Mumbai: Three state-owned non-life insurance companies – National Insurance, Oriental Insurance and United India – dealing with uncertainty in several fronts.
The Delhi High Court order overrides the promise of the Director by the Bank Board Bureau (BBB) on the grounds that jurisdiction has questioned the appointment of the chief executive too.
Capital erosion has made it difficult for them to grow a business or apply a revised wage that has matured for employees.
Also, the announcement of government privatizes some even as a previous plan to combine them hanging fire has added uncertainty.
In addition to appointing general managers and directors, BBB recommends the names of Inderdeet Singh and Suchita Gupta for the position of chairman and position of MD in United India and National Insurance this year.
Previously, Anjan Dey was chosen to head the Oriental insurance company.
The Bureau also recommends Siddharth Mohanty, Mini Ipe and B C Patnaiik as MDS in LIC.
Earlier this month, Delhi HC, in response to the writing petition submitted by the National Insurance General Manager Ravi, said that the promise made in accordance with the directors who were challenged in the WRIT officer could be set aside.
“Liberty with respondents No.1 to make a choice and appointment of general managers / directors in accordance with the law,” said the command.
In January 2020, board three non-life companies have approved a proposal to join.
However, following the Covid pandemic outbreak, the merger process was detained.
But in budget speeches for FY22, Minister of Finance Nirmala Sitharaman said that the government would advance with the privatization of two public sector banks and one general insurance company in FY22.
Meanwhile, with their finances in a precarious position, the three non-life companies have closed the office to cut costs.
The three companies have seen their solvency ratio – equivalent to the insurance industry from the capital adequacy ratio for banks – shrinking below the mandated levels.
Companies can continue to do business because of government ownership.
Senior officials in the industry feel that, given the state of finance and liabilities, it is impossible for the government to be able to privatize any company.
The combined entity will not be strong.
The only decent choice might be to transfer operations to new Indian guarantees.
Non-soul insurance companies face uncertainty
