New players are eyeing a pie of India's Rs. 221,400-cr insurance industry following last month's Cabinet's approval to raise foreign direct investment (FDI) cap in the sector from the current 26% to 49%.
While Magma HDI General Insurance and Liberty Videocon General Insurance have commenced operations, Avantha group has entered into a joint venture with Germany's Ergo Insurance Group to form Avantha Ergo Life Insurance.
Magma HDI General Insurance is a joint venture between Kolkata-based Magma Fincorp and Germany-based HDI-Gerling International Holding while Liberty Videocon General Insurance is a JV between US' Liberty Mutual Insurance and Videocon Group.
"There is room for 10-15 more players in the insurance sector going by the current low penetration of insurance products in India," said Shashwat Sharma, partner, KPMG.
Penetration of life insurance products in India is around 4.5% while that general insurance product is around 1%. Experts feel that new players will have a focussed approach and cater to a specific geography or customers."New players will develop and offer products for specific segments rather than offering everything," said Sharma. "Motor insurance is a segment, which may attract new players".
New players are also aggressive about the country's growth potential.
"We expect to touch Rs. 100-crore premium income by the end of the current fiscal year" said Swaraj Krishnan, chief executive officer, Magma HDI General. "Initially we will focus on motor insurance products."
Semi urban and rural areas in the country offer tremendous growth potential to the insurance companies, said Krishnan.