Public sector general insurance firms to soon have EDs

In future, only EDs will be eligible to become CMDs in PSGICs. While CMDs are treated equivalent to the post of additional secretary in the DFS, the yet-to-be appointed EDs are likely to be treated at par with Joint Secretaries

The Appointments Committee of the Cabinet (ACC), headed by Prime Minister Narendra Modi, has finally approved the proposal of the Department of Financial Services to frame guidelines for appointment of EDs in all public sector general insurance companies.

The much delayed interview for filling up the six posts of directors in the PSU general insurance industry will happen soon as, much like the PSU banking sector, the government has now cleared the move to appoint executive directors in place of general manger & directors (GMDs) in a PSU general re/insurance company.

The sole state-run life insurer, LIC is already having a good number of EDs in place.

Unlike a GMD, who used to continue with the same salary which he or she was drawing as a general manger, an ED of PSU general insurance company will now receive a higher salary, which is yet to be fixed by the government.

Thus we will soon have two EDs each in GIC Re, New India Assurance (NIA), National Insurance Company Limited (NIC), Oriental Insurance Company (OIC), United India Insurance Company (UIIC) and Agriculture Insurance Company who are members of the GIPSA, the official coordinating agency for all these six companies, said a December 21 notification by the ACC, which has been reviewed by Bizz Buzz.

Only LIC, GIC Re and NIA are listed companies.

Though, the proposal to convert the post of GMD into ED was initiated some years back, the government has notified the resolution only after ACC’s recent approval.

Going by the new appointment framework, all general managers of PSU non-life insurance companies, who have served for a minimum service of one year and a residual service of at least one year on the date of vacancy of the ED post, are eligible, says the notification.

Meanwhile, the minimum service and residual service requirement maybe relaxed with the approval of the Union Finance Minister, if sufficient candidates are not available in the zone of consideration.

Under the circumstances, in order to shortlist candidates for the forthcoming interview of EDs, the government has to include names of officials, who have become general managers in FY24, with the special permission of finance minister Nirmala Sitharaman.

Currently, there are only three serving GMDs in PSGICs each of who is working at OIC, NIA and UII whereas nine posts of GMDs are lying vacant.

Also, now it is clear that all future posts of CMDs in the PSU general insurance industry will be filled up by promoting officials who have become EDs and unlike earlier occasions, GMs will not be eligible for CMD interviews.

Two posts CMDs in the PSU general insurance industry will fall vacant as S. Tripathy will be completing his terms in UII in February-end after reaching 60 while similarly Neerja Kapur will be calling it a day in April-end after reaching 60.

There is a possibility that both Tripathy and Kapur may be given extensions as there are not many senior officials in the PSU general insurance industry, who have completed two years of services and still have two years residual services, one of key eligibility criteria of a candidate to be shortlisted for the CMD interview.

Only Hitesh Joshi, general manager, GIC Re and BS Rahul, general manager, Agriculture Insurance Company (AIC) are the two senior officials in the whole of PSU general insurance industry, who are eligible for shortlisting but government normally shortlists five candidates for the selection of two CMDs.

Before conducting any possible interviews for appointing two CMDs, the government will first appoint six EDs out of which there can be names for shortlisting of larger number of candidates for filling up two CMDs but none of these candidates would have completed at least one year as ED, one of the criteria for the selection of CMDs in the PSU general insurance industry.

In future, only EDs will be eligible to become CMDs in PSGICs. While CMDs are treated equivalent to the post of additional secretary in the DFS, the yet-to-be appointed EDs are likely to be treated at par with Joint Secretaries.

The government’s headhunting agency Financial Services Institution Bureau (FSIB), which selects top officials of PSU banks insurance companies, will be selecting EDs. The recommendation of FSIB will be valid for a period of up to one year or as per orders issued by the Government of India, and maybe extended with the approval the ACC.