Fresh capital for PSU general insurers likely in budget

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Subscribe to enjoy similar stories. The government may infuse fresh capital into its loss-making general insurers in the next financial year to strengthen their operations and help them meet regulatory requirements, two people aware of the plans said. The Union budget may allocate additional capital for these insurers after reassessing their quarterly parameters in the nine-month period ending December 2024, the people said on the condition of anonymity.

At three of the weak state-owned general insurers, solvency ratio - a key requirement for insurers to continue servicing their customers - is expected to turn positive after the capital infusion. Solvency ratios at National Insurance, United Insurance and Oriental Insurance stood at -0.45, -0.59 and -1.06 at the end of FY24, against the minimum required 1.5. Though the quantum of capital support will be worked out early next year, it may be ₹4,000-5,000 crore and would be contingent upon companies showing signs of consistent improvement in financial parameters and growth, the first of the two persons quoted earlier said.

“Solvency ratios of the three public insurers — United India Insurance Co., National Insurance Co. and Oriental Insurance Co. — is still low.

The government has sought exemption from the Insurance Regulatory and Development Authority of India for all three entities from meeting regulator-mandated solvency margins. We will assess the performance of all three entities afresh, and if we find marked improvement in their performance, capital infusion may be done to strengthen them further," the second person added. "The further strengthening of operations of the three entities may be a precursor to planned listing and privatization of one or all the