The four state-owned general insurers have decided to link the incentives to development officers with the profitability of the business procured by them. At present productivity of an officer is measured through the growth in business.
According to officials, the decision would help the insurers in keeping their underwriting losses under check.
"At present the development officers are more bothered about getting business and are not interested in the quality of the business they get," an official said.
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According to the new formula, the claim ratio of the entire sales force would be taken into account while calculating their respective incentive levels.
However, any loss above a certain amount -- Rs 3 lakh -- would not be taken into consideration while calculating the incentive.
Meanwhile, the Union finance ministry has also cleared a voluntary retirement scheme (VRS) for development officers. The other option being given to the development officers is to shift to the administrative cadre.
The package is, however, yet to be finalised but is expected that the compensation would be on the lines of the package given to public sector bank employees which entailed 60 days compensation for each year of service rendered or salary for the remaining years of service, whichever was less.
However, unlike a bank VRS package, there would be no prescribed age limit or the number of years of service put in to be eligible for a scheme, which means that the scheme would be open to all the 13,000-odd development officers of the four public sector general insurance companies.
"We do not think that a new package should be introduced but the decision would be left to individual boards," said an official.
There has, however, been no further progress on VRS for other classes of employees of state-owned insurance companies.