India’s central government is preparing a performance-linked approach to supporting three state-owned general insurance companies that have continued to face severe financial pressure despite earlier capital injections.
The companies—National Insurance Company Ltd (NICL), Oriental Insurance Company Ltd (OICL) and United India Insurance Company Ltd (UICL)—are expected to receive further government support only after demonstrating measurable improvements in their financial and operational performance. The approach marks a shift from providing capital primarily to address balance-sheet weaknesses towards linking future assistance with reforms in the way the insurers conduct their businesses.
According to a report by Business Standard, the proposed revival plan places particular emphasis on improving underwriting practices, introducing new insurance products and adopting performance-based management systems for employees. The government is also looking at ways to reduce operational weaknesses before committing additional funds.
Solvency position remains a major concern
The three insurers are currently loss-making, with their solvency ratios remaining well below the regulatory requirement. The Reserve Bank of India (RBI), in its Financial Stability Report published in June 2026, identified the deteriorating financial position of the three state-owned general insurers as a concern for financial stability.
India has four state-owned general insurance companies. While National Insurance, Oriental Insurance and United India Insurance have been struggling with losses and weak capital positions, New India Assurance has remained profitable.
The government had previously provided substantial capital to the three troubled insurers between the 2020 and 2022 financial years. A total of ₹17,450 crore was injected to strengthen their financial position and solvency levels. National Insurance received ₹9,275 crore, Oriental Insurance was allocated ₹4,420 crore, while United India Insurance received ₹3,755 crore.
Despite that support, their solvency positions deteriorated further.
At the end of the 2026 financial year, United India Insurance’s solvency ratio fell to minus 136 per cent from minus 65 per cent a year earlier. National Insurance’s ratio declined from minus 67 per cent to minus 111 per cent, while Oriental Insurance’s position worsened from minus 103 per cent to minus 163 per cent.
Under the framework of the Insurance Regulatory and Development Authority of India (IRDAI), insurers are required to maintain a minimum solvency ratio of 150 per cent. The ratio indicates an insurer’s ability to meet future claims and other financial obligations using its available capital and assets.
Underwriting losses add to financial pressure
The deterioration is not limited to solvency. Underwriting performance has also weakened significantly.
In the 2026 financial year, combined underwriting losses among public-sector multiline general insurers increased by 58.3 per cent from the previous year to ₹29,070.57 crore.
United India Insurance recorded an underwriting loss of ₹8,335.70 crore, an increase of 113 per cent. Oriental Insurance’s underwriting loss rose 84 per cent to ₹7,307.77 crore, while National Insurance’s loss increased by around 6 per cent to ₹4,625.16 crore.
Underwriting is central to the insurance business because it involves assessing risks and determining the terms and pricing of coverage. Persistent underwriting losses can therefore put pressure on an insurer’s ability to generate sustainable operating income, particularly when claims remain high.
The government’s new approach will involve closer monitoring of the three companies’ performance over the coming quarters. Their financial results and operational progress will be reviewed before decisions are taken on the amount and timing of additional capital.
The companies are also expected to conduct internal reviews alongside quarterly performance monitoring.
NSE stake sale could provide additional support
The insurers’ holdings in the National Stock Exchange (NSE) could provide another source of funds.
The three companies collectively hold around 9 crore NSE shares. Plans are reportedly being considered to sell 1.496 crore shares at ₹1,785 apiece. An earlier proposal had involved the sale of 1.8 crore shares, but the proposed quantity was subsequently reduced.
The proceeds could help strengthen the companies’ financial position, although the scale of the broader capital requirement remains substantial.
Rating agency Icra has estimated that, if the current trends in operations and solvency continue, the three insurers could require around ₹39,000 crore by March 2027 to reach the minimum solvency level prescribed by the regulator.
Technology to play a larger role
The proposed revival strategy also focuses on changes to the underlying insurance business rather than relying solely on government funding.
The insurers are expected to reassess their portfolios by improving risk assessment, adopting technology-driven underwriting and developing new insurance products. Greater attention could also be given to customers and market segments that remain inadequately covered by insurance.
Artificial intelligence (AI) is being considered as part of this effort. Alongside conventional actuarial models, AI-based tools could be used to analyse customer risk profiles and identify ways of reducing potential losses while maintaining appropriate levels of coverage.
Technology could also have a role in government-backed insurance schemes, particularly agriculture insurance. Weather-related Internet of Things (IoT) data and satellite imagery can provide additional information for assessing risks associated with weather and agricultural conditions.
Such technologies could help insurers improve the accuracy and speed of risk assessment, although their effectiveness would depend on the quality of available data and the systems used to interpret it.
Retaining skilled employees is another challenge
Human resources form another part of the proposed restructuring effort.
The expansion of competition in India’s insurance sector has increased the pressure on state-owned insurers to retain experienced employees. Financial constraints have also limited the scope for remuneration and incentives, potentially making it more difficult for these companies to compete for specialised talent.
The proposed performance-based management approach is therefore intended not only to improve productivity but also to strengthen the companies’ ability to retain skilled personnel.
Data from the General Insurance Council show the scale of the financial strain. Over the past five years, the three state-owned insurers have accumulated combined net losses of ₹31,200.86 crore. Their combined net loss reached a five-year high of ₹11,434.38 crore in the 2026 financial year.
Their net incurred claims ratios have also remained close to or above 100 per cent during the period, indicating continued pressure from claims relative to the premium income available to cover them.
The government’s latest strategy therefore places the emphasis on measurable operational improvement before further capital is committed. National Insurance, Oriental Insurance and United India Insurance will need to address underwriting losses, strengthen risk management, improve internal operations and tackle human-resource challenges.
Rather than relying on repeated capital injections to cover financial weaknesses, the proposed framework seeks to connect future government support with the insurers’ progress in rebuilding their underlying financial and operational capacity.