The All India Insurance Employees Association (AIIEA), one of the major unions in the government-owned general insurance sector, is demanding the merger of all four nonlife companies for faster growth, said a top union leader.
“The central government is planning to merge three non-life insurance companies — United India Insurance, Oriental Insurance and National Insurance — barring New India Assurance,” Mr Sanjay Jha, Secretary of the Standing Committee (General Insurance) of AIIEA, told the Indo-Asian News Service.
He said the government is planning to merge the three companies mainly to list and divest its holdings.
According to Mr Jha, the union welcomes the merger idea but felt that the exercise should include New India Assurance as well.
“The merger of all the four companies would prevent unhealthy competition amongst them and reduce marketing expenses. That apart, the risk retention capacity will increase for the merged entity thereby saving foreign exchange in terms of reinsurance premium outgo,” Mr Jha added.
According to data released by the IRDAI, the four government-owned companies had earned a combined premium of INR59,357.92 crore (US$9.23 billion) during the fiscal year ended 31 March 2017, commanding a market share of 46.7%. In comparison, the four companies had posted total premium income of INR47,690.68 crore for the previous fiscal year.
Queried about the possible reduction in the number of branches and the staff after the union's proposed merger of the four insurers, Mr Jha said that the total number of branches may be cut initially and some of the staff may be redeployed.
“But that will be in the short term. Post-merger, the business will grow, necessitating opening new branches and adding to staff strength. Look at the Life Insurance Corporation of India (LIC) which is opening new offices every year,” Mr Jha replied.
At 31 March 2016, the total number of branches of all the four companies stood at 8,331 and extension counters at 4,200. The total number of staff stood at over 67,000, he added.