New legislation in India is set to allow foreign insurers to enter both the life and general insuranc...
At present both life and general insurance in India are monopolised by two nationalised companies, Life Insurance Company of India and General Insurance Company of India.
The bill, now passed by both houses of parliament in India, will allow foreigners to own 26% in Indian insurance companies.
A number of companies including Standard Life, Royal & Sun Alliance and Commercial Union have been eagerly awaiting the legislation, whose passage has been thwarted a number of times in recent years by political instability.
Sandy Skinner, general manager of the international group at Standard Life, said: "Since around the 1950s both life and general insurance markets in India have been a monopoly controlled by the State. Over the last four or five years there has been a move to open the market up. The new legislation means the monopoly of the state companies will be broken.
"As a result, life and general insurance companies can apply for licences to operate with foreign companies holding up to 26% of their equity.
"The timetable for the granting of these licences is unknown at the moment, but we would expect at least some to be issued within a year."
Standard Life has a joint venture with Housing Development Finance Company, first set up four years ago.
Skinner said: "We have had a long-standing plan to set up a life insurance company in India via this joint venture and we will now activate that scheme by applying for a licence."
He believes there is enormous potential for life insurance companies in India. Standard Life estimates there are 250 million people in India at present who can afford life insurance.
"The number of people able to afford this type of product will grow, but even among the people who can afford life cover the penetration is not high compared with the rest of Asia.
"The expansion of the life assurance market should benefit the Indian economy as a whole. Life assurance is a form of long-term saving and this money will be invested back in India. This type of savings growth can only help the country."
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