MoF to meet CMDs of three PSU general insurance cos on Apr 18, to discuss merger roadmap
A committee consisting of Atul Sahai, general manger, Oriental Insurance Comoany,,John Pulinthanam. general manager & director, National Insurance Company, K. Govindrajan, general manager & director, United India Insurance., has already submitted a detailed report to the MoF suggesting the ways and means for the merger of three insurers..Another proposal to appoint a consultant to provide guidance on the merger is waiting for the approval of the GIPSA, the official association of four PSU general insurers.
The ministry of finance(MoF) has convened a meeting of chiefs of three merging PSU general insurers- United India Insurance (UII), National Insurance Company(NIC), Oriental Insurance Company(OIC)- on Apr 18, to iron out the key challenges- particularly on IT,HR and branch rationalisation- of the proposed mega mergers that would create the largest general insurer in the country with over Rs 45,000 crore of premiums and 30 per cent of the market share..
Debasish Panda, the newly appointed additional secretary, Insurance, Ministry of Finance will be meeting K Sanath Kumar,CMD, NIC, MN Sarma, CMD, UII and Girija Kumar, CMD, OIC, to discuss the roadmap for the mega merger that was announced by Finance Minister Arun Jaitley in Budget 2018-19.
In an internal reshuffle in the MoF, Panda's predecessor Ravi Mittal, who had played a key role in conceptualising the merger plan, has been shifted to banking division of the ministry in the begining of the month.
Rajeev Kumar, secretary, Department of Financial Service(DFS), has scheduled another larger meeting with the heads of the all public sector general insurers on May 2 to take stock of the performance of these companies.
Earlier, the three companies have formed a committee of general mangers to chart out an action plan for the proposed merger.The committee which is consisting of Atul Sahai, general manger, OIC, John Pulinthanam. general manager & director, NIC, Govindrajan, K. Govindrajan, general manager & director, has already submitted a detailed report to the MoF suggesting the ways and means for the merger.
Another proposal to appoint a consultant to provide guidance on the merger is waiting for the approval of the GIPSA, the official association of four PSU general insurers.
``There are various issues pertaining to IT, HR and branch rationalisation that need to be addressed. At the same time,, we also want the business to continue as usual at the company as the government has agreed to this view of ours,’’ said a CMD of PSU general insurers who doesn’t want to be quoted.
All the three merging companies are having different IT vendors. The problem is unlike experienced by the banking sector and there are too many products when it comes to general insurance, he said.
Hinting at delay in the implementation merger plans,he said that though, there is no timeframe for merger processes to be completed, as of now, it appears, it may not get completed by the fiscal-end. .
Meanwhile, after a bit delay, GIPSA, consisting of CMDs five companies -New India Assurance(NIA)OIC, NIC, UII- is conducting interviews during Apr 26-27 to complete promotional exercises from DGM(Deputy General Manager) to GM (General manager) among the senior officials of the industry. Afterwards, promotional exercises for the other posts will be completed.
The public sector general insurance industry is expected to face an acute crunch of officials at the senior level as a lot of general managers and three CMDs one after another are retiring in couple of months.Almost all GMs along with the CMD are retiring in the UII in next few months.
Sanath Kumar will be calling it a day at NIC during the month end while Sharma will be hanging up his boots next month. G Srinivasan unless being elevated as the chairman of IRDAI, will be completing his five-year stint at NIA by July end.
It is not even very clear whether government will be appointing new CMDs in two(NIC andUII) of the companies pending merger.
Earlier, though,before the merger proposal of three companies were announced, government had shortlisted eiight candidates – Hemant G. Rokade, GM & director, NIA, Atul Sahai, Dinesh R Waghela, general manger, OIC, Siddharth Pradhan, GM, NIA, Girish Radhakrishnan, GM, NIA and three senior most GMs of Delhi based Agriculture Insurance Company(AIC)- for the interview to select two CMDs for NIC and UII, nothing has happened as yet.
``Hopefully, government realises that it will be a disaster if it keeps any of these merging companies which are already under financial stress, headless or appoint temporary heads including bureacrats from the MoF for long. Most of the problems that are troubling these three merging companies started when these companies didn’t have regular CMDs in recent times,’’ said sources.
During 2017-18, , the three merging general insurers have mobilised a total premiums of Rs 45,000 crore and have a market share of over 30.21 per cent.