Health insurer Cigna seeks India re-entry

Font Size

Print

Feedback

Email

Discuss

Related Articles

Insurance cos to deal with terror cases swiftlyInsurance sector to grow 17 pct this fiscal: IRDAIRDA working on M&A normsInsurance cover? Not if you die in terrorist attac...

New Delhi, October 10: : In a major comeback plan, the $18-billion Cigna Corp, one of the largest health insurers in the world, has given consultancy firm Ernst & Young the mandate to assess the Indian health insurance market and advice it on a re-entry into the country. The US major had exited the country in 2001, disappointed with the slow pace of insurance reforms here. The companys plans for re-entry come when regulators are debating sweeping insurance reforms and insurance players expect the foreign direct investment (FDI) cap to go up to 49% from 26% now. Also, private health insurance in India is growing at 40% a year.

According to sources, Cignas entry is imminent, as three large global health insurers have already entered India through joint ventures. They are: Star Health & Allied Insurance (a JV between Oman Insurance Company, ETA Ascon Group, and a few insurance industry veterans in India) Apollo DKV Insurance Corporation, a JV between Apollo Group of Hospitals and DKV, a European insurance company, and Max Bupa Health Insurance Ltd, a JV between Max India and the British United Provident Association Ltd (Bupa).

The current norms mandate a foreign investment cap of 26% and a minimum capitalisation of Rs 100 crore. But last month, the empowered group of ministers (EGoM) headed by external affairs minister Pranab Mukherjee has reportedly finalised its recommendations on reforms in the insurance sector, including raising the foreign investment cap to 49% and lowering capitalisation to Rs 50 crore for stand-alone health insurance companies.

In 1997, Cigna International, the global operating business of Cigna Corp, had entered the Indian market with operations based out of New Delhi, under the name Cigna HealthCare Management Company (India) Pvt Ltd but closed in 2001.

Apparently, it was unhappy with the government’s stipulation of a maximum foreign stake of 26% and a minimum capitalisation of Rs 100 crore.

Also, unlike now, the supporting system for the health insurance industry, like hospitals and third party administrators (TPAs) for facilitating cashless services were lacking in 2001.

Other major insurance players like Aetna Inc of the US had also shown early interest but did not come in owing to the delay in announcing guidelines for the sector and lack of credible health data in the country.