Merger of PSU general insurance firms likely before end of FY19

The merger of the three public sector general insurance companies — National Insurance Company, United India Insurance and Oriental Insurance Company — is likely to be completed before the next financial year.

The chiefs of the three insurance companies will on Friday have the first meeting with the government on the merger.

“There is a departmental meeting on February 16 to discuss Budget pronouncements,” said M N Sarma, chairman-cummanaging director (CMD), United India Insurance, said on the sidelines of an insurance summit by Assocham here on Tuesday. “The merger is expected to be complete before the government presents the vote of account early next year.”

Union Finance Minister Arun Jaitley, in his Budget speech, announced the proposal to merge the three public sector general insurance companies into a single entity. The combined entity would be subsequently listed, Jaitley said while presenting the Budget 2018-19 in Parliament.

Also, the merger would lead to rationalisation of offices, but this will be done without any job cuts, said Sarma.

Earlier, K Sanath Kumar, CMD, National Insurance, too had said the government was of the view that the merger was likely to be complete by the end of the next financial year.

“I was told that the merger would be most likely finalised by the end of next financial year. The insurance nationalisation Act has to be amended and necessary permission for merger has to be acquired from the Irdai (Insurance Regulatory and Development Authority of India). Share transfer is not a challenge as 100 per cent of it is held by the government,” Kumar had told Business Standard earlier.

At the meeting on Friday, there could be discussions on the modalities of the proposed health insurance scheme to provide a cover of ~500,000 to 100 million households, as announced by the government in its Budget.

“The Irdai data says that about 465 million people have been covered by one or other type of health insurance. We have been articulating, linking the total insurance premium to GDP does not really reflect the achievements of the Indian insurance industry. Instead, there should be an index reflecting number of people covered under health insurance,” Kumar had said.