THE NEW ERA OF INSURANCE

INDIA'S INSURANCE INDUSTRY, WITH CUMULATIVE PREMIUMS OF $130 BILLION, IS ENTERING A NEW ERA OF GROWTH, MARKED BY BIG M&As, THE EXPECTED ENTRY OF MORE FOREIGN PLAYERS, AND TECH-LED DISRUPTIONS. WHO WILL COME OUT ON TOP?

- TEENA JAIN KAUSHAL

A QUARTER CENTURY is a long time for policy. It's no different in the case of the big bang opening up of India's state-controlled insurance industry in 2000. Two deals serve as book-ends for that phase.

Almost 25 years to the day when the Bajaj group, famous for its two-wheelers, formed a joint venture with German insurance giant Allianz, the two companies decided to part ways, in a development that points to a new phase for the sector.

Bajaj Allianz's journey was emblematic of the heady initial years of liberalisation in the space, coming less than a decade after the country opened itself up to foreign investments and decided to loosen the government's grip on various sectors. As an initial move, accepting the recommendations of a commission set up to look into the space, the central government allowed private sector participation and 26% foreign direct investment (FDI) in insurance in 2000. Till then, the landscape was dominated by the Life Insurance Corporation of India on the life insurance side and four public sector insurers on the general insurance side.

Bajaj and Allianz launched not one, but two ventures: Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance. For almost a quarter century, it appeared to be a partnership that had stood the test of time.

But there were rumblings underneath the surface, even though there were no public disagreements. Reports suggested that Allianz made several attempts to increase its stake in the ventures at discounted valuations, which did not materialise.

In March, Allianz decided to exit both ventures, selling its 26% stake back to Bajaj Finserv at a valuation of over ₹24,000 crore, making it the largest deal in the insurance industry.