The Centre is considering United India Insurance as one of the state-run insurers for privatisation. The other public sector insurers, which could be taken up for privatisation include National Insurance or Oriental Insurance, according to sources close to the development.
“United India Insurance is one of the top choices for privatisation. Discussions are on, with the other options being National Insurance or Oriental Insurance,” said a person familiar with the development.
However, any move towards privatisation and divestment of public sector insurers is likely only in the second half of the fiscal, the person added, noting that the process will take some time, including legislative amendments.
Finance Minister Nirmala Sitharaman had, in the Union Budget 2021-22, announced that other than IDBI Bank, the government would take up the privatisation of two PSBs and one general insurance company in the year 2021-22.
Sources said New India Assurance and state run re-insurer General Insurance Corporation of India, which are both listed entities, are unlikely to be taken up for privatisation.
“The idea is to take up one of the insurers, which are not doing well, but are still attractive enough for investors,” said the source.
According to IRDAI data, Chennai-based United India Insurance registered a 4.59 per cent de-growth in gross direct premium under-written in 2020-21 at ₹16,710.94 crore. Oriental Insurance witnessed an 8.93 per cent drop in gross direct premium under-written in 2020-21 at ₹12,452.11 crore, while National Insurance saw a 7.08 per cent drop at ₹14,180.98 crore last fiscal.
The Centre was earlier working on a proposal to merge these three public sector insurers.
However, it later decided not to go ahead with the plan. Instead, the Union Cabinet approved capital infusion of ₹12,450 crore (including ₹2,500 crore infused in 2019-20) in these three insurers – Oriental, National and United India Insurance. It also approved an increase in authorised share capital of NICL to ₹7,500 crore and that of United India and Oriental to ₹5,000 crore, respectively, to give effect to the capital infusion.