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AV Birla Group Joining Hands with Mometum Group for India’s Health Insurance Sector
- DetailsWritten by PolicyBazaar -
- Hits : 3141 -
Updated date : 09 September 2014
Aditya Birla Group is planning to enter India’s fast growing health insurance market with South African Momentum Groups. The third largest life insurer in South Africa is the Momentum Group that wholly owns the subsidiary of Momentum Holdings. Chief Executive for financial services at the Aditya Birla Group, Ajay Srinivasan informed about their discussion with the Momentum Group.
As informed by a person aware of the development process, the company is finalizing the joint venture agreement and planning to file for an R1 license, first step in registration process with Insurance Regulatory and Development Authority (IRDA). The major stake of 74% will be under billionaire Kumar Mangalam Birla and 26% will be under the Momentum group that is likely to get raised to 49%.
In the life insurance segment, AV Birla Group has joined hands with Canada’s Sun Life creating Birla Sun Life that sells ULIPs and traditional products along with life insurance products.
In the next five year, the health insurance market of India is estimated to grow by 25% as large global health insurers like South Africa’s Discovery and US- based Aetna and Humana are exploring ways of enter India.
A quarter of total non-life insurance business in the country is supported by the domestic health insurance business of Rs 12,606 crore. Penetration or the ratio of insurance premium to GDP has witnessed a stable pace (2.71% at the time) because non-state companies were allowed in 2000. In March 2012, penetration rose to 4%. For non-life insurance it was 0.68- 0.78% over the past decade although health insurance sector experienced a growth of 30% compounded annually for past 7 years.
In this segment the newest competitor is Cigna TTK (joint venture between TTK Group and US based Cigna). Whereas the standalone companies of this sector include- Max Bupa, Religare, Apollo Munich, and Star Health & Allied Insurance. There focus area is urban market that grows through clinics, doctors and hospitals.
Cleared by Lok Sabha, the amendment to the Insurance Bill is yet to be approved by Rajya Sabha. In addition to the increase in foreign direct investment limit from 29% to 49%, the bill states that insurance companies would require to maintain an equity capital of Rs 50 crore.
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