The Indian government has approved a retrospective wage and pension reset for employees of public sector general insurers, the Reserve Bank of India (RBI), and the National Bank for Agriculture and Rural Development (Nabard). The total payout is estimated to be around Rs 11,640 crore. The majority of this amount, Rs 8,170 crore, will go to state-owned general insurers, followed by the RBI at Rs 2,697 crore and Nabard at Rs 773 crore.
The payout for public sector general insurers includes Rs 5,823 crore in arrears, Rs 250 crore for the National Pension System (NPS), and Rs 2,098 crore for family pensions. This will benefit around 43,247 employees and 14,615 family pensioners across six insurance companies: National Insurance, New India Assurance, Oriental Insurance, United India Insurance, General Insurance Corporation of India (GIC), and Agriculture Insurance Company of India Limited (AICIL).
However, the financial health of these insurers is a concern, with three of them – National Insurance, Oriental Insurance, and United India Insurance – failing to meet the minimum solvency margin of 1.5 as of March 31, 2025. Only New India Assurance met this requirement, with a solvency margin of 1.9. This raises the possibility of the government providing budgetary capital infusion to fund the higher wages.
There is speculation that the government may link this support to reforms that make the public sector undertakings (PSUs) more sustainable. In the past, the government has tied budgetary support to reforms, and there is a possibility that it may announce consolidation of PSU insurers or sell stakes in these companies to improve their financial health. The government’s decision to approve the wage and pension reset is expected to have significant implications for the insurance sector and the overall economy.