NEW DELHI: The ministry of finance has asked state-owned general insurance companies to prioritise profitable ventures and focus on enhancing profitability rather than solely pursuing top-line growth.
The government recently provided Rs 7,250 crore in installments to three public sector general insurance companies –National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company.
The government official expressed optimism that these companies may not need additional capital infusion, which explains why no provision was made in the Budget.
“We have been monitoring performance of state-owned general insurance companies and as a result they have started looking up. So, we will watch their performance this year,” Financial Services Secretary Vivek Joshi told news agency PTI.
“A lot of employees retired, and there was a ban on hiring new staff. But now they are asked to recruit in a balanced way. We expect them to strengthen further,” he said.
The financial performance of these three general insurance companies has significantly improved, according to the official.
“Oriental Insurance has earned Rs 18 crore profit in FY24 as against a loss of Rs 5,000 crore a year ago, while National Insurance Company narrowed its loss to Rs 187 crore from Rs 3,800 crore, and United India Insurance to a loss of Rs 800 crore as against the loss of Rs 2,800 crore in the preceding year that is FY23.”
New India Assurance has maintained its strong performance, increasing its profits from Rs 1,000 crore in FY23 to Rs 1,100 crore in FY24.
Alongside the change in focus, the government is also tackling operational challenges within these insurance companies.
The finance ministry has asked these companies to focus on profitable lines of business, he said, adding, earlier they used to take business to show growth.
“Now we are asking them to come out of loss-making segments like motor and health insurance,” Joshi added.
The government has pumped a total of Rs 17,450 crore into these insurance firms to date to improve their financial stability. Public sector general insurance companies are undergoing various reforms, including organisational restructuring, product rationalisation, cost rationalisation, and digitalisation.
To ensure efficient capital utilisation and drive profitable growth, all public sector general insurance companies have implemented a set of key performance indicators linked to reforms, effective from 2020-21, when the maximum capital infusion was made.
Among the four state-owned general insurers, only New India Assurance Company is listed on the stock exchanges, while the other three are entirely government-owned.
The government has already declared its intention to privatise one general insurance company.
The government recently provided Rs 7,250 crore in installments to three public sector general insurance companies –National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company.
The government official expressed optimism that these companies may not need additional capital infusion, which explains why no provision was made in the Budget.
“We have been monitoring performance of state-owned general insurance companies and as a result they have started looking up. So, we will watch their performance this year,” Financial Services Secretary Vivek Joshi told news agency PTI.
“A lot of employees retired, and there was a ban on hiring new staff. But now they are asked to recruit in a balanced way. We expect them to strengthen further,” he said.
The financial performance of these three general insurance companies has significantly improved, according to the official.
“Oriental Insurance has earned Rs 18 crore profit in FY24 as against a loss of Rs 5,000 crore a year ago, while National Insurance Company narrowed its loss to Rs 187 crore from Rs 3,800 crore, and United India Insurance to a loss of Rs 800 crore as against the loss of Rs 2,800 crore in the preceding year that is FY23.”
New India Assurance has maintained its strong performance, increasing its profits from Rs 1,000 crore in FY23 to Rs 1,100 crore in FY24.
Alongside the change in focus, the government is also tackling operational challenges within these insurance companies.
The finance ministry has asked these companies to focus on profitable lines of business, he said, adding, earlier they used to take business to show growth.
“Now we are asking them to come out of loss-making segments like motor and health insurance,” Joshi added.
The government has pumped a total of Rs 17,450 crore into these insurance firms to date to improve their financial stability. Public sector general insurance companies are undergoing various reforms, including organisational restructuring, product rationalisation, cost rationalisation, and digitalisation.
To ensure efficient capital utilisation and drive profitable growth, all public sector general insurance companies have implemented a set of key performance indicators linked to reforms, effective from 2020-21, when the maximum capital infusion was made.
Among the four state-owned general insurers, only New India Assurance Company is listed on the stock exchanges, while the other three are entirely government-owned.
The government has already declared its intention to privatise one general insurance company.
