Money & Banking

Listing of public sector insurers will bring in much-needed capital, say industry players

Our Bureau Mumbai | Updated on January 20, 2018 Published on March 01, 2016

Will also help private sector insurers in price discovery

The Finance Ministry’s proposal to list public sector general insurance companies is likely to provide them with better market pricing and visibility, said industry players.

There are four public sector general insurance companies in the country — New India Assurance, United India Insurance, Oriental India Insurance and National Insurance. However, Finance Minister Arun Jaitley did not provide any timeline for the listing of these entities in Budget 2016-17.

In the past, there have been discussions between the Finance Ministry and the insurers on their possible listing. G Srinivasan, Chairman and Managing Director of New India Assurance, the largest public sector general insurer in the country, said the company is already compliant for the listing process, though a final call would be taken by the Centre.

This comes even as underwriting losses of general insurers jumped 33 per cent to ₹10,127 crore in 2014-15 from ₹7,641 crore in the previous year, according to the Insurance Regulatory and Development Authority of India’s annual report.

Bhargav Dasgupta, MD and CEO of ICICI Lombard General Insurance said that the listing of public sector general insurers is good for the industry as it will bring in additional visibility, governance and focus on performance.

Shashwat Sharma, Partner – Financial Services, KPMG in India, said that the listing would provide the capital required by public sector general insurers and may also help private insurance companies in price discovery before they plan to go for listing.

Further, in a move aimed at further liberalising foreign direct investment (FDI), the Budget announced that overseas investment up to 49 per cent in the insurance and pension sectors will be allowed under the automatic route.

Anuraag Sunder, Director, PwC India, said that the shifting of foreign investment to the automatic route will facilitate ease of doing business.

Published on March 01, 2016
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