Poddar panel to chalk out GIC arms' future

Poddar panel to chalk out GIC arms' future
PRESS TRUST OF INDIA

NEW DELHI, SEPT 10: An expert group headed by A N Poddar chairman and managing director of National Insurance Company (NIC) would soon submit a report on the strategies to be adopted by all the four subsidiaries of General Insurance Corporation (GIC) in the wake of opening up of the sector.

The committee, which comprises of the top officials of the four subsidiaries of General Insurance Corporation (GIC), would also look into the distribution of non-life business handled by GIC, which would only handle re-insurance business in the liberalised scenario, official sources said here.

All the four subsidiaries namely National Insurance, Oriental Insurance, New India Assurance and United India, are also in the process seeking necessary approvals for increasing its equity base to Rs 100 crore. The Poddar committee is expected to submit the report by this month, sources said.

They said the committee will recommend which of the four subsidiaries should handle GIC's non-life business namely crop and aviation insurance. The Poddar panel also include officials from Oriental Insurance, New India Assurance and United India Insurance, sources said.

They said, the four subsidiaries, which would become independent entities after the restructuring of the state-owned insurance companies, would be in a better position to compete with new players in the liberalised scenario.

Official sources said that as per the current plan, GIC would be delinked from the subsidiaries which would be converted into independent entities. However, in the future, if any of the four subsidiaries are not in a position to withstand the competition, it would be merged into either of the other three subsidiaries.

The committee would also study the prospect of medical and health insurance segment and is expected to suggest which of the four subsidiaries should take care of this segment. Earlier, the United Front government has approved a proposal by GIC to start a separate company exclusively to handle the medical and health insurance segment.

However, since the IRDA Act allows health insurance within the non-life insurance segment, sources said the proposed plan has been dropped and it has been decided to allow GIC's subsidiaries to start health insurance business. The sources said that the committee would decide which of the four subsidiaries should handle health insurance. It is also possible that the committee would recommend all the four subsidiaries to handle this segment, they added.