Merge PSU insurance firms: AIIEA

Contrary to the bank unions' demands to halt the merger of state-run banks, the All India Insurance Employees' Union (AIIEA) wants the four public sector insurance companies""United India Insurance, National Insurance, Oriental Insurance, New India Assurance---to merge.

Amanulla Khan, president, AIIEA, said at at a press conference in Kolkata on Monday, that the merger would create a total asset value of Rs 73,000 crore, which would enable insurance schemes penetrate in rural areas and help the merged company attain the economies of scale to compete with private sector insurance companies.

The members have also sought 40 per cent increase in wages after merging dearness allowance with basic pay at consumer price index of second quarter of 2007.

It has also threatened to go on a day long strike of April 23, preceded by agitation commencing with one-hour walk-out strike on March 26 and a two-hour walk-out strike on April 11 for withholding the promotion of class III and IV employees for the last four years.

The union has accused the government of deliberately weakening the public insurance companies to facilitate the privatisation of the insurance sector.

The AIIEA has also ridiculed the Union finance ministry directive to engage separate management consultants for business process re-engineering, at a fee of Rs 15.50 crore, by each public sector general insurance company.

"The four companies are expected to spend over Rs 400 crore to develop four separate IT solutions. This is yet another mindless act undertaken by the public sector companies, when the merger is still under the consideration of the government and a single IT solution will suffice," Khan said.

The AIIEA would also oppose any effort of the government to raise the FDI limit in the insurance sector from the present 26 per cent to 49 per cent, said Khan.

"The private sector's indulgences in unethical practices offer of higher commission beyond permissible limits to agents, and their refusal to underwrite socially necessary but unprofitable businesses are being ignored by the regulator," he said.

As on 31 March 2007, the four public sector general insurance companies, together had market share of 71.02 per cent in the segment. The profits of the four companies in 2006-07 increased from Rs 1,583 crore to Rs 3220 crore, marking a 103 per cent rise.