Senior executives from public sector general insurance companies will discuss ways to modernise their business at the two-day meet
Public sector general insurance companies will now have an annual ‘insurance manthan’ to look into the issues plaguing the sector.
Financial services secretary Rajeev Kumar said in a tweet that this initiative is to develop comprehensive reform agenda in six themes to modernize public sector general insurance companies.
The six-point agenda under discussion include fully-insured society, customer orientation, digital and analytics for future, sustainable and prudent business, reach for everyone and talent management.
‘Insurance Manthan’ initiated! Aim to develop comprehensive reform agenda in six themes to modernize Public Sector GICs. Committed to work towards safety net for all citizens#EASEforInsurance #Surakshakinayineev @PMOIndia @FinMinIndia @PIB_India @PTI_News pic.twitter.com/pH7B1JBFzp
— Rajeev kumar (@rajeevkumr) October 5, 2018
Among the state-owned insurers, New India Assurance and reinsurer General Insurance Corporation of India are listed. Others including Oriental Insurance, United India Insurance and National Insurance are unlisted.
Underwriting losses stay high
The underwriting losses of public sector insurers increased by 43.89 percent to Rs 15,591 crore in 2016-17, from Rs 10,835 crore in 2015-16. The Finance Ministry had also warned PSU general insurers to improve their underwriting performance and not focus solely on their investment income.
In categories like group health insurance, the combined ratios have crossed 130 percent meaning for every Rs 100 collected as premium, Rs 130 is paid out as claims. This is primarily because state-owned insurers price products aggressively to retain large clients.
Merger process delayed
In his Budget speech, Finance Minister Arun Jaitley had proposed a merger and subsequent listing of United India Insurance, National Insurance and Oriental Insurance. However, that process has also been pushed to FY20 due to lack of consensus among the companies on the structure and weakening financials.
At the close of FY18, the solvency margin of the insurers have seen an improvement. Oriental Insurance’s solvency improved to 1.67 in FY18 from 1.11 a year ago. National Insurance had a solvency margin of 1.55 at the end of the March quarter down from 1.90 a year ago. United India’s solvency moved to 1.54 from 1.15 a year ago.
Akin to Gyan Sangam of PSBs
Since 2015, the Finance Ministry has held an annual two-day retreat for banks and financial institutions called 'Gyan Sangam'. This retreat was held to take forward the government’s commitment to reforms in the financial sector. The idea of organising such a retreat was to provide an informal academic environment, which can bring out the creative best of the minds of professionals and regulators.
From 2017, it was rechristened 'PSB Manthan' where senior PSB officials met in Gurugram to discuss and brainstorm banking sector’s troubles and focus on improvement in credit growth and reducing non-performing assets.
Similarly, it is envisaged that the insurance sector will have similar deliberations over the course of the two days. After the completion of the event, a roadmap for progress will be released similar to the ‘Indradhanush’ proposal in the banking sector.
The government had announced Indradhanush plan for revamping Public Sector Banks (PSBs) in August 2015. The plan envisaged infusion of capital in PSBs as well as human resource initiatives in the sector.
In the insurance sector too, a roadmap for improvement in the quality of the book and the talent will be looked at.State-owned non-life insurers have a series of problems including high underwriting losses, lack of young talent as well as a traditional way of functioning. On the technology front too, private insurers are way ahead of their public sector peers, be it in policy issuance, servicing and claims settlement.