"We have had some discussions with each other. We will be looking at brown field projects in countries like North & South Sudan, Tunisia and some other West African nations in particular," said the chairman of one of the state run general insurers.
The finance ministry had earlier directed state-run general insurers to work with other public sector entities that have a presence abroad. "The core idea is that each foreign branch shall act as a stand alone profit centre. In the past it was observed that foreign operations of general insurers had incurred losses," said a finance ministry official.
Last year, the government had directed insurance firms to rationalise foreign operations and do a detailed analysis of their joint ventures and subsidiaries abroad. The insurers were asked to review the functioning of branches that had made losses in the last three years. "There were some losses due to concentration of risk.
The whole idea is to spread out and diversify. At present, there is a huge untapped potential in some of the African nations," said a senior official with New India Assurance. Almost all state run general insurers have posted handsome profits this year. New India Assurance has posted a profit after tax of Rs 844 crore, Oriental Insurance posted a profit of Rs 534 crore and United Indian Insurance Company posted a profit of Rs 527 crore. Some analysts however feel that general insurers should focus on India where the insurance penetration is abysmally low at 0.71%.
"India should continue to remain the core focus of these companies but they can certainly explore Africa as it tends to follow the Indian market trends," said Shashwat Sharma, partner, KPMG. The insurance density for general insurance in India is less than $9, while it is $53 in China. Gross underwritten premium of the sector was Rs 69,000 crore in 2012-13.
As per the budget announcement, by March 2014 all towns with a population of 10,000 and more will have an office of LIC and at least one of the four public sector insurance companies.