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The central government is considering a structural change in state-run general insurance companies to a three-tier structure, up from four previously, special correspondent Anurag Shah said, citing sources, in his exclusive report Thursday.
Shah said, “The general public sector enterprise (PSU) insurance companies are currently divided into head office, regional office, divisional office and branch office, where the division and branch will be merged into one and could be called office. operational. ”
These general PSU insurance companies with these structural changes will focus on profitability rather than growth, amid plans to inject government funds of Rs 12,000 crore. In addition, employee expenses will also be rationalized as planned, explains the special envoy, citing sources.
He added that the operation of state-owned general insurance companies and employee expenses are 5-7 times higher than that of private general insurance companies.
The loss-making general insurance PSU branches with lower or zero profitability and higher expenses will be closed and some of them will be merged, Shah said.
According to the source, the restructuring plan for the general insurance branches of PSU has been drawn up and it will be implemented gradually, added the special envoy.
Government-owned general insurance will focus more on digitization and also cost-cutting measures, Shah mentions, adding that potentially stressed employees get more business for the company through marketing and will also receive incentives for the same. .
The special envoy also expressed concern about the possibility of disruption from workers and unions. He adds that employees may be affected in the short term, but they will benefit due to the profitability of the company in the future.
Speaking on the impact of this news on state-run general insurance companies, Editorial Director Anil Singhvi explains that when an investor puts his money in a stock, it is mainly on the basis the business model of the company. In the P&C segment, we will not find an immediate change in the share price as its long-term business and the company’s share price will therefore react.
Singhvi assures that the actions of the insurance companies will certainly give you double that of the fixed deposit – FD.
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