The Hindu Business Line : 6 more life insurance ventures set for foray

Bangalore, June 16 In a bid to get a slice of the booming insurance market in India, six more life insurance joint ventures were expected to begin operations.

Speaking at the launch of operations of the tripartite joint venture life insurance of Canara Bank, Oriental Bank of Commerce and HSBC Insurance (Asia Pacific) Holdings, here today, the Union Finance Minister, Mr P. Chidambaram, declined to name the new companies that were on the verge of entering the country.

He, however said, “There is a huge unmet demand for insurance products in the country.”

Canara and OBC have 51 per cent and 23 per cent stake respectively in the joint venture capitalised at Rs 325 crore.

The remaining 26 per cent is held by HSBC Insurance.

This is the nineteenth life insurance company to begin operations in the country since the sector was opened up.

Need for more

Mr Chidambaram said that more insurers were required to care of the younger and ageing population in the country, He said there was a need to bring in international products in insurance and pensions to meet the aspirations of savers, both in rural and urban regions of the country.

Despite the presence of 18 companies, he said, insurance penetration in the country was low. “India is treated as an under-insured country,” he said, in view of the low penetration. Life insurance premium collections currently amounted to about 4.14 per cent of the GDP.

But the low penetration notwithstanding, he said there were objection from various quarters, without naming the Left parties. “To ideological objections, we do not have logical answers,” he said.

Stand-alone insurance companies, he said, had few advantages. The bancassurance model, he said, was better suited for the country. However, he advised insurers to keep the product design simple, in order to tap the rural markets.

Captive base

Earlier, Canara Bank’s Chairman and Managing director, Mr M. B. N. Rao, said that the initial focus of the insurance venture would be on captive 40 million customer base of both the domestic joint venture partners. This would be gradually scaled up through partnerships with other banks, he added.

The joint venture, he added, would have unit linked insurance plans, group linked cover and pension plans for meeting customer requirements.

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