Financial Daily from THE HINDU group of publications
Wednesday, Jun 01, 2005
Money & Banking
Oriental Insurance sends signals to staff on efficiency
Mr M. Ramadoss
Bangalore , May 31
PUBLIC sector insurance companies have begun shedding stereotype images. Changes now pushed through by the top management of Oriental Insurance Company Ltd (OICL) are an evidence of it becoming a demanding employer and more customer-friendly.
The first signals have gone through for the employees. OICL's chairman and Managing Director, Mr M. Ramadoss, has sent a message down the hierarchy conveying that wage increases could no longer be assumed as in the past.
Mr Ramadoss's letter to employees said, "Wage revisions and promotions have to be earned by performance, and not assumed to be periodical exercises."
The message conveyed by OICL was that public sector insurers were no longer prepared to go by the wage negotiations with the unions alone as a criterion for determining employee compensation. Unions at their last negotiations had sought an increase of 12.5 per cent and the insurers had conceded only 8.5 per cent.
But sources said that the OICL's message also conveyed that the PSU managements were now determined to retain their flock, especially high performers instead of losing them to the private sector.
The message was notjust about pay packets. In fact, the underlying focus in the message was on the bottom line. The letter by the CMD conceded that erosion of profitability and falling premiums were major worries for the public sector.
The public sector insurers have been losing market share to the private sector during the last few years. Private insurers now account for about 24 per cent of the market share. The losses were mostly in the lucrative low claims businesses, especially fire and retail.
The letter conceded that these pressures were likely to worsen. Therefore, employees were advised to focus only on profits instead of chasing volumes. This is a point that was emphasised by Mr Ramadoss, to Business Line on March 7 this year. Clearly, the emphasis would be on those policies that have a low claims history. In fact, the private sector has been poaching on these categories of customers along with the PSU employees.
This time of course, OICL's customers with low claims histories may find themselves being wooed by the company to retain their covers with them.
But the new line that is now being taken by OICL is the stress on keeping track of intermediaries. Intermediaries till recently were avoided by the public sector insurers.
The change appears to be led by the recognition of intermediaries' role for growth as the industry fully deregulates.
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