General Insurance News

The Finance Ministry has renewed its proposal to merge three state-owned general insurance companies-National Insurance Company, Oriental Insurance Company, and United India Insurance-citing the need for enhanced operational efficiency and financial stability.

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Merger proposal for PSU general insurers revived by FinMin

This move revives the earlier plan proposed in 2018, which was shelved due to the poor financial condition of the companies at the time.

Sources indicate that the Ministry is awaiting a report from NITI Aayog and the Department of Investment and Public Asset Management (DIPAM) before taking the final call. The government may also consider capital infusion to facilitate the merger process. Currently, all three insurers continue to face mounting losses and capital adequacy challenges, with the combined solvency ratios falling below the regulatory requirement of 1.5.

Officials believe that a merged entity could optimize administrative costs, improve underwriting performance, and create a stronger public sector general insurer capable of competing with private players. However, unions have previously opposed such moves, fearing job losses and service disruption.

If approved, the merger will mark a major structural reform in India's public insurance sector.

Kshema General Insurance secures $20 million from Green Climate Fund

Kshema General Insurance, a new entrant in the Indian insurance sector, has raised $20 million (approximately Rs. 166 crore) from the Green Climate Fund (GCF) to support climate-resilient insurance products aimed at vulnerable populations. This marks one of the first direct insurance sector investments by the GCF in India and aligns with global efforts to strengthen climate risk financing mechanisms.

The funding will help Kshema launch microinsurance products that offer protection against climate-related risks such as floods, droughts, and cyclones, especially for low-income communities dependent on agriculture and fisheries. The company aims to leverage technology and local partnerships to expand its reach and ensure faster claim settlements in climate disaster zones.