FinMin reviews revival of mega PSU insurance merger; privatisation, FDI hike also under review

The Finance Ministry is re-evaluating an earlier proposal to merge three public sector general insurance companies — Oriental Insurance, National Insurance, and United India Insurance — into a single entity, sources said. The move, aimed at improving operational efficiency and scale, is under preliminary assessment following a turnaround in the firms' financial performance. 

Between 2019-20 and 2021-22, the government infused ₹17,450 crore into the three insurers to stabilise their finances. The initial plan to merge them was announced in the 2018-19 Budget by then Finance Minister Arun Jaitley but was shelved in July 2020 in favour of a ₹12,450 crore capital infusion. 

With their financial position showing signs of recovery, the merger is back under consideration. In parallel, the proposal to privatise a general insurance company, as part of the government’s broader divestment agenda, is also being reviewed. While options are being discussed, no decision has been finalised, sources added. 

The General Insurance Business (Nationalisation) Amendment Act, passed in August 2021, paved the way for privatisation by removing the requirement for the Centre to hold at least 51% in such entities. It also aims to allow greater private participation and deepen insurance penetration. 

Additionally, the government is expected to introduce a bill in the upcoming Winter Session of Parliament to raise the FDI cap in the insurance sector from 74% to 100%. The session begins December 1 and will run for 15 working days.

(With inputs from PTI)