With the government proposing to allow composite insurers in the upcoming amendment, the four state-owned general insurance firms can be merged with the Life Insurance Corporation of India (LIC), reported by news agency IANS. The Centre has proposed to amend various provisions of the Insurance Act 1938 and the Insurance Regulatory and Development Authority Act 1999.
“Finance Minister Nirmala Sitharaman had earlier announced that in the case of strategic sectors, there can be four public sector units and in the case of non-strategic sectors, there will be only one government owned unit,” a senior insurance industry told IANS.
He added that in line with that announcement, the government can merge its four non-life insurance companies with LIC.
The proposed amendments allow composite insurers. It allows one insurer to sell life and non-life insurance policies, enables the insurance regulator to fix the minimum capital required, and scraps the statutory limits. The proposed amendments also allow different insurers including captives and others.
The report says that employee unions in the four government-owned general insurance companies have been demanding the merger of the companies into one strong entity. This includes unions from The Oriental Insurance Company Limited, National Insurance Company Limited, The New India Assurance Company Limited, and United India Insurance Company Limited.
Although the government also owns other insurance firms like General Insurance Corporation of India (GIC Re), ECGC Ltd, and Agriculture Insurance Company of India Ltd. But the report says that GIC Re is the national reinsurer, and ECGC and Agriculture Insurance are specialised business units.
The official said, “perhaps the Agriculture Insurance can be merged with LIC at a later date.”
“We welcome any move that would strengthen the public sector insurance companies,” Trilok Singh, General Secretary, General Insurance Employees’ All India Association (GIEAIA) told IANS.
The government had previously announced that it would merge The Oriental Insurance, National Insurance, and United India but it did not proceed with the idea.