Zee Media Bureau/ Amol Dethe
Mumbai: American health insurance company, Cigna, and country's biggest third party administrator, TTK Healthcare have approached IRDA for a license to form a new health insurance company.
Joint company may start its operations and launch products in next 15-18 months. TTK and Cigna, had confirmed a year back that they are in final stage of discussions.
“Cigna was looking for an Indian partner. Now along with TTK Healthcare they have applied to Insurance Regulatory and Development Authority (IRDA) for a license to operate in standalone health insurance segment,” said an official associated with the development. Generally IRDA takes 12-18 months to grant a license.
In the new health insurance entity that they plan to operate, the international partner is expected to hold 26 per cent stake. “Cigna also intends to increase its stake to 49 per cent once the parliament approves foreign direct investment in the sector. As of now, the remaining 74 per cent stake will be held by TTK healthcare, in majority,” the official said.
The Cabinet Committee on Economic Affairs (CCEA) has already approved increasing the limit of foreign investment up to 49 per cent, in the automatic route. However, it is yet to receive a nod from the Parliament. E-mailed queries sent to the both the companies, seeking comments on the story, were not answered.
Cigna is an NYSE listed companies and has operations across 30 countries. Its revenues are upwards of $29 billion per annum. TTK Healthcare has a wide geographic coverage within the country as it is present in 806 locations, serving both public and private insurance companies. TTK reported standalone sales turnover of Rs 109.13 crore and net profit of 2 crore for the quarter ending June 2013.
Cigna is not the only foreign company to have set its sight on the Indian insurance sector. Out of total 51 insurance companies that operate in the country, 39 of them have a joint venture with foreign companies. Many more have been trying to enter Indian shores and some of them include Korean giant Samsung, and American insurance giant Traveler. Both of them have been looking out for Indian partners, to make an entry into the business in India.
India has 27 general insurance companies, out of which three are dedicated to health insurance only. Health insurance generates around 23 per cent revenue for the general insurance sector, which forms the second largest entity after motor insurance.
Private sector was allowed into the insurance business around 12 years back. But, the penetration of general insurance industry is yet to reach one per cent, indicating huge potential. “Low penetration and scope to grab a big chunk of a growing general insurance pie, is the biggest attraction for foreign players,” said a sector analyst.
