in the interest of the policy-holders to whom the money belongs, but the interests of the community at large which would be vitally affected by the manner in which these vast sums are utilised and invested would be an equally important consideration……Incidentally, it might be noticed from clause 28 that at least 95 per cent of the surplus disclosed is to be allocated to the policy-holders. And 5 percent to the share-holders, that is, the Corporation. This is only the minimum and I am sure later on this proportion could be increased with the result that the State’s share will be correspondingly reduced“