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UK's largest insurer set to start shop in India

UK's largest insurance group, CGNU is set to start its Indian life insurance venture in three months, an official said on Thursday.

"We will submit our R2 (application for penultimate clearance) shortly and should trade within the next three months," Steve Purdy, chief executive officer of the group's Indian venture, Dabur CGU Life Insurance, said.

He was addressing a news conference to announce its first marketing tie-up with the private sector Lakshmi Vilas Bank.

CGNU's unit, CGU International partners Indian healthcare and consumer products firm Dabur India in the venture.

CGNU follows a host of other global majors making a beeline to India's largely untapped market including Prudential plc, Sun Life Financial Services of Canada, Standard Life Assurance Co, Royal & SunAlliance, American International Group, Cardif SA, and New York Life International Inc.

POTENTIAL

"You have a country which saves a huge part of its income as compared with international standards, yet its insurance spends are small," Purdy said. "The potential is immense."

India's insurance business was opened up to private and foreign investment only in 1999 and it is dominated by the state-owned Life Insurance Corporation of India.

The LIC, by its own estimates, has tapped just around 27-28 per cent of the market so far having sold 120 million policies.

But it expects premiums to grow by 23 per cent in 2001-02 (April-March) and predicts an annual growth of 30 per cent for the industry as a whole for the next decade.

"They key is offering better, more flexible options and making consumers aware of the underlying value of insurance as a protection rather than savings product," Purdy said.

"We are seeing this happening with new players coming in and with LIC getting more aggressive, which is good," he said.

STRATEGY

Dabur CGU is already working on its network having forged a marketing alliance with the Lakshmi Vilas Bank.

"The bankassurance route has worked very well in some markets such as Portugal and Spain where we sell 80-90 per cent of our products through this route," Purdy said.

"A lot depends on the bank's relationship with its customer and in India that is supposed to be strong. So we hope it will take off here as well," he said.

Lakshmi Vilas Bank -- with 208 branches and 800,000 customers -- has a strong regional presence in the southern part of the country which was key to Dabur CGU's strategy, Purdy said.

He said Dabur CGU was looking for more such tie-ups with banks with a strong regional presence and knowledge of both the rural and urban segments of their markets.

In addition, Dabur CGU will also have its own branch network starting with six in the first year of its operation.

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