Relief may come soon for loss-making government insurance companies (PSU Insurance Companies). The government is preparing to help such insurance companies. Three such government general insurance companies can get funding from the government during the current financial year i.e. 2023-24. With this funding, the three government companies are expected to get the necessary help in improving their condition.
Companies will get help here
According to a PTI news, the Finance Ministry is working on a plan to infuse additional capital of Rs 3,000 crore in three loss-making government general insurance companies during the current financial year. This information has been given by sources related to the case. According to sources, this capital infusion will help the three loss-making government insurance companies to improve their condition.
These three can get capital
In the financial year 2021-22 also, the government had infused a capital of Rs 5,000 crore in these three insurance companies. These three companies are Kolkata headquartered National Insurance Company Limited, Delhi headquartered Oriental Insurance Company Limited and Chennai headquartered United India Insurance Company. National Insurance Company Limited was given the maximum amount of Rs 3,700 crore. While Oriental Insurance Company Limited got Rs 1,200 crore and United India Insurance Company got Rs 100 crore.
Companies have got this work
According to sources, the Finance Ministry has asked these companies to improve their solvency ratio and meet the regulatory requirement of 150 per cent. Solvency ratio is a measure of how much capital is available with a particular company. Higher this ratio indicates better financial position of a company, which means that the concerned insurance company is in a better position to pay the claims. Such companies are considered to be able to pay the sudden liabilities in the future.
All companies behind in scale
Talking about this scale in the case of government insurance companies, except for New India Assurance, the solvency ratio of other insurance companies has been much less than the regulatory requirement of 150 percent. In the financial year 2021-22, the solvency ratio of National Insurance was 63 percent, Oriental Insurance was 15 percent and United India was 51 percent.
Will get money on this
Sources said that all these insurance companies were asked to follow the path of making profits. How much share these companies will get in the additional capital from the government will depend on their performance. Insurance companies showing signs of improvement will get more capital from the government, while lagging companies will be left behind in funding as well.
already got help
The government has been continuously helping these insurance companies to stand on their feet. In the financial year 2019-20 also, the government had infused capital of Rs 2,500 crore in these government insurance companies. After that, during the financial year 2020-21, the government had infused capital of Rs 9,950 crore in these companies.
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