As per the study India regulators raising alarm; over the poor health of National Insurance Company. As the Insurance Regulatory and Development Authority of India has shot off a letter to the finance ministry raising the alarm over the deteriorating financial situation of state-run general insurer National Insurance Company Limited.
Insurance Regulatory and Development Authority of India has flagged this issue repeatedly with the government as the company’s solvency ratio has gone below 1%, as against the regulatory requirement that all insurance companies maintain a surplus of 1.5 times the liabilities at all times.
National insurance service
The National Insurance Company’s solvency has gone below regulatory requirements despite the special dispensation provided by the regulator, which had earlier helped it along with the Oriental Insurance Company and United India Insurance Company; to meet the mandatory solvency ratio at the end of March 2018.
But the government will be needing to infuse around Rs 3,000 crore in the firm; so that to keep it afloat for the next two quarters; the official saying, adding that the finance ministry needs to fast-track the proposal for merger of the three state run general insurers.
However, as the government did not allocate any budget for the merger of the general insurers in the budget; for 2019-20 but proposed in the Finance Bill to amend the General Insurances Business (Nationalisation) Act, 1972 and replace the “there will be four companies. And expect the government to proceed with merger announcement in this quarter itself.
But in the budget for 2018-19, the government had announced merger of Oriental Insurances Company; National Insurances Company and United India Insurances Company all unlisted entities into one entity; keeping New India Assurance Company separate. The combined market share of the three state-run insurers in terms of gross direct premium was about 25% at the end of May. New India Assurance had a market share of 16.8% during this period.