Insurance Employees Union (IEU) attached to the Raichur Division of Life Insurance Corporation (LIC) has decided to take up a campaign among stakeholders for sensitising them on the adverse effects of the Union government’s recent decisions with regard to the insurance sector.
Addressing a media conference in Ballari on Tuesday, IEU general secretary M. Ravi said that the campaign was part of the nation-wide general strike by the insurance employees scheduled for Thursday opposing the Union government’s decision to list LIC in the stock markets through an Initial Public Offering (IPO), increase Foreign Direct Investment (DDI) in the insurance sector to 74% from 49% and its efforts to privatise the public sector general insurance company.
“Listing LIC in the stock market through an IPO will impact the economy and vulnerable sections and defeat the very purpose of its formation. The objectives of nationalisation will recede into the background and LIC will be forced to concentrate on delivering increasing profits to shareholders. Like the private companies, LIC too will have to target big policies which bring greater profits. In the process, small size policies, which the poor, vulnerable and lower-middle classes purchase, will no longer be attractive. The social objective of providing insurance cover to the weaker sections of society will receive a setback. The aim to expand insurance in the unprofitable rural areas too will suffer. Therefore, disturbing the character of LIC will harm the interests of the national economy and the poorer sections of the Indian population,” Mr. Ravi said.
Countering the arguments for its decision to increase FDI in the insurance sector to 74% from 49%, Mr. Ravi said that the government’s claim of incapability of Indian partners in meeting the massive requirement of investment for the expansion of insurance business was not true considering the fact that many Indian companies were expanding their insurance business outside the country.
“Another argument of the government that insurance in India is under-penetrated is based on the calculations of premiums collected in relation to GDP. Looking at the insurance market from this angle is not entirely right in a country that has a low per capita income and people lack adequate resources to save. Nearly 40 crore Indians are estimated to be insured through individual assurances and group insurance. The insurable population is estimated to be around 60 crore. This number can increase depending upon the rising levels of income and savings. Allowing foreign capital greater control over domestic savings in a country that has a scarcity of capital would surely harm the nation,” he said.
Strongly opposing the government’s efforts to privatise the public sector general insurance company, Mr. Ravi cautioned that such a move would compromise national interest. “Rather than privatising any public sector general insurance company, the government should actually consolidate them to make them more competent,” he said.
M. Sharanagouda and Sridhar, president and joint secretary of the union, respectively, were present.
