M Nagaraju, after becoming the DFS secretary, held his first review meeting with the four state owned general insurance companies in New Delhi on Tuesday
New Delhi: M. Nagaraju, secretary, Department of Financial Services (DFS), has asked the four state owned general insurance companies to guard their market share, bring down underwriting losses and increase rural business.
Nagaraju, after becoming the DFS secretary, held his first review meeting with the four state owned general insurance companies in New Delhi on Tuesday.
Nagaraju, took charge on August 19, 2024.
Along with Parshant Kumar Goyal, joint secretary, DFS, senior officials including CMD and executive directors of all four PSU general insurance companies, New India Assurance(NIA), Oriental Insurance Company(IOC), United India Insurance(UII) and National Insurance(NIC)- had attended the meet.
“It was more an introductory meet with the new the new DFS secretary and no serious discussion on any grave issues faced by the PSU general insurance companies were discussed,’’ said a senior official of a PSU general insurance company.
Nagaraju’s predecessor Vivek Joshi used to meet the four general insurance companies every quarter to review their performances.
Out of the four state general insurers, three – UII, OIC and NIC- have no required solvency and net worth and insurance regulator IRDAI has given them special dispensations(Forbearance) for the last couple of years so that they continue to do business.
These three insurers need around Rs 20,000 crore of capital to achieve solvency of 1.5, a regulatory requirement for any general insurer.
The DFS had earlier insisted that the companies, which are in dire need of capital among other issues, to restructure their business by exiting loss making business and be profitable.
Currently, except Chennai based UII, rest three have been profitable in the first half the current fiscal.
UII also would have been profitable but it has to provide quite a sum for pension and wage arrears of its employees during the period.
The routine review meetings are fine.
The mute question: are there any serious efforts to curtail leakage in claims ?
Is there any accountability for accepting bad business n curtailment of Loss producing biz ?
Any specific efforts for closure of unviable offices ?
Very severe message needs to go down that inefficiency shall be severely dealt n penalisef
Privatisation is best tool . Bring accountability. Reduce the staff
But sir, are you truly aware of the market scenario? First,PSUs have much lesser staffs than private players and accountability of private players are zero and they are doing business by illegal means & looting customers in every nook & corner of this country.
Had you been a govt employee, you wouldn’t have said this. You people always see laziness in govt sector but overlook their contribution to the public welfare unlike private bodies whose sole motto is profitability.
Remember, public welfare is the Ist priority of PSU, profit is secondary.
Well said Shri Lunawatji.
Practical decision to be taken by the government to provide services of general insurance to community poor or rich without expecting profit should be part of review.
If,Govt. really wants to see PSU general Insurance companies flourish, and if they want to penetrate the insurance for all by 2047,mockery of closing down profitable branches of various companies must stop.
The perfect solution is to make one single company by merger of all PSU, so that the multiple office’s of all the four companies be merged at every centre and they can open offices at taluka level by which untapped business can be done by the companies.
Also, by this huge payments of rents paid in big centre can be curbed and insurance for all can be made possible with unabated growth underwriting profits.
Even government schemes can easily be implemented without huge outgo on rents.
Earlier four-tier system can be replaced with one H.O at Mumbai and Zonal offices at East, West, South, North. The present headquarters offices of PSUs can be converted into Zonal offices and existing Regional offices of every company be put together as operating offices that can be deployed at each districts, big talukas and control of these office’s can be done from various Ros.
There can be claims hub at these office’s for fast and efficient service to customers.
Employees can be deployed effectively.
This opinion is based on huge experience one has in the industry and not like E &Y consultancy. They are inexperienced and charge a huge fees for restructuring of industry at their whims and caprices.
To minimise claims ratio & to achieve desired solvency ratio, the government should bring about changes in Third party limited liability. During motor accident on land resulting in death of humans, the liability is unlimited since compensation depends on victims financial status, last earnings, size of family etc., whereas death during air travel or rail, liability is limited. This has a great impact on general insurance companies leading to increase in claims ratio.
If the insurance for all is to be achieved by 2047, the basic requirement, which needs to be ensured, is the improvement of financial status of all the households.