Rs 180-cr business awaits insurers in MP

A big opportunity is brewing for private as well as government-owned insurance companies to do business of approximately Rs 180 crore in MP.

The state government is looking for private and government-owned insurance companies to insure 18,000 panchayat karmis (workers) in 48 districts.

The government is looking for a company that has a wide network in all the districts of the state or has an alternative route to arrange for tie-ups with other insurance companies for group insurance.

The state government will enter into tie-ups with the firm in one go. There will be no individual arrangements with employees for insurance.

The state has 23,000 panchayats with a workforce of 18,000 panchayat karmis. Other posts in panchayats that had earlier been declared "dying cadre posts" are likely to be filled up again. The group insurance covers employees in the age group 18-59.

Speaking to Business Standard, Commissioner (Panchayat) V S Niranjan said, "We are looking for private as well as government insurance companies." He, however, was not aware of the amount to be invested in the product.

"The panchayat and rural development departments will pay the premium each year in two installments," said another government spokesperson, adding, "companies with authorised permission to do business in Madhya Pradesh under the Insurance Act will be eligible and are required to bid for the product by October 31.

The company is also expected to furnish a bank guarantee of one-sixth of the total premium paid by the state government on terms and conditions laid down by the state government.

The scheme is slated to be launched in April next year. It will insure an employee for a compensation of Rs 25,000-100,000.

"The state government is asking for Rs 50,000 for accident claims and Rs 1 lakh for death claims. We will participate in the bidding," said a senior LIC official, adding, "we are waiting for our central office permission. The product size will be around Rs 180 crore."

As far as private companies are concerned, the state government is likely to get a lukewarm response.

"Private firms generally do not pick up these products, which offer very thin profits," an insurance industry source told Business Standard.