Finance Minister P Chidambaram has recently has shot off a stern letter to the chiefs of all four state-owned general insurance companies, with total assets of over Rs 50,000 crore, criticising their performance in many crucial aspects. He has asked the companies to submit strategies on how they plan to improve their performance. The finance minister has given the insurance majors four weeks to respond.State-owned insurance companies have lost more than 35 per cent of market share to nascent private sector general insurance companies since the liberalisation of the insurance sector more than six years ago, and the letter assumes particular significance in the post-detariffed regime, which came into effect from January 1.Confirming the development, a senior official of New India Assurance, the largest general insurance company, said Chidambaram expressed serious concern over the performance of these companies and highlighted several alarming areas of weakness, including customer service, expense management, and under-penetration in the health insurance market, all of which he felt needed to addressed urgently.“For these public sector companies, more claims are pending than are getting settled,’’ Chidambaram has pointed out in his strongly-worded letter.In particular, the finance minister has drawn attention to the number of pending motor insurance cases. Chidambaram called for sweeping changes in service levels in order to attract more customers and thereby improve the market share of state-owned companies.Officials of the state-owned general insurance companies are now reportedly busy formulating urgent action plans to be submitted to the finance minister before the end of the four-week deadline.“We may appoint consultants to prepare the strategies to improve our performance in this competitive atmosphere,’’ said one insurance company official. The boards of these companies are expected to meet soon to discuss the plans.
