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Wednesday, Jan 30, 2002

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3 options for insurance development officers

Sarbajeet K. Sen

NEW DELHI, Jan. 29

THE process of relocation/retrenchment of 12,000-odd development officers (DOs) of Government-owned insurance companies has commenced, with General Insurance Public Sector Association (GIPSA) preparing a detailed paper on repositioning their marketing force, offering them three options, including a voluntary retirement scheme (VRS).

The other two options being offered to the DOs are shifting over to the administrative side as Business Relations Executives or being redesignated as Marketing Executives under a modified scheme with strict performance criteria which could even lead to termination of employment in extreme cases.

Insurance industry functionaries said that the new scheme for marketing executives has been made so stiff that not many would venture to take it up in view of the likely threat of termination.

The offer was made during a recent meeting of GIPSA with representatives of DO unions.

In its offer, GIPSA stated that the redefinition of the DOs' role was being done in the wake of the requirements of the new liberalised insurance scenario.

"In the wake of liberalisation of the market, which will henceforth be driven by intermediaries like agents and brokers, the role of development officers has to be redefined,'' a GIPSA note prepared for the meeting said.

According to the proposal, the revised scheme for marketing executives would include a completely new definition of aspects such as cost, premium procured, increments and decrements and incentives.

Thus, the new calculation of `cost' incurred by a DO in procuring business would include salary and non-core allowance, which were excluded in the calculations since 1987.

Calculation on increment or decrement would be linked to the cost incurred by a DO (the new marketing executive) and the additional business generated by him.

If a DO exceeds the cost ratios, the emoluments would be reduced to within the limits specified as the first step.

In case of such reduction of emoluments for three consecutive years, the person's services are liable to be terminated.

On the incentive front, instead of the three-tiered incentive structure, a single incentive scheme based on operating surplus would come into operation.

The incentive would be paid only if a minimum of 20 per cent surplus is shown and could be capped at five per cent of the operating surplus.

DOs who opt for administrative function would be assigned tasks such as in-house surveys and risk inspection, assisting in motor third party claims, customer service, market research, product development or claims investigation.

They would have to forego all non-core benefits such as conveyance, telephone and entertainment allowance and incentives linked to business procured. They may also be transferred anywhere at the management's discretion.

The VRS seeks to target DOs who are above 40 years of age or have completed 15 years of service.

The compensation would be 60 days' salary or salary for the remaining months of service, whichever is lower.

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