On 18th January, the Cabinet Committee on Economic Affairs, headed by Prime Minister Modi, gave “in principle” approval for listing of state-owned general insurance companies. Listing them in the stock exchange is the first step towards their privatisation. The companies concerned are: New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company and the General Insurance Corporation of India (GIC). Following the meeting, Finance Minister Jaitley stated that 25% of the shareholding will be sold in one or more tranches over a period of time. Presently the government shareholding in these companies is 100%.
The four general insurance companies together have more than half the general insurance business. According to a statement given in 2015 by G Srinivasan, Chairman, New India Assurance, there was no pressure to raise fresh capital as his company had a solvency margin of 2.6 times the statutory requirement. All four companies were profitable until 2015-16. Two of them have suddenly reported losses in 2016-17, which has become the usual method of creating a justification for privatisation.
As part of preparing for this move, the Insurance Laws (Amendment) Bill, 2015 had been approved by both houses of Parliament, with the Congress Party and Biju Janata Dal supporting the BJP government. This legislation paved the way for permitting upto 49% foreign ownership in these companies.
The move of the government has been strongly condemned by workers’ unions, not only those in the insurance sector workers but also the major central federations including the All India Trade Union Congress (AITUC), Centre of Indian Trade Unions (CITU) and Bharatiya Mazdoor Sangh (BMS). They have demanded that government take back this anti-people decision. Workers’ unions have warned the government that they will take the struggle to the streets, mobilising workers as well as the general public, if government does not take it back.
Privatisation and permitting foreign capitalist ownership of insurance companies is against the interests of the majority of people. It means escalated robbery of policy holders so as to fulfil the greed for maximum private profits.