The government has asked public sector general insurers to focus on improving their underwriting performance, reducing management expense to below 20 per cent of the premium income, complete computerisation by June next year and undertake a restructuring in line with the recommendations of AF Ferguson, which conducted a management audit.
In a missive sent out by finance ministry on September 9, the government has asked general insurance companies - New India Assurance, National, Oriental and United India Insurance - to decide on the AF Ferguson recommendations by October 7.
The boards of the four are slated to meet over the next one week to deliberate on the recommendations.
Among other things, the report has recommended professionalisation of the marketing and investment departments by inducting experts and greater churning of investment portfolio, senior company executives said.
The consultant, appointed on instructions from the finance ministry, has recommended greater tracking of investments by general insurance companies. It has also suggested that companies should go for market mapping and greater segmentation on the market to improve their product reach.
On reinsurance, the consultant has advised the companies to go for long term engagements through treaty arrangements as also explore the option of commutation of old loss-making treaties.
Budgeting focus has also proposed to be overhauled and the role of financial advisors, who are general manager level executives, is recommended to be brought in line with those of a chief financial officer in companies.
AF Ferguson has recommended that the financial advisor should be assigned the task of accounting, budgeting and investments.
The report, submitted for individual companies, has also suggested that the present four-tier structure of a head office supported by regional, divisional branch offices be delayed by merging divisional and branch offices.
H S Wadhwa, chairman and managing director of National Insurance and head of General Insurers
