NEW DELHI, July 29: In a bid to prepare the nationalised insurance companies for competition, the Government is planning to professionalise their boards. The Ministry of Finance is mooting a proposal to induct more professionals and experts on the boards of General Insurance Corporation (GIC) and Life Insurance Corporation (LIC).The move is aimed at ensuring that commercial considerations are a priority when key decisions are taken at the board level. The presence of independent non-officials directors on these boards will also help reduce Government interference in the functioning of the companies.The Government wants to follow the example set by navratna PSUs. The Government had selected prominent professionals and placed them on PSU boards as non-officials directors to impart independence and sectoral expertise to companies. A separate mechanism to screen and interview candidates had been set up for this. But in the case of the insurance companies the selection will be done by the ministryitself.Professionals who are experts in specific fields like chartered accountancy, manufacturing, services, management and law will be chosen for the board. GIC, for instance, already has some non-Government representatives on its board. According to the latest available annual report for the year 1996-97, four non-official directors were appointed in GIC on March 6, 1997. These were Hasmukh Shah, chairman of Gujarat Ecology Commission; Prof Manubhai Shah, managing trustee of Consumer Education Research Centre; Dr D N Buragohain, director, Indian Institute of Technology, Guwahati; and K P Rao, senior partner of K.P. Rao & Co, a chartered accountant firm. Apart from representatives from the department of insurance of the ministry, other directors include economist Indira Rajaraman and Y B.Desai, executive director of Exim Bank.There is little industry or corporate representation on the boards. By its move to broad-base the board, the Government hopes to strengthen the boards of GIC and LIC. Preparingthese companies for competition is crucial. Once the Insurance Regulatory Authority Bill is passed, the Government would then move amendments in the GIC and LIC Acts. While there is still some months to go before private players enter the market, the nationalised insurance companies have to improve their decision making, cut their costs, and improve efficiency. The track record of introducing new insurance products of the companies has not been encouraging. An industrial all-risk policy launched by the GIC an year ago for its four subsidiaries did not do well.
