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General Insurance Corporation of India

            
 
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Case Details:

Case Code : BSTR111
Case Length : 31 Pages
Period : 1992 - 2002
Organization : General Insurance Corporation of India
Pub Date : 2002
Teaching Note :Not Available
Countries : India
Industry : Insurance

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"We are all gearing up to reposition GIC as a major global reinsurer."

- A top GIC official (September 2002).

Introduction

The General Insurance Corporation of India (GIC), a public sector enterprise, was also the largest non-life insurance company and one of the largest financial institutions in India. GIC used to sell non-life insurance products and related services. In 2001, GIC reported a gross direct premium1 income of Rs 107.72 billion.2

By April 2002, GIC had a net worth of Rs 23 billion. GIC had been operating through its four subsidiaries - National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited till December 2000. GIC and its subsidiaries had a network of more than 4,208 offices in India and their customer interface included agents, development officers and employees at its branch, divisional and regional offices of its four subsidiaries. The company had a workforce of 85,000. GIC also operated in the international markets in more than 30 countries, either through branches or subsidiaries. GIC offered a variety of non-life insurance policies in the fire, marine, theft, and other miscellaneous segments. It also offered health insurance through its Mediclaim policy.

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While some of the policies offered by GIC, like motor insurance, were mandatory, others were designed exclusively for specific segments - for instance, the rural insurance, which included insurance cover for huts, cattle and livestock, hens and crops. In November 2000, with the liberalization of the insurance industry, GIC became a national reinsurer - the official body for undertaking reinsurance business for all private and government organizations in the insurance industry.

Many private players had entered the general insurance market, which led to a significant increase in competition. Competition was expected to be more intense in the non-life segment than the life segment, as the term of the non-life policies was very short, and customers could switch between companies. Based on the recommendation of the consultants - PriceWaterhouse Coopers and MP Chitale - all the subsidiaries of GIC were restructured, in December 2000, as independent insurance companies. At the same time, the General Insurance Public Sector Association3 was formed to deal with the common issues related to the four subsidiaries. After the restructuring, New India Assurance Company, one of the four subsidiaries of GIC, became India's largest non-life insurer.

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1] Sum of net premium retained in India and net premium ceded to foreign reinsurers.(Cede: To transfer all or part of a risk written by an insurer [the ceding, or primary company] to a reinsurer.)

2] As on October 24, 2002, 1US$ was worth Rs 48.40

3] An association of public sector insurance companies for coordination among the four subsidiaries after GIC was made a national reinsurer.

 

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