Dr. Daleep Pandita
With premium income of nearly Rupees one lakh thousand crores, Indian Government general insurance industry catering about 75,000 manpower and feeding its several million agents, can not be ignored as a great contributor to the National economy. These companies have also contributed immensely in implementing various government sponsored socially benefited welfare insurance schemes from time to time.
But post nationalisation era of 40 years of this Indian insurance sector has neither served the very purpose of its penetration down to the masses nor has it generated cost effective market competitiveness in terms of its services besides generating negligible improvement in its customer services.
Of late, these Government General Insurance Companies are primarily struggling for their survival, mainly in terms of generating underwriting profits, maintaining requisite solvency levels, reducing claim loss burdens, downsizing their huge manpower, adopting rapid changing advanced technological techniques and due to various other cost efficient working parameters. On top of these operational constraints, at the helm of their affairs, remain their short tenured weak higher management, mostly succumbing to their staff unions mostly concentrating on their HR issues and relying on inaccurate feedback resulting into incorrect decisions, only add to their failure story of pre occupation with purposeless issues at the cost of their core business.
Currently three of these companies are functioning on solvency debentures and fund infusions from the Government of India ( GoI ) while their big brother thrive on the assets accumulated by its ancestors. In nutshell, all these four government undertakings are in financial intensive care situation. Merger of these companies in to a single unit, as proposed earlier by GoI, will not only lead to the adding of their all offices and their all employees but also hamper their working due to synchronization of their different operational systems that will take sufficient time during which most of their existing business will evaporate. In the meantime, minor disinvestment of one of its companies also did not yield expected results instead exposed indecisiveness and week financial policy of the Government in this direction.
Now that the Government of the day prempted to reverse this failure venture by lowering its stake and control in these companies by bringing in General Insurance Privatisation Bill in the monsoon session of Parliament with the main intention to regulate insurance business in India instead of running it.
Earlier experiment of bringing private sector in to the sanctum sanctorum of Indian Insurance industry has steadily shown their growth and overtaking market share to nearly 55 % within 15 years of their operation. Their efforts on penetration to rural India with fulfillment of the social obligations as stipulated by the Indian Insurance Regulator besides providing improved customer services has established more potentiality of private players in this sector.
Now under the current digitalization era, insurance companies need not to have their offices down to every location at village level instead can efficiently run on cost saving efficient service on line model through their competent representatives or qualified agents thereby reducing their salaried staff which in turn reduce their management costs and increase their profitability.
Reducing the control and interference of Government in Indian General Insurance Sector will not only give it a status of an industry that will run on profit but its share holders will also make it accountable for its services, which will be key to its success. Only regular and complete monitoring by the Insurance Regulator and their operational safety and security by the Government of the day to its shareholders, need to be ensured to bring back the glory to the insurance sector of India that remains to be seen in times ahead.
(The author is a retired Regional Manager with General Insurance PSU)
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