The ministry has taken a decision on the formation of GIA after accepting the recommendations of the Poddar Committee. The committee was constituted under the former chairman of the Calcutta based National Insurance AN Poddar to chalk out the strategy for the coordination among the four non-life companies after their holding company will be converted into a re-insurer.

``This Association may be entrusted with the coordination in the areas of personnel, technical, reinsurance and investment as recommended by the Poddar Committee," said a ministry communique.

The ministry has also asked GIC to take action to implement the other recommendation of the Poddar Committee to give operational and functional autonomy to the four subsidiaries. The full conversion of GIC into an Indian re-insurer will be complete after centre amends the General Insurance Business National Act.

Talking to The Financial Express United India chairman and managing director KN Bhandari said that it would take some time before GIC could actually coordinate between all the four subsidiaries.

The GIA will be headed by the senior most CMD out of the four companies and will have its secretariat in Mumbai. Going by the present seniority of CMDs,in the state owned non-life industry, Mr Bhandari will be heading the GIA. An officer of the general manager rank will be chief of the GIA secretariat.

Through the new arrangement each of the CMDs of the of the corporation will be delegated powers from the ministry of finance to post his companies' officers among the four companies. This effectively continues the present system where GIC coordinates the higher level postings of the subsidiaries.

Also on the basis of the Poddar Committee recommendation GIC's aviation and crop business will be transferred to Mumbai based New India Assurance and Delhi based Oriental Insurance, respectively New India Assurance will share the aviation insurance business consisting of business of Air-India and Indian Airlines with other companies in equal proportion.