Transcript WAGE REVISION
JOINT MEETING OF ALL CHECK OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs.
EXPLORATORY TALKS ON PROPOSED WAGE REVISION W.E.F. 01.08.2007
Friday, November 28, 2008 New Delhi
November 28, 2008 GIPSA 1
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 TO AS ON 31.03.2002 AND THEN CAME DOWN 69,445 AS ON 31.03.2008.
NUMBER OF OFFICES INCREASED FROM 750 1975 TO 4,074 AS ON 31.03.2008.
IN
November 28, 2008 GIPSA 2
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 03-2008 CRORES AS ON 31-
November 28, 2008 GIPSA 3
MANPOWER & PRODUCTIVITY
As On 31.03.2003
31.03.2004
31.03.2005
31.03.2006
31.03.2007
31.03.2008
No. of Employees Gr. Prem. (Rs. Cr.) Productivity/ Employee (Rs.'000) 78000 73580 72223 71868 70979 69445 13520 14285 14949 15976 17283 17813 1730 1941 2070 2223 2435 2565 % Growth in Prod.
Y2Y 12.20
6.62
7.40
9.54
5.34
Average Annual Increase in per employee productivity over last 5 years is 8.22%
November 28, 2008 GIPSA 4
MANPOWER AND PAY SCALES
FOUR CLASSES OF EMPLOYEES IN GIPSA COs. AS ON 31.03.2008, TOTAL STRENGTH IS, CLASS I : 17375 CLASS II : 9104 CLASS III : CLASS IV : 34040 8926 TOTAL : 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 5
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 6
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 7
AS ON 31.03.2002
31.03.2003
31.03.2004
31.03.2005
31.03.2006
31.03.2007
31.03.2008
Sept-08 (Flash Figures)
November 28, 2008
MARKET SHARE
PUBLIC 95.91
90.35
85.52
79.93
73.66
65.28
60.08
58.25
GIPSA
PRIVATE 4.09
9.65
14.48
20.07
26.34
34.72
39.92
41.75
8
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 9
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 10
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 11
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 closely evaluated.
– 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
November 28, 2008 GIPSA 12
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 Bangalore.
– 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
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 13
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 14
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 15
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 16
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 17
CHECK-OFF ACCREDITED UNIONS/ASSNS
1.
2.
3.
1.
2.
3.
4.
5.
CLASS I 1-4 NATIONAL/NEW INDIA/ORIENTAL/UNITED INDIA INSURANCE COMPANY OFFICERS’ ASSOCIATIONS (4) 5.
6.
7.
GENERAL INSURANCE OFFICERS’ ALL INDIA ASSN BHARTIYA VIMA KARAMCHARI SENA** NATIONAL FEDERATION OF GENERAL INSURANCE EMPLOYEES** CLASS II ALL INDIA GEN INS FIELD WORKERS’ ASSN BHARTIYA VIMA KARAMCHARI SENA** NATIONAL FEDERATION OF GEN. INS. EMPLOYEES** GENERAL INSURANCE DEV. OFFICERS’ ASSN GENERAL INSURANCE DEV. OFFICERS’ FEDERATION* CLASS III/IV GENERAL INSURANCE EMPLOYEES’ ALL INDIA ASSN ALL INDIA INS. EMPLOYEES’ ASSN NATIONAL FEDERATION OF GENERAL INS. EMPLOYEES** *Charter not submitted ** Representing more than 1 Class of Employees
November 28, 2008 GIPSA 18
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 19
GROWTH RATE (GROSS PREMIUM) %
YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 Sept-08 (FF) NIC 18.47
12.08
-7.20
8.22
5.09
10.75
NIA 2.26
3.69
11.22
4.60
3.62
4.58
OIC 1.10
6.58
16.79
11.39
-3.00
2.59
UII 3.16
-3.88
7.14
10.90
6.88
12.94
ALL COs 5.65
4.65
6.87
8.18
3.07
7.37
November 28, 2008 GIPSA 20
MANAGEMENT EXP. (% TO GROSS PREMIUM) YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 NIC 20.94
21.48
22.53
24.95
22.67
24.59
November 28, 2008
NIA 18.59
27.24
23.30
23.03
19.44
16.57
GIPSA
OIC 22.75
26.97
23.62
23.57
18.76
21.12
UII 20.96
26.02
29.30
30.96
25.56
24.40
ALL COs 20.49
25.55
24.35
25.14
21.23
21.02
21
MANAGEMENT EXP. (COMPLIANCE TO SEC 40C) YEAR NIC 2003-04 2004-05 2005-06 2006-07 2007-08
November 28, 2008 NO NO NO NO NO
NIA OIC
NO NO NO NO YES GIPSA NO NO NO NO YES
UII
NO NO NO NO NO
ALL COs
NO NO NO NO NO 22
M.E. (% TO NET PREMIUM)
YEAR 2005-06 NIC 31.94
2006-07 31.30
2007-08 32.65
NIA 31.84
25.44
21.18
OIC 36.08
28.02
28.63
UII 44.35
Wtd. Avg. 35.50
37.70
33.77
29.94
28.03
November 28, 2008 GIPSA 23
COMMISSION (% TO NET PREMIUM)
YEAR 2005-06 NIC 5.09
2006-07 4.13
2007-08 6.75
NIA 8.66
8.23
9.54
OIC 4.37
3.68
4.57
UII 2.92
2.86
5.05
Wtd. Avg. 5.70
5.19
6.88
November 28, 2008 GIPSA 24
ICR (% TO NET PREMIUM)
YEAR NIC 2005-06 102.43
NIA 88.13
2006-07 2007-08 86.50
94.05
80.34
86.82
OIC 87.61
87.66
90.47
UII 93.09
Wtd. Avg. 92.20
90.26
92.75
85.43
90.47
November 28, 2008 GIPSA 25
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 26
YEAR 2003-04
UNDERWRITING PROFIT / LOSS
NIC -527 NIA -688 OIC -462 UII
(Rs. in Crores)
TOTAL -544 -2221 2004-05 -535 2005-06 -1089 2006-07 -608 2007-08
November 28, 2008
-1013 -682 -1243 -610 -678 -656 -536 -844
GIPSA
-680 -745 -932 -770 -853 -2572 -3942 -2570 -3390
27
ESTIMATED WAGE BILL AS ON 31.07.2007*
NIC NIA OIC UII (Rs. Crores) ALL Cos.
641.41
774.26
560.89
720.85
2697.41
*
Extrapolated on the basis of expenses as on 31 st March, 2007 & 2008
November 28, 2008 GIPSA 28
ME & WAGE BILL – PROJ. Vs. ACTUAL
YEAR M.E. % PROJECTED ACTUAL WAGE BILL (Rs. Cr.) PROJECTED ACTUAL 2004-05 21.34
24.35
2170 2860 2005-06 2006-07 2007-08 20.54
19.77
19.04
25.14
21.23
21.02
2333 2508 2697 3184 2708 2676
November 28, 2008 GIPSA 29
WAGE BILL Vs. PRODUCTIVITY – PER CAPITA
Parameters Gross Premium (Rs. Crs.) Wage Bill – Aug 02/Mar 08 (Rs. Crs.) Employees Strength – Aug 02/Mar 08 Per Capita Productivity (Rs. Lacs) % Increase over 5½ Years Per Capita Wage (Rs. Lacs) % Increase over 5½ Years 2002-03 13520 1953 79980 16.90
51.74
2007-08 17813 2676 69445 25.65
2.44
3.85
57.81
November 28, 2008 GIPSA 30
CUSTOMER SERVICE INDICES (%)
Avg. - last 3 yrs Suit Claim Ratio Actual 2007-08 Target 2008-09 Avg. - last 3 yrs Non Suit Claim Ratio Actual 2007-08 Target 2008-09 Avg. - last 3 yrs Grievance Redressal Actual 2007-08 Target 2008-09
November 28, 2008
NIC 25.40
27.09
35.00
81.96
83.85
90.00
87.48
83.29
88.00
GIPSA
NIA 28.23
27.00
35.00
89.90
90.00
95.00
82.33
83.00
90.00
OIC 25.99
23.87
35.00
86.95
88.67
90.00
90.91
96.16
95.00
UII 24.89
29.50
35.00
85.53
87.60
90.00
73.21
81.04
85.00
31
CHALLENGES AHEAD
EXTERNAL CHALLENGES
INTERNAL CHALLENGES
November 28, 2008 GIPSA 32
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 33
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 34
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 35
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 36
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 1 Gross Prem ↑ @ 5.68% p.a.
M. Exp (w/o WR) ↑ @ 9.1% p.a.
ME % Addition to ME with 5% WR w.e.f. 01.08.2007
Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. ( @11.5
GR) Premium Gap
November 28, 2008
ACTUAL 2007-08 (Rs. in Crores) PROJECTIONS 2008-09 2009-10 2010-11 2011-12 2012-13 17813 18825 19894 21024 22218 23480 3744 21.02
93 3837 21.54
-
4085 21.70
153 4238 22.51
21733 -2908
GIPSA
4456 22.40
167 4624 23.24
23710 -3816 4862 23.13
182 5044 23.99
25868 -4844 5304 23.87
199 5503 24.77
28222 -6004 5787 24.65
217 6004 25.57
30790 -7310
37
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 2 Gross Prem ↑ @ 5.68% p.a.
M. Exp (w/o WR) ↑ @ 9.1% p.a.
ME % Addition to ME with 10% WR w.e.f. 01.08.2007
Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. ( @12.3
GR) Premium Gap
November 28, 2008
(Rs. in Crores) ACTUAL 2007-08 PROJECTIONS 2008-09 2009-10 2010-11 2011-12 2012-13 17813 18825 19894 21024 22218 23480 21.02
22.06
-
-
3744 185 3929 4085 21.70
306 4391 23.33
22518 -3693
GIPSA
4456 22.40
334 4791 24.08
24567 -4673 4862 23.13
365 5227 24.86
26803 -5779 5304 23.87
398 5702 25.66
29242 -7024 5787 24.65
434 6221 26.50
31903 -8423
38
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 3 Gross Prem ↑ @ 5.68% p.a.
M. Exp (w/o WR) ↑ @ 9.1% p.a.
ME % Addition to ME with 15% WR w.e.f. 01.08.2007
Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. ( @13.14
GR) Premium Gap
November 28, 2008
ACTUAL 2007-08 (Rs. in Crores) PROJECTIONS 2008-09 2009-10 2010-11 2011-12 2012-13 17813 18825 19894 21024 22218 23480 3744 21.02
278 4022 22.58
4085 21.70
460 4544 24.14
23304 -4479
GIPSA
4456 22.40
501 4958 24.92
25424 -5530 4862 23.13
547 5409 25.73
27738 -6714 5304 23.87
597 5901 26.56
30262 -8044 5787 24.65
651 6438 27.42
33016 -9536
39
GAP BETWEEN “HAVE” & “WANT TO HAVE” - 4 Gross Prem ↑ @ 5.68% p.a.
M. Exp (w/o WR) ↑ @ 9.1% p.a.
ME % Addition to ME with 20% WR w.e.f. 01.08.2007
Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. ( @13.9
GR) Premium Gap
November 28, 2008
(Rs. in Crores) ACTUAL 2007-08 PROJECTIONS 2008-09 2009-10 2010-11 2011-12 2012-13 17813 18825 19894 21024 22218 23480 21.02
23.10
3744 371 4115 4085 21.70
613 4697 24.95
24089 -5265
GIPSA
4456 22.40
668 5125 25.76
26281 -6387 4862 23.13
729 5591 26.59
28673 -7649 5304 23.87
796 6100 27.46
31282 -9064 5787 24.65
868 6655 28.34
34129 -10649
40
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.
November 28, 2008 GIPSA 41