FinMin plans Rs 3,000 cr additional capital infusion in PSU general insurance companies in FY24

New Delhi: The finance ministry is planning an additional capital infusion of Rs 3,000 crore this fiscal in the three loss-making public sector general insurance companies to improve their health, according to sources. The government in FY22 provided Rs 5,000 crore capital to three insurers including, National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company.

Govt provides capital to 3 general insurance companies

National Insurance Company Limited was given the highest Rs 3,700 crore, followed by Oriental Insurance Company Limited Rs 1,200 crore, and United India Insurance Company Rs 100 crore. According to the sources, these companies have been asked to improve their solvency ratio and meet the regulatory requirement of 150 percent.

The solvency ratio is a measure of capital adequacy. A higher ratio reflects better financial health and the ability of the company to pay claims and meet future contingencies and business growth plans. Barring the solvency ratio of New India Assurance, this key indicator of the three public sector general insurance companies stood below the regulatory requirement of 150 percent in 2021-22.

The solvency margin is the extra capital the companies must hold over and above the claim amounts they are likely to incur. It acts as a financial backup in extreme situations, enabling the company to settle all claims.
Each of these companies has been asked to pursue a profitable growth path, the sources said, adding further capital infusion would depend on their performance indicators being met.

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