It refers to downgrading of rating of three out of four public-sector-undertakings PSUs engaged in business of General Insurance namely National Insurance United Insurance and Oriental Insurance as announced by global rating-agency AM Best with two of them even having an erosion in their capital. The downgrade has come after Union Budget 2019-20 proposed the enabling provision for merger of non-life insurance firms by seeking to amend the General Insurance Business Nationalization Act. It is noteworthy that these three companies are continuously showing losses in past several years, and have become a white-elephant on public-money invested in these companies. Accountability should be fixed on highly paid Chairpersons (apart from too much facilities at public-cost) of these three PSUs for losses and rating-downgrade. With mega merger plan announced, immediate steps should be taken for mega-merger of not only three but all the four PSUs engaged in General Insurance.
If one single public-sector Life Insurance Corporation of India (LIC) provides life-insurance cover under so many plans effectively, then one General Insurance Corporation of India can also be formed by merging all public-sector General-Insurance-companies. Such unified company will be able to compete more effectively with private-sector companies engaged in General Insurance in the manner that no private Insurance-company is presently able to compete with public-sector Life Insurance Corporation of India. Merger will save huge overheads including rent on nearing units and top officers.
SUBHASH CHANDRA AGRAWAL