The Ministry of Finance, Government of India, has started discussions on merger of public sector insurance companies. The Finance Ministry is once again examining a proposal to merge three public sector general insurance companies — Oriental Insurance, National Insurance, and United India Insurance — into a single large entity, according to sources. The aim is to improve efficiency, reduce costs, and strengthen the companies’ overall performance.
These three insurance companies had been facing financial stress for several years. To stabilise them, the government infused ₹17,450 crore between 2019–20 and 2021–22. The plan to merge them was first announced in the 2018–19 Budget by former Finance Minister Arun Jaitley. However, the merger was put on hold in July 2020, when the government instead decided to provide a ₹12,450 crore capital infusion to support the companies.
Now that the financial health of these insurers has started to improve, the merger proposal is back under review. At the same time, the government is also considering the possibility of privatising one general insurance company as part of its broader disinvestment programme. Sources said that several options are being discussed, but no final decision has been made.
The process of privatisation received a boost with the passing of the General Insurance Business (Nationalisation) Amendment Act in August 2021. This law removed the requirement for the government to hold at least 51% stake in these companies. It also aims to increase private sector participation and expand the reach of insurance services in India.
The government is also likely to introduce a bill in the upcoming Winter Session of Parliament to raise the FDI limit in the insurance sector from 74% to 100%. The session will begin on December 1 and will continue for 15 working days. According to a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025, which seeks to deepen penetration, accelerate growth and development of the insurance sector and enhance ease of doing business, is part of the 10 legislations listed for the upcoming session of the Parliament. So far, the insurance sector has attracted ₹82,000 crore through foreign direct investment (FDI).
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