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JOINT MEETING OF ALL CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs.

JOINT MEETING OF ALL CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs. EXPLORATORY TALKS ON PROPOSED WAGE REVISION W.E.F. 01.08.2007 Friday, November 28, 2008 New Delhi. PUBLIC SECTOR GENERAL INSURANCE IN INDIA.

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JOINT MEETING OF ALL CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs.

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  1. JOINT MEETING OF ALL CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs. EXPLORATORY TALKS ON PROPOSED WAGE REVISION W.E.F. 01.08.2007 Friday, November 28, 2008 New Delhi GIPSA

  2. PUBLIC SECTOR GENERAL INSURANCE IN INDIA • FROM A MODEST BASE OF Rs. 208 CRORES IN 1973, GROSS PREMIUM HAS GONE UP TO Rs. 17,813 IN 2007-08. • AVERAGE GROWTH RATE 12.68% PER ANNUM SINCE 1973. HOWEVER, THE AVERAGE GROWTH RATE DURING PAST 5 YEARS HAS BEEN 5.68%. • MANPOWER GROWN FROM 26,112 IN 1973 TO 84,097 AS ON 31.03.2002 AND THEN CAME DOWN TO 69,445 AS ON 31.03.2008. • NUMBER OF OFFICES INCREASED FROM 750 IN 1975 TO 4,074 AS ON 31.03.2008. GIPSA

  3. Contd……. • INVESTMENT PORTFOLIO INCREASED FROM Rs. 355 CRORES IN 1975 TO Rs. 31,342 CRORES AS ON 31-03-2008 • INVESTMENT INCOME INCREASED FROM Rs. 21 CRORES IN 1975 TO Rs. 6,189 CRORES AS ON 31-03-2008 • RESERVES AND SURPLUS AS ON 31-03-2008 STANDS AT Rs. 13,253 CRORES • NET WORTH APPROX Rs. 13,800 CRORES AS ON 31-03-2008 GIPSA

  4. MANPOWER & PRODUCTIVITY GIPSA

  5. MANPOWER AND PAY SCALES • FOUR CLASSES OF EMPLOYEES IN GIPSA COs. AS ON 31.03.2008, TOTAL STRENGTH IS, • CLASS I : 17375 • CLASS II : 9104 • CLASS III : 34040 • CLASS IV : 8926 • TOTAL : 69445 • PAY SCALES OF ALL CLASSES OF EMPLOYEES GOVERNED BY SCHEMES NOTIFIED BY GOVERNMENT • FIRST SCHEMES FOR PAY SCALES NOTIFIED IN 1974, 1975 AND 1976 (CALLED RATIONALISATION SCHEMES) FOR CLASS III/IV, CLASS I AND CLASS II EMPLOYEES RESPECTIVELY GIPSA

  6. FIVE REVISIONS OF PAY SCALES • 1985 SCHEME W.E.F. 01.10.1983 • 1989 SCHEME W.E.F. 01.08.1987 • 1996 SCHEME W.E.F. 01.08.1992 • 2000 SCHEME W.E.F. 01.08.1997 • 2005 & 2008 SCHEMES W.E.F. 01.08.2002 • CURRENT WAGE REVISION DUE W.E.F. 01.08.2007 GIPSA

  7. SIGNIFICANT DEVELOPMENTS SINCE LAST REVISION • TOTAL NUMBER OF GENERAL INSURANCE COMPANIES IN INDIA WERE 10 AS ON 31.03.2002 AND HAVE GONE UP TO 20AS ON DATE. • DETARIFFING OF PREMIUM IN MOTOR OD W.E.F. 01.01.2007 AND ALL OTHER CLASSES OF BUSINESS, W.E.F. 01.01.2008, FURTHER STIFFENING THE COMPETITION. • MARKET SHARE OF GIPSA MEMBER COs. HAS SLIDED DOWN FROM 95.91% AS ON 31.02.2002 TO 60.08% AS ON 31.03.2008. • GIPSA MEMBER COs. HAVE UNDERTAKEN BUSINESS PROCESS RE-ENGINEERING INTITIATIVES. GIPSA

  8. MARKET SHARE GIPSA

  9. BUSINESS PROCES RE-ENGINEERING (BPR) IN GIPSA COs. • ALL THE FOUR COMPANIES APPOINTED MANAGEMENTS CONSULTANTS (MCs). • MCs TO MAKE AN ASSESSMENT OF KEY FUNCTIONAL AREAS AND DEVELOP OVERALL STRATEGIC PLAN FOR THEM IN FIRST PHASE • THE UNIQUE FEATURE IS THAT THE MCs WOULD BE INVOLVED IN IMPLEMENTATION OF RECOMMENDATIONS ACCEPTED BY THE MANAGEMENT OF COs. GIPSA

  10. MAIN AGENDA FOR MCs • REVIEW OF ORGANISATIONAL STRUCTURE AND ASSESSMENT OF KEY FUNCTIONAL AREAS • MARKETING AND SALES – REVIEW OF PRODUCT RANGE AND DISTRIBUTION STRATEGY • OPERATIONS – BETTER CUSTOMER SERVICING • HUMAN RESOURCE – RECRUITMENT & TRAINING, INCENTIVE SCHEMES • INVESTMENT, U/W, FINANCIAL MANAGEMENT, IT – REVIEW AND IMPROVEMENTS GIPSA

  11. BPR IN ‘NATIONAL’ • BANCASSURANCE – 5 Dedicated Bancassurance servicing offices have been opened. Target for 15 such offices by 31.03.2009 • SME SECTOR – 18 dedicated SME Cells have been opened and 22 more planned by 31.12.2008 and another 35 by 31.03.2009. • Claims Processing Hubs – Opened at Kolkata and Chandigarh for Motor OD Claims – Average Claim Processing Time reduced to 25 days. More such Hubs to be opened at New Delhi, Bangalore, Chennai, Luncknow and Hyderabad by 31.12.2008. • Agency Force - Efforts being undertaken to incentivise the performing agents through recognition and felicitation GIPSA

  12. BPR IN ‘NEW INDIA’ (NEW ENERGY) • WAVE 1 INITIATIVES– Process Redesign, Bancassurance, Brokers, Auto-dealers and Large Corporate – Pilot Work started in January, 2008 and rollout has commenced across the nation. Performance is being monitored by a dedicated HO Team for each initiative. • WAVE 2 INITIATIVES – Agency Performance Enhancement Program, Health TPA Management, HR & Organization Structure, Motor TP process redesign, Risk Based Pricing – Pilot work on these initiatives already started and performance is being closely evaluated. GIPSA

  13. BPR IN ‘ORIENTAL’ (NAYEE DISHA) • AGENCY MANAGERS– Project AGNI envisaged appointment of 80 Agency Managers at 10 Regional Centers by 15.10.2008 which has been achieved. • SERVICE CENTRES – Pilot launched in 9 Cities for Motor OD Claims and 3 more coming. 1 Pilot for Policy Issuance at Jaipur to be launched shortly. Motor TP Claims Hub Pilot started in Chennai and Bangalore. • HEALTH INITIATIVES – Regular and Enhanced Monitoring of TPAs started and Health Managers network created across the Regional Offices. • ORGANIZATION STRUCTURE, PMS AND INCENTIVE SCHEMES – Initiatives under advanced stages of finalization. GIPSA

  14. BPR IN ‘UNITED INDIA’ (UNISURGE) • As on 15.10.2008, have opened 7 Bancassurance Offices against 6 planned, 9 Tie-ups with Motor Dealers against target of 8, implemented Agency Managers concept in 96 Offices (9 ROs) and opened 3 Large Corporate & Broker Cells. • In Motor, 2 ‘filing ready’ products have been developed. • Design and Plan for Service Hub finalized with identification of location and personnel. • PMS and Incentive Schemes for Employees under final stages of discussion. GIPSA

  15. BPR – HR - COMMON IN ALL COs. • Management Consultants in each Company took extensive studies in the area of Manpower Planning. • Reforms in Promotional Processes undertaken by GIPSA to address the contemporary requirements in the changed business scenario. • New Promotion Policies evolved for Class I Officers and Class III/IV Employees. Promotion Policy for Development Officers amended to the requisite extent. GIPSA

  16. Contd……. • Companies have initiated Promotion Exercises for Promotions From Class IV to III, within Class III, From Class III to Class I, From Class II to I and within Class I (Scale I, II, III & IV) • All these Promotion Exercises scheduled to be completed by 15.12.2008. • Transfer and Mobility Policy now in vogue in all cadres to provide requisite flexibility in deployment to serve Organizational Requirements and career development of Employees. • PMS and Incentive Schemes for Employees under final stages of evolution. GIPSA

  17. PROCESS ANDFACTORSOF WAGE REVISION • 12 CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF EMPLOYEES IN MEMBER COMPANIES. • 2 OF THESE UNIONS REPRESENT MORE THAN ONE CLASS OF EMPLOYEES • ALL CHECK-OFF QUALIFIED UNIONS/ASSOCIATIONS (EXCEPT ONE FROM DEVELOPMENT OFFICERS) HAVE SUBMITTED THEIR CHARTER OF DEMANDS. GIPSA

  18. CHECK-OFF ACCREDITED UNIONS/ASSNS • CLASS I 1-4 NATIONAL/NEW INDIA/ORIENTAL/UNITED INDIA INSURANCE COMPANY OFFICERS’ ASSOCIATIONS (4) • GENERAL INSURANCE OFFICERS’ ALL INDIA ASSN • BHARTIYA VIMA KARAMCHARI SENA** • NATIONAL FEDERATION OF GENERAL INSURANCE EMPLOYEES** • CLASS II • ALL INDIA GEN INS FIELD WORKERS’ ASSN • BHARTIYA VIMA KARAMCHARI SENA** • NATIONAL FEDERATION OF GEN. INS. EMPLOYEES** • GENERAL INSURANCE DEV. OFFICERS’ ASSN • GENERAL INSURANCE DEV. OFFICERS’ FEDERATION* • CLASS III/IV • GENERAL INSURANCE EMPLOYEES’ ALL INDIA ASSN • ALL INDIA INS. EMPLOYEES’ ASSN • NATIONAL FEDERATION OF GENERAL INS. EMPLOYEES** *Charter not submitted ** Representing more than 1 Class of Employees GIPSA

  19. CHARTERS OF DEMANDS BY UNIONS / ASSOCIATIONS Charters of Demands submitted by the Unions / Associations talk of increasing the pay package by degrees varying from 20% to 60%. GIPSA

  20. GROWTH RATE (GROSS PREMIUM) % GIPSA

  21. MANAGEMENT EXP. (% TO GROSS PREMIUM) GIPSA

  22. MANAGEMENT EXP. (COMPLIANCE TO SEC 40C) GIPSA

  23. M.E. (% TO NET PREMIUM) GIPSA

  24. COMMISSION (% TO NET PREMIUM) GIPSA

  25. ICR (% TO NET PREMIUM) GIPSA

  26. COMBINED RATIO* (% TO NET PREMIUM) *INCLUDES NET INCURRED CLAIMS, M.E. & COMM. GIPSA

  27. UNDERWRITING PROFIT / LOSS GIPSA

  28. ESTIMATED WAGE BILL AS ON 31.07.2007* *Extrapolated on the basis of expenses as on 31st March, 2007 & 2008 GIPSA

  29. ME & WAGE BILL – PROJ. Vs. ACTUAL GIPSA

  30. WAGE BILL Vs. PRODUCTIVITY – PER CAPITA GIPSA

  31. CUSTOMERSERVICE INDICES (%) GIPSA

  32. CHALLENGES AHEAD EXTERNAL CHALLENGES INTERNAL CHALLENGES GIPSA

  33. EXTERNAL CHALLENGES • Intense Competition on more profitable lines of Business. • Premium rates to remain under pressure in De-tariffed regime. • Business acquisition cost continue to rise. • Re-insurance cost also continue to rise due to reduction in ceding commission by Treaty Re-insurers to compensate for lower rates in de-tariffed regime. GIPSA

  34. Contd……… • Shadow of global recession looming large on Indian Industry and Economy • Capital Markets meltdown reduces reliance on investment portfolio for net profit • Changing customer profile and increasing customer expectations • New emerging risks and need for continuous innovations GIPSA

  35. INTERNAL CHALLENGES • Statutory limits on ME Ratios – Sec. 40 C • Every rise in Wage Bill demands corresponding rise in productivity • Rigidity in pay package impedes retention of talent - need for flexi pay / differential pay package • Skill gap in the manpower flowing from fast changing technologies GIPSA

  36. Contd………….. • Adverse age profile of manpower – climate of inertia and rigidity • Imbalances in deployment of manpower – continued pockets of surplus / deficit despite structured TMP – widen TMP or more flexible TMP? • Continuous losses in Motor TP, Health etc. – Loss Management and Minimization • Attitudinal issues of manpower at various levels – commitment vs. alienation GIPSA

  37. GAP BETWEEN “HAVE” & “WANT TO HAVE” - 1 GIPSA

  38. GAP BETWEEN “HAVE” & “WANT TO HAVE” - 2 GIPSA

  39. GAP BETWEEN “HAVE” & “WANT TO HAVE” - 3 GIPSA

  40. GAP BETWEEN “HAVE” & “WANT TO HAVE” - 4 GIPSA

  41. HOPES • BPR initiatives expected to boost up productivity and rationalize expenses besides improving Customer Care. • Active co-operation from Employees and their Unions / Associations required to supplement these efforts. • An Organizational Agenda common to the Management and the Unions / Associations required for coordinated efforts and synergy. • Let us evolve such an Agenda. GIPSA

  42. Thank you

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