PSU non-life insurers should deploy 50% of their staff in marketing: EY

There could be a huge influx of insurance marketing personnel in the market as nearly 20,000 employees of the government-owned general insurance companies are recommended be deployed in that role, as per consultancy firm Ernst & Young's (EY) report.

On the other hand, a union leader said that the move should be to merge the four companies and not purge the employees.

The EY has been hired by the four government owned non-life insurers - the National Insurance Company Ltd, the Oriental Insurance Company Ltd, the United India Insurance Company Ltd and The New India Assurance Company Ltd - to suggest restructuring of operations.

According to the EY report, 50 per cent staff of every office should be deployed in marketing. The four companies have about 40,000 employees and about 50 per cent of them - 20,000- have to be deployed in business development roles, is the surmise.

If implemented, most of the fixed cost employees - clerical and administrative- will soon be meeting their own salary cost by fetching a premium. Prior to the opening up of the sector for private participation, some administrative staff used to bring in business - even corporate business. However, instead of encouraging such staff, they were discouraged.

Even if the companies are able to sell their retail policies - home insurance, personal accident and others, the premium income will be sizable, an industry official said.

According to the official, many employees have not insured their own home and household articles against fire, burglary and other risks. The EY said it had prepared its report after interviewing over 100 stakeholders, visiting over 18 locations and over 60 offices, studying 81 data points and after studying the benchmarking elements.

"The four companies, when the EY started its exercise, had over 8,000 offices. And visiting over 60 of them and interacting with over 100 stakeholders, the sample size is questionable," Sanjay Jha, Secretary, Standing Committee, All India Insurance Employees' Association (AIIEA) said.

"To the best of my knowledge, the EY team did not meet the important stakeholders of the four companies - the employee unions," Jha added.

The employee unions are opposed to the EY report and their one demand is the merger of four companies into one. "Changing administrative employees’ role into a marketing role, that too through forcible means is a completely wrong decision. We are asking GIPSA to revisit the decision," Jha said.

He said, the proposed variable pay system linking key performance indicators (KPI) indicators with performance of each employee for their future wages and promotions is a dangerous proposition.

"Such concept is not there in any government offices or public sector units. Moreover, insurance business is based on team effort. So, we reject the above proposal and have demanded the management to continue with our wage system with revision on five year periodicity," Jha said. The unions are also against the manpower planning suggested by EY terming it as a flawed one.

"It is our firm opinion that the best reform for four PSGICs is their merger into a single entity. This will help them take most advantage of economies of scale and the single large entity will be in a position to compete with 30 odd private general insurers in the most effective way," Jha said.

Merge first and not purge, is the unanimous view of the various unions in the four companies.