Mumbai: The non-soul insurance company public sector has begun restructuring exercise shrinking their branch network in an effort to reduce costs and improve finances.
Overall, three weak PSU insurance companies – national insurance, Oriental and India insurance – targeting around 25% of office rationalization through mergers and closures.
Rationalization plans move forward even when the government has introduced laws to facilitate the privatization of state-owned public insurance companies.
The Business Insurance Law (Nationalization) – or Gibn Law – Amendment was notified on August 18.
Amendments stated that on and from the date in which the central government stopped to control every particular insurance company, after the start of the GIBN Law, the provisions of this action will stop applying with respect to certain insurance companies.
Following the budget announcement to sell one non-life insurance company PSU, the Minister of Finance said that the interests of employees will be protected and that privatization will not end as a sale for closure.
The association of officers in non-life companies has submitted a petition to the government, asking him not to sell the company but to combine three non-life companies to strengthen them.
Some Senior PSU officials felt that the merger with new Indian guarantees might be the only choice because independent companies might not be attractive to investors.
“Mergers and Rationalization of Three Psus Weak – National, Oriental and United India – It makes sense.
Public problems of the combined entity must be, if at all, taken well after the merger process is complete and the combined entity is stable and profitable,” said the former member sector regulator Idai KKK K.
He added that the government should not be in a hurry to eliminate his ownership in the guarantee of India New and Re.
National Insurance reported the loss of Rs 2,751 Crore for FY21, according to its public disclosure.
The company’s solvency margin ratio for the necessary solvency margin has shrunk to 0.12 such as the 1.5 mandate.
Oriental insurance has a loss of Rs 1,498 Crore and a 0.92 solvency ratio.
United India reported a loss of Rs 300 Crore and a 0.7 solvency ratio.
The three PSU insurance companies have a total office of more than 5,200, which shrank from 6.001 in March 2021.
The association officers have said that the incorporation of three PSU will end unhealthy competition and bring a scale of the economy.
“By following the appropriate merger process and the existing office consolidation, we can achieve economic goals scale with the operating office produced has a much greater size than the appropriate office,” National Confederation of General Insurance Officers Association.
Have said in their representatives to Niti Aayog in July.