1. November 28, 2008GIPSA1 JOINT MEETING OF ALL CHECK- OFF QUALIFIED UNIONS / ASSOCIATIONS OF GIPSA COs. EXPLORATORY TALKS ON PROPOSED WAGE REVISION W.E.F. 01.08.2007 Friday, November 28, 2008 New Delhi

2. 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 2007-08.  AVERAGE GROWTH RATE 12.68% PER ANNUM SINCE 1973. 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 31.03.2002 AND THEN CAME DOWN TO 69,445 AS ON 31.03.2008.  NUMBER OF OFFICES INCREASED FROM 750 IN 1975 TO 4,074 AS ON 31.03.2008.

3. November 28, 2008GIPSA3 Contd…….  INVESTMENT PORTFOLIO INCREASED FROM Rs. 355 CRORES IN 1975 TO Rs. 31,342 CRORES AS ON 31- 03-2008  INVESTMENT INCOME INCREASED FROM Rs. 21 CRORES IN 1975 TO Rs. 6,189 CRORES AS ON 31- 03-2008  RESERVES AND SURPLUS AS ON 31-03-2008 STANDS AT Rs. 13,253 CRORES  NET WORTH APPROX Rs. 13,800 CRORES AS ON 31- 03-2008

4. November 28, 2008GIPSA4 MANPOWER & PRODUCTIVITY As On No. of Employees Gr. Prem. (Rs. Cr.) Productivity/ Employee (Rs.'000) % Growth in Prod. Y2Y 31.03.200378000135201730 - 31.03.20047358014285194112.20 31.03.2005722231494920706.62 31.03.2006718681597622237.40 31.03.2007709791728324359.54 31.03.2008694451781325655.34 Average Annual Increase in per employee productivity over last 5 years is 8.22%

5. November 28, 2008GIPSA5 MANPOWER AND PAY SCALES  FOUR CLASSES OF EMPLOYEES IN GIPSA COs. AS ON 31.03.2008, 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

6. November 28, 2008GIPSA6 FIVE REVISIONS OF PAY SCALES  1985 SCHEME W.E.F. 01.10.1983  1989 SCHEME W.E.F. 01.08.1987  1996 SCHEME W.E.F. 01.08.1992  2000 SCHEME W.E.F. 01.08.1997  2005 & 2008 SCHEMES W.E.F. 01.08.2002  CURRENT WAGE REVISION DUE W.E.F. 01.08.2007

7. November 28, 2008GIPSA7 SIGNIFICANT DEVELOPMENTS SINCE LAST REVISION  TOTAL NUMBER OF GENERAL INSURANCE COMPANIES IN INDIA WERE 10 AS ON 31.03.2002 AND HAVE GONE UP TO 20 AS ON DATE.  DETARIFFING OF PREMIUM IN MOTOR OD W.E.F. 01.01.2007 AND ALL OTHER CLASSES OF BUSINESS, W.E.F. 01.01.2008, FURTHER STIFFENING THE COMPETITION.  MARKET SHARE OF GIPSA MEMBER COs. HAS SLIDED DOWN FROM 95.91% AS ON 31.02.2002 TO 60.08% AS ON 31.03.2008.  GIPSA MEMBER COs. HAVE UNDERTAKEN BUSINESS PROCESS RE-ENGINEERING INTITIATIVES.

8. November 28, 2008GIPSA8 MARKET SHARE AS ONPUBLICPRIVATE 31.03.200295.914.09 31.03.200390.359.65 31.03.200485.5214.48 31.03.200579.9320.07 31.03.200673.6626.34 31.03.200765.2834.72 31.03.200860.0839.92 Sept-08 (Flash Figures) 58.25 41.75

9. 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.

10. 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

11. November 28, 2008GIPSA11 BPR IN ‘NATIONAL’  BANCASSURANCE – 5 Dedicated Bancassurance servicing offices have been opened. Target for 15 such offices by 31.03.2009  SME SECTOR – 18 dedicated SME Cells have been opened and 22 more planned by 31.12.2008 and another 35 by 31.03.2009.  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 31.12.2008.  Agency Force - Efforts being undertaken to incentivise the performing agents through recognition and felicitation

12. 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.

13. November 28, 2008GIPSA13 BPR IN ‘ORIENTAL’ (NAYEE DISHA)  AGENCY MANAGERS – Project AGNI envisaged appointment of 80 Agency Managers at 10 Regional Centers by 15.10.2008 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.

14. November 28, 2008GIPSA14 BPR IN ‘UNITED INDIA’ (UNISURGE)  As on 15.10.2008, 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.

15. 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.

16. 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 15.12.2008.  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.

17. 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.

18. 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

19. 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%.

20. November 28, 2008GIPSA20 GROWTH RATE (GROSS PREMIUM) % YEARNICNIAOICUIIALL COs 2003-0418.472.261.103.165.65 2004-0512.083.696.58-3.884.65 2005-06-7.2011.2216.797.146.87 2006-078.224.6011.3910.908.18 2007-085.093.62-3.006.883.07 Sept-08 (FF)10.754.582.5912.947.37

21. November 28, 2008GIPSA21 MANAGEMENT EXP. (% TO GROSS PREMIUM) YEARNICNIAOICUIIALL COs 2002-0320.9418.5922.7520.9620.49 2003-0421.4827.2426.9726.0225.55 2004-0522.5323.3023.6229.3024.35 2005-0624.9523.0323.5730.9625.14 2006-0722.6719.4418.7625.5621.23 2007-0824.5916.5721.1224.4021.02

22. November 28, 2008GIPSA22 MANAGEMENT EXP. (COMPLIANCE TO SEC 40C) YEARNICNIAOICUIIALL COs 2003-04NO 2004-05NO 2005-06NO 2006-07NO YESNO 2007-08NOYESNO

23. November 28, 2008GIPSA23 M.E. (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg. 2005-0631.9431.8436.0844.3535.50 2006-0731.3025.4428.0237.7029.94 2007-0832.6521.1828.6333.7728.03

24. November 28, 2008GIPSA24 COMMISSION (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg. 2005-065.098.664.372.925.70 2006-074.138.233.682.865.19 2007-086.759.544.575.056.88

25. November 28, 2008GIPSA25 ICR (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg. 2005-06102.4388.1387.6193.0992.20 2006-0786.5080.3487.6690.2685.43 2007-0894.0586.8290.4792.7590.47

26. November 28, 2008GIPSA26 COMBINED RATIO* (% TO NET PREMIUM) YEARNICNIAOICUIIWtd. Avg. 2005-06139.46128.63128.06140.36123.41 2006-07121.93114.01119.36130.81120.55 2007-08133.45120.00123.67131.58126.24 *INCLUDES NET INCURRED CLAIMS, M.E. & COMM.

27. November 28, 2008GIPSA27 UNDERWRITING PROFIT / LOSS (Rs. in Crores) YEARNICNIAOICUIITOTAL 2003-04-527-688-462-544-2221 2004-05-535-682-610-745-2572 2005-06-1089-1243-678-932-3942 2006-07-608-656-536-770-2570 2007-08-1013-844-680-853-3390

28. November 28, 2008GIPSA28 ESTIMATED WAGE BILL AS ON 31.07.2007* (Rs. Crores) NICNIAOICUIIALL Cos. 641.41774.26560.89720.852697.41 *Extrapolated on the basis of expenses as on 31 st March, 2007 & 2008

29. November 28, 2008GIPSA29 ME & WAGE BILL – PROJ. Vs. ACTUAL YEAR M.E. %WAGE BILL (Rs. Cr.) PROJECTEDACTUALPROJECTEDACTUAL 2004-0521.3424.3521702860 2005-0620.5425.1423333184 2006-0719.7721.2325082708 2007-0819.0421.0226972676

30. November 28, 2008GIPSA30 WAGE BILL Vs. PRODUCTIVITY – PER CAPITA Parameters2002-032007-08 Gross Premium (Rs. Crs.)1352017813 Wage Bill – Aug 02/Mar 08 (Rs. Crs.)19532676 Employees Strength – Aug 02/Mar 087998069445 Per Capita Productivity (Rs. Lacs)16.9025.65 % Increase over 5½ Years51.74 Per Capita Wage (Rs. Lacs)2.443.85 % Increase over 5½ Years57.81

31. November 28, 2008GIPSA31 CUSTOMER SERVICE INDICES (%) NICNIAOICUII Suit Claim Ratio Avg. - last 3 yrs 25.4028.2325.9924.89 Actual 2007-08 27.0927.0023.8729.50 Target 2008-09 35.00 Non Suit Claim Ratio Avg. - last 3 yrs 81.9689.9086.9585.53 Actual 2007-08 83.8590.0088.6787.60 Target 2008-09 90.0095.0090.00 Grievance Redressal Avg. - last 3 yrs 87.4882.3390.9173.21 Actual 2007-08 83.2983.0096.1681.04 Target 2008-09 88.0090.0095.0085.00

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

33. 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.

34. 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

35. 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

36. 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

37. November 28, 2008GIPSA37 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 1 (Rs. in Crores) ACTUALPROJECTIONS 2007-082008-092009-102010-112011-122012-13 Gross Prem ↑ @ 5.68% p.a. 178131882519894210242221823480 M. Exp (w/o WR) ↑ @ 9.1% p.a. 374440854456486253045787 ME %21.0221.7022.4023.1323.8724.65 Addition to ME with 5% WR w.e.f. 01.08.2007 93153167182199217 Total ME383742384624504455036004 ME (% to GP)21.5422.5123.2423.9924.7725.57 For 19.50% ME, Required Gross Prem. (@11.5 GR) - 2173323710258682822230790 Premium Gap - -2908-3816-4844-6004-7310

38. November 28, 2008GIPSA38 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 2 (Rs. in Crores) ACTUALPROJECTIONS 2007-082008-092009-102010-112011-122012-13 Gross Prem ↑ @ 5.68% p.a. 178131882519894210242221823480 M. Exp (w/o WR) ↑ @ 9.1% p.a. 374440854456486253045787 ME %21.0221.7022.4023.1323.8724.65 Addition to ME with 10% WR w.e.f. 01.08.2007 185306334365398434 Total ME392943914791522757026221 ME (% to GP)22.0623.3324.0824.8625.6626.50 For 19.50% ME, Required Gross Prem. (@12.3 GR) - 2251824567268032924231903 Premium Gap--3693-4673-5779-7024-8423

39. November 28, 2008GIPSA39 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 3 (Rs. in Crores) ACTUALPROJECTIONS 2007-082008-092009-102010-112011-122012-13 Gross Prem ↑ @ 5.68% p.a. 178131882519894210242221823480 M. Exp (w/o WR) ↑ @ 9.1% p.a. 374440854456486253045787 ME %21.0221.7022.4023.1323.8724.65 Addition to ME with 15% WR w.e.f. 01.08.2007 278460501547597651 Total ME402245444958540959016438 ME (% to GP)22.5824.1424.9225.7326.5627.42 For 19.50% ME, Required Gross Prem. (@13.14 GR) -2330425424277383026233016 Premium Gap--4479-5530-6714-8044-9536

40. November 28, 2008GIPSA40 GAP BETWEEN “HAVE” & “WANT TO HAVE” - 4 (Rs. in Crores) ACTUALPROJECTIONS 2007-082008-092009-102010-112011-122012-13 Gross Prem ↑ @ 5.68% p.a. 178131882519894210242221823480 M. Exp (w/o WR) ↑ @ 9.1% p.a. 374440854456486253045787 ME %21.0221.7022.4023.1323.8724.65 Addition to ME with 20% WR w.e.f. 01.08.2007 371613668729796868 Total ME411546975125559161006655 ME (% to GP)23.1024.9525.7626.5927.4628.34 For 19.50% ME, Required Gross Prem. (@13.9 GR) -2408926281286733128234129 Premium Gap--5265-6387-7649-9064-10649

41. 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.