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Privatization of state life insurance: an unjust proposal.

The Government is actively considering to privatise the State Life Insurance Corporation. It is not only a matter of shock for employees and the field workers but has also alarmed the policyholders who have contributed tremendously over the last 20 years to make it a sound and stable financial organisation. Before handing it over to private sector, government must consider the state of affairs of prenationalisation period of 32 Life Insurance Companies.

In fact, it was the malpractices of Insurance Companies which compelled the then Government to nationalise the Life Insurance business in the country in order to bring it back on the track.

Prior to nationalisation, the Insurance Companies were neither investing an appropriate portion of their life fund in the prescribed Government Securities, nor the fund was utilised on nation building programmes as it was required under the relevant provision of Insurance Act. Moreover, almost half of Insurance companies never declared bonus on life policies on one or the other pretext thus depriving the policyholders of the returns on their investment in life insurance. At that time life insurance was considered to be a fraud. During last 20 years a new dimension has been given to the life insurance business in the country. Because of dedication and sound working now a sense of credibility prevails which has provided life insurance cover to a large section of the society. Growth of life fund to the tune of about Rs. 26 billion is a glaring example of progress that life insurance business achieved during the nationalisation era.

The proposed action of denationalisation will neither serve the interest of policyholders nor the employees or field workers. It may prove to be counterproductive. It is also feared that the private management will opt to the old practices of pre-nationalisation period which would result into higher rate of premiums and less revenue to the Government besides generating industrial unrest among employees.

Above all the facility of Ombudsman available to the policyholders regarding their speedy disposal of claim would automatically be stopped as the said Institution does not have jurisdiction to intervene in the matter of private sector managements. The unilateral plan to denationalise State Life Insurance Corporation is likely to create industrial disturbance. To maintain industrial peace it is imperative to take in confidence the representative of the State Life Insurance Employees Federation of Pakistan (CBA) before considering the proposals of denationalisation.
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Publication:Economic Review
Date:Sep 1, 1993
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