PSU General Insurance: Merger plans for financial efficiency

New Delhi: The Centre is now planning to merge the government insurance companies, reports said. A plan has been prepared by the government for the reported merger process. According to the information, the Finance Ministry is considering the initial proposal to merge three government general insurance companies into a single unit. The purpose of this exercise is to ensure better efficiency and larger scale. Let us also tell you what kind of planning is being done by the government.

The government had invested a total of Rs 17,450 crore in Oriental Insurance, National Insurance and United India Insurance between 2019-20 and 2021-22 to lift them out of the financial crisis. In the budget of financial year 2018-19, then Finance Minister Arun Jaitley announced the merger of these three companies into a single insurance unit. However, in July 2020, the government shelved the idea and instead approved infusing capital of Rs 12,450 crore into the three companies.

Privatisation

According to sources, after improving their financial situation, the Finance Ministry is conducting a preliminary review of their merger so that their efficiency can be increased. Sources said that at the same time, a proposal for privatization of a general insurance company is also being considered. However, no final decision has been taken yet and various options are being considered. Finance Minister Nirmala Sitharaman had announced a larger privatization agenda, including privatization of two state-owned banks and a general insurance company, in the budget of 2021-22. Subsequently, in August 2021, Parliament passed the General Insurance Business (Nationalization) Amendment Bill 2021, which opened the way for the privatization of government general insurance companies.