By Venkatachari Jagannathan
Chennai, Jan 24 (IANS): With their premium income and solvency going southwards apart from suffering underwriting losses, government-owned general insurers have rolled out an incentive scheme for their administrative staff to carry out marketing activity.
The Business Development Incentive Scheme (BDIS) is an effort to bring in profitable retail business and also make the ‘fixed cost' administrative staff more productive.
However, the unions representing the employees and the agents are opposed to the scheme.
"It is an irony. The new scheme is being launched at a time when many of the one-man offices are being closed and those who are bringing in business running into lakhs of rupees are asked to do administrative work," an employee of one of the government insurers told IANS.
A senior industry official preferring anonymity told IANS: "The insurers should work out such schemes in a holistic manner than in an isolated way, taking the overall picture in view."
While agreeing with the view that `fixed cost' employees are being made productive, he said: "This will not give the desired result. The companies should have only three structural layers - Head Office, Regional Offices and Operational Offices - close/merge branches/divisional offices."
Such a measure would reduce the company's management expenses drastically.
According to him, the companies had earlier decided to reduce the number of offices by 25 per cent. Many branches were opened in unviable places to please the politicians, which is biting the companies hard now.
Be that as it may, the new scheme called Business Development Incentive Scheme (BDIS) has been rolled out on a pilot basis till March end.
Under the scheme, administrative staff selected to don the marketing cap will be paid a business development expense of Rs 2,500 to Rs 4,500 based on their existing cadre, along with an incentive-based number of policies and overall profit from the business brought in.
"The incentive calculation is complicated. It should have been kept simple," said a senior industry official.
"It should also be ensured that the officials do not neglect their basic administrative functions as this is an add-on role. If the person is on the field full time, his/her business target should not be less than the annual salary," a retired official of a government non-life insurer told IANS preferring anonymity.
The official had headed a one-man office hub before his retirement.
"Some were doing well and some were not doing well. Each one-man office should be given a target of Rs 1 crore and branches Rs 10 crore. While the salaries went up regularly, the target per operational office did not go up in line with the pay hikes," the official remarked.
According to him, the insurers should make the PAN of companies, individuals the unique identity number for the policyholders so that cheating in calculation of incentives are blocked.
Meanwhile, the unions representing the employees and the agents are opposed to the new incentive scheme.
"The offices are already suffering from staff shortage. Sending these employees for marketing work will hamper the growth of the industry further. Our union had suggested that the company can go for appointment of career agents with a stipend for one year which will help in bringing the youth to take up marketing job," a member of the All India Insurance Employees' Association (AIIEA) told IANS.
The General Insurance Agents Organisation (GIAO) has opposed the BDIS and has sent an identical letter to all the four government-owned general insurers.
"The development officers of the public sector general insurance companies have all along been exploiting the hard labour of the agents. Business canvassed by the agents will be appropriated by them to their accounts," GIAO said.
According to GIAO, the insurers have been showing unmerited indulgence towards them by permitting them to remain in the business field, on payment of hefty remuneration, with liberty to use all the infrastructural facilities of the companies and the data collected by the agents, even after they had retired from service.
The GIAO is opposed to the BDIS as it has to contend with the new marketing force - the staff of the insurers - at the market place.
Further, the service to them and the policyholders at the operational offices will be affected, the GIAO said.
"It does not require much scholarship or expertise to understand that the permission given to the regular employees of the companies to work as insurance agents is also against the public interest. The regular employees will consider their official duties only of secondary importance. That will have a devastating effect on the very existence of the public sector insurance companies in the country," GIAO President Chandran Thottupuram wrote in the letter to the four government-owned general insurers.
On the other hand, the existing agents could be appointed as marketing officers, GIAO said.