Top officials rush to take VRS at PSU insurers

The voluntary retirement scheme (VRS) announced by four public sector non-life insurance companies three weeks ago has received a mixed response. While Class-I officers have rushed to take the exit, the response from the lower rung has been lukewarm.

"As many as 10 per cent Class-I officers of the four companies have sought VRS," an official at one of the insurance companies said.

There are around 20,000 Class-I officers in the four public sector companies, of whom around 2,000 have already applied for separation.

This was higher than the ministry's expectation of only around 1,000 optees. United India Insurance, which was expected to witness the largest outgo of employees, saw as many as 400 Class-I officers applying for VRS.

Another 250 Class-III officers and a few Class-IV staff have also applied for the scheme.

At National Insurance Company Ltd, 500 Class-I officers out of a total 4,400 have opted for VRS. And 400 Class-III officers out of 8,000 have already applied, while the number was negligible in the Class-IV category.

Around 12 per cent of Class I officers have put in their papers at Oriental and New India Assurance.

"If all those Class-I officers applying for the scheme were separated, the public sector non-life insurance sector would face a major shortage of skilled officers," a source said.

The aim of the retirement scheme was to rationalise the workforce at the bottom of the hierarchy while also trimming flab at the top. But this objective seems to have been defeated owing to the surprisingly large number of Class I officers deciding to part ways.

A source at a private sector non-life insurer said that the private sector was not poised to absorb these exiting officials.

Most of the top slots in the private sector companies are taken and there is very little scope for the private sector to absorb this huge outgo, the source added.

"If these officers set up outfits of their own in the form of brokers or corporate agents, the industry will develop to some extent but such a trend is yet to be seen," explained Dalip Verma, managing director, Tata AIG General Insurance Co Ltd.

Under targets set by respective management's, United India Insurance was expected to witness the largest number of total outgo. It was estimated that as many as 2,117 employees would opt for the scheme against a total of 18046 employees, falling under Class I, III and IV category. UII in that case would have to shell out Rs 140 crore "" the highest among its counterparts.

Close on the heels would be New India Assurance where approximately 2,062 employees were expected to apply. Total cost of the retirement scheme was estimated at Rs 136 crore, with 19,824 employees opting for VRS.

National Insurance on the other hand was expected to see an outgo of 1,829 employees out of a total of 16,073 employees. This would cost the company around Rs 113 crore.

Oriental Insurance expected around 1648 employees to opt for the scheme, against 16128 employees on its payroll under the three categories.

The total number outgo from the four public sector non-life insurance companies therefore was estimated at 7656, while there are a total of 70,071 employees under the three categories. The cost was estimated at Rs 502 crore which would be amortised by the companies over the next five years.