KOLKATA: IDBI, Federal Bank and Belgian-Dutch insurance major Fortis Insurance International NV signed up on Tuesday to start a life insurance company.
Christened IDBI Fortis Life Insurance, the company will have an equity infusion of Rs 750-800 crore in 5-7 years. IDBI will have a 48% stake in the venture, while Fortis and Federal Bank having 26% each.
The company will now apply for regulatory approvals and registration from the Insurance Regulatory and Development Authority (Irda). It is likely to be operational by the end of the calendar year.
Once the life venture takes off, IDBI will have to discontinue its corporate relationship with Birla SunLife for its life insurance business. IDBI Fortis plans to have a national presence all across the country.
“The main focus of distribution will be through the bancassurance model, although other forms of distribution (including agency and direct sales) will be used as well,” G V Nageshwar Rao (pictured), CEO, IDBI, said.
While IDBI and Federal Bank are bank partners, Fortis has the expertise of bancasurance across markets where it sells insurance.
“This transaction is fully in line with our carefully planned expansion strategy announced last year,” said Peer van Harten, chief executive officer of Fortis Insurance International. “This is a unique opportunity for Fortis to start insurance operations in India, which is rapidly becoming one of the largest insurance markets in the world.”
Rao, however, declined to mention as to who would take over as CEO of the new insurance company or the targets for the next few years.
While the company is working on various delivery models and product strategies, it will start off by unfolding a host of individual endowment, group and unit linked products, which it will file with the Irda after receiving requisite approvals.
Asked whether the company will lose out owing to it being a late entrant into the already vibrant life insurance market, Rao said: “We have a trusted brand name that we will leverage on. IDBI also has a well established distribution network and, with all partners having deep pockets, required investments will be made”.
“As far as products are concerned, IDBI has demonstrated the ability to put in place a track record of being the first on infusing new products such as money transfer on the ATM, online air ticketing, bill payments across all channels. Hence the same will for insurance as well,” he added.
With almost Rs 35,000 crore of new life insurance business premium garnered by 15 life insurance companies including LIC, it will be interesting to see how IDBI Fortis fits itself in this insurance maze.