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German insurance firm Allianz is present in India through two joint ventures
© dpa - Report
India’s insurance sector attracts Germany

July 08, 2008

The Indian insurance sector is scripting its own growth story and German companies are playing their part in giving a boost to the sector in the country.

India’s insurance sector is experiencing steady growth. The premium underwritten by life insurers in India in 2006-07 was Rs 1560.42 billion, according to figures from India’s Insurance Regulatory and Development Authority (IRDA). The regulating agency also puts the gross direct premium income underwritten by non-life insurers in the same year at Rs 259.3 billion.

One of the earliest German companies to make a foray into India, Allianz Group has been witness to the boom in this sector. Allianz entered into India by setting up a liaison office in 1996. Subsequently, Allianz set up two joint venture (JV) companies in India with Bajaj Auto Ltd, one of India’s largest two and three wheeler manufacturer. The companies, known as Bajaj Allianz General Insurance Co Ltd (BAGICL) and Bajaj Allianz Life Insurance Co Ltd (BALICL), are two of the fastest growing private insurance firms in India.

BAGICL launched operations in 2001. The company today has a presence in over 100 cities and towns. In 2006-07, the company clocked a net premium of Rs 1,039 crore compared to Rs 698 crore in the previous year, an increase by 49 per cent.

At the same time, BALICL reported a profit of Rs 662 million. The gross premium written for 2006-07 was Rs 53,100 million as compared to Rs 31,336 million in the previous year. The company plans to scale up its capital base by Rs 5 billion during the current fiscal year as demand for insurance increases in the fast growing economy, the company said recently. Its current capital base is Rs 12.10 billion.

Meanwhile, BAGICL plans to expand its operations in India by opening another 50 branches over the next three years and also by expanding its service offerings from the Allianz portfolio. Allianz has identified India as a hub for is operations in SAARC countries. As a start, the company has set up general insurance operations in Sri Lanka, which are being managed by Bajaj Allianz India.

A survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) says that the insurance sector in India is likely to register unprecedented growth of 200 per cent and attain a size of Rs 2,000 billion by 2009-10. The report also states that the private sector insurance business will achieve a growth rate of 140 per cent in the same period. Currently, the size of the insurance sector is estimated at Rs 500 billion.

Another private company that has been making news in the private insurance sector is Apollo DKV Insurance Company Limited. The company is a joint venture between India’s Apollo Hospital Group and Germany’s DKV Deutsche Krankenversicherung AG, which is a part of German re-insurer Munich Re. Formed in August 2007, the company plans to invest up to Rs 5 billion in the next five years to increase market share here. Also, Apollo DKV plans to have a national presence across 25 cities by the second year of operation and spread to over 100 locations by 2010.

Apollo Hospitals Group is the biggest hospital chain in Asia. It currently owns and manages 42 large tertiary care hospitals, 60 primary care clinics, and the largest retail pharmacy chain of over 600 stores.
Based in Cologne, DKV is the European market leader and one of the world’s top five private health insurers. In 2006, the company reached a gross premium income of €5 billion with 7.3 million customers.

In April 2008, Apollo DKV Insurance announced its tie-up with India’s Bonsai Insurance Broking Pvt Ltd, a leading Insurance Broker in the General Insurance segment for online insurance shopping through its website

In May 2008, Germany’s Ergo Insurance Group formed an Indian life insurance company in collaboration with India’s Hero Group. The new joint venture named Hero-Ergo Life Insurance Company Ltd will work towards procuring regulatory approvals from IRDA over the next 10-12 months, and start operations during the second quarter of 2009. The new company aims to be among the top Indian life insurers within the next 10 years, the company statement said.

Ergo is the primary insurance entity of the Munich Re Group, one of the world’s leading risk carriers. In 2007, the Munich Re Group achieved a profit of €3,937 million. With more than 38,000 employees, the group is present in 50 locations throughout the world. With premium income of over €17 billion, Ergo is one of the largest insurance groups in Germany and Europe.

Another major German reinsurer group, Hannover Re, also recently formed a joint venture in India. Hannover Re tied up with General Insurance Corporation of India (GIC Re) to cooperate in the joint development, marketing and underwriting of life reinsurance business in India.

Hannover Re, the world’s fifth largest global reinsurance company, is looking to tap the fast-growing Indian market. With a population of 1.1 billion and a growing middle-class, India offers the reinsurers immense growth potential for the medium-term, particularly in the life insurance sector.

Initially planned for the next five years, the cooperation aims to “jointly build up a profitable portfolio with strong growth potential in the highly promising Indian market,” said Hannover Re in a statement. It will provide technical knowledge and training to GIC’s staff. The domestic reinsurer, GIC Re, will offer inputs on the Indian market to Hannover Re.

Indian government-owned GIC set up its life reinsurance department in 2002 and began operations in 2003. GIC’s reinsurance premium outgo from the life insurance market in India was around Rs 200 million for the year 2006-07.

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by Sakshi Arora
© German Information Centre New Delhi
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