At a time when the government wants to dilute its stake and list public sector insurance companies on the stock exchanges, three PSU general insurance companies — United India Insurance, Oriental Insurance Company and Agriculture Insurance Company — don’t have regular chairman and managing director with the appointment process getting stuck in the bureaucratic maze. A top panel constituted by the finance ministry with the involvement of TS Vijayan, chairman, Insurance Regulatory and Development Authority (IRDA) and Anjuly Chib Duggal, secretary, Department of Financial Services, Ministry of Finance, had selected three officials out of the 10 senior officials for the top post from the five companies in November 2016.
AV Girija Kumar, Director and General Manager, United India Insurance was selected for Oriental, Warendra Sinha, Director, National Insurance was for UII and TL Alamelu, Director, New India Assurance (NIA) for the Delhi-based Agriculture Insurance Company (AIC).
However, final orders of appointment for these officials are stuck in the bureaucratic processes and in the meantime, Sinha has put in his papers after being appointed as the Managing Director and CEO of private sector major Iffco Tokio General Insurance.
Interestingly, Girija Kumar, 57, has been appointed as the acting Chairman and Managing Director (CMD) of the company by the Ministry of Finance on Friday with retrospective effect from January to March. MoF issued Kumar’s appointment letter which is valid only up to March 2017. “His appointment letter came two and a half months late… and he can be acting chairman for another 12 days,” said an official source.
Kumar’s tenure as acting CMD of UII is likely to be further extended beyond March 2017 if the government doesn’t appoint a full-time CMD for the company, sources said. Chennai-based UII doesn’t have a regular CMD since M Kharat retired in June 2016. The Ministry had appointed Arif Hoda as the acting CMD who also retired in December 2016.
Girija Kumar is the senior most general manager of the public sector general insurance industry and is also in the race to become CMD of Delhi-based Oriental Insurance. Sinha is waiting for the clearances by the board of NIC to leave the company by availing voluntary retirement scheme (VRS). If that happens, the MoF has to select another official to head UII. But whether that will be from the list of officials who had already appeared in November interview or there will be another round of interview is yet to be known.
“One doesn’t know how and when these posts of CMDs of these companies, which didn’t have heads for last 8-10 months, will be filled up. Both Oriental and UII have financially performed very poorly in recent times and have suffered heavy losses. They even don’t have the minimum solvency ratio of 1.5 per cent as required by the regulations,” said an insurance sector official.
At the same time, the government has already announced its plans to disinvest up to 25 per cent in these companies. “But they can’t go for initial public offering (IPO) without improving their financial parameters including solvencies,’’ industry sources said.