Royal & SunAlliance expects Indian mart to double in 5 yrs
The Economic Times, 31 January, 2007
India is turning out to a crucial market for UK insurer Royal & SunAlliance with premium from India accounting for almost 25 percent of Asia & Middle East''s gross written premium for Royal & SunAlliance. The group expects the Indian market to double again in the next five years substantially increasing the region''s share in world insurance.
With the Indian market gaining importance, Antony Jacob, Managing Director, Royal Sundaram Alliance - the joint venture between Royal SunAlliance and Sundaram Finance has been promoted as Regional Finance Director for Asia and Middle East at Royal & SunAlliance. He will now be responsible for planning and facilitating profitable growth in the region. The role will include contributing to development and implementation of overall business strategy, particularly financial plans, strategies and targets; and development of joint ventures.
In an interview with ET, Mr Jacob said, India is a market of tremendous potential for R&SA and is a key element in our development strategy for the region as well as internationally. Asia and the Middle East have emerged as key regions as it houses around 45 percent of the world''s population and only 2 percent of the world''s non-life insurance business. India has a low insurance penetration rate and is a market waiting to be tapped.
The company expects gross written premium of Rs 600 crore in 06-07. "Motor contributes around 50% of our business, followed by fire insurance at 20% and health at 11%. Personal Accidents, engineering and marine add up for the rest of our business." RSA expects to make increased investments in the Indian venture when the legislation allowing 49% foreign equity in insurace comes through. "There are talks of increasing the FDI to 49%. When this happens, the market place will become a lot more exciting with new players coming in, bringing with them a whole lot of international business practices and process," said Mr. Jacob. The shareholders are in the process of short-listing a new CEO for the Indian joint venture. Until the new CEO is identified Mr. Jacob will continue to function as the MD for Royal Sundaram.
Mr. Jacob will be moving out of the company at a crucial phase given that pricing of non-life insurance products has been liberalised and there is a major change in the pricing. According to Mr Jacob systems have been put in place to respond to the changes in the market. "It is too early to say how de-tariffing will affect the shares of various businesses in our portfolio. We will wait to see the trends that are likely to emerge'he said.