The Hindu Business Line : DOs reject phase-out plan; look to Ministry

THE managements of the State-owned insurance companies and their 12,000-strong cadre of development officers (DOs) are heading for a protracted confrontation over the General Insurance Public Sector Association's (GIPSA) plan to phase out the entire marketing force.

The all-India representative bodies of DOs have rejected in toto the GIPSA proposal which offers three alternatives for relocating the cadre, while making a representation to the Ministry of Finance seeking its intervention in the matter.

In a communication to the Additional Secretary, Financial Sector, Mr S. K. Purakayastha, the three DO associations said the move to do away with the cadre, who has been procuring nearly 60 per cent of the business for the companies, would not be in the overall interest of the industry.

"The three offers made to us by GIPSA reek of ulterior designs and as such we cannot accept an approach which is neither in the interest of the industry nor of the DOs,'' the communication said.

GIPSA had recently offered the DOs a choice between converting themselves into a new cadre of Marketing Executives who would function under strict performance parameters or move over to the administrative side.

If both choices were not acceptable to anyone, the person would be offered a voluntary retirement scheme (VRS) which was being formulated.

Arguing in favour of the proposal, GIPSA had said the restructuring exercise had become necessary in view of the likely entry of dedicated intermediaries, such as broking companies, who could be hired to handle the marketing job.

However, the DO associations said that their cadre were capable of "meeting any challenge that private insurance companies posed.'' They have said that they would offer their cooperation to the Finance Ministry and the managements in formulating'' any (alternative) reasonable approach.''

The communication to the Ministry has been signed by Mr Ajit Gupta, President, All-India Federation of General Insurance DO Association; Mr Md Tyebbhoy, General Secretary, National Confederation of General Insurance DO Association; and Mr P. Verma, General Secretary, General Insurance DO Federation.

The associations argued that singling out the DOs as being responsible for the rising overall management costs was not backed by facts. "On an all-India basis, DOs contribute to 60 per cent of the total premium income and their average cost is 4 per cent against the average permissible cost of 9 per cent,'' they said.

They also urged the Ministry to make the insurance companies conduct an exercise wherein the cost factor is applied to the remaining class of employees to ascertain the correct facts.

Send this article to Friends by E-Mail

Stories in this Section
`RBI buying dollars, not targeting any rupee level'

Rupee steady; gilts rise

DOs reject phase-out plan; look to Ministry

Catholic Syrian Q3 net at Rs 15.7 cr

ICICI Bank to extend eCheque facility

BoI extends multi-branch facility

HSBC financial service for rich customers

Citibank launches new product

ECGC factoring for exporters from April