India Revives Merger Talks for Three State-Owned Insurers

India’s government has restarted discussions to merge three major state-owned general insurance companies, Oriental Insurance, National Insurance, and United India Insurance. This move is part of a larger effort to restructure the insurance sector. The Ministry of Finance is currently reviewing this initiative after significant improvements in the financial health of these firms in recent years. 

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Background of the Merger Plan 

The idea to consolidate these insurers was first announced in the 2018-2019 Union Budget, aiming to create operational efficiencies and greater scale in the public sector general insurance domain. The plan was dropped in July 2020 in favour of a substantial capital infusion of ₹12,450 crore, which was needed at the time to stabilise these companies amid heavy losses and low solvency margins. Including previous support, the government infused a total of ₹17,450 crore between 2019 and 2022, enabling the companies to begin financial recovery. 

Improved Financial Health 

The capital injections seem to have produced positive results for Oriental Insurance, National Insurance, and United India Insurance. Reports show that their financial situations have stabilised. At least some quarters in fiscal 2025 are expected to show a return to profitability for all three firms. This improvement has led the Ministry of Finance to review the merger proposal and evaluate its feasibility. 

Current Status and Options Under Review 

The Finance Ministry is currently conducting a preliminary assessment of the potential merger. Sources indicate that multiple options are on the table, including merging all three insurers into a single entity, merging two of them with the already listed and profitable New India Assurance, or privatising one of the companies. This approach aligns with the government’s policy to reduce the number of state-owned companies in non-strategic sectors, while consolidating the insurance sector for better efficiency.  

Privatisation and Legislative Changes 

Apart from the merger, a proposal to privatise one of these general insurance companies is also under consideration, as announced in the 2021-2022 Budget. Parliament’s approval of the General Insurance Business (Nationalisation) Amendment Act, 2021, further eased the path by removing the requirement for the central government to hold a majority stake in these insurers. 

As of late November 2025, the government has yet to finalise its decision on the merger or privatisation. The Ministry of Finance continues consultations with the Insurance Regulatory and Development Authority of India (IRDAI) and is reportedly working on a comprehensive restructuring plan. The aim remains to strengthen the insurance sector and drive further efficiencies for both the operators and policyholders. 

India's plan to merge its three major state-owned insurers shows a renewed effort for reform. Several structural options are under review. A final decision is expected during the upcoming fiscal year.