Merger of Three General Insurance Companies on Cards?
Updated On Dec 08, 2020
According to the Union Budget, as released on 5th July 2019, a scope for the merger of non-life insurance companies has been created by thinking of amendment in the General Insurance Business Nationalisation Act. The finance bill has proposed to replace the section saying “there will be four companies” with “there will be up to four companies”.
This could indicate that the government might look at a consolidation where the ownership of the two entities would be passed to another. The New India Assurance, which is the largest of four non-life insurance companies, is already listed. According to the last Budget, it was announced that the government intended to consolidate the rest three, viz., Oriental Insurance, National Insurance, and United India Assurance.
“This is a very positive move, which will help bring in more international players in the sector and also attract technical expertise into the country to enhance insurance penetration. The restrictions, which currently exist, that such entities are Indian owned and controlled by resident Indian citizens or entities owned and controlled by resident Indian citizens, will need to be revoked," stated Shardul Amarchand Mangaldas and Co Partner Shailaja Lall.