Page 9 - Insurance Times March 2024

shop and home insurance and in the Govt drops non-life PSU merger plan
third phase tractor, two-wheeler, live-
stock and non PMFBY insurance prod- Govt has decided against the merger of non-life public sector companies as
ucts will be introduced, Chauhan said. proposed in the Budget of FY19. This was disclosed by the department of
He also said that the government will financial services to the parliamentary standing committee on finance.
be able to monitor the response of The decision gains significance in view of the fact that govt had earlier at-
farmers to such nonsubsidised products tributed part of their losses to the unhealthy competition between public
and in case of a requirement may in- sector companies which were undercutting each other for top-line growth.
tervene with suitable schemes for the The standing committee on finance last week released its report on perfor-
overall welfare of the farming commu-
mance review and regulation of the insurance sector. In the report, the com-
nity.
mittee has recommended that govt amend laws to reduce GST on health
A learning material system about and term insurance, to reduce capital requirements for micro insurers and
PMFBY, Modified Interest Subvention enable the issue of composite licences allowing insures to undertake both
Scheme (MIIS) and Kisan Credit Card life and non-life.
(KCC) were also launched. In his Budget speech in 2018, then finance minister Arun Jaitley had said,
The 'Krishi Rakshak Portal and "Three public sector general insurance companies National Insurance Com-
Helpline', will operate as a facilitator, pany, United India Assurance Company and Oriental India Insurance Com-
bridging gap between insured farmer pany will be merged into a single insurance entity and will be subsequently
on one hand and insurance companies, listed."
bankers, Common Service Centres However, govt continued to infuse capital into the non-life companies in sub-
(CSCs) and State governments on the sequent years. In 2021, Nirmala Sitharaman said that govt would divest stake
other. in one public sector general insurance company but did not specify whether
it would follow a consolidation.
RCap administrator op- Responding to the committee, the department of financial services said that
poses Rs. 118 crore pay- the cabinet had taken a decision in 2020 itself not to proceed with the
merger.
out to Reliance General In-
Incidentally, the additional secretary department of financial services de-
surance officials posing before the parliamentary committee said that the problem with the

Reliance Capital's (RCap) central bank- general insurance companies was that of their portfolio - of which 50% is
appointed administrator has opposed health, 40% motor and only 10% is other lines of business.
the decision of Reliance General Insur-
ance Company Ltd (RGIC) board to to the management team of RGIC," out the prior written approval of the
make a one-time special payment of Rs RCap administrator Y Nageswar Rao Administrator," it said.
118.41 crore to key managerial staff said in a letter to RGIC.
and directors of RGIC. Big-ticket insurance re-
"This action of yours in provisioning for
RGIC is a subsidiary of RCap - part of the same runs contrary to your repre- forms on the anvil, signals
the Anil Ambani Reliance group - which sentations on the solvency ratio post
is going through the insolvency pro- infusion of the additional funds," the FinMin
cess. administrator said. "The provisioning in The Finance Ministry has not shelved
"It has now come to our attention that its financial statements is also in ex- its earlier planned set of big bang in-
the financial statements of RGIC for the press violation to our various email surance reforms including introduction
of "composite insurance licence", cap-
quarter ended December 31, 2023, communications with latest being Janu- tive insurers and differential minimum
specifically note 8 of the notes to ac- ary 12, 2024, issued by RCL to RGIC, capital requirements, a top official
counts, state that a provision has been wherein we had requested you to re- said.
made for an estimated amount of Rs frain from undertaking certain specified
118.41 crore, for RGIC to meet its obli- actions, inter alia, the one-time pay- These insurance reforms including
gations in relation to the one-time spe- ment proposed to be paid to any em- composite licence are very much on
cial payments proposed to be paid out ployee or key managerial person, with- the table and may be introduced at an

The Insurance Times March 2024 9