For a second phase of resistance

The All India Insurance Employees Association at its golden jubilee conference in Chennai issues a call to the working class to launch a second phase of resistance to the reforms process under way in the country.

WORKERS of one of the most unionised segments of Indian industry - life insurance and general insurance - gathered in Chennai from January 6 to 11 for the 18th Conference of the All India Insurance Employees Association (AIIEA), which is celebrating its 50th anniversary. The AIIEA, which represents more than 70 per cent of the two-lakh insurance employees in India, has organised resistance to liberalisation of the financial sector in the last 10 years, having repulsed, though only with temporary success , attempts to privatise the insurance industry.

The conference issued a call to the working class to launch a second phase of resistance to the reforms process. This, the union leaders said, is in response to the call of the government and organised industry for the launch of a "second stage" of refor ms. In the second phase of resistance, the leaders said, the AIIEA planned to extend the arena of struggle by mobilising workers on issues beyond the insurance industry-specific aspects of the reforms process. This they hoped to do in alliance with other sections of the working class. Nearly 800 delegates and 1,600 observers attended the conference. On the opening day of the conference, a rally was held. Workers from other industries, women, students and youth also participated in the rally.

In his inaugural address at the conference, Sitaram Yechury, a member of the Polit Bureau of the Communist Party of India (Marxist), congratulated the insurance workers for having "successfully delayed the threat of privatisation of the insurance industr y by ten years". He said: "You have gained valuable time by doing this." Pointing to recent labour unrest in sectors as varied as banking, telecom, power and postal services, apart from protests by peasants across the country, Yechury urged insurance wor kers to "join these sections, while intensifying efforts to create awareness among the people".

Yechury said that the globalisation process, initiated by the forces of imperialism, was aimed at recolonising the Third World. A key feature of the process is the "internationalisation of finance capital which seeks unhindered access to countries and ma rkets around the world". He said that hot money flows, estimated at $20 trillion a day, had "played havoc" with nations such as those in South East Asia. Finance capital, Yechury pointed out, needed a legal framework in countries across the world to allo w it unhindered access. This, he said, was being pushed by the trishul of the World Bank, the International Monetary Fund and the World Trade Organisation. Referring to the government's abdication of its social and economic responsibilities, Yechury said : "The reforms imply that politically and economically, there is less state for the people and more for capital."

In his welcome address, N. Ram, Editor, Frontline, said that the AIIEA had been active on the national stage focussing attention on the harmful consequences and implications of privatising the financial sector, insurance as well as banking. He sai d that successive governments had let down insurance workers and the country by not allowing the Insurance Regulatory and Development Authority (IRDA) Bill to be debated before its passage by Parliament. He said that in the post-IRDA phase, the AIIEA has "a tough, challenging period ahead" and asked it to fashion a fresh campaign unleashing "new forms of resistance and struggle against privatisation". N. Ram said that liberalisation and globalisation had weakened India's sovereignty; they were "anti-wor king class" and "anti-people" in nature; and "retrogressive" in terms of their economic content because they dampen the growth impulses of the Indian economy. "These post-1991 economic policies," he said, "take a big toll not merely in the field of the e conomy, but on education, society, culture and other areas of national life."

The arrival of foreign insurance companies in alliance with Indian partners is seen by the AIIEA as a throwback to the pre-1956 situation when the Indian insurance industry was nationalised after a series of scandals rocked Parliament. In a radio address to the nation in January 1956, C.D. Deshmukh, Union Finance Minister, said that nearly 50 private insurance companies had either been liquidated or had "frittered away their resources" mobilised from policy holders. More important, the nationalisation o f the insurance industry was visualised to play a key role in channeling public savings for nation-building.

Speaking to Frontline, N.M. Sundaram, general secretary of the AIIEA, said that in the post-IRDA situation, the insurance companies had been under two kinds of pressure. On the one hand, these companies continued to earmark substantial portions of their investible surpluses in socially relevant areas like crop insurance. However, at the same time, their ability to cross-subsidise such investment by the generation of surpluses in more profitable areas such as fire insurance was being undermined by government fiat. For instance, Sundaram said, the companies had been asked to reduce the premium on fire insurance, supposedly to enable them "to brace for competition". The premium levels for third party insurance on motor vehicles are reckoned by the AIIEA to be low; it believes that this situation is leading to substantial underwriting losses.

Sundaram said the government was pushing the publicly owned companies towards unviable operations. He claimed that in doing so the government was violating the Finance Minister's assurance to Parliament that the Life Insurance Corporation (LIC) of India and the General Insurance Corporation (GIC) would be strengthened and protected. The government, by separating the four subsidiaries of the GIC from the mother company, had harmed the interests of the GIC. He argued that the "collective strength of the f our subsidiaries (the National Insurance Company, the Oriental Insurance Company, the New India Assurance Company and the United India Insurance Company) confers economic power which enables the GIC to address the government's social objectives". Sundara m said that these public sector companies would now have to compete with foreign and Indian private companies which would "not touch business areas like crop insurance with a pair of tongs".

The nature of the insurance business is determined by the manner in which companies evaluate future risk. This means that companies with even a small equity base can have access to large volumes of funds. In order to deal with the uncertainty in the futu re, companies need to deploy their current resources judiciously. In other words, insurance selling has to be backed by prudential investment of resources mobilised from policy holders. Sundaram referred to several recent instances of fraud in the insura nce business worldwide, even in the supposedly better-regulated environments in the United States and the United Kingdom. He said that the American insurance model, where companies were notorious for contesting claims and forcing consumers to go to court , would be detrimental to the interests of policy holders when they operated here. Fearing a "terrible undercutting game" by the foreign players, Sundaram said that the foreign companies, with their assets spread across the world, would be able to incur short-term losses by undercutting premia. Their long-term interest would be to monopolise the Indian market once competition had been driven under, he said.

A FUNDAMENTAL feature of the insurance business since nationalisation is the mobilisation of public savings for capital formation. During the Eighth Five Year Plan period the LIC mobilised Rs.56,000 crores as funds. During the Ninth Plan period, this is expected to reach Rs.1,30,000 crores. The strength of the LIC's asset portfolio is what enables it to play this pivotal role; its total assets at the end of 1999-2000 amounted to Rs.1,60,935 crores. All this has been achieved on an equity base of just Rs .5 crores, contributed by the government at the time of the LIC's founding in 1956. The fact that its dividend payout in 1999-2000 amounted to Rs.265 crores indicates the profitability of the government's initial small investment in the Corporation.

The AIIEA has argued that the public sector cannot exist without subserving the larger economic and social objectives of society. This, according to Sundaram, is not dependent on the ownership of such enterprises but on what they actually do. The LIC is legally required to invest 75 per cent of its investible surpluses in defined areas of social and economic development; last year the LIC invested 84 per cent of its investible surplus in mandated areas of investment. The legal stipulation for the GIC in such investments was 50 per cent. Sundaram argued that the government might be "hopelessly inefficient, but there is no better agency than a democratically elected government to decide on priorities for such investments". Such investments are often depl oyed as socially targeted investments in sewage, water and other social infrastructure facilities. Sundaram observed that "almost every municipality and municipal corporation in India has borrowed from the LIC and the GIC for their projects." "Will priva te companies invest in these areas?" he asked.

Sundaram countered the media campaign against "middle class workers" by pointing out that the efficiency of the two insurance corporations was reflected in the 98 per cent settlement of claims in the LIC and 74 per cent in the GIC against the world avera ge of about 40 per cent.

As an indication of its resolve to broaden the base of its struggle, the AIIEA had campaigned across the country, conducting jathas, street-corner meetings, street plays and similar programmes in the run-up to the conference. Sundaram said that th e insurance employees' campaign had changed from being an insurance industry-specific campaign to one which focussed on larger issues tied to the globalisation and liberalisation process. The employees are also highlighting the impact of liberalisation i n the last 10 years on different sections of the Indian people - on coconut growers, small industries, fisherfolk, plantation workers, garment manufacturers, agricultural workers and peasants. "In the course of our campaigns," Sundaram said, "we have ide ntified the problems of the people in the particular areas and have tried to link our campaigns to those of these sections of people. We want to intensify these efforts."