Wiser with the experience of the public sector banking industry, the four state-owned general insurance companies and the General Insurance Corporation of India (GIC) are planning to introduce a voluntary retirement scheme (VRS) only after rationalising the branch network as well as delayering the organisational structure.
The proposed VRS in the insurance sector will be modelled on the banking sector VRS which offered employees 60 days of salary for every year completed or the residual years -- whichever is lower.
However, the exception would be made for development officers, for whom a special and more attractive package is being designed. The entry of new insurance intermediaries -- agents, corporate agents and brokers -- makes the 14,000-strong development officers redundant and an expensive proposition for the state insurers, which are reeling under the pressure of high administrative expenses.
The General Insurers' (Public Sector) Association of India (Gipsa), the co-ordinating body for the four companies, proposes to allow development officers having completed 10 to 15 years of service to be eligible for the golden handshake. This runs contrary to the banks' VRS which was offered to those in the age bracket of 40 years plus and who had completed 20 years of service. The apex body has forwarded the proposal to the finance ministry.
Moreover, to ensure the success of the VRS, the transfer policy is of critical importance as the four companies undergo massive restructuring of offices and de-layering of cadres. "We have to make sure that following the VRS all offices are able to run efficiently unlike what happened in the banking sector post-VRS," said Gipsa sources.
The transfer and mobility policy guidelines will come into effect by January 1, 2002, and will be applicable to all officers up to the rank of deputy managers. The total workforce today stands at around 80,000. "There are however, more officers in the urban areas than in the rural areas. It is imperative that the transfer policy succeeds so that the incident following the VRS in the banking sector is not repeated," said Gipsa sources. However, officers who are due for retirement on superannuation within two years, will not be transferred unless necessary. Earlier the transfer policy was not followed seriously.
Gipsa is in consultation with the government and various union bodies as it chalks out the final VRS proposal. In a presentation made to the various unions and approved by the four chairmen of the state-owned insurers, Gipsa highlighted in-house restructuring of the four companies in terms of rationalisation of cadres and grades, as well as consolidation of offices.
Gipsa hopes to bring down the number of branches by 5 per cent from the 12,000-odd at each of the four companies. Gipsa has identified September 30, 2002 as the deadline for individual companies to merge non-viable offices where the premium income is less than Rs 75 lakh and costs are in excess of 25 per cent. The four insurers have to merge offices within the same locality by March 31. "The process of consolidation of offices is not only to minimise infrastructure cost, but also to enhance our public image and render quality service to customers," said Gipsa.
