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Insurance staff fear private takeover

G.K. Nair

KOCHI, March 17

EMPLOYEES of the four general insurance companies (GICs) in Kerala are apprehensive of a takeover of their institutions by the private sector insurance majors now active in the State.

"The latest changes that are taking place in these public sector insurance companies are a prelude to this eventuality," say union representatives. The appointment of corporate agents, third party administrators for medi-claims and the reduction in field staff are cited as steps towards trimming the workforce to suit the requirement of private companies.

The GICs are now in the process of appointing banks and other establishments as corporate agents in the State. The United India Insurance Company Limited has already appointed a Thrissur-based scheduled bank as a corporate agent on a commission fixed by the IRDA, Mr K. Sanath Kumar, the company's Regional Manager told Business Line.

It would be easier for the banks to generate business from the clients who are being granted loans by it, while the insurance company with its wide network throughout the State would assist the bank, he said. Thus, insurance business is going to become "a broker/intermediary driven market", he said, adding that the payment to the brokers who would mobilise corporate business would add to "our business procurement cost."

Meanwhile, the agents will have to sustain on individual policy business. According to Mr Scaria, a union leader, the agency commission for the corporate brokers have been raised to 15 per cent for all the business. Besides, the borrowers are forced to take insurance by the banks, he alleged.

In this situation, the public sector companies feel that it does not require the services of its field staff who were providing the supporting service to the agents, apart from building up a strong client base. The development officers were given options either to opt for VRS or for administrative duties. However, hardly five per cent has opted for VRS in the State while 20 per cent opted for administrative duties, he said.

As majority of the development officers had preferred to be in the field where they had been working for decades, the company had brought in a new policy to transfer those development officers who had completed five years at one particular station. This, according to Mr Scaria, is "just to harass the development officers so as to make them to accept the VRS scheme."

The Regional Manager, United India Insurance, however, said that the company had to compete in the market, for which it had to reduce its operational cost. It has also decided to reduce the loss-making motor vehicle portfolio. The private sector insurance companies have the freedom to be selective in this segment. But the public sector companies with their social commitment cannot be selective and that is inflicting heavy losses to the companies, he said. Besides, the companies' returns from other investments have also dropped.

In Kerala, four private insurance companies have opened shops and in a short span, they have succeeded in cornering good business, Mr P.P. Mohanan, Kerala State General Secretary of General Insurance Officers All India Association, said. The private companies had allegedly resorted to un-ethical methods to capture fire insurance business from the major public sectors involving premium amounting to crores of rupees, he said.

They eye on businesses that have least risk, he alleged. According to him, the private sector companies issue motor vehicle insurance through their offices in Mumbai and Chennai to only new vehicles and as a result these policies, remain outside the jurisdiction of the State Consumer Forum and the Ombudsman.

He said that the approach of the IRDA was against the interest of the public sector companies. As a result, "development is for private sector while regulations are for the public sector insurance companies," he alleged.

Instead of equipping the field staff to compete with the private sector companies, the public sector companies are introducing policies to demoralise them, he said.

In fact, in the changed scenario, the employees of all public sector insurance companies have been demanding that United India, New India, Oriental and National Insurance companies be merged with GIC and a single corporation set up, Mr Mohanan said.

There is a possibility that all the efforts of the public sector companies to trim the workforce might pave the way for their takeover by the private sector in the near future, a senior official conceded.

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