Financial Daily from THE HINDU group of publications
Wednesday, Oct 13, 2004
Financial Daily from THE HINDU group of publications Wednesday, Oct 13, 2004 |
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Money & Banking
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General Insurance Unions seek merger of four public sector insurance companies Our Bureau
Kochi , Oct. 11 THE All India Insurance Employees Association (AIIEA) has called upon the Government to strengthen the four public sector insurance companies by merging the four to tap the entire insurance business in the country. The consolidation of insurance companies would help in getting the business as well as in providing additional resources to the Government. This would also help the insurance companies to underwrite higher risks and help in retention of higher percentage of premium, the Association General Secretary, Mr K. Venugopal, said at a press meet. It has been a long standing demand of the Association that that the four insurance companies should be merged into a single entity. He wondered as to why the Government was hesitant in this regard while there was talk of merger of banks and oil companies. Though the general insurance companies have been registering growth over a period of time, Mr Venugopal said an area of serious concern was the tremendous finance outgo in settlement of third party insurance claims. The gross direct premium income for the year ending March 2004 was Rs 13,828 crore. On an average, the public sector companies were incurring a loss of Rs 2,000 crore per year in this portfolio. The continuing loss in this segment was hampering cross subsidisation of social insurance by the public sector companies, he said. The AIIEA was demanding an amendment to the Motor Vehicles Act to provide for structured compensation in third party liability insurance. Such a provision would help the families of road accident victims to get quicker settlement of the compensation, he said. Contrary to the assurances given by the Government in the Common Minimum Programme, the Finance Minister, Mr P. Chidambaram, had proposed to increase the FDI limit in insurance. Hike in FDI would not only help the domestic insurance sector, but also increase the profit of multinational companies and help them repatriate Indian people's money to their countries. The Association has also decided to launch a day's strike if Bill to amend the IRDA Act to provide for hike in FDI limit is brought in Parliament. Pointing out that wage revision was overdue, Mr Venugopal said no serious measures had been taken on the issue. The public sector general insurance industry could post a profit (before tax) of Rs 2,846 crore for the year ending 2004, which was an increase of about 140 per cent compared to the previous year's profit of Rs 1,185 crore. It was also decided to observe a two-hour walkout strike on October 29 and a one-day strike in November demanding wage increase. The Association also demanded an end to the tie-up between a public and a private sector company. According to the association, the public sector company was exposing its database to the private sector company through the tie-up.
More Stories on : General Insurance | Trade & Labour Unions | Kerala
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