The Hindu Business Line : Govt seeks performance targets — Now, public insurers nudged to shape up

The four insurers have to submit performance targets for two consecutive years, unlike the PSBs which were asked to set out targets for the current fiscal only.

New Delhi , Sept. 15

AFTER extracting definite performance targets from public sector banks, the Ministry of Finance has turned its attention towards the state-owned non-life insurance companies.

For the first time ever, the Ministry has asked the four insurance companies - Oriental Insurance Co, New India Assurance Co, United India Insurance Co and National Insurance Co - to submit performance targets for two consecutive years, including the current fiscal.

This is in contrast to the exercise for the banking sector where the Statement of Intent on Annual Goals would be sought for one year at a time, with the first one setting out targets for the current fiscal.

"The four non-life companies have been asked to prepare the performance parameters for the fiscal year 2005-06 and 2006-07. They are in the process of submitting their targets to the Government," an industry source said. The Government of India owns the entire stake in the four insurance companies.

The parameters on which the insurers have been asked to prepare their targets include underwriting growth, underwriting profits, net premium growth, targets on investment and growth in motor and non-motor portfolios.

The Government is hoping that getting the companies to set out goals for themselves would help tone up their working and take on the competition from the private sector companies. The challenge from the private companies is getting tougher with each passing year, resulting in cut-throat competition for acquiring business.

Besides the four Government-owned companies, the Insurance Regulatory and Development Authority (IRDA) has presently given registration to another 10 non-life insurers including Export Credit Guarantee Corporation (ECGC) and the Agriculture Insurance Company of India Ltd.

Recently, 27 public sector banks have submitted their target for the current fiscal that includes parameters such as net NPA, capital adequacy ratio, return on average assets, return on average net worth, net interest margin, cost-to-income ratio and profit after tax.

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