**Executive Summary**
This document is the answer to Unstarred Question No. 1380 in Lok Sabha, answered on December 8, 2025. It addresses the assessment of risk to policyholders' funds due to concentrated investments by the Life Insurance Corporation (LIC) of India. The document outlines regulations, processes, and oversight mechanisms in place to manage investment risks and ensure transparency.
**Key Points / Main Content**
* **Regulatory Framework**
* LIC investments are governed by Insurance Regulatory and Development Authority of India (IRDAI) regulations, specifically the (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, and LIC's Board approved policies.
* Investments in both equity and debt for all companies in an investee group are limited to 15% of the respective funds maintained by the insurance company.
* **Investment Due Diligence and Monitoring**
* LIC's investments follow Board-approved policy guidelines based on detailed due diligence from Internal Research Reports.
* The portfolio is dynamically monitored and rebalanced according to market conditions.
* The Investment committee, a sub-committee of the Board of the Corporation, reviews the portfolio quarterly.
* Due diligence of debt proposals includes evaluation of financials, balance sheet ratios, and credit ratings.
* Investment committee approval is obtained as stipulated by IRDAI regulations.
* **Independent Verification and Compliance**
* Investment processes' checks and controls are independently verified by Concurrent Auditors, Statutory Auditors, System Auditors, IFC Auditors, and Information Systems Auditors.
* LIC publishes periodical reports.
* IRDAI conducts on-site and off-site inspections to ensure LIC investments comply with IRDAI norms.
**Impact Analysis**
**Policyholders**
* **Impact:** The policies and processes outlined aim to safeguard policyholders' funds by limiting investment concentration and ensuring robust due diligence and oversight.
* **Action Required:** No direct action required, but policyholders are indirectly affected by investment decisions; the aim is to improve policyholder value and security.
**Life Insurance Corporation (LIC) of India**
* **Impact:** LIC must adhere to IRDAI regulations and LIC's Board approved policies regarding investment limits, due diligence, and reporting.
* **Action Required:** Maintain compliance with regulations, conduct thorough due diligence, dynamically monitor the portfolio, and publish periodical reports as required.
**Insurance Regulatory and Development Authority of India (IRDAI)**
* **Impact:** IRDAI is responsible for setting regulations and conducting inspections to ensure LIC's compliance and protect policyholder interests.
* **Action Required:** Continue to enforce regulations, conduct on-site and off-site inspections, and review LIC's periodical reports to ensure compliance.
Key Entities Referenced
Life Insurance Corporation of India (LIC): The central entity whose investment risks are being assessed in the context of policyholder funds.
Insurance Regulatory and Development Authority of India (IRDAI): The regulatory body that governs LIC and sets investment exposure norms.
Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024: Regulations governing LIC's investments, specifically referencing actuarial, finance, and investment functions.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION No. 1380.
ANSWERED ON MONDAY, 08 December, 2025/ AGRAHAYANA 17, 1947 (SAKA)
Assessment of risk to policy holders
1380. SHRI CHARANJIT SINGH CHANNI :
Will the Minister of FINANCE be pleased to state:
(a) whether the Government has undertaken any assessment of the risk to policyholders’ funds due
to concentrated investments by Life Insurance Corporation (LIC) of India in a single corporate group,
if so, the details thereof;
(b) whether LIC has carried out an independent valuation or risk-profiling of these investments in light
of market fluctuations, if so, the details thereof; and
(c) the steps taken by the Government to ensure transparency, safeguard policyholders’ interests and
prevent any undue concentration of investments in high-risk corporate entities?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) Investment made by Life Insurance Corporation of India (LIC) are governed by Insurance
Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of
Insurers) Regulations, 2024, and LIC’s Board approved policies.
As per these regulations’ investment in both equity and debt for all companies in an investee
group is limited to 15% of the amount under respective funds maintained by an insurance
company. This limit has been prescribed to prevent concentration of investment and risk to policy
holder fund. As per the information provided by LIC, its investments are well within the exposure
norms prescribed by Insurance Regulatory and Development Authority of India (IRDAI).
(b) The investments of LIC are made in accordance with Board approved policy guidelines after
detailed due diligence based on the Internal Research Reports. The portfolio is dynamically
monitored and rebalancing is done as per market condition and the portfolio is also reviewed
quarterly by the Investment committee which is a sub-committee of the Board of the Corporation.
Due diligence of the debt proposals is made on the basis of financials, various balance sheet ratios
and credit rating before making any investment. The approval of the Investment committee is
obtained, wherever necessary, as stipulated by IRDAI regulations. In respect of Investment
processes, the Checks and Controls are independently verified by Concurrent Auditors, Statutory
Auditors, System Auditors and IFC Auditors and Information Systems Auditor.
(c) LIC publishes various periodical reports and IRDAI also conducts on-site and off-site inspections
to check that investments made by LIC are compliant with IRDAI norms.
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