No Plans to merge Public Sector Insurance Companies: DFS Secretary
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The Secretary of the Department of Financial Services (DFS), M. Nagaraju, has cleared the air on recent rumors about merging India’s state-owned insurance companies. On May 5, Nagaraju confirmed that no decision has been made to merge public sector insurance firms. He added that if the government decides to move forward with such a policy, it will be officially announced. Meanwhile he has confirmed that IDBI Bank will be privatised this year. Click here to read this news.
Speaking at the listing event of India’s first residential mortgage-backed securities, Nagaraju said, “There’s no decision to merge the PSU (public sector undertaking) insurers at this time. Once a policy decision is taken, the government will share it.”
What Was the Merger Rumor?
Recently, some media reports suggested that the government was planning to merge four large state-owned general insurance companies into one big entity. The companies named in these reports were:
- New India Assurance
- National Insurance
- Oriental Insurance
- United India Insurance
According to the reports, the goal of the merger was to create a strong insurance company that could stand up to private competitors, similar to the way Life Insurance Corporation of India (LIC) leads the life insurance market. A larger merged company would also be better positioned to expand general insurance services across India, the reports claimed.
Has This Merger Idea Come Up Before?
The idea of merging public sector insurance companies is not new. It was first suggested in the Union Budget of 2017-18. At the time, the government talked about combining the general insurance companies to make them stronger and more efficient.
In 2021-22, NITI Aayog, the government’s policy think tank, recommended privatizing United India Insurance. However, no major progress has been made on this recommendation so far.
What Does This Mean?
For now, the government is not moving forward with merging these insurance companies. But the topic remains under discussion, and a final decision could be made in the future. If the government chooses to merge the companies or take another action, it will officially announce the plan.
This clarification provides relief to employees, policyholders, and industry watchers who were concerned about the possible impact of a sudden merger.
