The Life Insurance Corporation of India is the largest insurance and investment group owned by Indian State with assets, funds and policies. The Parliament enacted the Life Insurance Corporation Act in 1956 which came into force on July 1, 1956. After the enactment, the private insurance groups were nationalized and many insurance and provident societies were combined to form Life Insurance Corporation under the ownership of the State.
The Act provides for the establishment of the Life Insurance Corporation of India which shall start functioning on September 1, 1956. The Corporation shall have the status of a body corporate with continuous succession, common seal and the power to purchase, hold and sell off property and shall have the right to litigate. The corporation shall comprise of a maximum of sixteen members including the Chairman who shall be appointed by the Central Government. The person to be appointed as a member should not have any pecuniary or other concerns which would affect detrimentally the performance of functions as a member of the Corporation. The members shall also furnish the information necessary to discharge the functions, to the Central Government when demanded. A member who is involved directly or indirectly in any agreement performed or intended to be performed by the Corporation shall reveal the character of the interest to the Corporation and he shall not involve in any deliberations or debates of the Corporation in relation to the agreement.
The capital of the Life Insurance Corporation shall be Rs. 5 crores but the Central Government shall after necessary appropriations and stipulations determine and fix the capital of the Corporation. The Central Government may have the power to decrease the capital of the Corporation as determined. The general responsibility of the Corporation is to conduct the business of life insurance and to secure that such business is progressed for the benefit of the community, subject to the rules formulated by the Central Government. The Corporation shall have the following additional functions:
- To conduct business of capital redemption, allowances or reinsurance to the extent where such business appertain to the business of life insurance;
- To invest the accounts of the Corporation according to the procedures of the Corporation and to take measures to protect and realize any savings;
- To purchase, hold and sell off property for business purpose;
- To transfer the insurance business conducted abroad to any others in the interest of the Corporation;
- To provide or lend finance under the security of any corporeal property;
- To have a loan of any amount under the Security as decided by the Corporation;
- To conduct any other business if such business is functioning through the subordinate of any insurer whose business is transferred and is under the control of the Corporation;
- To conduct any other business which is capable of being done by the Corporation and computed to provide the business of the Corporation more profitable;
- To perform other functions for the efficient implementation of any powers of the Corporation.
After the enforcement of the Act, the Corporation shall transfer the entire assets and accountabilities of the insurers who are engaged in the controlled business. Under certain circumstances the service of the prevailing employees of the chief agents of the insurers shall be transferred to the Corporation. The Central Government is empowered under the Act to establish Tribunals and appoint members as provided under the Act. The Corporation is endowed with absolute privilege to carry on its activities. All the policies and bonuses assured by the Corporation shall be approved by the Central Government.
The Central Government has formulated the Life Insurance Corporation Rules, 1956 according to the power conferred under the Act. The Life Insurance Corporation Act, 1956 has been proposed to be amended by initiating The Life Insurance Corporation Amendment Bill, 2009 which enhances the equity capital of the Corporation.