Govt weighs ₹5,000 crore capital infusion for three PSU insurers as losses return

₹5,000 crore into three loss-making and financially weak public sector general insurers—United India Insurance Co. (UIIC), National Insurance Co.

(NIC) and Oriental Insurance Co. (OIC), according to two people aware of the discussions.

The move follows a brief earnings turnaround last year that failed to translate into sustained balance-sheet repair.The proposal, which could be routed through a second supplementary demand for grants this fiscal or the Union Budget for FY27, the people said, revives a plan that was deferred in the past two budgets after the insurers reported short-lived quarterly profits.The proposed funding is aimed at stabilizing the balance sheets of the insurers, restoring their solvency margins and preparing them for a long-delayed consolidation and potential sale plan, one of the two people quoted above said. The government wants the entities to be adequately capitalized before executing structural reforms such as mergers, listing or privatisation, this person added.The second person said the quantum and timing of the capital support will depend on a reassessment of the insurers’ financial performance over the nine-month period ending December 2025.

One option under consideration is to provide limited support this year through supplementary demand for grants, followed by a more comprehensive infusion in the Union Budget for 2026-27.The government’s reassessment reflects the failure of temporary profitability in FY25 to arrest deeper structural weakness. Despite profits in select quarters last year, the insurers’ solvency margins remain deeply negative and well below the Insurance Regulatory and Development Authority of India’s (Irdai) mandated minimum of 1.5x.