Mumbai: The Finance Ministry will hold a meeting in Hyderabad tomorrow to review operations of all public sector insurance companies to know their preparation to face larger competition.
Financial Services Secretary Hasmukh Adia has called for a high level meeting to assess the past performance and future strategies to expand the operations of PSU insurance companies. IRDA chairman T S Vijayan is also expected to participate in the meeting. Confirming the development, LIC chairman S K Roy told PTI that he will also be attending the meet.
Roy had earlier said, “We are working on three pronged strategy to achieve our Vision 2020 which include launch of more plain vanilla products, technological innovation and above all, strengthening our distribution network. We are trying to expand our reach.
“Currently we have got 30 crore people in the country under our life insurance cover. However, we are looking at adding another 37 crore policies by 2020 and for that we are implementing Vision 2020.” The Pradhan Mantri Jan-Dhan Yojana (PMJDY), which also forms the agenda of tomorrow’s review meeting, will help LIC covers 10 crore people, he had said.
A K Roy, CMD of GIC Re, G Srinivasan, CMD of New India Assurance, Milind Kharat, CMD of United India, along with other the top officials of other state-owned insurance companies may also participate in the meeting.
Sources in the ministry said that after banking industry for which Gyan Sangam was organised in Pune, it is now focusing on the insurance sector. The ministry has asked all these companies to provide their strategies for the next five years.
Besides, the Insurance Ordinance which is likely to be converted into an Act in the Budget Session of the Parliament, has allowed the government to disinvest in state owned general insurance companies.
All the state owned general insurers are now recording underwriting losses and their profitability can be attributed to their investment income. All these companies have an investment asset of Rs 1 lakh crore. “Government will like to secure a higher valuation of these companies by making them more profitable even as competition will grow,” an official said.
Also, for the first time, GIC Re will face competition in the domestic market as the Insurance Ordinance has allowed the entry of foreign reinsurers including Lloyd’s. Though GIC Re still enjoys the 5 per cent obligatory business, it may not continue for long.