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Dabur CGU Life Insurance eyes bank tie-ups to sell products

Sumeet Chatterjee in New Delhi

Britain's largest insurance group CGNU has decided to tap the vast network of state-owned and private sector banks in India to sell its life insurance policies in urban as well as rural markets.

CGNU's Indian arm, CGU International, has entered into an agreement with New Delhi-based healthcare and consumer products major Dabur group to foray into the country's newly liberalised insurance market.

"The bank assurance route has worked very well in some markets such as Portugal and Spain where we sell 80-90 percent of our products through this route," said Stuart Purdy, chief executive officer of Dabur CGU Life Insurance Company.

"We are currently talking to many public and private sector banks here to market our products in the urban as well as rural areas. This will be backed by our own network of agents and other distribution channels," Purdy said.

Dabur CGU Life Insurance - in which Dabur holds the majority 74 per cent stake, while the remaining 26 per cent is owned by CGU - has recently forged a marketing alliance with the Lakshmi Vilas Bank.

Lakshmi Vilas Bank -- with 208 branches and 800,000 customers -- has a strong regional presence in the southern part of the country.

"Typically we are looking to tie up with banks with strong regional presence and knowledge of both the rural and urban segments of their markets. We feel that banks have got the expertise to give financial advice to its customers, helping them make right decision," he said.

"For selling specialised financial products such as life insurance policies a lot depends on the distributor's relationship with its customer and in India, customers share a strong and long-term relationship with banking institutions," he added.

Purdy said that the joint venture would also set up its own branch network in six cities - New Delhi, Bombay, Madras, Bangalore, Hyderabad, and Calcutta -- in the first year of its operation.

"Further, we will also employ a large number of agents to market our specially tailored products in the rural areas. Since Dabur has strong brand reputation in rural markets, we are also exploring the possibility of using Dabur's marketing channels as collection points," the official said.

Dabur CGU Life plans to launch its first set of products in four metros - New Delhi, Bombay, Madras and Calcutta- and select rural areas in three months. The company is currently awaiting a final nod from the insurance market watchdog, Insurance Regulatory and Development Authority.

"We will submit our R2 (application for penultimate clearance) in 10 days and should start trading within three months," Purdy said.

CGU follows a host of other global majors making a beeline to India's largely untapped market including Prudential, Sun Life Financial Services, Standard Life Assurance, Royal & Sun Alliance, American International Group, Cardif S.A., and New York Life International Inc.

India's insurance business was opened up to private and foreign investment in 1999, ending a 44-year-old state monopoly. The state-owned Life Insurance Corporation of India currently dominates the life insurance segment.

Only 5 per cent of India's one billion people have life insurance, and the vast majority of them live in urban areas.

"India offers immense potential for private sector companies because the people here save a huge part of their income as compared with international standards, yet insurance spends are too small," Purdy said, adding that the Indian life insurance market would grow by 3-4 percent in the next 10 years.

Indo-Asian News Service

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