The government may inject up to Rs 5,000 crore in extra capital into public sector general insurers

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Public Sector Insurance
Life Insurance Corporation of India

The Insurance Act of 1956, which was passed by Parliament on September 1, 1956, merged 243 companies into the LIC of India. The Insurance Act of 1938, the LIC Act of 1956, the LIC Regulations of 1959, and the Insurance Regulatory and Development Authority Act of 1999 control LIC. LIC has 8 Zonal Offices, 113 Divisional Offices, 2048 Branch Offices, 73 Customer Zones, 1401 Satellite Offices, and 1240 Mini Offices in India as of March 31, 2016.

Fiji, Mauritius, and the United Kingdom are all home to the Corporation’s branch offices. Life Insurance Corporation (International) B.S.C.(c), registered in Manama (Bahrain); Kenindia Assurance Company Ltd., registered in Nairobi; Life Insurance Corporation (Nepal) Ltd., registered in Kathmandu; Life Insurance Corporation (Lanka) Ltd., registered in Colombo; and Saudi Indian Company for Co-operative Insurance (SICCI), registered in Riyadh. On December 14, 2015, Life Insurance Corporation of India, Strategic Equity Management Ltd, and Mutual Trust Bank Ltd launched a joint venture company called Life Insurance Corporation (LIC) of Bangladesh Limited. On April 30, 2012, Life Insurance Corporation (Singapore) Pte Ltd., a wholly owned subsidiary, was founded. Kenindia Assurance Co. Ltd., Nairobi, Kenya, and Saudi Indian Company for Co-operative Insurance (SICCI), Riyadh, Kingdom of Saudi Arabia, are composite businesses that transact life and non-life business, and two JVs, LIC (Nepal) Ltd. and SICCI, are both listed on their respective stock exchanges.

GENERAL INSURANCE CORPORATION OF INDIA


In 1972, 107 insurers were united and amalgamated into four companies: National Insurance Co. Ltd., The New India Assurance Co. Ltd., The Oriental Insurance Co. Ltd., and United India Insurance Co. Ltd. The GIC was founded in 1972, and the other four firms were spun out as subsidiaries. GIC was designated as the Indian Reinsurer in November 2000, and its supervisory responsibility over its subsidiaries was terminated. GIC’s role as a holding company for its subsidiaries ended on March 21, 2003, and the subsidiaries’ ownership was transferred to the Government of India. The Corporation employs 558 people as of March 31, 2016. The company’s authorised capital is Rs.1000 crore, and its paid-up equity capital is Rs.430 crore.

THE NEW INDIA ASSURANCE COMPANY LIMITED

Sir Dorabji Tata created the corporation on July 23, 1919, and it was nationalised in 1973 after a merger of Indian companies. As of March 31, 2016, the company had 2329 offices and 18783 employees. Customers can get insurance from the company, which has over 170 products that cover practically every aspect of general insurance. The company’s authorised capital and paid-up equity capital are respectively Rs.300 crore and Rs.200 crore.

UNITED INDIA INSURANCE COMPANY LIMITED


In 1938, United India Insurance Company Limited was established. With the nationalisation of India’s general insurance business, United India Insurance Company Limited merged 12 Indian insurance companies, four cooperative insurance societies, and the Indian operations of five foreign insurers, as well as the general insurance operations of Life Insurance Corporation of India’s southern region. As of 31.03.2016, the company had 2080 offices and 16345 employees. Customers can get insurance services from the corporation, which covers practically all aspects of general insurance. The company’s authorised capital and paid-up equity capital are respectively Rs.200 crore and Rs.150 crore.

THE ORIENTAL INSURANCE COMPANY LIMITED

The Oriental Insurance Company Limited was founded in 1947. The General Insurance Corporation of India surrendered all of the company’s shares to the Indian government in 2003. As of 31.03.2016, the company had 1924 offices across the country and 13923 employees. Customers can get insurance services from the corporation, which covers practically all aspects of general insurance. The company’s authorised capital and paid-up equity capital is Rs.200 crore.

NATIONAL INSURANCE COMPANY LIMITED


The corporation was established in 1906. It was merged with 21 international and 11 Indian enterprises after nationalisation to become National Insurance Company Ltd. As of 31.03.2016, the company had 1998 offices across India and 15079 employees. Customers can get insurance services from the corporation, which covers practically all aspects of general insurance. The company’s authorised capital and paid-up equity capital are respectively Rs.200 crore and Rs.100 crore.

According to sources, the government may inject Rs 3,000-5,000 crore in extra capital into the three public sector general insurance companies, depending on their performance and needs for the year. The capital injection will help the general insurance firms National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company enhance their financial health. The government invested Rs 5,000 crore in these three insurance businesses during the previous fiscal year. The government would invest Rs 9,950 crore in three PSU general insurers in 2020-21, with Rs 3,605 crore going to United India Insurance, Rs 3,175 crore to National Insurance, and Rs 3,170 crore to Oriental Insurance.

Last financial year, fund help was granted to the weak general insurance businesses, but sources say further funding is needed to get them back on track to profitability. Sources stated that a capital infusion of Rs 3,000-5,000 crore could be made in these firms dependent on their performance, and that the government has already increased their allowed capital in anticipation of future financial infusions. The three public sector general insurers are short on solvency buffer, and an external expert will be hired soon to improve operational efficiencies. Four public sector enterprises have filed a request for proposal (RFP) to restructure insurers and achieve profitability and employee development through the General Insurers’ Public Sector Association of India or GIPSA.

“Through performance management and capability management, there is a proposal for restructuring the organisation to bring in profitable growth and employee development, in alignment with the Key performance indicators (KPIs) devised by the Public Sector General Insurance Companies (PSGICs),” the RFP stated. The deadline for proposal submissions is June 2, 2022. Only New India Assurance Company, one of four state-run general insurance firms, is publicly traded; the other three are completely controlled by the government. It should be remembered that the government has already stated that one general insurance business will be privatised. The General Insurance Business (Nationalisation) Act has previously been amended by Parliament to promote privatisation (GIBNA).

In the Budget 2021-22, Finance Minister Nirmala Sitharaman unveiled a big-ticket privatisation strategy that comprised two public sector banks and one general insurance firm. “In the years 2021-22, we propose privatising two public sector banks and one general insurance firm. This would necessitate legislative changes “she stated at the time.

 

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