Statement by Trilok Singh, Convener Joint Forum of Trade Unions (JFTU) in PSGICs, Northern Zone
Dated 15th Jan 2022
As the Budget Session begins on Jan 31st 2022 and the Govt prepares to get its legislative business done, using all its dexterity trying to avoid any policy flip flop for a smooth passage of business in Parliament. However, the employees of the Public Sector General Insurance Companies appear to be the victims of the policy flip flop by the Govt. of the day, as they wait from August 2017 for revision of their five-year wage settlement notification.
While the former and late finance minister Shri Arun Jaitley in his Union Budget proposals of 2018 had announced the merger of three public sector insurance companies—The Oriental Insurance Co. Ltd, National Insurance Co. Ltd, and United India Insurance Co. Ltd. The same was recommended by the Malhotra committee and committee led by Late Sushma swaraj ji, but somehow after Sh. Jaitley’s untimely death, the idea of merger took a back seat in the corridors of North Block.
While introducing Insurance Privatisation Bill in 2002, on the floor of Parliament the then Govt vociferously announced to strengthen the public sector companies, the employees and the progressive section of the country have been demanding merger of the state run General insurance companies to avoid rate cutting and inter-company competition for better and effective functioning but the current establishment is more in favour of privatisation of the non-life insurance companies. In her 1st February 2021 budget proposals, finance minister had proposed privatisation of one general insurance company in FY 2021-22. The various media reports have been saying for privatisation of one or the other PSGI companies. This flip flop not only weakens the financials of all public sector general insurance companies; the Govt. has not named any particular general insurance company for privatisation, but it also affects the morale of large number of employees who are very committed towards the betterment of the financial condition of these companies.
These PSGI companies are also implementing all social schemes introduced by the Govt, as Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Suraksha Yojna, Ayushman Bharat, Pradhan Mantri Jan Arogya Yojana in the interest of farmers, weaker sections of society, Jan Dhan Bank account holders and economically vulnerable people. These companies have underwritten around 9 crore Pradhan Mantri Suraksha Bima Yojana, a pet project of the govt. The insurance cover provides 2 lakh compensation in case of death; for a premium of just twelve Rupees.
These PSGI companies stood with citizens and the country during the worst disasters, Earthquakes, flood, riots, through the ongoing pandemic Covid-19 and various other welfare policies besides giving thousands of crores of rupees to the govt as dividends over the years. These PSGICs have also invested around Rs. 1.7 lakh crore in Govt Securities and have hugely contributed to the development of country’s Infrastructure.
These public sector general insurance companies are underwriting nearly 20% of the business in rural areas, provide general insurance service to the common man and serve more than 50 crores people of the country through various social schemes thereby fulfilling the commitment of the Govt towards its citizens.
While the capital infusion of around Rs.12,500 crores by the Govt in these companies is not only welcome but also overdue, given the regulatory requirements for solvency. The North Block mandarins must remember that the capital infusion was not required from 1973 to 2020 as PSGI companies were self-sufficient and paid handsome dividends to the govt. The need for capital infusion arose due to rising underwriting losses caused due to undercutting of premium rates amongst the Public Sector General Insurance Companies (PSGICs), fulfilling the social commitments, the move of merger of three companies in 2017 and the sale of one company in 2020.
Despite intense competition from around 28 private general insurance companies, these four public sector general insurance companies command more than 40% of the market share, this would have been much higher had the four state run companies been merged into single entity.
On a lighter note, we must not forget the story of an old farmer who had four sons. They always quarrelled with one another. Farmer was worried about his sons. He wanted to teach them a lesson. He asked them to live in unity but in vain. He then asked his son to bring a bundle of sticks. He called his sons one by one and asked them to break the bundle. None could do that. Then he ordered his son to untie the bundle. Now each one of them could break the sticks easily. He advised his sons to live like a bundle of sticks in unity.
Currently, only one general insurance company viz. The New India Assurance Company Limited is listed on the stock exchanges.
Insurance, as we all know, is a commoditized business where the difference between a profitable and non-profitable company is caused by the management of these companies. It is, therefore, desirable that the workforce, which has stood steadfastly towards keeping the high standards of service to the people of India, the officers and employees of these companies be given their due in terms of an early wage settlement.
It is surprising and unfortunate that some hidden forces are working against the public sectors, misleading and maligning their image, there is a hue and cry seen on the capital infusion in PSGICs by these forces, it is a matter of record that after the direction from the Govt. the public sector banks have written off loan of Rupees 2.02 lakh crore in FY 2021 and the Rupees 10.7 lakh crore in last 7 years of corporates. Similarly. the Govt has converted Rs. 16,000 crore interests due from Vodafone into equity shares and have given thousands of crores relief to the corporate houses when multitude of our people are reeling under pathetic living conditions.
We therefore welcome more capital infusion in PSGI Companies and reiterate our demand of merging all four public sector general insurance companies in the interest of the nation and the common man.