The country’s largest lender, State Bank of India (SBI), has entered into a joint venture agreement with Insurance Australia Group (IAG) of Australia for its proposed foray into the general insurance business and will be approaching regulatory authorities for necessary approval.
The company hopes to commence business in the next financial year and aspires to be among the top three players in the general insurance space in the medium term. Equity participation is proposed at 74:26 between SBI and IAG, subject to approval of the Reserve Bank of India.
SBI already offers life insurance products through its subsidiary SBI Life Insurance Company of India. IAG is an international general insurance group, with operations in Australia, New Zealand, Thailand, Malaysia, China and UK. Its current businesses underwrite premium worth more than Australian $7.5 billion per annum. It sells insurance under many brands like NRMA Insurance, CGU, SGIO, SGIC and Swann (Australia); NZI and State (NZ); Equity Red Star (UK); and NZI and Safety (Thailand). The group has strong presence in major segments of the general insurance market, including auto, insurance, property, casualty and commercial business.
OP Bhatt, chairman, SBI, said that the joint venture is part of SBI’s strategic initiatives to retain its position as the pre-eminent financial services group in India. ?Insurance penetration in India is very low and the general insurance industry is expected to grow at a brisk rate of 15-20% over a period of next 10 years?, said Bhatt.
Michael Wilkins, IAG managing director and chief executive officer, said that forming the joint venture was a significant step in IAG’s strategy to pursue select international general insurance opportunities.
?Entering the Indian general insurance market has been a priority for IAG for some time, to support our longer term growth and profitability,? he noted.
SBI, with its brand equity and extensive distribution network, will be able to provide protection to people even in the far flung rural and semi-urban areas throughout the country and help deepen the market, said Bhatt.
?I am sure that this venture, like our life insurance venture SBI Life, will also emerge as a leader within a short span of time,? said Bhatt.
?This initiative will further diversify SBI’s portfolio of financial services offered to customers. We look forward to developing a successful business with IAG,? he added.