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Sarbajeet K. Sen

Besides aiming at a leaner structure, the revamp plan has been prepared to cut down the rising operational costs of the companies

NEW DELHI, Feb. 20

PUBLIC sector general insurance companies have together prepared a blueprint for the complete overhaul of their organisational structure. The revamp plans include a phased rationalisation of their office network through select mergers, including inter-company mergers, and a delayering of their organisational structure.

While the two-phase consolidation of the organisational structure is to be completed by December 31, 2002, the delayering exercise is scheduled to be finished by April 1.

A note on the proposed revamp has been prepared by the General Insurance Public Sector Association (GIPSA), the joint forum representing the managements of the four non-life PSU insurers — New India Assurance Co Ltd, Oriental Insurance Co Ltd, National Insurance Co Ltd, and United India Assurance Co Ltd. The plan has also been discussed by GIPSA with officials of the Ministry of Finance.

Besides aiming at a leaner structure, the revamp plan has been prepared to cut down the rising operational costs of the companies. "One of the major steps that could be adopted to contain the overall costs of the companies is the process of consolidation of offices, which are operating at high costs,'' the GIPSA note has said.

Phase-I of the consolidation process, which is to be completed by March 31, would involve the merger of offices situated in the same building, followed by the amalgamation of offices at metros and other centres that are in close proximity to each other.

However, GIPSA has said that the consolidation during this phase "would be done with due regard to location, space, availability and clientele.''

The inter-company merger of offices and branches would figure in the second phase of the exercise. During this phase, the companies would explore the possibility of consolidating offices within a radius of 100 km, where no second offices are situated in a nearby location.

In the absence of a second office of a company within 100 km, the companies could consider consolidation of offices between themselves, GIPSA has said.

Phase-II would specifically aim at eliminating the loss-making branches of the companies. "In such a case (inter-company merger of branches), a non-viable unit of one company has to merge with the unit of the other company with a higher premium base,'' the GIPSA note has said.

The delayering exercise would be aimed at reducing the existing four-layer structure to a three-tier one. The axe would fall on either the divisional offices or the regional offices, which will be sandwiched between the branch offices at the bottom and the head office at the top.

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