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Private firms may insure teachers

delhi Updated: Jul 19, 2010 00:09 IST
Charu Sudan Kasturi
Charu Sudan Kasturi
Hindustan Times
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Private insurance firms may soon have access to a massive, readymade and virtually captive market of school teachers across the country. The government is mulling allowing private insurance firms to compete for a mammoth life and health insurance scheme to cover 62 lakh school teachers across the country.

The move was announced last month by Human Resource Development Minister Kapil Sibal.

The HRD ministry has so far consulted only public sector firms - Life Insurance Corporation (LIC) of India and Postal Life Insurance under IndiaPost - for the project. The scheme is India's biggest ever initiative to insure health of its teachers.

But the finance ministry has nudged the HRD ministry to allow private insurance firms to compete with the public sector firms in bidding for the project, top government sources told HT.

"No final decision has been taken yet. But the HRD ministry appears to understand the argument behind allowing private players to compete for the health insurance project," a finance ministry source said.

The finance ministry has argued that allowing private firms to compete with the two public sector firms would help further drive down already subsidised premium rates that teachers would have to pay under the scheme, the source said.

"There appears no harm in allowing private insurance firms to also participate in the bidding process. The more the competition, the better," another government official said.

The HRD ministry is still finalising the broad contours of the insurance scheme - which will cover teachers across government, aided and unaided schools across the country - and is not yet ready to invite bids.

It is unclear whether one insurance firm will be allowed to cover all 62 lakh teachers or whether multiple firms will be allowed to operate. But whichever firms win the bids will enjoy a market of clients handed on a plate by the government, and virtually captive - since the choices open to customers will be limited.

Representatives of two private insurance firms, Royal Sundaram and Star Dai-ichi, have independently confirmed to HT that they are interested in the schemes and are likely to formally approach the government soon.

This scheme and a block housing project for teachers were announced at a meeting of the Central Advisory Board of Education (CABE) last month by Sibal. The schemes form key components of the minister's vision to make teaching a more respectable and alluring profession than it is today.

India faces a desperate teacher shortage in its schools even as it implements the landmark right to education law that aims to guarantee schooling for all children between 6 and 14.