The Hindu Business Line : PSU non-life insurers seek consulting help

The first to kick off the process is United India Insurance Company, which has invited applications from consulting firms to assist it in fashioning what it calls "a transformation strategy."

The proposal is part of a broader public sector initiative at the instance of the Ministry of Finance, a source close to the industry said.

"The Finance Ministry has asked the four public sector non-life insurance companies - New India, Oriental, National and United - to appoint a consulting firm, so that they can reposition themselves in the light of increasing competition from private insurers. The idea is to create world-class organisations," said a senior official at a public sector non-life insurance company.

Public sector non-life insurance companies have been steadily losing market share in the past few years.

In 2006-07, the share dropped to 65 per cent, against 73 per cent in the previous year.

Analysts estimate that the four insurers have together clocked an underwriting loss of around Rs 2,000 crore in 2006-07.

The companies have been able to report profit only on account of their investment returns.

The losses have mainly been on account of a bleeding motor insurance portfolio, according to officials.

The four insurers have grown at 4-11 per cent in 2006-07.

In a note inviting interest from consultant firms, United India said: "United India registered the highest incurred loss ratio (91.80 per cent) among all companies and also the highest ratio among all companies of management expenses to net premium at 43.88 per cent."

The consultant will help the company develop a vision up to the year 2025, explore new areas for business diversification and evolve strategies on domestic and global expansion. It will also redesign processes with respect to policy issuance, claims settlement and grievance redressal.

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