Better Days Ahead for Indian General Insurance Companies

Lloyd''s of London is the most revered name in global insurance. It doesn't like controls like any dyed in the wool financial services giant from the capitalist world. But when it comes to India, it is willing to take what's on offer from the government and do business even if it means kicking and screaming.

It is not alone. For someone who thought of riding the general insurance wave on the back of the strength of an Indian financial giant, Prem Watsa, the Warren Buffett of Canada, is open to take a gamble on his own with a partner other than ICICI.

Watsa's 35% stake in ICICI Lombard, a unit of ICICI Bank, is on the block. And he is pitching for a license from the Insurance Regulatory and Development Authority of India (IRDAI) to open a general insurance shop that would compete with stateowned giants like New India Assurance & Oriental Insurance and private players like HDFC Ergo.

In the 17 years since the private sector general insurance companies were permitted to write policies, hardly anything changed for nearly a decade. Almost every company was reporting losses because of controlled pricing and the way claims were settled. But that may change for the better.

New companies that are coming in will have very little to destabilise market dynamics when the industry is at Rs 1.25 lakh crore," said Joydeep Roy, leader-insurance, PwC India.

Industry was giving discounts to grab market share and that is going to change now." Other than Lloyd's which is opening a branch for reinsurance, Edelweiss, the DHFL conglomerate are also vying to compete with Watsa's firm. Global reinsurers like Swiss Re and Munich Re have applied and seek to challenge the monopoly of GIC Re in India.