Swadeshi Jagran Manch (SJM), an RSS affiliate has voiced concern against the merger of the public sector general insurance companies Oriental Insurance Company, United Insurance Company and National Insurance Company. SJM, in its letter to the Prime Minister Narendra Modi despatched on Thursday, said the merger will endanger the growth of insurance sector in the country and the flagship insurance-based social schemes like Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Aarogya Yojana.
SJM national co-convenor Dr Ashwani Mahajan said ”If these public sector enterprises start turning away from socially desired insurance, similar to private sector companies, what will happen to the flagship insurance schemes started by the government under your leadership and the public outcry resulting thereof. Our estimates show that merely on account of three insurance schemes mentioned above, total accumulated losses in the last three years, 2016-17, 2017-18 and 2018-19 were to the tune of more than Ra 7,000 crore. If we add other schemes where public sector undertakings have to shed more claims than the private sector counterparts, this figure may go much higher.”
He informed that the PSUs are the ones servicing most of the claims under Motor Third Party insurance in far-flung rural areas where private players do not want to enter. The obligated claims share for PSUs is higher than their market share, as per IRDAI report. Losses under this segment have been in the range of 111-128%. 80% of Group health schemes are being serviced by PSUs alone at losses of close to 115%.
Dr Mahajan urged the Centre not to go by the Consultants’ report suggesting the merger of these three PSU insurance companies. He said the total losses of the general insurance companies are due to their obligation and presence in far-flung areas for servicing this portfolio have resulted in huge losses. ”The proposed merger of three public sector general insurance companies would create a situation where the merged entity will be competing with other public sectors general insurance company, the New India Insurance Co Ltd,” he noted.
Further, SJM observed that private sector insurance companies would never go for general health insurance business being a loss-making proposition. They may consider general health insurance when the premiums are hiked substantially. ”Therefore, the advice of the consultants is needed to be dumped, as this advice comes with bias and malafide intentions and the proposed merger, which is being pushed by the vested interests, based on biased data with a lot of concealment needs to be outrightly rejected,” SJM said.