By Dr. A Mathew, Secretary, Kamgar Ekta Committee (KEC)
The General Insurance Business (Nationalization) Amendment Bill, 2021 was passed by the Lok Sabha on August 2 without any discussion, just like many other anti-people bills being passed in this monsoon session of the parliament.
Immediately after that, in response to a call given by the Joint Front of Trade Unions to workers of public sector general insurance (PSGI) companies, all of them observed a one-day nationwide strike on 4th August to protest against this privatization move. Many central trade unions as well as the All India Bank Officers’ Confederation (AIBOC) and All India Bank Employees Association immediately declared their support to the struggle of PSGI workers. It should be noted that over the last two decades workers of PSGI companies and working people all over the country have been constantly opposing the moves of various governments in power at the centre towards the of privatization of the insurance sector by.
Disregarding all this opposition, on 11th August the bill was presented in the Rajya Sabha. Almost the entire opposition, including those who normally support the ruling party (YSR Congress and BJD) demanded that it be referred to a Select Committee. However, this demand was rejected by a voice vote and within minutes of presenting the bill, without any discussion, the bill was declared as passed by Rajya Sabha.
As per the statement of objects and reasons of the General Insurance Business (Nationalisation) Amendment Bill, 2021, it seeks to remove the requirement that the central government should hold not less than 51 per cent of the equity capital in a specified insurer. It also provides for cessation of application of the general insurance law to those insurers over which the government ceases to have control. Control means the right to appoint the majority of directors or to have the power to influence management or policy decisions. This thus completes the process of privatization of the General Insurance sector which was pursued by various governments at the centre over the last 25 years.
As of date, there are four general insurance companies in the public sector -National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. The four general insurance companies have around 8,000 offices across the country with about 52,000 employees and officers who cater to crores of general insurance policy holders, individual health insurance policy holders and peasants availing crop insurance, hut insurance, cattle insurance, etc. The future of such a large section of our citizens has thus been decided in minutes by the parliament!
The finance minister justified the bill by saying that it will usher in more private capital into the general insurance business, will help improve its reach, will make more products available to customers and will better secure the interests of the policy holders. However, the facts are exactly opposite to her claims.
The experience with private insurance companies before nationalisation in India and in other countries shows that the privatisation of the insurance sector is not in the interest of people. In India private life insurance companies, before nationalisation in 1956, were known for unscrupulous business practices and frauds. They used to have high premium rates and had a bad record of settling claims. Insurance is a type of business that ought never to fail if it is properly run. Yet, during 1950-1954, 43 private life insurance companies failed in India! Even in the recent past Reliance Health Insurance has closed its general insurance operation, while L&T and Apollo Munich have sold their operations! In the year 2020 and 2021 penalties were imposed against private insurance companies and the number of grievances against them was 82 per cent as against 18 per cent against public sector insurance companies.
Public sector general insurance companies have introduced more than 150 products at the lowest possible premium. The private sector is not interested in doing any loss-making or low profitability insurance, whereas it is the public sector general insurance companies which are tasked by governments to implement their schemes like crop insurance, hut insurance, cattle insurance, etc. The government offered personal accident insurance of up to Rs. 2 lakh rupees as an incentive under the Pradhan Mantri Suraksha Bima Yojna through the public sector general insurance companies. The premium offered by the public sector is as little as Rs. 12 per year. The private sector was not interested in this loss-making business.
Similarly, after the entry of the private sector in general insurance the premium for a two-wheeler increased from Rs. 40 earlier to Rs. 568; for a lorry, it has gone up from Rs. 1,235 to Rs. 17,300 rupees. After 20 years of private players entering the general insurance market, the 27 private general insurance companies have only 49 of their total 2,469 branches in tier 3,4,5 and 6 cities as against public sector companies who have 40% of their offices in those cities. The public sector general insurance companies have a customer base of 50 crores as a result of massive rural penetration, which private players do not have.
Privatization of the general insurance sector will thus endanger all the safety covers which working people of our country currently have. We call upon all the working people to join us in opposing this anti-people and anti-worker bill!