Plans to further liberalise Indian insurance industry and allowing more foreign equity participation and privatisation of public sector companies must be given up in view of the international stress on taming financial markets and also public investment for building infrastructure, All India Insurance Employees' Association president Amanullah Khan has said.
Delivering the key-note address at a seminar on ‘A decade of liberalised insurance industry – way ahead' organised by the Centre for Social Science Research and the Department of Economics and Visakhapatnam Insurance Institute (VII) on Thursday, he criticised the excessive obsession with foreign capital and said insurance, especially life insurance, mobilised long-term funds and the government should exercise control over them.
The hike in foreign equity would only succeed in giving greater access and control to foreign capital over domestic savings and “this is simply against national interests.”
In spite of 30 to 35 per cent of new premium income, private companies are yet to make large-scale investments for infrastructure.
The Insurance Laws (Amendment) Bill 2008 and LIC Act (Amendment) Bill 2009 have been tabled in Parliament and are being scrutinised by the Standing Committee on Finance. They intend to hike foreign equity participation and privatisation of public sector companies.
Opposing the suggestion to abolish agency system, he stressed the need to cover rural people and those in the unorganised sector, and health insurance should not be left in the hands of private sector.
He warned against “mis-selling” and lapse of policies in the private sector.
Tracing elaborately the opening up of the sector in the face of popular opposition, Mr. Khan attributed the growth in the insurance industry (new business premium increased from Rs.19,857.28 crores in 2001-02 to Rs.87,006 crores in 2008-09) to growth of economy, levels of income and disposable income and not due to competition.
Belying predictions, LIC was holding 70 per cent of the market share in number of policies and 65 per cent in new business premium.
Pat for LIC
Insurance Institute of India Secretary-General Sharad Srivastava raised questions over the silence on sum insured while lives insured and first premium hog the limelight.
Andhra University Vice-Chancellor Beela Satyanaryana lauded LIC for growing in spite of so many players.
Crop insurance should evolve to prevent farmers' suicide.
LIC of India Senior Divisional Manager D. Nageswara Rao, who presided, saw a host of products, bigger needs of smaller families, popularity of unit-linked schemes and potential for pension market as characterising the insurance scenario.
Another 25 players were likely to be added to the present 25 by 2012 and the growth prospects were unprecedented.
Head of the Department of Economics R. Sudarsana Rao wanted the insurance sector to set up a Chair in the department.
Seminar convener and Director of AU Centre for Social Science Research K. Sreerama Murthy, Chief Regional Manager of Oriental Insurance Company P.S. Haranadh and seminar co-convener B.L. Narayana of VII spoke.