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India Mulls Merger, Privatization of Top State-Owned General Insurers
17 Nov
Summary
- Government discussing options to restructure 3 state-owned general insurers
- Potential merger, privatization or both being considered
- Aim to limit state-owned firms in non-strategic sectors to 1-2
As of November 17, 2025, the Indian government is in discussions to overhaul the structure of three state-owned general insurance companies - National Insurance, Oriental Insurance, and United India Insurance. The Union finance ministry is exploring various options, including merging two of the firms with the profitable and listed New India Assurance, merging all three, or merging only two while preparing the third for privatization.
The government's aim is to align the insurance sector with its broader policy of limiting the number of state-owned enterprises in non-strategic sectors to one or two, while retaining a minimum of four in strategic sectors. The discussions are still in the early stages, and any decision will depend on a deeper analysis of the insurers' solvency profiles, integration challenges, and the fiscal implications of further capital support.
Despite reporting profits in some recent quarters, the three general insurers remain undercapitalized, with solvency ratios below the regulatory minimum of 1.5x. In contrast, the stronger New India Assurance has maintained a healthy solvency position. The government is now seeking a more pragmatic approach to consolidate the sector and limit future fiscal exposure.
