ICICI Prudential Life Insurance Co. Ltd, the largest private sector insurance company in terms of new business, has fired nearly 5,000 employees in the past four months across various positions.
“We stopped hiring after December and since then exits (based on performance appraisal) are happening at two levels—managerial and non-managerial ones. Following this, our employees’ strength has reduced to 25,000 from 30,000,” said Judhajit Das, chief of the human resources department, ICICI Prudential Life Insurance, which is a joint venture between the ICICI Bank Ltd and the UK’s Prudential Plc.
The company has closed around 100 of its branches across the country in the past few months. “We closed our branches to rationalize on rent. We moved the employees of those branches to other branches in the area,” Das said.
“The emphasis is on improving the productivity of the company and the agents. Therefore, thousands of employees were asked to leave,” said a senior official at ICICI Prudential who didn’t want to be identified because he is not authorized to speak with the media.
No exception: P. Nandagopal of Reliance Life Insurance. Ramesh Pathania / Mint
“Though the industry had absorbed 300,173 employees in the quarter ended December compared with 253,522 a year ago, the number of recruitment by life insurers has come down in the past six months with companies focusing more on cost-cutting,” said S.B. Mathur, general secretary of Life Insurance Council, an umbrella organization for life insurers.
The life insurance industry registered a 10% fall in new premium incomes in the fiscal year ended March compared with a year earlier, led by slumping demand for unit-linked insurance plans, a policy with market-linked returns. It was the first time since the insurance sector was opened up to competition in 2001 that the industry closed a year with a decline in new premiums.
Life insurers collected a combined Rs44,688 crore in new premium incomes in the year gone by. New business premiums are also declining as the economy grows at a slower pace after expanding an average 8.9% in the past four years.
A survey of professional forecasters conducted by the Reserve Bank of India (RBI) has cut the estimate for economic growth to 5.7% for 2009-10, from an earlier 6%.
Meanwhile, a senior official at Reliance Life Insurance Co. Ltd, which is part of Reliance Capital Ltd, said on condition of anonymity that the company has recently sacked 500-600 employees. The company spokesperson, however, denied any such move. “We are not cutting down any workforce but as part of the company’s annual performance appraisal some people have been asked to leave mainly because of their poor performance. It’s an annual phenomenon in the industry and the churn is around 2-3% every year. This year is not an exception,” the spokesperson of Reliance Capital said.
P. Nandagopal, chief executive officer of Reliance Life, said the company has stopped new recruitment but declined to share the number of existing employees saying their performance appraisals are on.