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Insurance move ignites unions, excites industry

The Union Cabinet's decision to allow 40 per cent foreign equity in the insurance sector has evoked mixed reactions.

The industry expressed happiness. The employees aired their displeasure.

The latter went on to stage protest demonstrations in front of their offices against the government decision.

Yvo Metzelaar, chief Indian representative of ING Insurance, one of the world's largest integrated financial services companies, said the move will eventually benefit the Indian consumer.

ING is gearing up for the introduction of insurance services in association with Vysya Bank in India, he said.

Besides exploring opportunities in retail financial services including life insurance in India, the cooperation between ING and Vysya Bank would seek to bring together the local expertise and go for extensive network of branches across the country.

Another leading institution, the 20th Century Finance Corporation in India which has an MoU with the Canada Life Assurance Company in the areas of life insurance, pension annuities and permitted health products, has expressed its confidence that it will be able to commence its joint venture business at the earliest.

Both the companies have conducted an extensive research study in India to evaluate consumer needs and preferences. It shows that there is tremendous potential in increasing the reach and penetration of insurance in India.

However, the employees from the public sector LIC are critical of the government move and urged the government to reconsider its decision in the long term interest of the nation.

National Organisation of Insurance Workers president M P Patwardhan said that the government should not fall prey to the pressure tactics of international financial institutions.

Addressing the lunch-hour demonstration at the LIC headquarters in Bombay, Patwardhan said that the insurance workers would fight back the anti-people and anti-labour decision of the government and decided to stage day-long sit-in before all offices of LIC on November 30.

Other leaders said the government's decision not only goes far beyond the decision taken by the previous government (which was to restrict the opening to pension and health insurance segments that together constituted less than ten per cent of the insurance business in the country), it nonchalantly strikes down the parameters prescribed by the Malhotra Committee in its report published in January 1994.

The Malhotra Committee recommended that the promoters' holding in a private insurance company should not exceed 40 per cent of the total. It also said that promoters should at no time hold less than 26 per cent of the paid-up capital.

There are reasons to believe that these extraordinary favours to foreign capital are being made by a tottering government in the hope that it would be a new source of funding for elections if it faces a collapse, the represenatvies alleged.

The insurance employees are determined to ''smash the government's pernicious move towards reckless opening of the insurance sector''. They will take out a mammoth march to Parliament on December 8, observe strike on December 11 and plunge into various other militant actions, they added.

UNI

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