What are the 7 Allegations, 4 warnings and 2 key demands between LIAFI and LIC

A recent development has sparked considerable controversy within India’s insurance industry, particularly affecting the relationship between the Life Insurance Corporation of India (LIC) and its insurance advisors, represented by the Life Insurance Agents Federation of India (LIAFI). One prominent LIAFI leader has made a series of serious allegations, warnings, and demands against LIC. This article delves into the ongoing dispute, examining the 7 allegations, 4 warnings, and 2 critical demands laid out by the LIAFI leader. This issue has escalated to the extent that a request for self-immolation permission was reportedly made to the President and Supreme Court, marking a new level of urgency.

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The 7 Allegations Against LIC

1. Indiscriminate Issuance of Warning Letters

The first allegation brought forward by the LIAFI leader concerns LIC’s alleged issuance of warning letters to multiple insurance advisors. According to the leader, these letters accuse advisors of indiscipline, claiming that they are damaging LIC’s reputation through protests and actions that supposedly harm the corporation’s public image. However, LIAFI argues that this approach is both unjust and a violation of the advisors’ fundamental rights. They assert that, as citizens, advisors are entitled to freedom of expression and have the right to peaceful protest if they disagree with LIC’s policies.

The leader contends that LIC should respect this fundamental right, allowing advisors to voice their concerns without facing disciplinary actions. Advisors argue that they are protesting peacefully and that LIC should not view this as a threat. Issuing warning letters, they believe, infringes upon their rights and fosters an atmosphere of hostility rather than constructive dialogue. This allegation highlights the advisors’ frustration with LIC’s alleged intolerance toward dissent, which they feel is counterproductive and violates their right to freedom of expression.

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2. IRDAI Foreign Influence on Regulations

The second allegation raised by the LIAFI leader focuses on the Insurance Regulatory and Development Authority of India (IRDAI) and its regulatory approach. The leader asserts that IRDAI lacks an understanding of the unique geographical and cultural diversity of India and is instead attempting to apply foreign-inspired concepts to the Indian insurance industry. This criticism suggests that IRDAI’s rules and regulations may not align well with the needs of India’s insurance advisors, potentially hindering their ability to operate effectively.

The leader has called on advisors and the public to reflect on this and voice their thoughts, questioning whether these regulations genuinely serve the interests of Indian advisors. This allegation has sparked a discussion on whether IRDAI’s decisions support the growth of domestic advisors or if they impose unnecessary constraints on their work.

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3. Premium Hike Without a Corresponding Bonus Increase

LIAFI’s third major allegation targets LIC’s recent decision to increase policy premiums by 9% without offering a corresponding bonus hike. Advisors argue that this premium increase places them at a significant disadvantage, making it more challenging to sell insurance policies. According to LIAFI, customers are increasingly analytical and often calculate the Internal Rate of Return (IRR) on policies. When they see that LIC policies are struggling to keep pace with inflation due to stagnant bonus rates, it becomes harder for advisors to justify the added premium expense. LIAFI emphasizes that this lack of balance between the premium hike and bonus rates ultimately diminishes the competitiveness of LIC policies, directly affecting advisors’ ability to attract and retain clients.

4. Stagnant Bonus Rates

The fourth allegation raised by LIAFI against LIC concerns the stagnant bonus rates. According to LIAFI, LIC has failed to increase the bonus rates, which has had a direct impact on the maturity amount received by policyholders. While premiums have risen significantly—by approximately 8-9%—the returns have remained unchanged. This imbalance has led to frustration among policyholders who see higher premiums but no corresponding increase in benefits.

Advisors argue that this situation makes it difficult for them to justify LIC policies to potential customers, as the return maturity calculators continue to display the same returns, despite higher premium contributions. This issue has become a focal point of contention, with LIAFI urging LIC to reconsider the bonus structure to align with the increased premiums.

5. Violation of Fundamental Rights

The fifth allegation brought forward by the LIAFI leader is a serious accusation of fundamental rights violations by LIC. Citing Sections 19 to 23 of the Indian Constitution, which guarantee freedom of expression and the right to peaceful protest, the LIAFI leader questions LIC’s authority to issue warning letters to advisors who are protesting. He argues that these sections of the Constitution protect citizens’ rights to voice disagreements without facing repercussions, as long as they do so peacefully.

In a formal letter addressed to both the President of India and the Supreme Court, the leader underscores that these actions by LIC potentially infringe upon constitutionally protected freedoms. He claims to have sent this letter to seek legal intervention, requesting clarity on how LIC can restrict advisors from expressing their concerns openly. The LIAFI leader further urges fellow advisors to speak up, emphasizing that their reactions and opinions on the matter are crucial. This allegation points to a profound mistrust, as the issue has escalated to seeking judicial review and even possible presidential intervention to uphold advisors’ rights.

This claim of a constitutional breach adds a new layer to the ongoing dispute, highlighting a fundamental question about the rights of advisors to challenge LIC policies without fear of reprimand. The LIAFI leader’s appeal to the highest offices in India underscores the gravity of the situation, seeking resolution through a broader legal framework.

6. Fear of Suspension and Threats to Commissions

The sixth allegation put forth by the LIAFI leader accuses LIC of using threats of suspension and commission withholding to silence and intimidate insurance advisors. Advisors, many of whom have dedicated decades to the corporation, report receiving warnings that their commissions could be withheld or their positions suspended if they continue to protest or voice dissent.

According to LIAFI, these actions create a pervasive atmosphere of fear, causing advisors to worry about the security of their careers and the loss of their hard-earned income. The leader emphasizes that this type of intimidation is unwarranted, especially given that advisors are simply advocating for what they view as fair treatment and adequate compensation. This allegation highlights the growing tension between LIC and its advisors, with the latter feeling increasingly marginalized and disempowered in the face of LIC’s management practices.

7. Overall Climate of Fear and Intimidation

Finally, LIAFI claims that LIC’s approach has created a climate of fear among advisors, affecting morale and productivity. The leader suggests that LIC’s alleged attempts to stifle the advisors’ demands through fear tactics are detrimental to the industry as a whole.

Escalation to Supreme Court and Presidential Involvement: LIC Advisors Seek Justice Amid Growing Frustrations

The ongoing conflict between LIC and its advisors, represented by LIAFI, has reportedly reached India’s highest offices, with discussions being directed towards both the Supreme Court and President Draupadi Murmu. According to the LIAFI leader, a letter detailing the grievances of insurance advisors was written with intentions to escalate it to the President and the Supreme Court. However, only one copy of this letter has reportedly been provided to the leader, who claims to lack confirmation of whether it was formally submitted to the Supreme Court.

Interestingly, the Supreme Court and President are said to have suggested that advisors attempt to resolve the issue internally with LIC management first, before escalating further. This guidance suggests an inclination towards facilitating internal resolution over litigation, encouraging dialogue as the primary course of action.

The 4 Warnings Issued by LIAFI

First Warning: Mobilizing as Customers to Protest

In response to LIC’s recent actions, the LIAFI leader has issued a bold warning highlighting the power that LIC insurance agents hold, not only as representatives of LIC but as customers themselves. With 14 lakh insurance agents under LIC’s umbrella, many agents have also taken LIC policies personally, making them policyholders as well. The leader pointedly remarks that if LIC continues to threaten them with commission seizures, warnings, and other punitive measures, these agents are prepared to protest from the standpoint of policyholders.

For those interested in supporting this stance or reviewing official documentation, the LIAFI leadership has offered to make related letters available to those who wish to understand the full scope of the issues.

Second Warning: Violation of Fundamental Rights

LIAFI’s second warning to LIC centers on the violation of fundamental rights, which advisors consider a significant and intolerable issue. The advisors emphasize that if LIC continues to infringe upon their constitutional rights to freedom of expression and peaceful protest, they will escalate their demonstrations. While advisors have so far engaged in peaceful protests during lunch breaks—ensuring that customers are not inconvenienced—LIAFI has now warned that they are prepared to take their protests to a more public level if their rights are not respected.

This warning implies that if LIC persists with restrictive measures, advisors could organize protests similar to those of LIC employees, which have historically involved roadblocks, branch shutdowns, and public demonstrations. Advisors stress that, although their protests will remain non-violent, the intensity of the demonstrations could increase. This escalation could include gathering in open spaces, blocking roads, and making their voices heard on larger platforms. By doing so, they hope to draw attention to the injustice they feel and compel LIC to recognize and address their concerns.

Third Warning: Appeal to the President for Fundamental Rights

In the third warning, the LIAFI leader emphasized that if LIC fails to meet their demands, they will take further action by submitting an additional letter to the President of India. In this appeal, the leader is asking the President to intervene and uphold the advisors’ fundamental rights under Sections 19 and 23 of the Constitution, which grant freedom of expression and the right to peacefully protest. They argue that as citizens of an independent nation, advisors should be allowed to express disagreement and advocate for their rights without fear of retaliation.

Fourth Warning: Self-immolation and Voluntary Death

The fourth warning from LIAFI carries a particularly grave and intense message, as it touches on the possibility of self-immolation and voluntary death as a form of protest. The leader who expressed this intention emphasized the seriousness of such a warning, clarifying that this drastic measure is not about personal recognition or credit but rather about representing LIAFI’s collective struggle and the advisors’ demands. The leader highlighted the importance of focusing solely on the unity and representation of LIAFI, emphasizing that the movement aims to expedite the fulfillment of their demands without unnecessary distractions.

This warning underscores the dire situation and the desperation felt by many advisors, with a focus on regaining rights and resolving the ongoing conflict to allow everyone to return to their work.

The seriousness of this warning serves as a final reminder of the lengths to which LIAFI is willing to go, demonstrating the depth of their dissatisfaction and the urgency for LIC to address their grievances.

The 2 Key Demands

First Demand: Restoration of Previous Commission Structure

The primary and most pressing demand made by LIAFI is the restoration of the original commission structure, which was recently reduced by 7%. According to LIAFI, the revised commission rates implemented after September 30 have significantly impacted advisors’ earnings. They argue that LIC should reinstate the previous structure and reverse any recent restructuring to restore financial stability for its advisors. This reduction in commission has created widespread frustration, as it directly affects the livelihood of LIC’s large network of insurance advisors, many of whom rely on these commissions as their primary income source. LIAFI maintains that this demand is crucial for the advisors to continue their work effectively and ensure sustained support for LIC’s growth.

Second Demand: Complete Removal of Clawback Policy

The second demand from LIAFI centers around the abolition of the clawback policy. Advisors have taken a firm stance, stating that the clawback provision should be eliminated entirely. According to the LIAFI leader, the clawback policy, even if presented as part of future restructuring, has been met with a complete boycott. This policy allows LIC to reclaim commissions if a policy lapses within a certain period, which advisors argue unfairly penalizes them for circumstances beyond their control. LIAFI insists that clawback should not be part of any commission restructuring and demands its full removal to secure advisors’ financial stability and independence.

Broader Implications of the Conflict

The ongoing dispute between LIC and LIAFI has several broader implications. If unresolved, it could lead to a decline in LIC’s market share as advisors may be less motivated to promote LIC products effectively. Furthermore, continued tensions may discourage new advisors from joining LIC, impacting the corporation’s growth and reach. Public protests could also harm LIC’s reputation, affecting customer confidence and trust.

Conclusion

The current situation reflects a serious rift between LIC and its advisors, with far-reaching consequences for the insurance industry in India. The 7 allegations, 4 warnings, and 2 critical demands put forward by LIAFI highlight deep-rooted issues that LIC must address. Advisors are calling for a return to policies that value their contributions and uphold their rights. Only through meaningful dialogue and structural changes can LIC and LIAFI hope to resolve this dispute.

FAQs

Disclaimer: This article is based on publicly available information and statements attributed to leaders within the Life Insurance Agents Federation of India (LIAFI). It reflects their perspective on ongoing disputes with LIC. The views and allegations mentioned are solely those of LIAFI representatives and do not necessarily represent factual conclusions or the position of any governing body.