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Oriental Insurance Company may require capital support close to ₹3,000 crore to fund its growth needs in 2020-21. The state-owned general insurer, which was largely focussing on consolidating its business in 2019-20, is looking to grow the business next fiscal.
According to AV Girijakumar, Chairman and Managing Director, Oriental Insurance Company, the company’s board is slated to meet on March 18 to examine the budget for growth in the coming fiscal.
“While we may require capital close to ₹3,000 crore for growth and meeting regulatory solvency requirement in FY21, however, the business plan (growth plan) will be made in line with the capital support that we get,” Girijakumar told newspersons on the sidelines of a session on insurance, organised by the Merchants’ Chamber of Commerce and Industry on Friday.
The 2020 Budget has set aside ₹6,950 crore for recapitalisation of the three public sector general insurance companies — National Insurance, Oriental Insurance and United India Insurance.
According to industry experts, the recapitalistion move will not only help improve the solvency ratio of these companies but also help fast-track their merger.
A year of consolidation
During financial year 2019-20, Oriental Insurance has been consolidating operations with a clear focus to achieve “economics of business” rather than growing the business.
The general insurer has been directing its efforts towards conciliation of motor third-party cases, making price corrections in group health policy and also property insurance, and also closely looking at loss-making businesses with a view to reprice them.
“Our focus this year has been on reviewing claims and settling them as quickly as we can. We had set a target of conciliation of close to 24,000 motor third-party cases this fiscal; of this, we have already completed 18,000, and are hopeful of achieving the remaining by the end of this fiscal. This will give us a big relief,” he said.
Premium growth
Oriental Insurance, which grew its business by over 15 per cent in FY19, is likely to close this year with only around 6 per cent growth in premium at ₹14,250 crore by March 2020. Health insurance accounts for nearly 30 per cent of the total premium, motor accounts for 34 to 35 per cent, while crop insurance makes up around 17 per cent of the total business.
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