Finance Minister Nirmala Sitharaman recently reviewed the performance of public sector general insurance companies (PSGICs) and emphasized the need for innovative insurance products tailored to emerging risks. The meeting, attended by top officials from the finance ministry and PSGICs, discussed key performance indicators such as premium collections, insurance penetration, and density. Sitharaman directed the companies to develop products that address new risks, including cyber fraud, and to diversify their portfolios to meet evolving consumer needs.
The review highlighted the importance of robust underwriting practices and portfolio optimization to ensure profitability and financial stability. The companies were instructed to align their combined ratios with global industry benchmarks. The meeting noted that the total premium collected by PSGICs has increased significantly, from Rs 80,000 crore in 2019 to Rs 1.06 lakh crore in 2025. The overall general insurance industry also reported growth, with total premium collections reaching Rs 3.07 lakh crore in FY 2024-25.
Despite the growth, general insurance penetration in India remains relatively low at 1% of GDP, compared to a global average of 4.2% in 2023. Insurance density has improved, increasing from $9 in 2019 to $25 in 2023. Sitharaman stressed the need for PSGICs to improve both penetration and density to provide wider financial protection. The companies have shown a significant turnaround, with all of them becoming profitable again. Oriental Insurance and National Insurance started posting quarterly profits in 2023-24 and 2024-25, respectively, while United India Insurance posted a profit in Q3 of 2024-25 after a gap of 7 years. New India Assurance has consistently maintained its position as a market leader and has been making profits regularly.
The minister’s directives aim to enhance the competitiveness and sustainability of PSGICs, ensuring they remain relevant in a rapidly evolving market. By developing innovative products and improving their underwriting practices, the companies can better address emerging risks and increase insurance penetration in India. The growth of the general insurance industry and the turnaround of PSGICs are positive signs, but there is still a need to improve penetration and density to provide adequate financial protection to the population.