Government May Infuse More Capital In General Insurance Companies: Official

The government may have to infuse more capital in the three public sector general insurance companies to improve their financial health, according to a PTI report citing a senior government official. The government last year reportedly provided INR 5,000 crore capital to three insurers --National Insurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company.

Based on the performance in FY23, the finance ministry would take a call as to how much capital they would require to meet regulatory requirements, the official said. They are not in good financial health and funds would be infused in these entities to augment their solvency margin, the official told PTI.

Furthermore, the report stated that the solvency margin is the extra capital the companies must hold over and above the claim amounts they are likely to incur. It acts as a financial backup in extreme situations, enabling the company to settle all claims. As per the regulator IRDAI's mandate, the minimum solvency ratio insurance companies must maintain is 1.5 to lower risks. In terms of solvency margin, the required value is 150 per cent.