Swadeshi Jagran Manch (SJM), an RSS(Rashtriya Swayamsewak Sangh)affiliate, has written to the Prime Minister Narendra Modi, seeking the review of the government’s decision to merge the public sector general insurance companies Oriental Insurance Company(OIC), United Insurance Company(UIC) and National Insurance Company(NIC) as it would do anything good to the sector and economy.
After seeking the approvals of the boards of three PSU general insurance companies –United India Insurance(UII),Oriental Insurance Company)OIC) and National Insurance Company(NIC)-whose merger into one company was announced by former finance minister Arun Jaitley while presenting the Buget 2018-19- it is now expected that union finance minister Nirmala Sitharaman will announce the plans for execution of final merger, of these companies,called as `amalgamation', from Apr 1, in her forthcoming Budget 2020-21,to be presented in Feb 1.
Among other issues, SJM in its letter, signed by Ashwani Mahajan is the National Co-Convener of Swadeshi Jagaran Manch, to PM has argued that the merger of public sector insurance companies is likely to endanger growth of insurance sector in the country in general and would hamper the successful implementation of socially important flagship insurance schemes like like Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Aarogya Yojana,
Although these schemes were supposed to be implemented by both private and public sector insurance companies, unfortunately in reality these schemes are left majorly to be implemented by the Public Sector Insurance Companies (PSGICs) only as they are no money spinners for the private sector.
It is estimated that Pradhan Mantri Suraksha BimaYojana which is a Personal Accident Policy for unorganised worker, 90 per cent of the business is done by PSGICs at a loss ratio of 221 per cent whereas PSUs are mandated to offer these policies and private players are choosing not to service this huge loss making scheme, said SJM.
In case of Pradhan Mantri Fasal BimaYojana, more than 50 per cent of the drought prone area is being serviced by four PSGICs making combined losses worth 115 per centwhereas private players are servicing the better parts of country which have much lesser risk of loss at a loss ratio of less than 60% (which clearly means that hapless farmers are left in the lurch by these private players to keep their profits high).
Government sponsored health schemes (primarily RSBY/Ayushman Bharat) are being serviced generally by PSGICs at losses of more than 110% while private players are servicing these schemes selectively at losses of less than 90 per cent.
“If these public sector enterprises start turning away from socially desired insurance, similar to private sector companies, what will happen to the flagship insurance schemes started by government under your leadership and the public outcry resulting thereof?,’’ questioned SJM.
The total losses of Public Sector General Insurance Companies due to their obligation and presence in far flung areas for servicing this portfolio have resulted in huge losses.
“And then if the consultants give presentations in official circles claiming that public sector insurance companies are inefficient, as indicated by their losses, we at Swadeshi Jagaran Manch wish to challenge their claims about the same. We fear that conflict of interest of these consulting companies is also the reason for concealing the facts about PSUs and their losses, which are primarily because of servicing the social sector insurance schemes’’ observed SJM.