Trinamool opposes Insurance Bill in Rajya Sabha

Leader of Trinamool Congress in Rajya Sabha, Derek O’Brien, today opposed the Insurance Bill which seeks to increase the cap on FDI in insurance sector from 26% to 49%.

He said, “In the last five years, the insurance penetration has dropped by 1%. FDI in insurance, has given you Rs 7,800 crore and LIC Dividend has given you Rs 12,000 to 14,000 crore in the last 10 years.”

He raised the point that average annual premium that an individual has to pay, for the private insurance companies is Rs 60,000 whereas for LIC is it only Rs 9,000.

Regarding claim settlement, Derek O’Brien said, “LIC’s settlement figure is at 99.86 % whereas private sector is at 79%. These are IRDA figures. Lapse ratio for LIC is 5% as compared to 47% in private sector insurance.”

He warned the Government of the dangers of exposure to global recession and reminded the Government of how AIG had to be bailed out with $ 200 billion.

Trinamool Congress walked out of Rajya Sabha on this Insurance Bill issue.

Click here for the transcript of Derek O’Brien’s speech

Derek O’Brien speaks on Insurance Laws (Amendment) Bill, 2015 | Transcript

Full transcript:

Sir, I rise to strongly oppose the Bill that proposes to increase the FDI cap in Insurance from 26% to 49%.

It is not a coincidence that the Prime Minister is on an island somewhere in the Indian Ocean or the Finance Minister is on a plane to London or the Home Minister is about to try some vegetarian sushi in Japan.

So who are we left with? We are left with the Foreign Minister on Indian soil. This gives us a good sense of this new Government and where this new Government is headed.

So, it does not surprise me one bit that they believe that FDI is the magical jaributi, which will cure India of all its problems.

Sir, I have heard what the Samajwadi Party said and what the JDU said, and I urge Bahujan Samaj Party and the DMK, as Trinamool, not to be a part of this new alliance between both the sides.

I want to give them five solid reasons as where both sides are wrong. But before I give the five reasons, let me respond to the two-three points that the Speaker from BJP said.

One he said, that in USA, 100% of FDI is allowed. Correct, but what he didn’t tell you is how many States have taken 100% in FDI. 37 States in United States of America have never taken FDI in insurance under their State Law. Only 13 States have adopted it.

Secondly, he told you quite correctly that when LIC Chairman came and had coffee with us at the Select Committee meeting, he endorsed FDI. What he didn’t tell you is what happened on March 9 is all across the country the LIC employees were protesting and doing dharna.

Now, let me come to the five points. I will speak one by one, no emotion, only rationale. Not political but insurance rationale. Trinamool always gives you constructive criticism. That is why we gave you Mining Bill, which is going through in one week.

Sir, on the insurance penetration, Ram Gopal ji had made the point; I do not want to dwell on it. From 2000 to 2015, there has been an increase of 3.9% in insurance penetration. In the last 5 years, the penetration has in fact dropped by 1%.

Now their target is 3% in the next five years. Do not say we did not warn you, this will never happen. Next, in the last ten years how much has the LIC given you in terms of dividend? Rs 7800 crore is what you have got from FDI in ten years.

What has the LIC given you? About Rs 1200 crore to Rs 1400 crore every year. You add it up, FDI in Insurance has given you Rs 7800 crore and LIC Dividend has given you Rs 14000 crore in the last 10 years.

Now let me come to the dangerous part about investment in infrastructure. This is my second point. 65% of the Funds are invested in ULIPs (this is the private insurers who have come to India) whereas LIC has only 8%. Now what does this mean? This means these funds are at high risk; that is why we are telling you, do not touch this, this is dangerous.

The last point is the investment in infrastructure – average annual premium for the private insurers, is an interesting figure of Rs 60,000, and the average annual premium of LIC – Rs 9000. You can draw your own inferences as to who is going to the top end of the market and who is actually doing the dirty work at the bottom end of the market.

My third of the five points Sir. Let me come to claim and settlement performance. These are not my figures, these are IRDA figures. Claims and settlement performance the best you can have in Six Sigma is 99.999%. The LIC’s figure is at 99.86% settlement and the private sector is at 79%. These are IRDA figures, not mine and the same Chairman of LIC who had come and had coffee and said “sell”.

Lapse ratio in LIC is 5% and in private insurers it is 47%. I am not getting technical; Ram Gopal ji has already mentioned that for claims if you do this then from LIC you send it to the ICU.

Sir, portfolio investment has been included. This is hot money and both the Congress and BJP have included themselves in this. This is dangerous because portfolio investment, everyone knows what happened in the time of global recession. What would have happened to this money if it was caught up in the global recession? If it was caught up in the global recession I do not need to remind you Sir, AIG was bailed out for almost USD 200 Billion. So this is a very dangerous trend Sir.

Sir, because the Congress speaker who got up said “I went to UPenn”; this gentleman also went to UPenn. We are happy and proud of such Indians. Then Harvard, then McKinsey; all are very good institutions. I only went to St. Xavier’s in Kolkata. So, I wanted to quote a great American Noble Laureate, Joseph Stiglitz, because even Joseph Stiglitz cautioned against FDI in insurance. He avoided foreign capital advised to leverage domestic savings.

I will conclude with an Indian quote.

“The public sector general insurers have expressed confidence in raising the capital projected as required by IRDA. The double digit growth of the Indian insurance sector could be maintained during the global financial crisis of 2008, because 74% of the paid-up equity capital was held by Indian promoters and only 26% by the foreign promoters. The Committee would, therefore, consider it prudent to seriously pursue the alternate route of tapping the Indian market for raising the capital required for the sustenance and growth of the sector.”

It was a disaster in 2008. Thankfully because we had 26%, we got saved.

Now, who said this? This was said by Yashwant Sinha ji. Now, at least he should try and convince you.

Now, the Trinamool warns you, we also warned the previous Government. We warned them on the Land Acquisition. We were the only party who called for a Division and said do not do that, but our friends from the Congress and our friends from the BJP said, “no, no you are 11-12 in Rajya Sabha.”

Now, what do I say? This is Yashwant Sinha ji’s view. So all I have to say at the end is:

Papa kehte hain bada naam karega
Beta humaara aisa kaam karega.

Parliament: Trinamool speaks on important legislations

Trinamool MPs today spoke on important legislations in both Houses of the Parliament.

Derek O’Brien supported the Citizenship (Amendment) Bill, 2015 in the Rajya Sabha. But he moved a Statutory Resolution on the Ordinance and slammed the Government for issuing a flurry of Ordinances in the last nine months. “Ordinance is passed when the Legislature is not in Session and immediate action is required. My contention is, Sir, it was not required to be introduced in such a hurry”, he said.

Full transcript to theDerek O’Brien speech

Derek O’Brien also raised the important issue of rising communal violence in the country during Zero Hour. He slammed the government for lack of progress in SIT probe on church attacks. He asked the government to clarify the number of communal incidents.

Full transcript to the Derek O’Brien speech

Kalyan Banerjee spoke on the Coal Mines (Special Provisions) Bill, 2015 in the Lok Sabha and requested the Hon’ble Minister make a legislative scheme through which priorities could be given to PSUs of our country in the bidding process itself. “The committee felt that entire decision making process for distribution of coal blocks needs investigation and necessary penal steps should be taken”, he said.

Full transcript to the Kalyan Banerjee speech

Saugata Roy objected to the Insurance Laws (Amendment) Bill 2015 in the Lok Sabha. He spoke against hiking the FDI cap from existing 26% to 49%. “If you compare LIC lapsing with private industry, more than 99% settlements of the claims and more than 99% of death claims this is the performance of LIC. Now, the private sector Future Generali 49%, Prudential 42%, Reliance 38%, Bharati AXA 36%”, he said.

Full transcript to the Saugata Roy speech

Saugata Roy also raised concerns regarding how Centre has stopped funding under JNNURM scheme. He said,” I ask the Hon’ble Minister what is the exact plan for an alternative mission to follow up the Jawaharlal Nehru National Urban Renewal Mission which had done quite significant work 65 mission cities throughout the country.”

Full transcript to the Saugata Roy speech

Saugata Roy opposes the introduction of Insurance Bill | Transcript

As per Rule 71 (1) of the Rules of Procedure, I oppose the introduction of the Insurance Laws (Amendment) Bill, 2014 to further amend the Insurance Act, 1938 and the General Insurance Business Nationalisation Act, 1972, and to amend the IRD Act 1999.

My esteemed colleagues have already mentioned some points. The history of the Bill is stated in the Statement of Objects and Reasons in this Bill. If I may read just two lines, the Select Committee this was appointed in August 2014 incorporated amendments to the Insurance Laws along with 99 official amendments, the Cabinet approved the proposal to enable the Bill as quoted by Select Committee to be taken up into consideration and passing. According the Finance Minister, who is not here, who has gone to the States, has given a notice in the RS, that the Bill as reported by the Select Committee be taken into consideration and be passed. However the Bill could not be taken up into consideration during the Winter Session, 2014.

Then again the Govt for some reason felt that there was urgency in the matter, so the Cabinet approved on the 24 December, promulgation of the Insurance Laws (Amendment) Ordinance, 2014, and it was issued on 26 December, 2014. Now after the Ordinance was promulgated in the current session, the Government gave a motion in the Rajya Sabha to withdraw the Insurance Laws Amendment Bill from the Rajya Sabha. However the Government’s motion for withdrawal could not be passed, so the fact remains that the Insurance Laws Amendment Bill, as per the report of the Select Committee appointed by the Rajya Sabha, remains in the Rajya Sabha, and is the property of the Rajya Sabha.

Now, show me one instance in the last 65 years of the operation of Constitution of India that a Bill, while it is still pending in one House was presented in another House. If we do that this whole Constitution, as was pointed out by Sampat, which talks of a bi-cameral system, the Rajya Sabha has no powers as far is financial matters are concerned, but as far as Legislative matters are concerned, Rajya Sabha has equal powers as the Lok Sabha. So while the Bill remains in the Rajya Sabha, we have objection to the Bill, we do not agree this 49% of FDI in Insurance. I will not go into the substance of the Bill, I am talking of the procedural point, that while the Bill remains the property of the other House, can the Lok Sabha overlook that and bring first an ordinance, and then introduce a Bill? Are we subjected to Ordinance raj? Are we subjected to a system where there is a Constitutional Imbroglio?

These sort of questions have to be answered and clarified, once and for all not only for this Bill but also for posterity, whether a Bill remaining pending in one House, not allowed to be adjourned in that House, can be introduced in the other House. Same Bill going from one House to another House, and an Ordinance coming in, this is not the way a Govt should function.

So I oppose the introduction, of the Insurance Laws (Amendment) Act and we shall ask for a revision on this Motion, opposing the introduction of the Insurance Laws (Amendment) Bill.

 

Derek O’Brien speaks during Question Hour regarding FDI in Insurance | Transcript

Say, an American or a Mauritius insurance company with the lot of capital decides to come to India through the FDI route. When we look at that from a company level the point of view it may seem like the capital is enough. But, Sir, in Lehman kind of event, or AIG kind of crash, the US Government would seize all the capital of the existing American companies. They don’t need to take on the global risk policies holders across the world.

My question, Sir, is that will the minister care to clarify on explain how the foreign company without dedicated operations in India ensure that if something goes wrong like Lehman or AIG – where 80 billion dollars had to be given by the US Government to AIG – that the capital of the Indian Company will be available to take care of those who have insured in India.

I hope the minister will answer. Thank you.