The Hindu : Andhra Pradesh News : ‘Global companies keen on major share of Indian insurance sector’

Online edition of India's National Newspaper
Monday, Jun 02, 2008
ePaper | Mobile/PDA Version

Andhra Pradesh

Andhra Pradesh

‘Global companies keen on major share of Indian insurance sector’

Staff Reporter

Pressure being exerted on government to allow FDI: AIIEA

Kakinada: The All India Insurance Employees’ Association (AIIEA) is opposed to hike in the limit of Foreign Direct Investment (FDI) in Indian insurance companies, not because of fear of competition from foreign companies but due to the danger of ‘native savings’ ending up in ‘alien hands’. Several foreign companies, whose performance is below global standard, are seeking partnerships with Indian firms to exploit the burgeoning middle class, said AIIEA general secretary K. Venugopal. Addressing a press conference here on Sunday, Mr. Venugopal said pressure is being exerted on Indian Government to allow more FDI in private insurance companies due to the stagnation in US and European markets and the prospect of quick returns in India. Moreover, the performance of several foreign companies keen on entering India has been pathetic in their own countries.

Against this backdrop, the excellent performance of Life Insurance Corporation of India (LIC) and four public sector General Insurance Companies (GIC) despite the slowing down of the economy, underline the need to support them rather than helping foreign companies, which are bent on capturing a greater share of the Indian insurance industry.

Settlement rate

The AIIEA leader said the rate of settlement of claims by LIC has been consistently above 99 percent (72 percent in the private sector) and its operating expenses are just 5.54 percent against 23.11 percent of the private companies. LIC has been outperforming the private companies, with 23 crore policies in its kitty and the lowest lapsing ratio of four percent. The LIC’s market share is 64 percent followed by 8.94 percent of its closest competitor, ICICI Prudential Life Insurance. The performance of GIC has also been impressive with Rs 17,000 crore premium income earned in 2007-08.

As regards wage hike, Mr. Venugopal said the Centre should increase the wages that were due for revision on August 1, 2007, by 40 percent as the salaries were much lower than the wages of private insurance companies. However, the problem of attrition is not alarming, with only four to five percent of the employees opting for jobs in private insurance companies. The government should realise that the demand was justified and both LIC and GIC have capacity to pay. Insurance Corporation Employees Union leaders Banerjee, P Satish and G Rambabu were present.

Printer friendly page
Send this article to Friends by E-Mail

Andhra Pradesh