PIVOTAL MOMENT

The key question for the Indian insurance sector now is whether composite licences will drive consolidation or would 100% FDI attract new entrants

- BY TEENA JAIN KAUSHAL

INDIA'S INSURANCE MARKET is at an inflection point. Germany-based Allianz ended its long-standing partnership, which began in 2001, with Bajaj Life and Bajaj General Insurance companies, selling its 26% stake to Bajaj Finserv for ₹24,180 crore (EUR 2.6 billion). Shortly after this development, Prudential plc, a UK FTSE 100-listed company, announced its plans to set up a joint venture with Vama Sundari Investments (Delhi) Private Limited, a promoter compa-ny of the HCL Group, to establish a standalone Indian health insurance business.

Insurance penetration in India is at just 3.7%, well below the global average. With 100% foreign direct investments (FDI) now allowed, is the market ripe for global insurers? “We will have to wait and see. Insurance is a long-term business and those with the willingness and capacity to make the required investments and have the patience to play the 15-20-year game can succeed. With so much competition, they (foreign players) will need to bring differentiated propositions rather than buy business at high cost,” says S Sreenivasan, President—Insurance & Special Projects, Bajaj Finserv Ltd.