‘Consultants come and go in PSU non-life insurers but nothing changes’

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The four government owned general insurers are looking to hire a consultancy firm that has advised and completed at least one organisational transformation assignment for public sector organisations during the last five years.

However, a top leader of a major union is of the view that consultants come and go regularly but nothing much has changed except the companies getting poorer by lakhs of rupees as their fee.

As per the stipulations laid down by the four insurers, the public sector organisation could be a bank/insurance company or a central public sector enterprise with pan India presence, having a turnover of more than Rs 10,000 crore and a minimum employee base of 5,000.

Further the bidder or its parent company should have an average annual turnover of at least Rs 100 crore in the past two financial/calendar years, preceding the date of submission of the request for proposal (RFP).

The four general insurers have decided to restructure the organisation towards profitable growth and have called for RFP from consultancy firms.

The assignment is called ‘Organisational Efficiencies and Performance Management in Public Sector General Insurance Companies.’

The four insurers are: The Oriental Insurance Company Limited, National Insurance Company Limited, The New India Assurance Company Limited and United India Insurance Company Limited.

Of the four, The New India Assurance is listed in the stock exchanges.

As per the tender, the companies are calling for one consultant for the assignment which is logical as the process, human resource policies and procedures are uniform in the four companies, a senior industry official told IANS.

“The unions are not against the management. The management could have called us and asked for our views. The companies are engaging consultants regularly but the outcome is not much. The consultants get their fat fee,” K. Govindan, General Secretary, General Insurance Employees All India Association (GIEAIA), told IANS.

Several years ago, United India Insurance, The New India Assurance and The Oriental Insurance had hired Boston Consulting Group (BCG) and National Insurance Company had hired PwC. But nothing much has come out of that exercise except setting up of some claims hubs, he added.

The consultants had recommended a three-tier structure — operating offices, regional office and head office. But nothing has changed, Govindan added.

“As per BCG recommendations, the Oriental Insurance and United India Insurance had set up centralised claims hubs, went in for operating offices that handled corporate accounts,” a retired official told IANS.

Referring to the government’s decision to shelve its earlier proposal to merge The Oriental Insurance, United India Insurance and National Insurance, Govindan said even the consultant Ernst and Young seems to have recommended the same.

“It is still not known why the government did not proceed with the merger of the three companies. The Boards of the three companies had passed resolutions and the government had also amended the law in favour of the merger,” Govindan added.

As on March 31, 2022, the four insurers together have procured a total premium of Rs 75,116 crore with a market share of around 34 per cent.

The total employee strength is around 44,743 spread over 6,759 offices.

Govindan said the management went on opening offices as per the direction of the government and later started closing down the same saying the offices are not viable.

“The management should be professional. Do a market study before opening new offices. Further closing down offices that are fetching sizable premiums will pave the way for private players to set up shop there and reap the benefits,” he said.

(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)

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