It Centre introduces bill to hike FDI in insurance sector
: All India Insurance Employees’ Association (AIIEA) and other trade unions have warned the Central Government of nation-wide strikes if it introduces the bill to hike foreign direct investment (FDI) in insurance sector during the upcoming Winter Session of the Parliament.
Along with a slew of economic reform measures, the Union Cabinet in October had approved amendments to Insurance Laws (Amendment), Bill, 2008 to allow the increase of FDI limit in insurance sector from the present 26 per cent to 49 per cent.
The unions have already begun an awareness campaign across the country through conventions, agitations and streetplays focussing on “adverse affects” of increasing foreign investment in Indian economy, according to the national joint secretary of AIIEA K. Swaminathan.
Speaking to The Hindu here on Wednesday, he said that the objective was to bring a mass mobilisation of public and workers against the move to take up the amended bill before November 21 when the Parliament would convene for Winter Session.
“The unions are going to meet all the Members of Parliament belonging to both Lok Sabha and Rajya Sabha as this bill has to be passed by both Houses. Unlike in retail and telecommunication sectors, the Centre cannot increase FDI in insurance through notifications as the 26 per cent cap was fixed in the IRDA Act, 1999.”
He also decried the arguments of Insurance Regulatory and Development Authority (IRDA) Chairman J. Hari Narayan that FDI was needed to capitalise Indian private insurance companies and increase penetration.
Indian promoters of insurance companies that are collaborating with foreign companies were making large scale acquisitions abroad indicating that they were flush with funds. Further in the 10 years of having allowed 26 per cent FDI in insurance, only Rs. 6,300 crore had come into the sector.
This was a meagre compared to size of the Indian economy. The Life Insurance Corporation of India (LIC) alone contributed more than Rs. 7 lakh crore to the last Five Year Plan of 2007-12.
As regards market penetration, Mr. Swaminathan said that LIC had 30 crore individual polices and covered ten crore persons under group insurance and still accounted for 76 per cent of market share till August this year.
It was only public sector companies that were increasing penetration, he said, adding that the claims settlement of LIC was 99 per cent while private companies had outstanding between 18 and 40 per cent.
He also noted that a Parliamentary Standing Committee on Finance, in which United Progressive Alliance had a majority of the members, had unanimously voted against increasing FDI in insurance. He held discussions with local trade union office bearers.