NEW DELHI: The Insurance Regulatory and Development Authority of India ( IRDAI ) has shot off a letter to the finance ministry raising the alarm over the deteriorating financial situation of state-run general insurer National Insurance Company Limited “IRDAI has flagged this issue repeatedly with the government as the company’s solvency ratio has gone below 1%, as against the regulatory requirement that all insurance companies maintain a surplus of 1.5 times the liabilities at all times,” a government official aware of the matter told ET on condition of anonymity.ET’s queries emailed to the IRDAI did not elicit any response till press time.National Insurance Company’s solvency has gone below regulatory requirements despite the special dispensation provided by the regulator, which had earlier helped it along with the Oriental Insurance Company and United India Insurance Company , to meet the mandatory solvency ratio at the end of March 2018.“The government will need to infuse around Rs 3,000 crore in the firm to keep it afloat for the next two quarters,” the official said, adding that the finance ministry needs to fast-track the proposal for merger of the three state-run general insurers.The solvency margin — the minimum margin of assets required by an insurer in excess of its liabilities — is like a bank’s capital ratios.The government did not allocate any budget for the merger of the general insurers in the budget for 2019-20 but proposed in the Finance Bill to amend the General Insurance Business (Nationalisation) Act, 1972 and replace the “there will be four companies” with “there will be up to four companies”.Another official said that the government has appointed consultancy firm EY for the merger of the three general insurers and that initial estimates are that around Rs 10,000-12,000 crore capital support will be required to keep the combined entity afloat and meet all regulatory norms. “We expect the government to proceed with merger announcement in this quarter itself,” he said.In the budget for 2018-19, the government had announced merger of Oriental Insurance Company, National Insurance Company and United India Insurance Company — all unlisted entities — into one entity, keeping New India Assurance Company separate.The combined market share of the three state-run insurers in terms of gross direct premium was about 25% at the end of May. New India Assurance had a market share of 16.8% during this period.