Source The economics Times
The Finance Ministry has revived its proposal to merge three state-owned general insurance companies, aiming to strengthen their financial position and improve operational efficiency. According to official sources, the government is re-evaluating the long-pending plan to consolidate National Insurance Company (NICL), United India Insurance (UIICL) and Oriental Insurance Company (OICL)—a move first suggested in 2018 but kept on hold due to capital shortages, pandemic-related disruptions and concerns over operational integration.
Officials familiar with the development said the Finance Ministry has instructed the Department of Financial Services (DFS) to reassess the financial health, solvency position and capital needs of the three insurers before moving forward. All three companies have a significant market share in the non-life insurance segment but have faced profitability challenges in recent years due to underwriting losses, rising claim ratios and delays in premium rationalisation.
The renewed merger proposal is part of the Centre’s broader roadmap to reform the public-sector insurance ecosystem. The government believes consolidation could lead to better risk management, reduced administrative costs, streamlined underwriting processes and a stronger balance sheet capable of competing more effectively with private insurers.
However, the proposal also raises questions about workforce integration, product portfolio alignment and technology standardisation across the three companies. Employee unions have previously opposed the merger, expressing concerns about job security and the potential impact on service quality.
If revived successfully, the mega-merger would create one of India’s largest general insurance entities, reshaping the public-sector insurance landscape. The government is expected to hold further consultations with stakeholders before taking a final decision, and an official announcement may follow once the evaluation report is completed.
