People's Democracy

15TH GIEA-SZ CONFERENCE AT COIMBATORE

Govt out to Kill Golden Eggs Laying Goose

M Ajith Kumar

THE three-day, fifteenth conference of the General Insurance Employees Association South Zone (GIEA-SZ), affiliated to the All India Insurance Employees Association (AIIEA), recently concluded at Coimbatore in Tamilnadu. It  discussed  the state of the public sector general insurance companies in India. The conference expressed serious concern over the central government’s move to pass the Insurance Laws (Amendment) Bill, in the winter session of the parliament.

It will be noted that the general insurance business in India was nationalised four decades ago, through the General Insurance Business (Nationalisation) Act 1972. The objectives of the nationalisation were (1) to spread the message of general insurance to the common mass of this country (2) to introduce new policies to cater to the needs of rural areas and (3) to open new branches in small towns to serve the people. The top leaders of the Association, who spoke at the conference, explained with authentic figures and studies that the public sector general insurance companies have fulfilled the mandate despite tremendous odds.

Today, public sector general insurance companies issue more than 6.25 crore policies every year and have 150 types of policies, right from crop insurance to aviation insurance, in order to serve different sections of the people, G Anand, general secretary of the GIEA-SZ, said so while presenting the organisational report.

With a net worth of Rs 1,50,000 crore and an investment of Rs 65,000 crore in social sector, public sector general insurance companies have earned Rs 3,282 crore as profit and paid a dividend of Rs 521 crore to the government of India this year, the report of the working committee said.

P R Natarajan, a member of parliament who addressed the conference said the central government, by introducing the Insurance Laws (Amendment) Bill, was trying to “kill the public sector general insurance companies.” He appreciated the efforts of the AIIEA to “enlighten the public about the disastrous consequence of the Insurance Laws (Amendment) Bill, by organising seminars, meetings and jathas, throughout the country.” He said AIIEA leaders have relentlessly campaigned among the general public and held meetings with members of parliament, central and state ministers, members of legislative assemblies and local bodies, which has helped to build resistance against the bill throughout the country.

In his inaugural address, K Venugopal, general secretary of the AIIEA, narrated the UPA government’s moves to force the bill through since 2008.  Because of the stiff resistance, it was referred to the standing committee on finance. The bill is aimed at bringing amendments in three important insurance acts: (1) Insurance Act 1938 (2) General Insurance Business (Nationalisation) Act 1972 (3) IRDA Act 1999. He said the epic struggle of the association  stalled the government’s attempt to pass the bill and privatise the public sector companies. He said the AIIEA’s deposition before the standing committee, with facts and figures, influenced the committee’s decision to recommend against an increase in the foreign direct investment (FDI) in insurance business. 

He said the four public sector general insurance companies had done exceedingly well in terms of growth in premium income and accretion. He also said that the cost of insurance premium was 12 to 15 percent of the cost of the vehicles in the western countries, compared to two to three percent in India. 

AIIEA president Amanulla Khan, in his special address to the conference, observed that it was due to vigorous campaigns that the government was not able to arrive at a consensus on the bill, without which it cannot be passed in the parliament. He said in spite of the representation by the association for the merger of four public sector companies into a monolithic corporation, so as to face the stiff completion form private companies, the government’s approach was to weaken the public sector companies and help the private players. He expressed the hope that the general insurance business in India would witness tremendous growth in the coming years. 

Khan said no shares of the public sector general insurance companies were sold yet. The merger of general insurance companies would affirm the government’s control and further strengthen the companies in terms of tariff and service. It would be more advantageous to both customers and general public, he said, adding that the common minimum programme framed in 2004, when the UPA government came to power, had promised that the public sector general insurance companies would be strengthened and safeguarded.

P V Nandakumar, president of the GIEA-SZ, said the ban on recruitment since 1991 had impacted the public sector adversely. The core strength of the employees was not maintained for many years and the quality of service by the companies was therefore affected, he said. There were also exits through the SVRS, VRS, retirement, resignation, death etc. He said the development officers of the public sector companies, who did the job of selling the insurance policies, were quietly phased out and brokers were given prominence as insurance intermediaries.

J Gurumurthy, secretary of the Standing Committee (General Insurance) of the AIIEA, said that since the entry of private players, many unhealthy trends had set in, in the general insurance sector in the country. He said under-quoting had become a very serious problem. He said with the arrival of brokers, individual agents who brought nearly 35 percent of the insurance business, that too mostly profitable, were paid a meagre commission.

Gurumurthy said prior to the entry of private companies, public sector general insurance companies undertook many social security schemes. These companies, in every nook and corner of this country, sanctioned Rs 1,500 immediately as compensation (hut insurance) for any fire accidents. Similarly, the PASS scheme helped the surviving members when a family’s breadwinner met an accidental death, by paying Rs 2,000 without any premium being charged. In the new dispensation, these schemes were discontinued. 

A resolution passed by the conference demanded that the government must withdraw the Insurance Laws (Amendment) Bill and consolidate the public sector general insurance industry on the lines suggested by the parliamentary committee on public undertakings.