November 28, 2008GIPSA1 JOINT MEETING OF ALL CHECK- OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs. EXPLORATORY TALKS ON PROPOSED WAGE REVISION W.E.F Friday, November 28, 2008 New Delhi

November 28, 2008GIPSA2 PUBLIC SECTOR GENERAL INSURANCE IN INDIA  FROM A MODEST BASE OF Rs. 208 CRORES IN 1973, GROSS PREMIUM HAS GONE UP TO Rs. 17,813 IN  AVERAGE GROWTH RATE 12.68% PER ANNUM SINCE HOWEVER, THE AVERAGE GROWTH RATE DURING PAST 5 YEARS HAS BEEN 5.68%.  MANPOWER GROWN FROM 26,112 IN 1973 TO 84,097 AS ON AND THEN CAME DOWN TO 69,445 AS ON  NUMBER OF OFFICES INCREASED FROM 750 IN 1975 TO 4,074 AS ON

November 28, 2008GIPSA3 Contd…….  INVESTMENT PORTFOLIO INCREASED FROM Rs. 355 CRORES IN 1975 TO Rs. 31,342 CRORES AS ON  INVESTMENT INCOME INCREASED FROM Rs. 21 CRORES IN 1975 TO Rs. 6,189 CRORES AS ON  RESERVES AND SURPLUS AS ON STANDS AT Rs. 13,253 CRORES  NET WORTH APPROX Rs. 13,800 CRORES AS ON

November 28, 2008GIPSA4 MANPOWER & PRODUCTIVITY As On No. of Employees Gr. Prem. (Rs. Cr.) Productivity/ Employee (Rs.'000) % Growth in Prod. Y2Y Average Annual Increase in per employee productivity over last 5 years is 8.22%

November 28, 2008GIPSA5 MANPOWER AND PAY SCALES  FOUR CLASSES OF EMPLOYEES IN GIPSA COs. AS ON , TOTAL STRENGTH IS, CLASS I:17375 CLASS II: 9104 CLASS III:34040 CLASS IV: 8926 TOTAL:69445  PAY SCALES OF ALL CLASSES OF EMPLOYEES GOVERNED BY SCHEMES NOTIFIED BY GOVERNMENT  FIRST SCHEMES FOR PAY SCALES NOTIFIED IN 1974, 1975 AND 1976 (CALLED RATIONALISATION SCHEMES) FOR CLASS III/IV, CLASS I AND CLASS II EMPLOYEES RESPECTIVELY

November 28, 2008GIPSA6 FIVE REVISIONS OF PAY SCALES  1985 SCHEME W.E.F  1989 SCHEME W.E.F  1996 SCHEME W.E.F  2000 SCHEME W.E.F  2005 & 2008 SCHEMES W.E.F  CURRENT WAGE REVISION DUE W.E.F

November 28, 2008GIPSA7 SIGNIFICANT DEVELOPMENTS SINCE LAST REVISION  TOTAL NUMBER OF GENERAL INSURANCE COMPANIES IN INDIA WERE 10 AS ON AND HAVE GONE UP TO 20 AS ON DATE.  DETARIFFING OF PREMIUM IN MOTOR OD W.E.F AND ALL OTHER CLASSES OF BUSINESS, W.E.F , FURTHER STIFFENING THE COMPETITION.  MARKET SHARE OF GIPSA MEMBER COs. HAS SLIDED DOWN FROM 95.91% AS ON TO 60.08% AS ON  GIPSA MEMBER COs. HAVE UNDERTAKEN BUSINESS PROCESS RE-ENGINEERING INTITIATIVES.

November 28, 2008GIPSA8 MARKET SHARE AS ONPUBLICPRIVATE Sept-08 (Flash Figures)

November 28, 2008GIPSA9 BUSINESS PROCES RE-ENGINEERING (BPR) IN GIPSA COs.  ALL THE FOUR COMPANIES APPOINTED MANAGEMENTS CONSULTANTS (MCs).  MCs TO MAKE AN ASSESSMENT OF KEY FUNCTIONAL AREAS AND DEVELOP OVERALL STRATEGIC PLAN FOR THEM IN FIRST PHASE  THE UNIQUE FEATURE IS THAT THE MCs WOULD BE INVOLVED IN IMPLEMENTATION OF RECOMMENDATIONS ACCEPTED BY THE MANAGEMENT OF COs.

November 28, 2008GIPSA10 MAIN AGENDA FOR MCs  REVIEW OF ORGANISATIONAL STRUCTURE AND ASSESSMENT OF KEY FUNCTIONAL AREAS  MARKETING AND SALES – REVIEW OF PRODUCT RANGE AND DISTRIBUTION STRATEGY  OPERATIONS – BETTER CUSTOMER SERVICING  HUMAN RESOURCE – RECRUITMENT & TRAINING, INCENTIVE SCHEMES  INVESTMENT, U/W, FINANCIAL MANAGEMENT, IT – REVIEW AND IMPROVEMENTS

November 28, 2008GIPSA11 BPR IN ‘NATIONAL’  BANCASSURANCE – 5 Dedicated Bancassurance servicing offices have been opened. Target for 15 such offices by  SME SECTOR – 18 dedicated SME Cells have been opened and 22 more planned by and another 35 by  Claims Processing Hubs – Opened at Kolkata and Chandigarh for Motor OD Claims – Average Claim Processing Time reduced to 25 days. More such Hubs to be opened at New Delhi, Bangalore, Chennai, Luncknow and Hyderabad by  Agency Force - Efforts being undertaken to incentivise the performing agents through recognition and felicitation

November 28, 2008GIPSA12 BPR IN ‘NEW INDIA’ (NEW ENERGY)  WAVE 1 INITIATIVES – Process Redesign, Bancassurance, Brokers, Auto-dealers and Large Corporate – Pilot Work started in January, 2008 and rollout has commenced across the nation. Performance is being monitored by a dedicated HO Team for each initiative.  WAVE 2 INITIATIVES – Agency Performance Enhancement Program, Health TPA Management, HR & Organization Structure, Motor TP process redesign, Risk Based Pricing – Pilot work on these initiatives already started and performance is being closely evaluated.

November 28, 2008GIPSA13 BPR IN ‘ORIENTAL’ (NAYEE DISHA)  AGENCY MANAGERS – Project AGNI envisaged appointment of 80 Agency Managers at 10 Regional Centers by which has been achieved.  SERVICE CENTRES – Pilot launched in 9 Cities for Motor OD Claims and 3 more coming. 1 Pilot for Policy Issuance at Jaipur to be launched shortly. Motor TP Claims Hub Pilot started in Chennai and Bangalore.  HEALTH INITIATIVES – Regular and Enhanced Monitoring of TPAs started and Health Managers network created across the Regional Offices.  ORGANIZATION STRUCTURE, PMS AND INCENTIVE SCHEMES – Initiatives under advanced stages of finalization.

November 28, 2008GIPSA14 BPR IN ‘UNITED INDIA’ (UNISURGE)  As on , have opened 7 Bancassurance Offices against 6 planned, 9 Tie-ups with Motor Dealers against target of 8, implemented Agency Managers concept in 96 Offices (9 ROs) and opened 3 Large Corporate & Broker Cells.  In Motor, 2 ‘filing ready’ products have been developed.  Design and Plan for Service Hub finalized with identification of location and personnel.  PMS and Incentive Schemes for Employees under final stages of discussion.

November 28, 2008GIPSA15 BPR – HR - COMMON IN ALL COs.  Management Consultants in each Company took extensive studies in the area of Manpower Planning.  Reforms in Promotional Processes undertaken by GIPSA to address the contemporary requirements in the changed business scenario.  New Promotion Policies evolved for Class I Officers and Class III/IV Employees. Promotion Policy for Development Officers amended to the requisite extent.

November 28, 2008GIPSA16 Contd…….  Companies have initiated Promotion Exercises for Promotions From Class IV to III, within Class III, From Class III to Class I, From Class II to I and within Class I (Scale I, II, III & IV)  All these Promotion Exercises scheduled to be completed by  Transfer and Mobility Policy now in vogue in all cadres to provide requisite flexibility in deployment to serve Organizational Requirements and career development of Employees.  PMS and Incentive Schemes for Employees under final stages of evolution.

November 28, 2008GIPSA17 PROCESS AND FACTORS OF WAGE REVISION  12 CHECK-OFF QUALIFIED UNIONS / ASSOCIATIONS OF EMPLOYEES IN MEMBER COMPANIES.  2 OF THESE UNIONS REPRESENT MORE THAN ONE CLASS OF EMPLOYEES  ALL CHECK-OFF QUALIFIED UNIONS/ASSOCIATIONS (EXCEPT ONE FROM DEVELOPMENT OFFICERS) HAVE SUBMITTED THEIR CHARTER OF DEMANDS.

November 28, 2008GIPSA18 CHECK-OFF ACCREDITED UNIONS/ASSNS  CLASS I 1-4 NATIONAL/NEW INDIA/ORIENTAL/UNITED INDIA INSURANCE COMPANY OFFICERS’ ASSOCIATIONS (4) 5. GENERAL INSURANCE OFFICERS’ ALL INDIA ASSN 6. BHARTIYA VIMA KARAMCHARI SENA** 7. NATIONAL FEDERATION OF GENERAL INSURANCE EMPLOYEES**  CLASS II 1. ALL INDIA GEN INS FIELD WORKERS’ ASSN 2. BHARTIYA VIMA KARAMCHARI SENA** 3. NATIONAL FEDERATION OF GEN. INS. EMPLOYEES** 4. GENERAL INSURANCE DEV. OFFICERS’ ASSN 5. GENERAL INSURANCE DEV. OFFICERS’ FEDERATION*  CLASS III/IV 1. GENERAL INSURANCE EMPLOYEES’ ALL INDIA ASSN 2. ALL INDIA INS. EMPLOYEES’ ASSN 3. NATIONAL FEDERATION OF GENERAL INS. EMPLOYEES** *Charter not submitted ** Representing more than 1 Class of Employees

November 28, 2008GIPSA19 CHARTERS OF DEMANDS BY UNIONS / ASSOCIATIONS Charters of Demands submitted by the Unions / Associations talk of increasing the pay package by degrees varying from 20% to 60%.

November 28, 2008GIPSA20 GROWTH RATE (GROSS PREMIUM) % YEARNICNIAOICUIIALL COs Sept-08 (FF)

November 28, 2008GIPSA21 MANAGEMENT EXP. (% TO GROSS PREMIUM) YEARNICNIAOICUIIALL COs

November 28, 2008GIPSA22 MANAGEMENT EXP. (COMPLIANCE TO SEC 40C) YEARNICNIAOICUIIALL COs NO NO NO NO YESNO NOYESNO

November 28, 2008GIPSA23 M.E. (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg

November 28, 2008GIPSA24 COMMISSION (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg

November 28, 2008GIPSA25 ICR (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg

November 28, 2008GIPSA26 COMBINED RATIO* (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg *INCLUDES NET INCURRED CLAIMS, M.E. & COMM.

November 28, 2008GIPSA27 UNDERWRITING PROFIT / LOSS (Rs. in Crores) YEARNICNIAOICUIITOTAL

November 28, 2008GIPSA28 ESTIMATED WAGE BILL AS ON * (Rs. Crores) NICNIAOICUIIALL Cos *Extrapolated on the basis of expenses as on 31 st March, 2007 & 2008

November 28, 2008GIPSA29 ME & WAGE BILL – PROJ. Vs. ACTUAL YEAR M.E. %WAGE BILL (Rs. Cr.) PROJECTEDACTUALPROJECTEDACTUAL

November 28, 2008GIPSA30 WAGE BILL Vs. PRODUCTIVITY – PER CAPITA Parameters Gross Premium (Rs. Crs.) Wage Bill – Aug 02/Mar 08 (Rs. Crs.) Employees Strength – Aug 02/Mar Per Capita Productivity (Rs. Lacs) % Increase over 5½ Years51.74 Per Capita Wage (Rs. Lacs) % Increase over 5½ Years57.81

November 28, 2008GIPSA31 CUSTOMER SERVICE INDICES (%) NICNIAOICUII Suit Claim Ratio Avg. - last 3 yrs Actual Target Non Suit Claim Ratio Avg. - last 3 yrs Actual Target Grievance Redressal Avg. - last 3 yrs Actual Target

November 28, 2008GIPSA32 CHALLENGES AHEAD  EXTERNAL CHALLENGES  INTERNAL CHALLENGES

November 28, 2008GIPSA33 EXTERNAL CHALLENGES  Intense Competition on more profitable lines of Business.  Premium rates to remain under pressure in De-tariffed regime.  Business acquisition cost continue to rise.  Re-insurance cost also continue to rise due to reduction in ceding commission by Treaty Re-insurers to compensate for lower rates in de-tariffed regime.

November 28, 2008GIPSA34 Contd………  Shadow of global recession looming large on Indian Industry and Economy  Capital Markets meltdown reduces reliance on investment portfolio for net profit  Changing customer profile and increasing customer expectations  New emerging risks and need for continuous innovations

November 28, 2008GIPSA35 INTERNAL CHALLENGES  Statutory limits on ME Ratios – Sec. 40 C  Every rise in Wage Bill demands corresponding rise in productivity  Rigidity in pay package impedes retention of talent - need for flexi pay / differential pay package  Skill gap in the manpower flowing from fast changing technologies

November 28, 2008GIPSA36 Contd…………..  Adverse age profile of manpower – climate of inertia and rigidity  Imbalances in deployment of manpower – continued pockets of surplus / deficit despite structured TMP – widen TMP or more flexible TMP?  Continuous losses in Motor TP, Health etc. – Loss Management and Minimization  Attitudinal issues of manpower at various levels – commitment vs. alienation

November 28, 2008GIPSA37 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 1 (Rs. in Crores) ACTUALPROJECTIONS Gross Prem 5.68% p.a M. Exp (w/o WR) 9.1% p.a ME % Addition to ME with 5% WR w.e.f Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. GR) Premium Gap

November 28, 2008GIPSA38 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 2 (Rs. in Crores) ACTUALPROJECTIONS Gross Prem 5.68% p.a M. Exp (w/o WR) 9.1% p.a ME % Addition to ME with 10% WR w.e.f Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. GR) Premium Gap

November 28, 2008GIPSA39 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 3 (Rs. in Crores) ACTUALPROJECTIONS Gross Prem 5.68% p.a M. Exp (w/o WR) 9.1% p.a ME % Addition to ME with 15% WR w.e.f Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. GR) Premium Gap

November 28, 2008GIPSA40 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 4 (Rs. in Crores) ACTUALPROJECTIONS Gross Prem 5.68% p.a M. Exp (w/o WR) 9.1% p.a ME % Addition to ME with 20% WR w.e.f Total ME ME (% to GP) For 19.50% ME, Required Gross Prem. GR) Premium Gap

November 28, 2008GIPSA41 HOPES  BPR initiatives expected to boost up productivity and rationalize expenses besides improving Customer Care.  Active co-operation from Employees and their Unions / Associations required to supplement these efforts.  An Organizational Agenda common to the Management and the Unions / Associations required for coordinated efforts and synergy.  Let us evolve such an Agenda.