NIC chief-designate plans to look into Reliance Infocomm claim

Bimalendu Chakraborty, general manager on special duty, designated to take over as the chairman and managing director of National Insurance Co Ltd (NIC) today said the company may look into the Reliance Infocomm claim issue once he took over as the chairman of the company.

"I have also heard about the issue and would take a close look once I take over as the chairman," explained Chakraborty.

The problem came up after NIC's audit committee disagreed with the way in which the company had accounted for provisions made for claims that flowed from the Reliance Infocomm account.

The company wanted to spread the impact of Reliance Infocomm's claims over three years in accordance with its reinsurance policy, alternate risk transfer. The audit committee wanted the full provision to be made the same year, 2003-04 which was close to Rs 100 crore.

H S Wadhwa, NIC's chairman and managing director, said some provisions made in last year's accounts would be offset in the current financial year following permission given by the national re-insurer, General Insurance Corporation.

Chakroborty also said that he would also make an assessment of the risk NIC was at present covering.

When asked what would his priorities be when he takes over, Chakroborty said, "Quality, quantity, cost and time would be the four points he would be working on."

In terms of quality, Chakroborty said, "Premium income was also one of the indicator of the amount of risk an insurer was carrying in its portfolio."

He also said that growth rate of an insurance company should also have to be sustainable and profitable "" because in the long run sustainability and profitability was all that matters.

Talking on detariffing, Chakroborty said that following detariffing, segments making more than normal profits would see a reduction in premium while products making losses were likely to see rising premium "" which would be determined by market demand and supply forces.

"I am looking at total de-tariffing so that the market can determine the price of products and one client is not compelled to subsidise another," he added.

"This means will be looking at customer satisfaction, sustainable growth and good corporate governance," he said.

As part of the strategy, NIC would endeavour to usher in a business process re-engineering by reducing distribution costs through tie-ups and bundling of services to increase the volume of business, Chakraborty said.

Expressing himself against cost-subsidisation in the insurance sector, Chakraborty said, "I want super-profits from certain segments of business to come down to normal levels and the losses from certain other segments to also turn to normal-level profits."