Finance Ministry officials are urging the management of three state-owned non-life insurance companies to hasten the process of merging the insurers. The government wants the merger to be completed by 31 March 2019.
The wishes were conveyed at a meeting on 23 April with the chairmen and managing directors of the three general insurance companies, which are: National Insurance, Oriental Insurance and United India Insurance, reports DNA Money.
During the meeting, the decision to open tenders for the appointment of an external consultant agency along with terms and conditions for the consultant was also taken. The appointed consultant will supervise the whole merger process. The consultant will be assisted by a committee of 20-30 high-ranking officers from all the three insurers.
The consultant will also review the insurers' balance sheets, IT resources and employees.
An official said that the three insurers would have to withdraw a number of insurance products to avoid duplication in the merged entity. The number of regional offices of the three insurers will be halved, that is, there will be 45 offices instead of the current 90. Further, the database will have to be revamped as all the three firms are currently using different systems. There are predictions that the combined entity will have to let go 5,000-7,000 employees under a voluntary retirement scheme.
In the Union Budget on 1 February 2018, Finance Minister Arun Jaitley proposed the merger of these three general insurers and said the merged entity could then be listed on the stock exchanges. The government had cited financial weakness as the primary reason behind its decision for the proposed merger of the insurers.