Alliance of 3 general insurance companies: Minister of State for Finance & Corporate Affairs, Anurag Thakur recently told the Lok Sabha that 3 public-sector General Insurance firms, namely, United India Assurance Company Ltd, National Insurance Company Ltd, and Oriental India Insurance Company Ltd will soon be merged into a single insurance entity. This move was announced by Nirmala Sitharaman, Finance Minister in her original Budget 2019-20 speech, suggesting to amend the General Insurance Business Act, 1972 to allow the merger of non-life insurance firms.
Alongside the Budget 2019-20, finance bill was also announced, suggesting to replace the ‘there’ll be 4 firms’ statement of a 1972 act section with “there’ll be up to 4 firms” merger.
The union of these 3 insurance firms was also announced by Arun Jaitley who is the former Finance Minister in his Budget speech of 2018-19, but there was nothing majorly done in this regard. The mandatory Finance Ministry is now taking this matter about the merger of these 3 firms serious.
The United India Assurance Company Ltd, The National Insurance Company Ltd, and Oriental India Insurance Company Ltd had earlier appointed Ernst & Young as a consultant for their union. Ernst & Young has been given the task to carry out the merger in a consolidated way.
Ernst & Young is expected to advise on organizational restructuring, management of operational issues, rationalization of human resources, and other concerned issues.
For the creation of synergy and unlock the value of the insurance sector, this has been decided by the government to merge 3 leading public-sector general insurance firms. This consolidation of the general insurance firm is part of the Disinvestment Strategy of the Modi 2.0 Government.
Government has the aim to augment the performance of these three insurance firms through this merger without any further delay.