Govt unlikely to infuse capital in PSU general insurers in FY24

The PSUGeneral Insurance Companies are unlikely to get capital funding from the government in the current fiscal, a senior official said. He said one of the PSU non-life insurance companies is likely to give a dividend to the government in the current fiscal and they will be able to meet their solvency margins.

The government last year provided Rs 5,000 crore capital to three insurers –National Insurance Company, Oriental Insurance Company and United India Insurance Company.

The Budget 2023-24 has not provided for the capital infusion for insurance companies.

"We do not think there is a need for capital infusion as of now. In fact, one of the general insurance companies may give a dividend this year," the official said.

According to rating agency ICRA, most PSU insurers are expected to witness a high combined ratio resulting in net losses, though it will be lower compared to the last few years.

The capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable Rs 17,200-17,500 crore to meet solvency of 1.50x as of March 2024, assuming 100 per cent forbearance on FVCA (fair value change account), ICRA said in a report in May.

During 2020-21, Rs 9,950 crore was infused in three public sector general insurers by the government, out of which Rs 3,605 crore was infused in United India Insurance, Rs 3,175 crore in National Insurance and Rs 3,170 crore in Oriental Insurance.