GIC Housing Fin in alliance talks with GIC arms for insurance

Kolkata, Aug 14: GIC Housing Finance (GICHF) is holding talks with four former insurance subsidiaries of General Insurance Corporation (GIC) to enter into a tie-up for launching housing insurance products.

“We are getting quotations from New India Assurance, Oriental Insurance, United India Insurance and National Insurance to launch housing insurance schemes against natural calamities like earthquake and fire,” top sources in GICHF said.

The company would first evaluate the quotations on the basis of premium charges and others and “will tie up with the one offering the best price so that the product can be offered at a subsidised rate to our customers,” the sources said. The GIC arms, however, required to get prior permission of the Insurance Regulatory and Development Authority (IRDA) for this purpose.

The sources said the companies have sought the IRDA nod and the respective boards were also considering the proposed tie-up for the product that would be launched by next two months. GICHF already has a tie-up with New India Assurance for a scheme of free accidental insurance cover for its customers.

Besides, the new insurance product, GICHF, which has crossed Rs 1,000 cumulative business mark with a customer base of 40,000, was also considering to offer consumer durable loans along with housing finance at the same rate of interest, the sources said. This was part of the strategy chalked out by the company to achieve an annual business of Rs 1,000 crore by 2004. The company’s sanction and disbursement, which stood at Rs 180 crore and Rs 171 crore last fiscal, were targeted to be doubled by next five years.

However, the fall in interest rate charges on housing loans was putting pressure on the company’s margins.

As a result, profit before tax during the quarter ended June 30, 2001 has declined though sanction and disbursement increased by 80 per cent and 33 per cent respectively over corresponding period last fiscal.

The interest rates charged by GICHF on housing loans have steeply fallen from 13.5 per cent, 14.5 per cent and 15 per cent (three slabs) during the first quarter of the last year to 12.5 per cent, 12.75 per cent and 13 per cent in the first quarter of this fiscal.

-- PTI