The capital injection will enable the general insurers businesses – National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company – to restore their financial condition.
According to reports, the government may inject Rs 3,000-5,000 crore in extra capital into the three public sector general insurance firms this year depending on their performance and needs.
State-Run General Insurers
The capital injection will enable the general insurance companies, National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company, to restore their financial health.
The government invested Rs 5,000 crore in these three insurance businesses during the previous fiscal year.
The government invested Rs 9,950 crore in three PSU general insurers during 2020-21, including Rs 3,605 crore in United India Insurance, Rs 3,175 crore in National Insurance, and Rs 3,170 crore in Oriental Insurance.
According to sources, money assistance was provided to the poor general insurance businesses last fiscal year, and further funds are required to get them back on track to profitability.
According to sources, capital infusions of Rs 3,000-5,000 crore may be made in these firms dependent on their performance, and the government has already increased its authorized capital in anticipation of additional money infusions.
The three public sector general insurers are short of solvency margins, and an external consultant will be recruited shortly to enhance operational efficiency.
Four public sector enterprises have submitted a request for proposal (RFP) via the General Insurers’ Public Sector Association of India (GIPSA) to reorganize the insurers and achieve profitability and employee development.
According to the RFP, “there is a proposal for restructuring the organization to bring in profitable growth and employee development through performance management and capability management, in alignment with the Key performance indicators (KPIs) devised by the Public Sector General Insurance Companies (PSGICs).”
The deadline for proposal submissions is June 2, 2022.
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Only one of the four state-run general insurance firms, New India Assurance Company, is publicly traded; the other three are completely controlled by the government.
It should be noted that the government has previously said that it intends to privatize one general insurance firm. To allow privatization, the General Insurance Business (Nationalisation) Act has already been amended by Parliament (GIBNA).
In Budget 2021-22, Finance Minister Nirmala Sitharaman outlined a major privatization program that comprised two public sector banks and one general insurance firm.
“In 2021-22, we intend to privatize two public sector banks and one general insurance firm. This would need legislative changes “At the time, she had said.