Page 70 - India Insurance Report 2023- BIMTECH

58 India Insurance Report - Series II

PSU Insurers – Why and How

They Need to be Revived?

- K B Vijay Srinivas
7 Retired as a GM and Director and also held

Jt. Addl. Charge as CMD of United India Insurance Co. Ltd.

This fable is about a farmer who had a hen which used to lay a golden egg every morning. Though it
made him rich, one day, he thought the hen’s stomach carried a lot of golden eggs. He reasoned that if he
were to cut its stomach, he would get a whole lot of golden eggs at one go, which the hen was rationing to
him at one a day. The net result was he lost the hen and the golden egg daily, which he was getting.

1. Current Scenario

The four PSU General Insurers have jointly and severally a significant presence in the market.
However, there are major areas of concern: The PSU market share, for the first time, went below one-
third; Solvency margins continue to be a major concern; Underwriting continues to show losses and are
much higher than their comparable private sector peers; Lack of direction from the owner - Varying
signals have been coming from the government. There was news of total disinvestment of one or more
of the companies. Similarly, the news of mergers of companies in various combinations has circulated.
The most authentic was the budget announcement a few years back, where three companies were to be
merged. A couple of years later, this was dropped.

2. The Past

A small peek into the past would be useful to understand the performance of these companies and
what could be done for them.

2.1. Profitable Dividend Paying Companies

These companies have been profitable for many years with a record of consistent dividends and
increases in the share capital by issuing bonus shares. Their performance could very well compare with
some of the best in the private sector.