Prudential - Icici, Dabur Seek Insurance Licence

Prudential-ICICI and Dabur All State yesterday became the first two companies to file applications with the Insurance Develop- ment and Regulatory Authority. The IRDA yesterday opened the window for private players ending decades of state control on the sector. The Dabur joint venture will be called Dabur All State Insurance Company with Dabur holding 74 per cent and All State 26 per cent. According to company sources, the joint venture's capital base is about Rs 120 crore. The company will provide life insurance with health as a supplementary cover. Dabur will also leverage its brand and existing network for the insurance JV. Other companies in line to file applications are Newyork Life with Max India, Royal son and Alliance with TVS Group, and Zurich Insurance in partnership with Hero Motors and Bank of India. Industry sources said Royal & Sun Alliance and TVS group had to restructure their alliance because TVS group's net worth was falling short of Rs 500 crore. The company has now brought in group companies Laxmi General Finance, Impa Ltd and the holding company TVS Iyengar and sons into the joint venture. IRDA had last month has notified a first set of final guidelines that included solvency norms, entry guidelines, rural and social sector exposure and advertising code. On entry guidelines, the regulator has struck with foreign investment cap of 26 per cent that was put in the draft guidelines. IRDA has also said foreign institutional investor's holding in the Indian promoter will not be taken into account provided that the holding is within Securities and Exchange Board of India's prescribed limit of 40 per cent total FII holding and 10 per cent by an FII. The minimum equity share capital for life and general insurance has been kept at Rs 100 crore while the limit is Rs 200 crore for re-insurance. Those companies whose applications have been rejected will be debarred for two years. Also, on reapplication the applicant will have to come with a new set of promoters or have lContinued on Page 10 to apply for a class of business other than which it had applied for. IRDA set a minimum rural sector exposure limit of five per cent in the first fiscal increasing to 15 per cent by the fifth year in case of life insurance and at two per cent in the first year which increases to three in the second year and five per cent thereafter for non-life. For the social sector the insurers have to cover 5,000 lives in the first year, 7,000 in the second, 10,000 in the third, 15,000 in the fourth and 20,000 in the fifth year.