3 State general insurers seek recapitalization now

Mumbai General Insurance Public Sector Association (GIPSA), the apex body of the three state-run non-life insurers comprising United India Insurance, Oriental Insurance & National Insurance, has urged the Department for Financial Services (DFS) for recapitalization.

The issue will be discussed at length during the review meeting of all the four state-run non-life insurers, including New India Assurance, at New Delhi on August 2, sources said. The meeting will be addressed by DFS Secretary Vivek Joshi. The meeting will focus on crucial aspects such as capital requirements, financial performance and business revival plan.

While National and United have sought recapitalisation of Rs6,500 crore each, Oriental has requested the government for recapitaisation to the tune of Rs14,500 crore, sources familiar with the development, told Bizz Buzz.

Meanwhile, talking to Bizz Buzz, SL Tripathy, Chairman and Managing Director of United India Insurance, said: “We are trying our best to improve solvency margin of the company by adopting measures like correct underwriting process and reduction of claims.”

As per the reliable DFS sources, the government has made up its mind to collaborate with the insurance companies and may provide necessary financial support to ensure the smooth functioning of the sector. These meetings come at a critical juncture for the PSU general insurance companies.

As on the fiscal year 2022, National Insurance’s solvency margin, which indicates the financial health of an insurer, stood at 0.31 times, much less than that of the standard norm at 1.5 times. In case of Oriental, it was as low as at 0.15 times. However, United was having the solvency margin at 0.51 times.