NEW DELHI: As many as eleven banks including Punjab National Bank, Canara Bank and Bank of Baroda are planning to enter the lucrative insurance market in joint ventures with leading overseas insurance companies in 2007.
Besides a foreign partner, banks are expected to enter the market with one domestic player as overseas insurers' holding was capped at 26 per cent, while banks are permitted to hold a maximum 49 per cent in any insurance JV.
With many private banks having forayed into insurance when the sector was opened up in 2000, the new entrants into the sector, one of the fastest growing financial services, will be mostly from public sector banks.
Given the negligible penetration of insurance in India, there is a huge market for insurance companies to tap and more players entering the market is good news for consumers, who would like to choose insurance to suit individual needs.
PNB, has submitted its application to IRDA for licence and expects to get the approval by December-end. It is likely to set up a life insurance joint venture with UK financial major Principal and Vijaya Bank.
Bangalore-based Canara Bank is scouting for partners, both foreign and domestic, to foray into the life insurance sector.
Mumbai-based Bank of Baroda is in the process of finalizing partners for foraying into the life insurance sector and its Board has already identified the foreign partner.
Delhi-based Oriental Bank is likely to finalise joint venture partners in a months' time for foraying into the life insurance sector.
"We will finalise the partners in the next 10-15 days," said Union Bank of India Chairman M V Nair.
Similarly, Bank of India is now looking for a new domestic partner after talks with Andhra Bank for a life insurance JV failed to make any headway due to differences over the shareholding pattern.
BoI now is looking for another bank for the JV, which is likely to come up with Japanese insurance major, Dai-ichi.
Andhra Bank is also looking for alternative arrangements, although the bank is yet to receive any specific proposal.
On the general insurance side, Allahabad Bank, Karnataka Bank, Indian Overseas Banks, Dabur Investment Corporation and Sompo Japan Insurance Inc have tied up for forming a non-life insurance company.
The proposed company would be called Universal Sompo General Insurance Company Ltd. Allahabad Bank will have 30 per cent stake, while Indian Overseas Bank, Allahabad Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc will hold 19 per cent, 15 per cent, 10 per cent and 26 per cent, respectively.
Besides that, one more general insurance company is likely to come with Apollo Group and German-based Deutsche Krankenversicherung AG (DKV) as partners. They have submitted an application to regulator IRDA for setting up a standalone health insurance company.
The life insurance industry's new premium income grew by 162 per cent in the first half of 2006-07, as the 16 insurers collected Rs 29,664 crore as against Rs 11,323 crore in the same period of 2005-06.
The 12-player strong general insurance industry clocked 22.8 per cent growth in premium collections at Rs 12,376 crore in the first half of this fiscal compared to Rs 10,079 crore in April-September last fiscal.
Banks are entering the insurance sector as part of their business diversification strategy.
