The Union Cabinet on Wednesday gave an in-principle approval to pump in Rs 2,500-crore capital into three public sector general insurance companies. These three insurers are Oriental Insurance Company Limited (OICL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).
The Cabinet has allowed “immediate release of Rs 2,500 crore in the light of the critical financial position and breach of regulatory solvency requirements” of these general insurers”, an official statement said.
Briefing reporters here, Union Minister Prakash Javadekar said the capital has been infused in the light of the critical financial position and breach of regulatory solvency requirements of the general insurers.
The capital infusion in these companies comes ahead of their proposed merger by the end of March 2020.
Earlier in January, the finance ministry had said that the merger of PSU general insurers was at an advanced stage and that could happen soon as the matter was pending before the Cabinet. In his Budget speech 2018-19, the then finance minister Arun Jaitley had announced that the three companies would be merged into a single insurance entity.
However, the merger process could not be completed due to various reasons, including poor financial health of these companies. As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 crore and a market share of around 35 per cent.