The four public sector government insurers — The Oriental Insurance Company Limited, National Insurance Company Limited, The New India Assurance Company Limited and United India Insurance Company Limited — have hired consultancy firm EY to suggest rejig measures.
The companies have started implementing the recommendations made by EY and also sought the views of the employee unions.
The unions on their part had asked for a copy of the report prepared by EY so that they can give their comments.
“During our discussions, it was stated by the GIPSA (General Insurers’ (Public Sector) Association of India) and the officials of the member companies that there is no such complete report available with them rather the consultant is used to submit their recommendation in phased manner and in PPT presentation format,” Girish Khurana, National Convener, Joint Forum of Trade Unions and Associations (JFTU) said in letter to Suchita Gupta, Chairperson, GIPSA & The Chairman-cum-Managing Director, National Insurance.
Last fiscal, the four insurers on the advice of Department of Financial Services/GIPSA had appointed EY to diagnose andAidentify the reasons attributed to the losses suffered by the companies and to design and implement the necessary changes to ensure profitability.
“Similarly, in GIC Re one consultant KPMG has been appointed to modernise its human resources and lay out digital strategies for developing its talent pool and manpower for faster business growth globally,” Khurana’s letter notes.
He said EY has divided the consulting project into three phases — diagnosis, design, implementation — and had completed the first phase, but that report was not shared by the companies.
However, the EY had shared the design for structural changes in the four government companies.
According to Khurana, the GIPSA had shared the following documents with the unions: the consultants’ key observations and way forward giving insight to the proposed initiatives; proposed broad structure of Performance Pay from FY 2022-23; and consultants’ report on Operating Model Transformation.
“The consultant failed to analyse the unnecessary competition among the four PSGICs and failed to suggest the need for merger in the line being followed in the Banking Sector earlier Union Budget declarations,” he said in the letter.
“The reports failed to mention the reasons for the required structural changes as with the similar structure we have done profits and given dividends to the owners for several years. Further for proposing this structure, a comparative study with the other players of the insurance industry has not been done.”
Khurana told the GIPSA Chairperson, in absence of the Diagnosis Phase Report and copy of Terms of Reference for which the EY was appointed, it is difficult to give concrete suggestions for the betterment of the four insurers.
He also said, for the success of the structure recommended by EY necessary technological infrastructure should be there in the companies but there has been no visible progress on that front.
Further, the standard operating procedure (SOP) for the new structure is yet to be designed, Khurana added.
According to Khurana, the present restructuring plans will be a futile exercise if the government were to merge the four companies with the Life Insurance Corporation of India (LIC) or the four companies get into life insurance business under the proposed composite insurance licence regime.
“So, we request you take clear guidelines from the owners in the above respect and till the process will be kept in abeyance,” Khurana suggested to GIPSA Chairperson Gupta.
IANS