The underreported July 7, 2006 circular by The Oriental Insurance Company (OIC) on zero commissions for its Mediclaim policy for individuals over 55 is the result of a typical half-way reforms trap, a three-sided prism that takes the clean white concept of market and colours it in hues of morality, subsidies, social justice. Side 1: reversal of the level playing field argument, being made by an incumbent, state-owned company. Side 2: 40,000 incumbent agents and brokers seeking to revoke their money trails. Side 3: 350,000 policyholders, who need health insurance the most and at the cheapest price. This circular has everything that helps turn reforms into a four letter word. It has more to do with the process of opening up a sector, with the way PSUs are transformed into delivering social justice than with servicing policyholders and investors.
Read beyond the order and you see three questions underlying it:
• Should public sector companies subsidise private sector ones?
• Should the young subsidise the old, the healthy subsidise the unhealthy?
• Should fire or marine insurance subsidise health and motor third party insurance?
Opinion in The Indian Express, August 10, 2006