PSU gen insurers seek cover of downsizing

Cost Minimisation 

- PSGICs will identify products and lines of business profitable

- Cost cutting through merger/closure of offices

- Reduction in management expenses

- Utilisation of 50% officials for marketing insurer's products

- Introducing a new concept of Business Development Officers (BDOs)

Mumbai: After having decided to close their non-profitable branches, all the four state-run general insurance companies have now started to implement it at the ground level. The story was first broken by Bizz Buzz in its edition, dated October 11.

It has been observed that bad, trash & behaviour pattern of underwriting is the reason for downfall of public-sector general insurance companies (PSGICs). It was nearly a couple of months ago when the managements of all the four-state owned general insurers had sent mails to all Regional Offices (ROs) regarding their 'office consolidation' plans. New India Assurance alone plans to shut 30 per cent of its offices (nearly 650 offices) all over India by March 31, 2022. Moreover, ROs had been asked to hold discussion with unions/associations will give their recommendations soon, before sending promotion posting recommendations.

DFS had asked NIA to close 650 offices by end of this fiscal year. For UIIC, the target to have total number of offices is 1,350 in the first year, 1100 in the second and 800 in the third financial year end.

NIA will be having 1500, 1200 and 1000 offices respectively during next three years. Similarly other two PSGICs will also reduce the number of branches accordingly.

Anjan Dey, Chairman and Managing Director of Oriental Insurance Company (OIC), held an interaction with the members of OIC Officers' Association (OICOA) on December 1 on key performance indicators (KPI).

Initiating the meeting, the CMD agreed that they are late in holding the meeting due to various reasons but ROs have already started to brief the associations on the developments on KPI and have started working on it. There are three areas on KPI – profitable growth, digital issuance of policies and cost minimisation.

First, the company has to identify the products and lines of business profitable to its officials. Claim settlement ratio should be improved. Primary focus will be on cost minimisation through merger/closure of offices and reduction in management expenses.

Utilisation of 50 per cent officials for marketing of the insurer's products by introducing a new concept of Business Development Officers (BDO) in addition to agency vertical and tie up verticals. Two-tier structure has been proposed where the operating offices shall bring the business and SVC/TP Hubs have to settle the claims.

Vishnu Aggarwal, General Secretary-OICOA, says, "On behalf of OICOA, we stated that we are a constructive association and is with the management on restructuring where our company becomes stronger but without affecting the interests/benefits of our officers' community who are more committed and shouldering more responsibilities."

Surprisingly, the meetings started at RO levels without any briefing to the central units. Our Regional Units are looking on us and we have no information in this regard. It would have been better if a small note containing the details of KPI should have been circulated with the checked off associations before starting any dialogue on this issue, he added.

Surprisingly, GM-IT was absent in the crucial meeting where digital part was to be discussed.

Aggarwal said, "We are required to invest in technology. Why HO is asking for data from underwriting offices whereas it is available with HO as well. On feedback form, there has been various feedbacks but no follow-up right now. It will not serve any purpose if no action is taken on the feedback."

The association wants that there should be a transparent system to identify the offices for closure/merger after due consultation with it. No profit-making office to be closed/merged with loss making office with in-charge of loss-making office as in-charge of consolidated office. All the BCs working without any in-charge/business or negligible business should be closed/merged immediately.

While considering loss making offices for merger/closure, losses due to govt business like crop insurance and health schemes etc. and poor performance by the DO/BO in-charge due for retirement and not showing any interest to improve the performance of that particular office should not be considered for closure or should not be taken into account for closure on account of loss-making grounds. Also, the offices which are very far away from another office and have potential to improve should not be closed/merged for proper visibility of our company.

The CMD, while replying to the association's points, stated that there shall be a common feedback form for all PSGICs and an external agency will evaluate these feedbacks and give their suggestions in this regard. RO in-charges have been advised to have meetings with associations before taking a decision on closure/merger of offices.