Budget 2020

Govt to merge 3 general insurance companies

Our Bureau Mumbai | Updated on February 02, 2018 Published on February 01, 2018

National Insurance Company, United India Insurance Company and Oriental Insurance Company to form single insurance entity

 

The government’s plan to merge the three unlisted public sector general insurance companies (PSGICs) – National Insurance Company, United India Insurance Company and Oriental Insurance Company – will create a giant much bigger than New India Assurance Company, India’s largest general insurer, going by the insurance regulator’s data for FY2017.

The three PSGICs, which along with New India Assurance received Cabinet approval in January 2017 to get listed on the stock exchanges, had initiated the process of tapping the capital markets.

Listing process

Following the announcement in the Budget that the three PSGICs will be merged and be subsequently listed, they will have now to halt the listing process. New India Assurance, which is also the largest PSGIC, got listed in November 2017. Going by the 2016-17 annual report of the Insurance Regulatory and Development Authority of India, New India Insurance Company was the country’s biggest general insurer, with gross direct premium (GDP) collection of ₹21,598 crore in FY2017. It accounted for 16.50 per cent of the GDP of general and health insurers in FY2017. The GDP of the unlisted three PSGICs put together amounted to ₹41,462 crore in FY2017.Collectively, they accounted for 32 per cent of the GDP of general and health insurers in FY2017.

K Sanath Kumar, Chairman-cum-Managing Director of Kolkata-headquartered National Insurance Company, said that as a single entity, the merged company would emerge stronger and its valuations improve. United India Insurance Company and Oriental Insurance Company are headquartered in Chennai and Delhi, respectively. The four PSGICs collectively accounted for 48 per cent of the GDP of general and health insurers in FY2017.

Private sector general insurers (17) accounted for 41 per cent of the GDP of general and health insurers in FY2017. The balance was accounted for by specialised insurers and standalone health insurers.

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Published on February 01, 2018
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