The roughly 68,500-strong staff of state-owned insurance companies can look forward to better compensation if it focuses a great deal more on service delivery. To improve the bottomlines of these companies and more importantly to enthuse staff across all levels to focus more on customer relationships, the government has proposed a group incentive scheme for all employees. The performance-linked incentive plan, hitherto available only to the chairman and managing director, will be extended to operating staff and employees as well.

“This is the first time the government has proposed such a plan for employees as well. Clearly the intent is to improve the bottomline of the companies and also pull up the service levels,” said a top executive in state-owned Oriental Insurance Company.

In fact, public sector banks do offer some sort of performance-linked incentives. “We set aside 1 per cent of our net profit for performance-linked incentives,” said M V Nair, chairman, Indian Banks’ Association. But for insurers, the incentive will be tied to strict parameters.

Broadly, incentives will be doled out if the respective companies earn a profit after tax of at least Rs 200 crore in a year. Moreover, companies must maintain a minimum solvency margin of 150 per cent at all times. At an individual level, employees will have to achieve at least 80 per cent of their targets to be eligible for incentives.

A host of factors will decide the quantum of payout. Some of the factors are: business premium growth, customer relations and combined business ratios. The incentive structure will be different for all four companies and decided by their respective boards. “Unlike before, this year the there is a greater emphasis on customer relations,” the official said. While the general insurance companies have been successful in holding on to their market share, their aggressive pricing strategy has affected their bottomlines. All four PSU general insurers are learnt to have incurred underwriting losses of more than Rs 3,000 crore during financial year 2009.

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