Merger of three Public Sector Insurers in India and its effect

After successful listing of largest and market leader among Public sector Insurers - New India Assurance, Govt. of India in its budegt declared the merger of three public sector insurers in India namely National Insurance Company, United India Insurance and Oriental Insurance. Though it is presented as huge step forward int he industry, the policy holder and market seems to be confused as what is in store goinf forward? 

Shorterm effect

Reduction in competition - All three have a consolidated market cap of 30% which would mean that there would be reduction of competition to that extend in the insurance market which in turn would result in increase the premium across the insurance industry; private players too following the band wagan.

Intregation of people, work culture  - Though all the three were Govt. of India companies but were Head Quatered in three regions of india, National in East, Oriental in North and United in south strategically with the objective of creating healthy competition with region focus on sensitivities and thus increase the insurance penetration. they were allowed to develop and form policies and have technologies as per their specific requirement. This very characteristics of these three companies would become major up hill task at the merger. Thought in last two decades or so all the three did rechristian themself has pan india companies some of their intra branches intergration is still in the process. techlogy This brings to what happens to excess man power and outlets.

technology intergration - Technology intregation would be a major issue. Mere shifting from one platform to another has caused major service disturbance in few public sector insurer lately, main reason is that the resources are not very tech savvy. Moreover there is no urgency to resolve the issues to serve the client. 

Manpower & Point of Sale - It is quite obvious that there would be larger scale manpower excess which needs to be redeployed internally and rest to be give golden hand shakes - a cost which would find its way to the policy holders eventually. Multiple branches of the merged entity in the same location would be closed down causing disturbance to the services to the policy holder. 

long term effect 

Publice sector insurer would loose flaps gained over years and would become more agile and professional. The combined entity would have more financial strength, stability and maintain better solvency margin enabling them to undwerwriting larger risks which would inprove the negotiation power in the reinsurance market. The combine entity can list inline with New India Assurance and healthy competition between the Two along with other private players can in long term bring premium down.

Nutshell - Policy holder can expect market to harden and premium to go up. Couple of years  during the transition period the policy holder can expect disturbtion of services. But this merger would create a stronger entity which would bring stability and security to the policyholder. after the listing of the combine entity, it may competet aggressively with New India Assurance which may soften the market in long term basis.