PSU general insurance firms see a dark tunnel ahead

THE PUBLIC SECTOR general insurance companies have been losing out to private players for many years now, and the slide continues unabated. According to latest data, the four public sector companies now account for less than a third of the non-life insurance market after losing a further 2% share in FY23.

- MITHUN DASGUPTA

There is near-unanimity that the slide will continue due to policy flip flops. For example, in his Budget speech in 2018-19, former finance minister Arun Jaitley announced that the three companies - United India Insurance Company Ltd, Oriental Insurance Company Ltd and National Insurance Company Ltd – would be merged into a single insurance entity. Several years have passed since the announcement, and the merger did not occur, but the resulting confusion sent the wrong feelers in the industry.

This wasn't an exception.Finance minister Nirmala Sitharaman in her Budget for 2021-22 had announced a big-ticket privatisation agenda, which included two public sector banks and one general insurance company. There is now total silence on the issue.

There's more. Budget 2018-19 had not provided for any capital infusion for the state-run insurance companies, though it gave ₹2,500 crore, ₹9,950 crore and ₹5,000crore capital to the three loss-making insurers during FY20, FY21 and FY22, respectively.

But the central government decided not to pump in fresh capital in the PSU general insurance companies for 2022-23, even as every company witnessed a sharp deterioration in its solvency ratio since FY19.