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November 28, 2008 GIPSA 1
JOINT MEETING OF ALL CHECK-OFF QUALIFIED UNIONS /
ASSOCIATIONS OF GIPSA COs.
EXPLORATORY TALKS ON PROPOSED WAGE REVISION
W.E.F. 01.08.2007Friday, November 28, 2008
New Delhi
November 28, 2008 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.
November 28, 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
November 28, 2008 GIPSA 4
MANPOWER & PRODUCTIVITY
As OnNo. of
Employees
Gr. Prem. (Rs. Cr.)
Productivity/Employee (Rs.'000)
%Growth in Prod.
Y2Y
31.03.2003 78000 13520 1730 -
31.03.2004 73580 14285 1941 12.20
31.03.2005 72223 14949 2070 6.62
31.03.2006 71868 15976 2223 7.40
31.03.2007 70979 17283 2435 9.54
31.03.2008 69445 17813 2565 5.34
Average Annual Increase in per employee productivity over last 5 years is 8.22%
November 28, 2008 GIPSA 5
MANPOWER AND PAY SCALES
FOUR CLASSES OF EMPLOYEES IN GIPSA COs. AS ON 31.03.2008, TOTAL STRENGTH IS,
CLASS I : 17375CLASS II : 9104CLASS III : 34040CLASS IV : 8926TOTAL : 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
November 28, 2008 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
November 28, 2008 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 20 AS 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.
November 28, 2008 GIPSA 8
MARKET SHARE
AS ON PUBLIC PRIVATE
31.03.2002 95.91 4.09
31.03.2003 90.35 9.65
31.03.2004 85.52 14.48
31.03.2005 79.93 20.07
31.03.2006 73.66 26.34
31.03.2007 65.28 34.72
31.03.2008 60.08 39.92
Sept-08 (Flash Figures) 58.25 41.75
November 28, 2008 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.
November 28, 2008 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
November 28, 2008 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
November 28, 2008 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.
November 28, 2008 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.
November 28, 2008 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.
November 28, 2008 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.
November 28, 2008 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.
November 28, 2008 GIPSA 17
PROCESS AND FACTORS OF 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.
November 28, 2008 GIPSA 18
CHECK-OFF ACCREDITED UNIONS/ASSNS
CLASS I1-4 NATIONAL/NEW INDIA/ORIENTAL/UNITED INDIA INSURANCE COMPANY
OFFICERS’ ASSOCIATIONS (4)5. GENERAL INSURANCE OFFICERS’ ALL INDIA ASSN6. BHARTIYA VIMA KARAMCHARI SENA**7. NATIONAL FEDERATION OF GENERAL INSURANCE EMPLOYEES**
CLASS II1. ALL INDIA GEN INS FIELD WORKERS’ ASSN2. BHARTIYA VIMA KARAMCHARI SENA**3. NATIONAL FEDERATION OF GEN. INS. EMPLOYEES**4. GENERAL INSURANCE DEV. OFFICERS’ ASSN5. GENERAL INSURANCE DEV. OFFICERS’ FEDERATION*
CLASS III/IV1. GENERAL INSURANCE EMPLOYEES’ ALL INDIA ASSN2. ALL INDIA INS. EMPLOYEES’ ASSN3. NATIONAL FEDERATION OF GENERAL INS. EMPLOYEES**
*Charter not submitted** Representing more than 1 Class of Employees
November 28, 2008 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%.
November 28, 2008 GIPSA 20
GROWTH RATE (GROSS PREMIUM) %
YEAR NIC NIA OIC UII ALL COs
2003-04 18.47 2.26 1.10 3.16 5.65
2004-05 12.08 3.69 6.58 -3.88 4.65
2005-06 -7.20 11.22 16.79 7.14 6.87
2006-07 8.22 4.60 11.39 10.90 8.18
2007-08 5.09 3.62 -3.00 6.88 3.07
Sept-08 (FF) 10.75 4.58 2.59 12.94 7.37
November 28, 2008 GIPSA 21
MANAGEMENT EXP. (% TO GROSS PREMIUM)
YEAR NIC NIA OIC UII ALL COs
2002-03 20.94 18.59 22.75 20.96 20.49
2003-04 21.48 27.24 26.97 26.02 25.55
2004-05 22.53 23.30 23.62 29.30 24.35
2005-06 24.95 23.03 23.57 30.96 25.14
2006-07 22.67 19.44 18.76 25.56 21.23
2007-08 24.59 16.57 21.12 24.40 21.02
November 28, 2008 GIPSA 22
MANAGEMENT EXP. (COMPLIANCE TO SEC 40C)
YEAR NIC NIA OIC UII ALL COs
2003-04 NO NO NO NO NO
2004-05 NO NO NO NO NO
2005-06 NO NO NO NO NO
2006-07 NO NO YES NO NO
2007-08 NO YES NO NO NO
November 28, 2008 GIPSA 23
M.E. (% TO NET PREMIUM)
YEAR NIC NIA OIC UII Wtd. Avg.
2005-06 31.94 31.84 36.08 44.35 35.50
2006-07 31.30 25.44 28.02 37.70 29.94
2007-08 32.65 21.18 28.63 33.77 28.03
November 28, 2008 GIPSA 24
COMMISSION (% TO NET PREMIUM)
YEAR NIC NIA OIC UII Wtd. Avg.
2005-06 5.09 8.66 4.37 2.92 5.70
2006-07 4.13 8.23 3.68 2.86 5.19
2007-08 6.75 9.54 4.57 5.05 6.88
November 28, 2008 GIPSA 25
ICR (% TO NET PREMIUM)
YEAR NIC NIA OIC UII Wtd. Avg.
2005-06 102.43 88.13 87.61 93.09 92.20
2006-07 86.50 80.34 87.66 90.26 85.43
2007-08 94.05 86.82 90.47 92.75 90.47
November 28, 2008 GIPSA 26
COMBINED RATIO* (% TO NET PREMIUM)
YEAR NIC NIA OIC UII Wtd. Avg.
2005-06 139.46 128.63 128.06 140.36 123.41
2006-07 121.93 114.01 119.36 130.81 120.55
2007-08 133.45 120.00 123.67 131.58 126.24
*INCLUDES NET INCURRED CLAIMS, M.E. & COMM.
November 28, 2008 GIPSA 27
UNDERWRITING PROFIT / LOSS
(Rs. in Crores)
YEAR NIC NIA OIC UII TOTAL
2003-04 -527 -688 -462 -544 -2221
2004-05 -535 -682 -610 -745 -2572
2005-06 -1089 -1243 -678 -932 -3942
2006-07 -608 -656 -536 -770 -2570
2007-08 -1013 -844 -680 -853 -3390
November 28, 2008 GIPSA 28
ESTIMATED WAGE BILL AS ON 31.07.2007*
(Rs. Crores)
NIC NIA OIC UII ALL Cos.
641.41 774.26 560.89 720.85 2697.41
*Extrapolated on the basis of expenses as on 31st March, 2007 & 2008
November 28, 2008 GIPSA 29
ME & WAGE BILL – PROJ. Vs. ACTUAL
YEARM.E. % WAGE BILL (Rs. Cr.)
PROJECTED ACTUAL PROJECTED ACTUAL
2004-05 21.34 24.35 2170 2860
2005-06 20.54 25.14 2333 3184
2006-07 19.77 21.23 2508 2708
2007-08 19.04 21.02 2697 2676
November 28, 2008 GIPSA 30
WAGE BILL Vs. PRODUCTIVITY – PER CAPITA
Parameters 2002-03 2007-08
Gross Premium (Rs. Crs.) 13520 17813
Wage Bill – Aug 02/Mar 08 (Rs. Crs.) 1953 2676
Employees Strength – Aug 02/Mar 08 79980 69445
Per Capita Productivity (Rs. Lacs) 16.90 25.65
% Increase over 5½ Years 51.74
Per Capita Wage (Rs. Lacs) 2.44 3.85
% Increase over 5½ Years 57.81
November 28, 2008 GIPSA 31
CUSTOMER SERVICE INDICES (%)
NIC NIA OIC UII
Suit Claim Ratio
Avg. - last 3 yrs 25.40 28.23 25.99 24.89
Actual 2007-08 27.09 27.00 23.87 29.50
Target 2008-09 35.00 35.00 35.00 35.00
Non Suit Claim Ratio
Avg. - last 3 yrs 81.96 89.90 86.95 85.53
Actual 2007-08 83.85 90.00 88.67 87.60
Target 2008-09 90.00 95.00 90.00 90.00
Grievance Redressal
Avg. - last 3 yrs 87.48 82.33 90.91 73.21
Actual 2007-08 83.29 83.00 96.16 81.04
Target 2008-09 88.00 90.00 95.00 85.00
November 28, 2008 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.
November 28, 2008 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
November 28, 2008 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
November 28, 2008 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
November 28, 2008 GIPSA 37
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 1
(Rs. in Crores)
ACTUAL PROJECTIONS
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Gross Prem ↑ @ 5.68% p.a.
17813 18825 19894 21024 22218 23480
M. Exp (w/o WR) ↑ @ 9.1% p.a.
3744 4085 4456 4862 5304 5787
ME % 21.02 21.70 22.40 23.13 23.87 24.65
Addition to ME with 5% WR w.e.f. 01.08.2007
93 153 167 182 199 217
Total ME 3837 4238 4624 5044 5503 6004
ME (% to GP) 21.54 22.51 23.24 23.99 24.77 25.57
For 19.50% ME, Required Gross Prem. (@11.5 GR) - 21733 23710 25868 28222 30790
Premium Gap - -2908 -3816 -4844 -6004 -7310
November 28, 2008 GIPSA 38
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 2
(Rs. in Crores)
ACTUAL PROJECTIONS
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Gross Prem ↑ @ 5.68% p.a.
17813 18825 19894 21024 22218 23480
M. Exp (w/o WR) ↑ @ 9.1% p.a.
3744 4085 4456 4862 5304 5787
ME % 21.02 21.70 22.40 23.13 23.87 24.65
Addition to ME with 10% WR w.e.f. 01.08.2007
185 306 334 365 398 434
Total ME 3929 4391 4791 5227 5702 6221
ME (% to GP) 22.06 23.33 24.08 24.86 25.66 26.50
For 19.50% ME, Required Gross Prem. (@12.3 GR) - 22518 24567 26803 29242 31903
Premium Gap - -3693 -4673 -5779 -7024 -8423
November 28, 2008 GIPSA 39
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 3
(Rs. in Crores)
ACTUAL PROJECTIONS
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Gross Prem ↑ @ 5.68% p.a.
17813 18825 19894 21024 22218 23480
M. Exp (w/o WR) ↑ @ 9.1% p.a.
3744 4085 4456 4862 5304 5787
ME % 21.02 21.70 22.40 23.13 23.87 24.65
Addition to ME with 15% WR w.e.f. 01.08.2007
278 460 501 547 597 651
Total ME 4022 4544 4958 5409 5901 6438
ME (% to GP) 22.58 24.14 24.92 25.73 26.56 27.42
For 19.50% ME, Required Gross Prem. (@13.14 GR)
- 23304 25424 27738 30262 33016
Premium Gap - -4479 -5530 -6714 -8044 -9536
November 28, 2008 GIPSA 40
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 4
(Rs. in Crores)
ACTUAL PROJECTIONS
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Gross Prem ↑ @ 5.68% p.a.
17813 18825 19894 21024 22218 23480
M. Exp (w/o WR) ↑ @ 9.1% p.a.
3744 4085 4456 4862 5304 5787
ME % 21.02 21.70 22.40 23.13 23.87 24.65
Addition to ME with 20% WR w.e.f. 01.08.2007
371 613 668 729 796 868
Total ME 4115 4697 5125 5591 6100 6655
ME (% to GP) 23.10 24.95 25.76 26.59 27.46 28.34
For 19.50% ME, Required Gross Prem. (@13.9 GR)
- 24089 26281 28673 31282 34129
Premium Gap - -5265 -6387 -7649 -9064 -10649
November 28, 2008 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.