Oriental Insurance requires Rs 3,000 crore for growth, solvency

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February 29, 2020 3:30 AM

Health insurance accounts for nearly 30% of the total premium, motor accounts for 34-35%, while crop insurance makes up around 17% of the total business.

oriental insurance, oriental insurance companyOriental Insurance has been directing its efforts towards conciliation of motor third party cases, making some price corrections in group health policy and also property insurance.

State-owned general insurer Oriental Insurance Company may require close to Rs 3,000 crore capital support from the government to fund its growth needs and meet regulatory solvency requirement in the next fiscal.

The board of Oriental Insurance will meet on March 18 to look into the budget for growth in the next financial year. The public sector insurer has largely been focusing on consolidating its business in this fiscal, and is looking to grow the business next fiscal.

“While we may require a capital in the vicinity of Rs 3,000 crore for growth and meeting regulatory solvency requirement in FY-21, however, the business (growth) plan would be made in line with the capital support that we get,” A V Girijakumar, chairman-cum-managing director, Oriental Insurance Company, told reporters on the sidelines of an event organised by the Merchants’ Chamber of Commerce and Industry here on Friday.
The Union Budget 2020 has set aside Rs 6,950 crore for recapitalisation of the three public sector general insurance companies —National Insurance, Oriental Insurance and United India Insurance. The government aims to complete the merger of these three general insurers by the end of March, finance secretary Rajiv Kumar has recently said.

Girijakumar indicated that the current valuation of the company would be in excess of `10,000 crore. Valuations of all the three PSU insurers, which would be merged to form a single entity, are going on.

Oriental Insurance has been directing its efforts towards conciliation of motor third party cases, making some price corrections in group health policy and also property insurance. It is also closely looking at loss making businesses with a view to reprice them. “Our focus this year has been on reviewing claims and settling them as quickly as we can. We had set a target of conciliation of close to 24,000 motor third party cases this fiscal, of this we have already completed 18,000 and are hopeful of achieving the remaining by the end of this fiscal. This will give us a big relief,” Girijakumar said.

Oriental Insurance, which grew its business by over 15% in FY19, is likely to close this fiscal with only around 6% growth in premium at Rs 14,250 crore by March 31, 2020.

Health insurance accounts for nearly 30% of the total premium, motor accounts for 34-35%, while crop insurance makes up around 17% of the total business.

“The growth (in business premium) next year would be tailored to the capital support we get, we will take a considered view,” Girijakumar added.

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