|HOME | BUSINESS | NEWS|
|May 25, 1998||
Insurance employees to protest against opening up of sector
Over 200,000 insurance employees from all over the country will stage a demonstration before Parliament on Wednesday -- the opening day of the Lok Sabha's Budget session -- to protest against the Bharatiya Janata Party-led government's attempts to introduce a bill for the establishment of an Insurance Regulatory Authority and simultaneous amendments to the Life Insurance Corporation and General Insurance Corporation Acts.
The unions, in a joint statement, feared that the amendments will allow entry of private companies in the insurance sector. On the same day, over one million employees of the banking sector will stage a demonstration against the recommendations of the Narasimhan Committee report.
The representatives of the unions of officers and employees of the LIC and GIC are scheduled to meet in New Delhi tomorrow to finalise the action programme that includes strikes, public meetings, and a march to Parliament.
The unions have argued that the private companies will not spread out to reach the uninsured people, most of whom have no disposable incomes to buy insurance. The vast majority of the population can be brought under insurance through rural business and social security schemes.
However, unwanted competition from private companies will reduce the capacity of the LIC and GIC to cater to the needs of a large population, the unions claimed.
Listing their complaints and reasons why the insurance sector should not be opened to competition, the unions alleged that the assumption that the entry of private and foreign companies will pursuade the affluent sections of society to invest more in insurance is not correct. Their preference will continue to be for investments in short-term deposits, shares of companies, and real estate, said the unions.
The urban middle class, in search for higher yields on investments, is likely to get cheated in competition which the private companies will play through undercutting of premia and illegitimate benefits to big agents.
The unions pointed out that insurance is a business based on the theory of probability and the true picture of profit or loss can emerge only over a period of time. It is unlike the supply of a commodity or service where the level of satisfaction is seen immediately in the case of life insurance.
The ability of the company to pay bonuses on a rising scale and settle the maturity claim on time can be tested only after 20 to 25 years. The policies issued by the LIC enjoy government guarantee and therefore, the policy monies are fully secure. Private companies will ask for removal of government guarantee to ensure a level-playing field.
It is not as if India needs the services of foreign insurance companies, the unions stated. It is the foreign companies who are keen to enter into a lucrative market in India in the face of continuing stagnation and low interest rates in their own countries.
There is nothing that LIC and GIC cannot do, the union leaders said. In the last five years alone, LIC has contributed to the Government of India a sum of Rs 7.9 billion by way of dividend on its paid-up capital of Rs 50 million. It has maintained an annual growth at the compound rate of 20 per cent, while its performance in respect of claims settlement continues to be satisfactory. There is perceptible improvement in service to the policyholders after the introduction of information technology, the unions added.
Tell us what you think of this report
INFOTECH | TRAVEL | LIFE/STYLE | FREEDOM | FEEDBACK