Insurers may see hike in stakes post budgetary proposal
Jul 13 2014 , Mumbai
"If the growth potential is realised, profitability would improve for non-life insurance companies. Their overseas JV partners who are haven here for over a decade would be interested in increasing their stake to 49 per cent," General Insurance Council Secretary General R Chandrasekaran told PTI.
Around Rs 3,000 crore of fresh capital investment is likely to happen in the sector over next two-three years and so far Rs 1,800 crore has already been invested into the sector.
"The budgetary measures are specifically positive for the insurance sector. This will bring in much needed long-term capital which can be effectively channelised to increase penetration and reach," ICICI Lombard managing director Bhargav Dasgupta said.
While corporate houses with JV in general insurance segment include the Tatas, Bharti, ICICI and HDFC, Reliance and L&T are without any foreign partners.
Currently, there are 22 non-life insurers in the country.
The health insurance sector is also expecting infusion of foreign capital after the budgetary announcement.
"We expect further capital investments to filter into multiple areas, including technology driving efficiency in customer service and distribution facilitating the governments agenda on enhancing financial inclusion," Cigna TTK Health Insurance managing director Sandeep Patel said.
Health insurers, which are five in number as of now, are likely to come up with innovative products.
"With 49 per cent FDI coupled with developments in healthcare industry over the next few years, health insurers are expected to come out innovative products," Chandrasekaran said.
The Insurance Act Amendment Bill, which is likely to be tabled in Parliament shortly, has proposals to relax minimum capital as well as earmark health insurance business as a separate class, he added.