Indian insurers urged to grow business abroad

Insurers need to look beyond national boundaries and expand their operations abroad, urges Sudhin Roy Chowdhury of the IRDA, according to Business Standard.

“If foreign companies can come to India in a big way, why can’t we expand our wings abroad? Look at (German insurer) Allianz. Around 60% of their business is from markets outside Germany,” the IRDA member (Life) said in a speech at a seminar organised by the Indian Chamber of Commerce last Friday.

Domestic insurers could either explore acquisition opportunities or grow businesses organically in foreign markets.

He said: “It is time now when our home-grown insurers should look at overseas countries both in terms of acquisitions and opening branches there.”

Reports in the media say the IRDA official’s comments come at a time when the industry and the government are debating whether the limit on foreign direct investments in Indian insurance joint ventures should be increased to 49% from 26%. The decision is pending, as many political parties are not in favour of the increase.

Industry players say they are not keen to grow their businesses outside India, at least for now. “We don’t have the appetite or scale to serve customers globally,” a chief executive of a private life insurance company says. “There are plenty of opportunities in India and we would like to focus on these.”

Kshitij Jain, ING Vysya Life Insurance Company managing director also notes that domestic insurers might face capital constraints if they wish to acquire companies abroad. The prevailing opinion is that insurance companies, at best, will open only a few branches abroad to serve non-resident Indians. Chowdhury also suggests that for cost effective delivery of services at home, insurers should consider setting up ATMs, especially in unbanked centres and remote areas. The move will also likely improve the penetration of insurance products, as ATMs offer clients an instant redemption facility. However, he clarifies that the proposal to set up ATMs is at a discussion stage.