India's general insurance industry is attracting interest from individuals who want to start operations in the field.
The IRDAI has received applications from three individuals who are backed by large funds seeking to operate general insurance companies: Oben General Insurance by Kamesh Goyal, Acko General Insurance by Varun Dua and Aspire Health Insurance by Rajesh Relan, reported The Economic Times.
Previously, individuals have received permits to offer financial services. The Reserve Bank of India granted payment bank licences to Vijay Shekhar Sharma, founder of Paytm, and Dilip Shanghvi, founder of Sun Pharma, in their individual capacity in August 2015. Earlier, RBI had awarded licence to Ashok Kapur and Rana Kapoor to set up Yes Bank which has grown and is profitable.
“The regulators are encouraged by the performance of technocrats showing fantastic performance in sectors such as banking and the new licences given for payment banks,“ said Mr Relan. “With the availability of venture capital that is coming to financial services, professionals in the insurance sector are also getting encouraged to quit their jobs and start new ventures.“
Mr Relan, a former MD of PNB MetLife, wants to start a health insurance company with private equity firm, Arth Capital. The company, to be called Aspire Health Insurance, will sell products through multiple channels, with a focus on online business.
Acko General Insurance started by Mr Dua, cofounder of Coverfox, which is backed by NR Narayana Murthy's Catamaran and other domestic, foreign venture capital and family offices, sees the foreign direct investment ceiling of 49% as a constraint on the industry.
“Relatively, there is a lot more global capital wanting to enter the sector, but the 49% limit poses a constraint,“ he said.
The lack of capital is one of the major reasons deterring individuals from setting up an insurance company. An insurance company needs an initial capital of at least INR1 billion (US$15.5 million) to be formed.