New players are eyeing a pie of India’s INR2.21 trillion (US$40.2 billion) insurance industry following the Cabinet’s approval last month to raise foreign direct investment (FDI) cap in the sector from the current 26% to 49%, reported the Hindustan Times. A partner of KPMG was quoted as saying that there is room for some 15 more players in the sector, going by the current low penetration of insurance products in the country.
While Avantha group has entered into a joint venture with Germany’s Ergo Insurance Group to form Avantha Ergo Life Insurance, Magma HDI General Insurance and Liberty Videocon General Insurance have commenced operations.
Magma HDI General Insurance is a JV between Magma Fincorp and Germany-based HDI-Gerling International Holding, while Liberty Videocon General Insurance is a JV between US-based Liberty Mutual Insurance and Videocon Group.
Penetration of life insurance products in India is around 4.5%, while that of general insurance products is around 1%. Experts feel that new players will have a focussed approach and cater to a specific geography or customers.”New players will develop and offer products for specific segments rather than offering everything,” said Mr Sharma.
New players are also aggressive about the country’s growth potential. Mr Swaraj Krishnan, CEO, Magma HDI General, said semi-urban and rural areas in the country offer tremendous growth potential to the insurance companies.