Don't merge PSU insurers: RSS economic wing
BENGALURU: Two days before the Budget announcement, Swadeshi Jagran Manch (SJM) wrote to the PMO requesting that the government not proceed with the proposed merger of the three general insurers of the public sector: Oriental, United India and National. In a previous budget announcement, the Center had announced the merger of the UPM.
TOI previously reported that the planned merger could be delayed because the solvency margins of the three UPMs are worrying. The solvency margin was particularly worrying, since it had fallen below the mandatory level of 150%. The IPO of the merged entity (three UPMs) could also be delayed, as insurers expect an infusion of government capital.
The economic wing RSS said the merger would jeopardize many government welfare schemes, such as (PMSBY) or the Rs 12 insurance scheme. It would also generate additional costs and less insurance penetration, said national co-coordinator Ashwani. Mahajan
The economic wing RSS said that government schemes such as Pradhan Mantri Fasal BimaYojana (PMFBY), (PMJJBY) and (PMJAY) were for the benefit of small farmers, unorganized workers, the population living below the poverty line, etc. . These schemes were supposed to be implemented by public and private sector insurance companies, but the implementation has been largely left to public sector insurers, he said.
The RSS said that the loss rate for Pradhan Mantri Suraksha BimaYojana was 221%. He claimed that the public sector had a loss rate of 115% for Pradhan Mantri Fasal BimaYojana, while private players faced a loss rate of less than 60%. For health plans such as RSBY/Ayushman Bharat, public sector insurers face losses of 110%, while private actors, who selectively provide services to these schemes, face losses of less than 90%.
The RSS estimates that the total accumulated losses of the three insurance plans in the last three years, 2016-17, 2017-18 and 2018-19, exceeded Rs 7,000 million. Insurance penetration is only 3.69% of GDP. For this we need to expand insurance companies to rural areas and small towns, he said.
The RSS also said it feared an increase in premiums for private players if the merger of the PSU results in a more competitive environment. The organization also pointed out additional costs associated with the merger: the integration of the IT infrastructure of these three companies will not only be an exercise that will take a long time, but would also imply a huge cost and a major disruption in the operation of the entity merged proposal.