3 public sector general insurance companies – National Insurance Company, United India Insurance Company and Oriental Insurance Company - are all set to merge, as per the announcement during the Interim Budget 2019-20.
The Government of India has finalized the merger of India’s 3 leading PSUs - National Insurance Company, United India Insurance Company and Oriental Insurance Company. They are headquartered in Kolkata, Chennai and Delhi. The merger had been proposed for the first time during the Budget of 2018-19. However, the Centre was not in a hurry to complete the process within a short span of time as per the July 2018 reports. It is the country’s first initiative to liberalize the insurance industry, which is predominantly government-owned, after about seven decades post-Independence.
Reportedly, Management Consultancy Firm Ernst & Young (EY) has been shortlisted, according to the bid. This consultancy would oversee the process of merger and provide expert advice on restructuring, human resource and operations management, and regulatory and compliance issues. In totality, the insurers have about 200 insurance products, and boasts of a market share of 35% approximately and a consolidated premium of Rs. 41, 461. The combined net worth reportedly is Rs. 9,243 crore across an employee strength of 44,000 throughout 6,000 branches. The merger is believed to establish the new insurance company, post the consolidation process, as the largest non-life insurance company of the country. The net worth for this merger would approximately be Rs. 1.2 lakh crore to Rs. 1.5 lakh crore.
India waits with bated breath to see how the insurance industry will perform after liberalization.
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