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New Delhi: The finance ministry has asked state-owned general insurance companies to focus on profitable businesses and not to chase top-line but aim for improving profitability.
The government has recently infused Rs 7,250 crore in installments in three public sector general insurance companies -- National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company.
"We have been monitoring 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 told PTI.
Hopefully, he said, these companies may not require any further capital infusion, which is why the Budget has not made any provision.
These three general insurance companies have improved their financial performance significantly, he said.
For instance, he said, Oriental Insurance has earned Rs 18 crore profit in FY24 as against a loss of Rs 5,000 crore a year ago, while National Insurance Company narrowed its loss to Rs 187 crore from Rs 3,800 crore, and United India Insurance to a loss of Rs 800 crore as against the loss of Rs 2,800 crore in the preceding year that is FY23.
New India Assurance has continued to perform well, increasing its profits from Rs 1,000 crore in FY23 to Rs 1,100 crore in FY24.
In addition to the shift in focus, the government is also addressing operational issues within these insurers.
"A lot of employees retired, and there was a ban on hiring new staff. But now they are asked to recruit in a balanced way. We expect them to strengthen further," he said.
The finance ministry has asked these companies to focus on profitable lines of business, he said, adding, earlier they used to take business to show growth.
"Now we are asking them to come out of loss-making segments like motor and health insurance," Joshi added.
In all, the government infused Rs 17,450 crore into these insurance firms so far to improve their financial health. Public sector general insurance companies are undergoing various reforms, including organisational restructuring, product rationalisation, cost rationalisation and digitalisation.
For efficient use of capital and to push profitable growth, a set of key performance indicators linked reforms have been initiated by all public sector general insurance companies effective 2020-21, when the maximum capital infusion was made.
Of the four state-owned general insurers only New India Assurance Company is listed on the stock exchanges, the remaining three are wholly owned by the government.
The government has already announced its intention to privatise one general insurance company.