The PSU general insurance companies are board governed commercial entities operating in a competitive and regulated market. This entities are empowered to take appropriate decision in such a matter in compliance with regulatory framework and guidelines, said Bhagwat Karad, Union Minister of State for Finance
New Delhi:
Playing hardball, the Ministry of Finance(MoF) has refused to intervene in the ongoing overhauling of the four public sector general insurance companies about which unions are up in arms.
Currently, four PSU general insurers, New India Assurance(NIA), Oriental Insurance Company(OIC), National Insurance Company (NIC) and United India Insurance(UII) are undertaking massive restructuring exercises to streamline their operations to be agile and profitable.
Since July 2022,GIPSA, the official coordinating body of the four companies, had roped in international consultant E&Y to prepare a restructuring report and help implementing it.
The restructuring exercises also include closure of large number of branches and assessing the performance of employees of these companies in a new manner, which had irked the unions.
Chandeshwar Prasad, a JD (U) member of parliament(MP) from Bihar, had written to Union Finance Minister Nirmala Sitharaman in August along with a petition of General Insurance Employees’ All India Association representing against the issues of closed/merger, restructuring, KPI(key performance indicators) and Transfer of employees/officers in PSU general insurance companies.
Responding to Prasad, Bhagwat Karad, Union Minister of State for Finance, on 5th December has strongly defended the sweeping overhauling exercise by saying closure/merger and restructuring of offices is an internal matter of PSU general insurance companies and is commercial in nature.
The PSU general insurance companies are board governed commercial entities operating in a competitive and regulated market. This entities are empowered to take appropriate decision in such a matter in compliance with regulatory framework and guidelines, he explained.
Further according Karad, KPIS are for objective measurement of performance of organisation and employees.
“PSU general insurance companies have instructed that the guidelines outlined in transfer and Mobility Policy followed strictly,’’ said Karad.
The employees’ unions from the beginning of the restructuring exercise have alleged that the proposed overhaul would weaken the public sector entities as it involves the closure and merger of offices, including profitable offices, and imposition of Key Performance Indicator (KPI).
According to the unions the four companies are losing their business in the centers where the pilot projects on KPI and restructuring are rolled out.
Hasty implementation of these initiatives lack adequate planning, infrastructure and back up strategy, the unions said.
The unilaterally forcing massive closures and mergers of hundreds of offices in public sector general insurance companies are not only affecting the policyholders but the citizens at large and also giving undue favour to private insurance companies to capture the market in Tier II and III cities, said the unions.
The consultant failed to analyse the unnecessary competition among the four PSGICs and failed to suggest the need for merger in the line being followed in the Banking Sector earlier Union Budget declarations, the unions have said.
Observe the improvement and profit in Banking after Post merger scenario as Banking and General Insurance are Two faces of the same Coin Any impairment to Public sector reminds period of Pre Nationalisation Havoc
Restructuring can happen if it advances the interest of all stakeholders esp. the public, for whose benefit general insurance was nationalised. Only if internal customers are satisfied they will ensure satisfaction of external customers.
Challenges in the changed atmosphere can be faced by creating confidence among the the employees and by recruiting marketing people to represent the institution in the market. Level playing field must be ensured for all the players, without any fetters to the PSUs’.
When there are so many players in the field, where is the need for PSUs to compete with themselves and also with others, since the owner of PSUs, is the same.
Motivating the workforce by the management and recognising their skills & talent will help in achieving the desired results.
Concerted efforts and unified execution as a team brings glory to the organisation and leaves an imprint in the market.
Fulfill the promise when there is a need so that customers can have faith in the entity and will continue their support. A satisfied customer is the best advertiser for any service provider.
I fully agree with the comments ” concerted efforts & unified execution as a team bring glory to the organization and leave an imprint in the market”
The way the Public Sector General Insurance Companies are being restructured as per the advice of E & Y consultant will only bring a big devastating situation to the companies, thereby more & more employees will be adversely affected.
Such restructuring only helps Pvt players to flourish more and more in Insurance Market.
It is a big question why the present Govt is aiding such restructuring process which hampers all the stake holders involved in the Public Sector General Insurance Companies.
Anyway, let it be stopped before it is not too delayed.
As a longtime agent I not only welcome this. I think non insurance members should be roped in especially for marketing.
The underwriters are doing the marketing job too. Unlike LIC Which has not only structured marketing setup but also dedicated agents .
Here they are driving away the agents by reducing the commission but perinially increasing the salary whose output is lopsided.
They don’t have any marketing tools.
There is no analysis of share, cost, projections.
Even managers don’t know their costs.
Unlike Pepsi where every penny and sales are analysed accounted and timely course correction is done, here everything is taken for granted. The Union members should first go incognito to branches for buying policies and experience firsthand.
Even, they don’t have a Bank like toll free servicing nos.
What takes minutes with pvt players it takes half a day for some PSU general insurers!!
Even IDV for vehicles is a big issue even after 50 years of existence.
The will not underwrite exempted /non registered vehicles which is widely being done by pvt players.
Salary cost per policy is huge.
Employees, retirees and their families including grand children are allowed to participate in group mediclaim policies with 50 lac cover, when the very public is being offered such covers now only.
They have carved out a niche out of public funds.
Vote for full privatisation that too with involvement of task masters like Ambani and Adani!!!
Good as far as the comments concerning employee productivity. But at the macro level , past experiences show private sector insurers acted as devils prior to nationalisation and there are some among the new companies whose reputaions are not good.
Large scale expansion,like micro offices, service centres and so on, of PSU general insurers happened at govt diktats.
Insurance cannot be treated with other industry. The less we talk of Pepsi, Cola etc who are selling poison, it is better,
The freedom of an illiterate becoming elected to rule the literates and so on spread to PSUs in the name of social responsibility. Blame game will not help. These consultants lack in domain experience and commitment to the nation.
Why the companies are not being merged into a single entity just like LIC
In the interest of the PSU general insurance companies, strictly implement the TMP(Transfer and Mobility Policy) All the companies’ management are favouring their own well wishers and retain the officers in the same place who are in the same city since last 15-16 years. These type of attitude are not favourable in the interest of the companies and ONLY allow corruption in the industry.
Today, Financial Growth of India is remarkable.
For a more stable & faster growth, strong Insurance set-up is needed especially in the General Insurance sector. However, under the aegis of the IRDA for more than 20 years, Insurance penetration has climbed up from 0.56% to 0.94% only.
In the field, PSGICs are gasping to survive and fighting to snatch the left-out loss making business from each other’s whereas the Private Insurers are in control of major profit-making business which they have snatched from the PSGICs.
The Regulator has failed in achieving expected Insurance penetration in the country.
An open-minded enlightened suggestion is to merge all PSU general Insurance Companies into one.
Let India have a giant Life as well as a General Insurance company with a new system and level playing field with Private Insurers.
It is NOT a far-fetched imagery.
To become 3rd largest economy of the world, a monolithic Insurance Company will contribute to achieve the goal faster.
Journey for a monolithic Insurance company will indeed be painful for some but in the larger interest, we should bear it. For the sake of our country, we should accept it.
Regards.
Bijon
All PSU insurance company working without any accountability on public money or not able to penetrate the market. It’s just transfer business among themselves. The restitution with accountability is order of the day to save PSU’s.
If Govt has already decided for restructuring to make PSUs profitable, it’s fine, But will it solve the problem.. Better analyse why PSUs are loosing market sahre to the Private Insurers..
1. Complacency amongst existing workforce.. No monitoring of productivity.
Promotions are done just to fill up vacancies, compromising qualities quite often. Less accountability.
2.Biggest hindrance is Decision Making. Executives even with good intention are often afraid of risk taking decisions..because of our very orthodox Internal Vigilance Departments..A slight wrong decisions may jeopardize the career..so better not to take aggressive decisions..sit on the file…No one wish to burn fingers…Compare this system with Private Insurers.. they have free hands in accepting risks with lot of flexibility and similarly in Claim settlements..
Hundreds of Officers in PSU’s have faced Disciplinary actions even when it comes to commercial decisions /interpretations of guidelines, pressure to achieve target without support, whereas other private sectors are cashing on with flexible attitudes, innovative initiatives.
Their efforts are aptly rewarded, unlike mostly Seniority based promotions in PSUs..
More than 80% senior officers working in Private sectors are from PSUs..and they are running the show successfully…But when working with PSUs these officers could not give their best.
4. First, do something on Internal Vigilance and Internal Audit departments..Take lessons from Private Sector workings..
Such agencies must examine the mistake if any, is whether willfully or by external pressure, of matter of interpretation, or a genuine mistake or for a personal gain, .before any case is accepted for scrutiny..
2)Then fix accountability. Promotions on merits only to deserving candidates..
3) Inter subsidiary transfers of senior executives were not effective…One must need time to understand the pulse/working atmosphere of the Company and must KNOW the people with whom he/she has to work..it takes time..What would be there next goal? So they are not so effective.
4) Allow flexibility in an open market..
But,Impose Strict penalty for violation of IRDA guidelines applicable to All Insurers..and that’s immediate..no lingering process..
Finally, Restructuring /Merging would be successful, only if existing system of working is thoroughly changed…with logical intervention by Govt Agencies and monitoring of performance in line with Private Insurers..
To save the PSGIC,the only remedy is to have a Monolithic
Corporation,like LIC .
Not only there shall be reduction of Costs but also increased Efficiency.