The government proposes to merge National Insurance, United India Insurance and Oriental India Insurance into one company. We spoke to experts about the challenges this can raise
Naresh Makhijani, partner and head, financial services, KPMG in India
The merged entity will control about one-third of the total non-life insurance market in India.... Such a merger may result in a monopoly-like situation with low focus on customer service. It also leads to concerns about ‘too big to fail’ due to the continuous operating losses reported by these entities. India is a highly under-penetrated market. Apart from penetration, the non-life insurance industry requires huge transformation in product portfolio and operating models. Currently, crop and health insurance hardly exists; there are very few micro agents and most public non-life insurers rely on individual agents for product sales; and digital penetration is low. In light of these transformation priorities, concentration of business in the hands of only a couple of public insurance companies may limit customers’ options.
