The Government may likely infuse about Rs. 5,000 crores equity into state-run general insurers to help them achieve solvency requirements. This step has been taken as they meet an inflated wage bill.
The employee wage revision was approved earlier in October. This follows along with five-year arrears payments. Reportedly, it is expected to cost four general insurers an additional Rs. 8,000 crores.
It is to be mentioned that the planned equity support is above the Rs. 5,000 crores already infused during 2022 in National Insurance (Rs. 3,700 crores), Oriental Insurance (Rs. 1,200 crores) and United India Insurance (Rs. 100 crores).
As per Insurance Regulatory and Development Authority of India (IRDAI) regulations, all insurance companies have to meet a required solvency margin-the excess of the value of assets over the number of liabilities. IRDAI has set this requirement as a solvency ratio, currently at 1.5 for general insurers. United India had a solvency ratio of 0.43 in June, while that of National Insurance was a little higher at 0.63 at the end of March.
The regulations also say that out of the four state-run general insurers, only New India Assurance is profitable. The remaining three- Oriental Insurance, National Insurance, and United India are loss-making.
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