Pending the proposed merger of the three state-owned general insurance companies, the central government has allocated interim funding of Rs 2,500 crore. The decision to this effect received the approval of the Union Cabinet headed by PM Narendra Modi.
The intention of the government to merge National Insurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited was announced way back in 2018 when the then Finance Minister Arun Jaitley had mentioned in his budget speech. However, the government has not been able to carry out the merger primarily due to the financial weakness of the companies. The amount now being paid to the companies is to enable them to tide over immediate financial crises and to stay above the prescribed insolvency levels. General insurance companies and all other insurance companies are expected to have sufficient financial resources so that they are in a position to honour the claims presented to them by their policy holders.
A minimum threshold limit is prescribed, below which they can be stopped from issuing further policies by the IRDA, the insurance regulator.
The government is hoping that the merger process may be completed before this financial year closes out by March 2020.
As per the figures available for the year ended March 31, 2017, the three general insurance companies had on their books, a total premium of Rs 41,461 crore from 200-odd insurance products they were selling. They possessed a market share of 35%. The current figures are not known. Perhaps, once merged, the company may become more transparent and share information in public.