Business

Canara Bank, HSBC insurance JV kicks off

— PHOTO: BHAGYA PRAKASH K.

COMING TOGETHER: Union Finance Minister P. Chidambaram (second from right), with Alok K. Mishra (left), Managing Director of Oriental Bank of Commerce, M. B. N. Rao (second from left), Chairman and Managing Director of Canara Bank, and Group Managing Director at HSBC Holdings plc, Clive Bannister, at a press conference in Bangalore on Monday.

BANGALORE: Finance Minister P. Chidambaram on Monday inaugurated the operations of the life insurance venture run by Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. The company — a joint venture of Canara Bank, Oriental Bank of Commerce (OBC) and HSBC Insurance (Asia Pacific) Holdings Ltd., the Asian insurance arm of the banking and financial services group, HSBC — with a capitalisation of Rs. 325 crore is headquartered in Gurgaon, Haryana.

Mr. Chidambaram said the company was the nineteenth life insurance company. “Six more in the wings, an indication of huge interest that banks and foreign insurance companies have taken in the Indian insurance business,” he said. There was a “huge unmet demand for insurance products in India,” which was reflected in the low level of premia as a percentage of national income as well as the low level of insurance penetration in the country, he said.

Mr. Chidambaram pointed out that the insurance needs of the young and the elderly were different. “Insurance is not only against death but for a steady income stream in old age,” he said. The Government had opened up the insurance sector because a variety of products were needed in India. “Some of the opposition to this opening up has been on ideological grounds, which cannot be given a logical answer,” he added.

Canara Bank Chairman and Managing director M. B. N. Rao said the insurance sector in India had registered at a compound annual growth rate of 28 per cent in the last five years. The capitalisation of the insurance venture was one of the highest in the insurance industry in India, he pointed out.

Clive Bannister, Group Managing Director, Insurance, HSBC Holdings, said the company had a net earned premia, amounting to $9.1 billion last year, of which 53 per cent came from emerging markets. He pointed out that a quarter of the profits from insurance came from the Asian region.

Alok K. Misra, Chairman and Managing Director, OBC, said the high cost of penetration, particularly in rural areas, and the low priority people accord insurance, were the main reasons for the low level of penetration.

Mr. Chidambaram gave away the first insurance policies to eight school children from underprivileged backgrounds.

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