By Venkatachari Jagannathan

Chennai, Aug 30 (IANS): Asset monetisation is one of the parts of organisational overhaul that the four government-owned general insurance companies are expected to do, said a senior industry official.

The four insurers are: The Oriental Insurance Company Limited, National Insurance Company Limited, The New India Assurance Company Limited and United India Insurance Company Limited.

The four companies have hired Ernst & Young (EY) as the consultant for the assignment called "Organisational Efficiencies and Performance Management in Public Sector General Insurance Companies."

According to industry officials, the assignment is for 10 months and EY seems to have started delivering.

"The four insurers own some prime real estate, many of which came to them when the private insurers were nationalised in 1972," a senior industry official told IANS preferring anonymity.

According to another senior industry official, the real estate assets that are under utilised can be monetised.

The companies also own residential apartments some of which are in a dilapidated condition or where the repair expenses far exceed their intrinsic value.

Unlike the Life Insurance Corporation of India (LIC) the four non-life insurers are not major real estate owners but do have properties in some major cities.

These properties are used by the insurers and are also let out on rent.

In their balance sheet, the real estate is shown at their historical value minus depreciation and any impairment loss.

Revaluation of real estate is not allowed in the case of the general insurance sector.

"The organisational restructuring will result in merger of offices which may free up properties for sale. Further the merger of offices will also save the companies huge sums in terms of rental outgo," an industry official told IANS.

The four companies have about 44,750 employees operating out of about 6,760 offices.

According to the officials, there has been no major recruitment drive by the four companies while retirements are happening.

The branch and divisional offices will be merged -already this has started happening- and staff redeployed resulting in reduction in the need of office space, said an official.

"The four companies will now have to make an assessment of its real estate properties," the official added.

As per the EY recommendations, the claims processing will be taken out of branch/divisional offices and transferred to claims hub.

This will enable the operating offices-branch/division- to focus on marketing.

There will be four types of claims hubs: health, vehicle damage, vehicle third party and general.

According to officials, there are plans to create an underwriting hub to streamline the work and also issue the policies faster.

Further, taking out the claims processing from operating offices can result in outgo of lease rentals as they are functioning from rented premises.

It will also release staff from the operating offices for efficient redeployment.

The insurers also have subsidiaries and associate companies.

The four companies have floated a health insurance claims processing company -third party administrator- Health Insurance TPA of India Limited.