Weak PSU insurers may get budget aid

Fresh capital of ₹4,000-5,000 cr may help meet solvency rules

- Subhash Narayan & Rhik Kundu

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 fresh 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.