Government to list Public Sector General Insurance Companies

General Insurance News Page: March 2016

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Government may list Public Sector General Insurance Companies
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Finance Minister Arun Jaitley announced in his Budget Speech ( 2016-17) a proposal for a public listing of the country's four government-owned general insurance companies.

He also proposed to significantly relax the foreign investment policy in insurance and pension, to attract more foreign investments. He also announced a new health insurance scheme aimed at families below the poverty line with the aim to cover tertiary care. The sum insured for this health plan will be Rs 1,00,000/- and for senior citizens another top up cover of Rs 30,000/- will be available. The present health plan popularly known as RSBY ( Rashtriya Swasthya Bima) mainly covers the primary care and to some extent it covers the secondary care as the limit of the health plan for an annual term is Rs 30,000/- for a family and for one illness episode it is restricted to Rs 15,000/-.

Mr Jaitley said that the General Insurance Companies owned by government will be listed on the stock exchange. These companies are:

1.     New India Assurance Company Limited,

2.     National Insurance Company Limited,

3.     The Oriental Insurance Company Limited and

4.     United India Insurance Company Limited.

However, he did not stipulate a timeline for the initial public offers of the insurers. The insurance trade unions have immediately reacted to this move.

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Railway Minister announced Rail Insurance proposal in Rail Budget 2016-17

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The Railway Minister Sh Suresh Prabhu has announced in his budget to provide rail travelers the option of buying travel insurance when they book train tickets. Ministry may work with insurance companies for this cover. The scope suggested for this cover includes indemnity against hospitalization due to train accidents, personal accident and baggage loss during travel.

According to estimates, there are 13 million rail passengers daily in India. Assuming that 30% of the passengers opt for insurance cover, the business potential could range between Rs 50-70 crores. At present travel insurance is not very popular in India. The travelers going overseas buy overseas mediclaim policies of public sector and private sector insurance companies. For domestic travel the major share of premium is underwritten by private sector insurers. Rail and road travelers rarely buy travel insurance. The insurance minded people have in place the personal accident cover that takes care of travel by rail and road. However, for air travel domestic travel insurance is commonly purchased in India. This business is again not substantial.

This travel insurance plan may provide safe and secure travel for railway passengers in case of unfortunate incidents if those occur. While insurance companies welcome the move as it will increase insurance penetration, they also have a point related to delivery of services. Like air travel business this segment may be targeted best by way of online transactions.