The Indian government is considering merging three public sector general insurance companies – Oriental Insurance, National Insurance, and United India Insurance – into a single entity in the upcoming budget for the financial year 2026-27. The proposal aims to improve the efficiency and health of general insurance companies in India. The Union finance ministry has expedited its capital infusion plan for the forthcoming budget, and a fresh preliminary assessment on further consolidation is underway.
The government had previously announced plans to merge the three companies in the 2018-19 budget, but the idea was dropped in 2020 in favor of a capital infusion of Rs 12,450 crore. Between 2019-20 and 2021-22, the government infused Rs 17,450 crore into the three PSU general insurance companies to bring them out of financial distress. With their finances now improved, the finance ministry is reassessing the possibility of a merger.
Additionally, the government is considering privatizing a general insurance company, as announced by Finance Minister Nirmala Sitharaman in the 2021-22 budget. The General Insurance Business (Nationalisation) Amendment Act, 2021, was passed in August 2021, allowing for the privatization of state-owned general insurance companies and increasing private participation.
The government is also planning to introduce a bill in the winter session of Parliament to raise foreign direct investment (FDI) in the insurance sector from 74% to 100%. This move aims to attract more global players and expand insurance access across India. The winter session of Parliament is scheduled to start on December 1 and end on December 19.
The proposed merger and privatization plans are part of the government’s efforts to strengthen and restructure the insurance sector in India. The finance ministry is working closely with the insurance regulator, Irdai, to improve the efficiency and health of general insurance companies. The government’s goal is to enhance insurance penetration and social protection, while also attracting more private investment and global players into the sector.