Finance ministry weighs proposal for PSU general insurers' merger

NEW DELHI: The finance ministry is considering an earlier proposal to merge the three state-owned general insurance companies into a single entity, following their improved financial health, to achieve better efficiency and scale.

Government infused Rs 17,450 crore between 2019-20 and 2021-22 in three PSU general insurance companies, namely Oriental Insurance, National Insurance and United India Insurance, to bring them out of financial distress.

In the Budget for 2018-19, the then finance minister Arun Jaitley announced that the three companies - Oriental Insurance, National Insurance, and United India Insurance - would be merged into a single insurance entity.

However, govt dropped the idea in July 2020, and the Union Cabinet rather approved a capital infusion of Rs 12,450 crore into the three general insurance companies. As their finances have improved, the finance ministry is doing a preliminary assessment of the merger of these entities with a view to improving their efficiency, according to sources.

Besides, the proposal to privatise a general insurance company, as announced by govt, is being examined, sources said, adding that various options are on the table, but nothing has been firmed up yet.

It is to be noted that finance minister Nirmala Sitharaman, while announcing the 2021-22 Budget, had announced a big-ticket privatisation agenda, including the privatisation of two public sector banks and one general insurance company.

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