Consultants major Deloitte Tohmatsu and AF Ferguson who were appointed by the Life Insurance Corporation (LIC) and four state-owned general insurance companies respectively to prepare their future stratergy report in light of liberalisation and competition in the domestic insurance market have finalised the blue print after working for four months.
Though both consultants have submitted their reports last month the state owned insurers are tight lipped about the recommendations of their consultants.
“The report has gone to the government for its view and we have not studied the report now”, observed the top officials of these organisations.
Contrary to normal practice, where any consultant’s report is analysed by the top officials and then by the boards of the respective companies, the state owned insurers had the government dictating the terms with them on the recommendations.
The Rs 2,90,000 crore, LIC, in its brief to its consultant had focussed on the possible investment strategies while the briefs for the Ferguson report from the four companies New India Assurance, United India Insurance, National Insurance and Oriental Insuranceare were a wide ranging one.
The four state-owned companies had preferred to focuss on ten key parameters like, organisational restructuring, business growth, IT network, investment return and prudential guidelines, human resource development, cost cutting, underwriting and claim managment, corporate governance, motivating the employees and above all identifying possible areas of stress and vulnerablities of these companies with adequate suggestions.
The companies had appointed management consultants after the Union finance minister Jaswant Singh had asked for a reality check in the days of liberalisation and competition.
The Centre would like to make use of Ferguson report to asses short and long term potentials of these companies. In the long term, MoF perceives that the insurance market will undergo substantial structural changes and without sufficient vigil and care, government-owned companies will suffer a good valuation during dis-investment.
For the short term, MoF would like to prepare a much needed VRS plan and wage revision package for the 2,00,000 employees of the state owned insurance companies. Also on the basis of the report, the MoF would like to revisit its decision whether to allow the four companies to continue their operations independently or merge.
Ferguson has formed four separate groups to undertake the viablity study of the four companies.
The four general insurance companies and LIC have some 2,000 branch network each and have so far lost 10 per cent of the market share to the private sector companies.