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Our Bureau

To form life insurance venture to tap growing market in the country

Kochi , July 11

IDBI, Federal Bank and Fortis, an international financial service provider engaged in banking and insurance, signed a memorandum of understanding here on Tuesday for the formation of a life insurance company to tap the growing insurance market in the country.

The new company, to be known by the name `IDBI Fortis Life Insurance in association with Federal Bank' and headquartered in Mumbai, is expected to commence operations by February 2007, after regulatory formalities. IDBI will own 48 per cent stake in the new venture and the remaining 52 per cent stake would be equally owned by Federal Bank and Fortis.

Bancassurance

Speaking on the occasion, Mr M. Venugopalan, Chairman of Federal Bank, said that the vision of the new venture is to create a multi-channel distribution model with a core focus on bancassurance and generate good returns to investors on a sustained basis. The products will be marketed through branches of IDBI and Federal Bank and the bank is expected to issue at least 1,000 life policies in the first year of operations, he said.

The company will utilise two channels of distribution — the distribution network of the banks and agents and brokers.

Insurance Market

"The potential for insurance market in India is vastly under-exploited now. The synergy of IDBI Bank and Federal Bank, the two Indian banks and that of Fortis with its vast expertise in insurance business is expected to enrich the Indian insurance market," Mr Venugopalan said.

Mr V.P. Shetty, CMD, IDBI Bank, said that IDBI had decided to make a foray into life insurance business to complement the range of financial products and services being offered to its clientele in consonance with its vision statement to be a financial conglomerate. Mr Damais Zeings, CEO Asia, Fortis Insurance International, said that this transaction is fully in line with Fortis' expansion strategy.

More Stories on : Life Insurance | Private Banks | Alliances & Joint Ventures

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