USTR Flags LIC’s Sovereign Guarantee; LIC Rejects Claims of Unfair Advantage

New Delhi — The United States Trade Representative (USTR) has raised concerns over what it terms an “uneven playing field” in India’s insurance sector, citing the sovereign guarantee provided to Life Insurance Corporation (LIC). In response, the state-owned insurer has firmly denied any misuse of the guarantee, asserting that it operates on equal footing with private competitors.

The USTR’s latest report argues that LIC benefits from advantages unavailable to private firms, including government-backed guarantees that allegedly influence consumer preference. It claimed that India’s state-owned insurers are not subject to the same legal and regulatory standards as private companies, thereby distorting competition in the domestic insurance market.

However, LIC dismissed the assertions, stating that the sovereign guarantee instituted at the time of its establishment in 1956 has never been invoked nor used as a promotional tool. The company emphasized that it is regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and the Securities and Exchange Board of India (SEBI), and does not receive any preferential treatment from the government or regulators.

“LIC is treated like any other insurance company,” the insurer clarified, adding that its dominance in the sector is attributed to public trust, financial strength, and decades of service. Currently, LIC competes with 24 private insurance providers in India and serves over 300 million customers.

LIC further criticized the USTR’s interpretation of Indian insurance norms, calling it an “incomplete understanding” of the regulatory environment and LIC’s operational framework. It urged for a more nuanced and accurate assessment of the Indian insurance industry, particularly in the context of financial inclusion and consumer protection. – News Agency