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January 10, 2000


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"The awareness level among Indian consumers is quite high"

The Rediff Money Channel presents a guide to the private insurance companies that are open to shop in India.

Davinder Rajpal, general manager (general insurance), AXA China Region Insurance Company, has charted out plans for the company's entry into the Indian insurance industry. AXA, headquartered in Paris, France, is a major global player in insurance and asset management. The group manages assets of over $ 700 billion and recorded revenues of over $ 70 billion in 1998. It operates in more than 60 countries, and it employs 1,30,000 people.

AXA China Region is a member of the global AXA Group and is based in Hong Kong. In December 1992, AXA China Region became the first major insurance group to be listed on the Hong Kong Stock Exchange. The company is now one of the two largest life insurance groups in Hong Kong. In China, the group has a tie-up with Alliance Capital for life insurance. Davinder Rajpal talks to Neena Haridas on the company's plans for the Indian consumer.

You already have a presence in the Indian market. What are your current activities?
We have 50:50 joint ventures with two groups based in South India -- Cholamandalam and Guardian. We have started our financial services in India. But since the Indian government has finally opened up the insurance sector we now hope to expand our portfolio in the country.

What kind of a portfolio are you planning to offer to the Indian consumer?
Our objective is to enter the life and non-life insurance services market. Besides, we are interested in getting more aggressive in asset management and risk management. Of course, it would be an understatement to say that there is a huge insurance market in the country - both in life and non-life. Our core business is in the provision of life, health and disability insurance to individuals. The group also provides life, health and disability insurance and retirement schemes for corporations, and general insurance and unit trusts in Hong Kong. I think in India too, there is a huge market waiting to be tapped - but tapped diligently.

How would you compare the Indian consumer with his/her Chinese counterpart?
The awareness level among Indian consumers is quite high. They may not know all the insurance services that are available worldwide but they know their rights and use them diligently. Besides, as an industry, India has past experience of working as a private sector. There are also minimum barriers in this economy. I think these factors will work to the advantage of companies planning to enter the market.

But do you think the regulatory framework is upto the mark in India?
I think India has made a beginning by putting the Insurance Regulatory Development Authority (IRDA) in place. As the market opens up more and more, the government needs to put regulatory bodies in place. People ask me if I am happy with the 26 per cent cap on foreign equity, and I say, nobody is happy but at least a figure has been reached.
Otherwise, I think this regulatory body has been constituted keeping international standards in perspective. In your opinion which are the areas that have more potential - life insurance or non-life insurance?

Both are potential markets. You see, in India it will be for the first time that so many companies will be offering services. Hence, there will be a lot of things that the customer will be exposed to for the first time, in terms of services. Worldwide, 57 per cent of our revenue comes form life insurance, 24 per cent from non-life, 16 per cent from financial services and 3 per cent from reinsurance. In India too, the break-up could be similar. With so many players entering the market, what is going to be your unique selling proposition (USP)?

Well, we have interests in a variety of areas - which is not the case with all the players planning to enter India. But yes, we will be focusing on the services; we will try to give more than what is the convention. For instance, take risk management - the usual risks that are insured are fire, accidents etc - but we will try to go beyond that and cover a lot of unconventional areas on the social level as well. Do you think the premia is likely to fall?

I cannot predict that, but I think it will be comparable worldwide. More than premia, there will be an overall improvement in the services and products on offer. Even the public sector that is enjoying monopoly now will have to improve its services. What I mean is that there will be competition and with competition comes improvement. And only the better of the lot will survive. You are one of the few companies that has shown interest in both life and non-life. Is that your strategy worldwide?

Well, we have different strategies for different markets. In India, the current services available in the market are few in numbers. We want to fill in the gap. But it is a good idea to hit the market with one product and then expand on it with time. How are you going to price your products?

We will test the market and then decide accordingly. But I can assure you one thing it will be competitively priced. We are not going to have one price in China and another in India. Do you intend to launch specific products for the rural market?

Well, I don't know what specific products are suited for rural India. But I think there is a market out there. We will study the market properly and decide on our products accordingly. Who is your joint venture partner in India?

We are still in discussion. We have a tie-up with Cholamandalam. It could be them, but as of now, I can't comment on it further. Are you open to the idea of a consortium?

For the time being we are only looking at single partner. We will finalise it soon.


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