With the merger of three public sector insurance companies — Oriental Insurance, National Insurance and United India Insurance — postponed to the next financial year, the finance ministry has sought a capital infusion of Rs 6,000 crore out of the budgetary provision into three firms to keep them financially viable.
“The merger plan is very much on the track. However, there may be some delays in the process. Till this happens, the plan is to infuse Rs 6,000 crore in these firms out of budgetary provisions to make them financially stronger. We have already requested for the fund,” a senior official from Department of Financial Services (DFS) told this paper.
According to the official, the complete merger process will take between 18-19 months once the government appoints a consultant.
According to Finance ministry sources, the delay in the merger was due to the complex process of combining different IT platforms, workforces and other similar technical issues.
Finance Minister Arun Jaitley in the Union Budget for FY2018-19 had announced the merger, with plans to list the merged entity on the bourses. However, with the process already delayed, this is likely to be pushed to the next financial year. In 2017, the government had listed two state-owned insurers — New India Assurance Company Ltd and General Insurance Corporation of India — on November 13 and October 25, respectively.
The move to infuse capital comes in the wake of general insurance agents working with public sector insurers moving the Prime Minister’s Office on November 19, seeking better employment terms for about 2 lakh agents.
By the end of FY18, the three general insurers put together had more than 200 insurance products with a total premium of Rs 45,126 crore and a market share of around 35 per cent. The total employee strength of the three firms is around 42,000, spread over 5,700 offices.