LIC Gears Up for Legal Battle Against Policy ‘Trading’ by ACESO, Calls It a Threat to Insurance Industry

The Life Insurance Corporation of India (LIC) is preparing to take legal action against a company named ACESO, which is involved in trading insurance policies. LIC believes this practice is illegal and could harm the entire insurance industry, potentially causing financial losses for policyholders.

ACESO, founded by two chartered accountants, Ketan Mehta and Himanshu Ashar, offers a service called “Assign Your Life Insurance Policy” (ALIP). They claim that this service is legal and benefits both policyholders and insurance agents. ACESO offers to buy LIC policies from policyholders, paying them more than what they would get if they surrendered the policy to LIC. Additionally, agents continue to receive commissions, making it attractive for them to support this practice.

However, LIC argues that this kind of trading goes against the core purpose of insurance, which is to protect policyholders. LIC is concerned that if a policy is assigned to a company like ACESO, it is unclear who would receive the death benefit, creating uncertainty and risk for the policyholders.

This isn’t the first time LIC has faced such a challenge. Nearly two decades ago, a similar issue arose when another company started buying lapsed insurance policies. LIC declared those assignments invalid, but the Supreme Court ruled against LIC, complicating the situation.

Now, with changes in the law, LIC believes it has a stronger legal position to challenge ACESO. The law allows LIC to refuse assignments if they believe it is not in the best interest of the policyholder or the public.

Despite LIC’s concerns, ACESO insists that their operations are legal and beneficial, claiming that their service helps grow the insurance market and is backed by regulatory approval. They argue that ALIP carries a high rating, ensuring no risk to policyholders.

LIC remains determined to oppose this practice, believing it poses significant risks to policyholders and the insurance industry as a whole.