FinMin Directs State-Owned General Insurers To Prioritise Profitable Businesses

The finance ministry has instructed state-owned general insurance companies to prioritise profitable businesses over chasing top-line growth, with a clear aim of enhancing profitability. This directive comes in the wake of the government's recent capital infusion of Rs 7,250 crore into three public sector general insurance companies: National Insurance Company, Oriental Insurance Company, and United India Insurance Company.

"We have been monitoring the performance of state-owned general insurance companies and, as a result, they have started looking up. So, we will watch their performance this year," Financial Services Secretary Vivek Joshi informed the media. Joshi expressed optimism that these companies may not require additional capital infusion, which is why the current Budget has not allocated any provision for this purpose.

Significant improvements in financial performance have been observed among these insurers. Oriental Insurance, for instance, reported a profit of Rs 18 crore in FY24, a substantial turnaround from a loss of Rs 5,000 crore the previous year. Similarly, National Insurance Company narrowed its loss to Rs 187 crore from Rs 3,800 crore, and United India Insurance reduced its loss to Rs 800 crore from Rs 2,800 crore in FY23.

The finance ministry's directive and the subsequent financial turnaround highlight the strategic shift towards sustainable profitability in the public sector insurance domain.