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Govt to Merge 3 General Insurance Companies
- DetailsWritten by PolicyBazaar -
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Updated date : 06 April 2020
Oriental India Insurance Company, National Insurance Company, and United India Insurance Company are three public sector general insurance companies. These companies are owned by Government of India and the government has plans to merge them for increased profitability and operational feasibility. The government has set a divestment target of Rs. 80,000 crores for 2018-19. The consolidations of companies have taken place in the oil sector and banking sector. The three general insurance carriers have one-third of the market share. The market capitalization of motor, health and industrial insurance is Rs. 1.5 lakh crores.
Benefits of Merger
The three public sector general insurance companies have spread their network through the length and breadth of the country. Instead of operating as separate entities, they can work together and enhance operational efficiency. The merger of these three public sector general insurance companies will lead to higher withholding capacity. The companies will be listed through an IPO on stock exchanges and capital will be raised to make them stronger. These measures aim to increase the underwriting capability of the company.
- Enhancing the Solvency Ratio - An insurance company should maintain an asset value at 150% of the liabilities. As of March ’17, The Oriental Insurance Company Ltd and United India Insurance have a solvency ratio of 1.11 and 1.15 respectively. These ratios are less than the regulatory mandate. The solvency ratio of National Insurance is 1.9.
- Largest General Insurance Company - The government intends to create the largest general insurance company in the public sector after the merger of these three public sector companies. New India Assurance Company was the fourth public sector general insurance company listed in November 2017. The market share of the four general insurance companies is about 60%.
- Strike a better IPO Price - The competition between the three public sector insurance companies will be eliminated after the merger. Even though the General Insurance Corporation and New India Assurance Company ventured into the public stock market, they performed poorly. When the three companies are merged, it will enable them to earn a higher valuation. Even if one company fails through the poor underwriting process, it will be easier to absorb the loss with the merger.
- Better Performance - The merger will improve key parameters such as solvency, growth and profitability of the enterprise. If the merger is successful, it can address all the issues and there will be great transparency in conducting the business. With the improvement in accountability, it is likely to increase the customer service.
Oriental India Insurance Company
The Oriental India Insurance Company Limited was established on September 12th, 1947. The company has 30 regional offices and 1800 branches across the country. As the leading general insurance company in India, it has offices in Nepal, Kuwait and Dubai. The company collected Rs. 99,556 as premium in 1950. The gross premium collection was Rs. 7283 crores in FY 2013-14.
Oriental India Insurance Company offers health insurance products, motor insurance products and business insurance products.
- Health Insurance Products - There are affordable health insurance policies from Oriental India Insurance Company which can take care of healthcare expenses efficiently. The mediclaim policies it offers for individuals between 18 and 80 years of age. If you are hospitalized due to a sudden sickness, the health insurance plan will take care of your interests.
With a family floater plan, it is possible to cover an entire family. The insured, spouse, children, parents and dependents can be covered by the policy.
A group health insurance policy will offer great benefits, especially for corporate groups, and which there is no waiting period. The coverage is available from day one. You can buy group health insurance policy from Oriental India Insurance Company, if there are more than 50 persons in the group.
The Oriental Health of Privileged Elders (HOPE) insurance policy is exclusively meant for senior citizens. It will reimburse the hospitalization and domiciliary expenses for certain diseases.
- Motor Insurance - There are motor insurance plans for Oriental Insurance to cover two wheelers, three wheelers, four wheelers, and commercial vehicles.
- Coverage of Business Risk - The burglary policy, carrier’s liability policy, money insurance policy, and office umbrella policy are some of the general insurance plans meant for businesses.
National Insurance Company
The second largest insurance company in India, National Insurance Company has a strong presence in the Northern and Eastern parts of the country. The company was formed on December 6, 1906. This award-winning company offers a wide range of products to take care of the needs of people from all walks of life.
- Personal Insurance – The personal insurance cover offered by the company includes medical insurance, auto insurance and property insurance.
- Rural Insurance – The rural insurance focuses on protection of agricultural income and rural businesses. If there is a loss of crop due to natural disasters, the company will pay a sum assured.
- Industrial Insurance – The damage and loss of industrial goods will be protected through industrial insurance.
- Commercial Insurance – If there is a loss of property during transit, the insurance company offers a cover.
- Health Insurance Plans - The health insurance plans offered by National Insurance Company fulfil the needs of individuals as well as families in an unexampled way.
The National Parivar Mediclaim is a family floater policy. It covers the insured, spouse, children, dependents and parents. You can buy a cover of up to Rs. 1 lakh to Rs. 10 lakhs. The minimum policy period is one year and the maximum policy period is 3 years.
With the National Parivar Mediclaim Plus policy, you can get the highest cover to the extent of Rs. 50 lakhs.
- Motor Insurance - You can buy two wheeler and car insurance policies at competitive rates at National Insurance Company. You can buy comprehensive insurance policy as well as third-party coverage from the National Insurance Company.
- General Insurance - The travel insurance, mediclaim business, and mediclaim study policy will take care of your overseas traveling needs. You can also buy machine insurance, electronic equipment insurance, standard fire & peril, credit insurance and shopkeeper insurance policies from the National Insurance Company.
United India Insurance Company
The company was established in February 1938. The company offers various kinds of insurance products to serve the needs of various segments of society. The company has 18,300 employees, 1340 offices and more than one crore policyholders. The company offers insurance products to large companies such as ONGC Ltd., Mumbai International Airport Ltd. It has a great presence in rural India. It has taken great strides in implementing the universal health insurance program of the Government of India.
- Health Insurance Policies - United India Insurance Company offers various kinds of health insurance policies to cater to the needs of individuals, families and groups. Its family floater policy will cover all the members of the family under a single policy.
A family floater plan can be subscribed to by the insured, spouse and children. There are health insurance plans to cover the hospitalization expenses. The individual mediclaim plan fulfills the healthcare needs of an individual. The expenses not exceeding the sum assured will be paid through the TPA to the hospital/clinic or the insured.
The coverage can be enhanced by choosing top-up plans. There are special health insurance policies to cover critical illnesses as well. The hospitalization expenses are covered by workmen medicare policies.
- Motor Insurance - United India Insurance Company offers motor insurance plans to cover two-wheelers and private cars. You can buy an affordable comprehensive policy which will cover third party liability, damage to your vehicle and personal accident risk as well. The package car policy will cover man-made as well as natural disasters.
- General Insurance Plans - The company offers general insurance policies to cover travel-related risks and business trips. Some of the special policies offered by the company include Overseas Mediclaim Policy (OMP) for business and holiday, OMP employment and studies, OMP for corporate frequent travelers, baggage policy and Marga Bandhu policy.
The damage to the building and the contents can be covered through the householder policy. The policy will also cover the accidental death or injury and liabilities to third parties.
The personal accident policies offered by the company include mediclaim policy, road safety package policy, and unimedicare policy.
The business plans offered by the general insurance company include shopkeeper’s policy, burglary policy, jewelers block policy, money-in-transit policy, compact policy, and dukan mithra policy. Businesses can also go for motor liability, public liability, product liability, professional indemnity, and workmen compensation insurance.
Merging the three State-run general insurance companies will boost the solvency ratio. The news about the merger of the three insurance companies was announced during the Budget 2018 by the finance minister. At the moment, all the three state-run insurance companies are suffering from poor solvency ratio. As some companies find it difficult to be listed on stock exchanges due to poor underwriting performance, the merger will trigger better performance of the company. The merger will increase the efficiency of the enterprise and it will be the largest company in the non-life insurance sector.
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