PSU general insurers continue to lose market share, merger plan stuck

Public sector general insurance companies continue to lose market share to their private peers. As of January, the collective market share of the four PSU general insurance companies stood at 38.2 per cent, against 40.23 per cent in January 2019, according to the data released by the Insurance Regulatory and Development Authority of India (Irdai).


National Insurance, Oriental Insurance, United India Insurance and New India Assurance are the four PSU insurers, and barring New India Assurance, the others have been losing market share for some time now. However, compared to December 2019, United India Insurance has marginally gained market share in January.


New India Assurance continues to have the highest market share in the general insurance space at 14.28 per cent, followed by United India Insurance at 9.19 per cent, National Insurance at 7.67 per cent, and ICICI Lombard at 7.22 per cent.


In the February 2018 Budget, the government had announced a plan to merge National Insurance, United India Insurance and Oriental Insurance, and list the merged entity on the stock exchanges.


However, there has little progress on the merger since, even as the financial health of the firms deteriorated in terms of losses, falling market share and poor solvency ratios.


National Insurance’s solvency ratio, a key measure of financial strength, stood at 1.04 at the end of FY19, against the regulatory requirement of 1.5, according to the data.


It was 1.05 for United India in the second quarter (Q2) of FY20. The company posted pre-tax loss of Rs 1,091 crore in Q2FY20, according to the data from the General Insurance Council. Oriental Insurance’s solvency ratio was 1.56 in Q1FY20. The company had posted net loss before tax of Rs 330 crore in Q2FY20.


The three insurers, under the aegis of GIPSA (General Insurance Public Sector Association), earlier appointed consultant EY to draw a blueprint for the merger plan.

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