CGU-Birla Life to approach IRDA for licence

CGU-Birla Life Insurance, the insurance joint venture between UK-based CGU and The Hindustan Times, will approach Insurance Regulatory and...

CGU-Birla Life Insurance, the insurance joint venture between UK-based CGU and The Hindustan Times, will approach Insurance Regulatory and Development Authority (IRDA) in the next two weeks for licence, top company officials said.

"We are planning to put in our application very shortly, we would do that in the next couple of weeks," Deepak Verma, chief executive officer of CGU-Birla Life told reporters at a function here to announce the company’s tie-up with NIS Sparta to set up an insurance academy in the country.

The 74:26 joint venture between one of the biggest media companies in the country and the largest insurance company in the UK would initially have a paid-up capital of Rs 100 crore, the minimum stipulated under IRDA Act.

Verma said the equity capital would be increased as and when the business develops. "We are open to the fact that business will need more funding. It could be another Rs 100 crore or more," he said.

He said the company hoped to garner a five per cent share in the projected Rs 170,000-200,000 crore insurance market at the end of 10 years. So far IFFCO-Tokio Marine, Dabur-Allstate, HDFC-StandardLife, Reliance Group, Prudential-ICICI, Max-New York Life, Kotak Mahindra-Old Mutual and Sundaram-Royal Sun Alliance have applied to IRDA for licence.

Verma said CGU-Birla was in talks with a number of banks D Financial institutions to integrate products of each other like providing insurance cover to housing finance.

On prospects for private insurance companies in the country, Stuart Purdy, Deputy CEO of CGU-Birla Life said traditionally the state-owned insurance companies tended to retain their market even after the opening of the sector.

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He said Life Insurance Corporation would at best go down to 70-75 per cent and the private players would have to share the remaining 25-30 per cent.

Verma said CGU-Birla, which hopes to start operations early next year, would initially be in urban areas and would go national in two-three years time.

CGU-Birla and NIS Sparta, a group company of NIIT, have come together to set up an academy to induct and train sales agents and unit managers for CGU-Birla.

Verma said CGU-Birla’s agreement with NIS Sparta was "semi-exclusive" and the training institute was free to tie up other insurance companies in areas which are not proprietary.