The government-owned non-life insurers are witnessing the exit of a sizeable number of their employees owing to retirement as well as voluntary retirement due to a combination of factors personal as well as the possibility of privatisation, said a top leader of General Insurance Employees All India Association (GIEAIA).
The government is planning to sell off about 50 per cent stake in one of the three non-life insurers viz National Insurance, United India and Oriental Insurance Company Ltd.
“As per the information, at least one person in each region in the three companies is opting for voluntary retirement. While some are quitting for personal and family reasons, some others are also quitting as there is uncertainty since the government is planning to privatise one of the three companies,” K. Govindan, General Secretary, GIEAIA, told IANS.
Apart from voluntary retirement, about 150-200 employees in each of the three companies are retiring in the normal course, he added.
“At a time when there are already 26 private non-life insurers, what is that the government is going to achieve by bringing one more? The government could merge the three companies into one,” Govindan said.
He also wondered whether the government will be able to earn more by privatisation, as most of the non-life insurers are not earning profits.
Though the government had initially announced the merger of United India, National Insurance and Oriental Insurance into one company, it decided to junk the plan because of the issues that would rise, the related process and the huge cost involved, it is learnt.
Moreover, while the synergy of the merger versus its cost was being looked at, the Covid-19 pandemic broke out.
Further, the three companies are more or less similar in their operations and their solvency ratio is below the stipulated one, a senior official governing the insurance sector told IANS.
According to the source, for the last one year, the three companies are showing some signs of green shoots and they are turning profitable or getting on to a profitable growth path.
The government is mulling a strategic disinvestment, i.e., sell off 50 per cent as the buyer will want to have his say in running the company.
The government was not able to get the expected price when it divested its holding in New India Assurance a couple of years back and hence the strategic sale route, Govindan said.
Next year, another round of divestment of the government’s holding in New India Assurance will take place.
Meanwhile, two insurers — National Insurance and United India — will be getting new head honchos next month.
The Banks Board Bureau has recommended Inderjeet Singh, now with New India Assurance, for United India, and Suchita Gupta, now with GIC Re, for National Insurance.
The Oriental Insurance is now headed by Anjan Dey.
The interesting question is which one of the three head honchos will be spearheading the privatisation of his/her organisation?
The employees are also waiting for wage revision to happen.
(Venkatachari Jagannathan can be contacted at [email protected])