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Insurance law begins its course, halts employees' struggle

Syed Firdaus Ashraf in Bombay

The premises of Yogakshema building on the Jeevan Bheema Marg in Nariman Point (the financial district of India) today resembled a stadium after a one-day cricket match. Slogan-shouting, placard-flashing crowds, uproarious scenes, the electric atmosphere, the frequent applause… all these were missing. Earlier in the day, Parliament in New Delhi had approved the insurance bill; and the headquarters of the Life Insurance Corporation in Bombay was coming to terms with the momentous decision.

This was the calm after the storm. The seemingly incredible truth, that foreign companies will now enter the insurance sector, that LIC and the General Insurance Corporation could be privatised, refused to sink into the collective psyche of thousands of public sector employees.

For years, they had been agitating against the legislation -- the Insurance Regulatory and Development Authority Bill -- that they fear would sound the death-knell for the government-controlled insurance companies, imperiling their jobs, their lives, everything….

The saga began in 1991, when the P V Narasimha Rao government unleashed economic reforms. Ever since, the insurance bill evoked extreme reactions; it split the political class vertically, but fostered a rare bond on the issue among trade unions spanning the entire political spectrum, and pit the government against the working class. The bill became the battleground on which the Swadeshi versus Videshi (national Vs multinational) war was fought.

The Yogakshema (Sanskrit for 'your welfare is my responsibility') premises was the natural choice for the main demonstations over the years. This is where countless trade union leaders delivered incendiary speeches to thunderous applause of their 'comrades'. This went on for days, weeks, months, years. Come what may, they would not allow the bill to become law, the leaders had vouched. And today? The silence was pregnant with pathos; the general feeling was: 'what can one do if both the government and the Opposition gang up in favour of the multinational companies, and back-stab the working class?'

A solitary wall poster at the building entrance pleads: 'Stop privatisation of the insurance sector for the sake of profits for big business'. Trade union leaders went into a huddle, ostensibly to evolve strategies for the future.

"Prime Minister A B Vajpayee opposed this bill when he was the Opposition Leader. Finance minister Yashwant Sinha had stated that this bill is anti-national in Parliament when he was in Opposition. But today, the same leaders have passed the bill!" says A V Nachane, general secretary, the All India LIC Employees Federation.

He recalls that the LIC was nationalised in 1956 and the GIC in 1973, soon after the nationalisation of banks in 1969, in keeping with Indira Gandhi's famous slogan garibi hatao (remove poverty) which was aimed at making India economically self-sufficient. This, Nachane stresses, was done after people complained against the misuse of public funds by private insurance companies.

Thus began the government monopoly of the LIC and GIC for public good. In the next 26 years, the LIC's network of 2,000 branches spread countrywide; the GIC became the holding company of four subsidiaries which were based in east, west, north and south respectively and spawned 5,000 branches.

"Now, we fear that these four companies will be privatised and forced to compete with foreign players," says M S Upadhyaya, general secretary, the General Insurance Employees' All-India Association.

Union leaders says the LIC and GIC achieved great penetration into rural areas and contributed to the socio-economic well-being of the nation. Nearly 55 per cent of the insurance business comes from rural India. This, they say, was possible because the LIC and GIC were promoted by the government. In the post-IRDA phase, the prevailing economic model will be turned on its head, they say.

"We are sure to lose a lot of business to the private companies. The government is not doing anything about it. The profit-making government companies will become sick units," says Upadhyaya. "Private insurance companies will never meet the social obligations and be driven purely by the profit motive."

Agrees Nachane. "Competition will make the LIC and GIC withdraw the cross-subsidisation for rural areas. This will harm the rural people who account for 75 per cent of our population."

Employee representatives seek to shatter the "myths" that public sector units are slothful, inefficient and consumer-unfriendly. The LIC's success in claims settlement is 97 per cent while that of the GIC is 78 per cent. "The LIC and the GIC are indeed some of the most efficient companies of the world," says Upadhyaya.

The "world class efficiency" is what got the LIC nearly 12 million policy-holders and the GIC nearly eight million patrons. However, in the post-bill phase, these numbers could shrink. Already, 12 joint ventures comprising foreign and Indian companies are waiting in the wings to enter the insurance sector. According to senior BJP leader K R Malkani, the American Insurance Group with its capital base of $ 135 billion, can afford to undercut losses for years till the LIC and GIC are wiped out. "Once they achieve that, premium rates will be jacked up and harmful monopoly will set in," he had said.

According to BJP's S P Gautam, a Parliament member, the national government must not lose sight of the strong swadeshi thrust in its agenda while opening up of the insurance sector to the private and foreign companies.

"The worst fear I have is that these companies will offer lucrative salaries to the top and efficient people in the LIC and GIC to work for them thus causing much harm to us," says Nachane.

"Not only that, they will also take over the LIC and GIC sub-agents by causing them much harm," adds Upadhyaya.

For years, political parties in opposition scuttled the bill. That kept alive the employees' hope that they will be safe from the 'MNC invasion'. That hope now lies shattered. Where do they go from here?

Conversations with a cross-section of insurance employees reveal expectations of a raise in salaries. They point out that pay cheque figures were raised in the airline industry soon after its privatisation, to match global standards. Performance-based incentives, monetary or otherwise, would boost the morale and commitment of employees and the PSUs, they add.

Others feel that just like private airlines, private insurance companies would not survive for long as they would not be able to match the countrywide services of the LIC and GIC. Aggressive marketing (as against dependence on sub-brokers and agents) would help the LIC and GIC to withstand the foreign companies' onslaught, they add.

Trade union leader Nachane says, "Even if the bill is adopted, the grant of licence will take not less than six months. So, we still have time to fight back and educate people. Nearly 15 million people had signed a memorandum against the bill. The Indian people still are very much with us."

One most ventilated concern is that of losing jobs, thanks to the government's statements that "some hard decisions" are necessary to downsize the PSU staff.

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