SBI shortlists 3 cos for insurance

MUMBAI: State Bank of India, the country's largest bank, is close to finalising a partner for its proposed general insurance venture. SBI, which announced its intention to enter the segment last year, has shortlisted three partners from a list of 9, said industry sources. According to a senior official, one of the players under consideration is Australia's IAG (Insurance Australia Group).Of the other two players, one is German and the other is a US-based firm.
SBI's entry into general insurance is expected to change the dynamics of the industry given the strengths of the bank in corporate and retail business as well as its reach. Industry sources said SBI will clearly look at a partner who will be able to utilise the bank's strengths to the fullest, because of which the bank is likely to demand a significant premium. The foreign partner will bring in 26% of the capital, in keeping with the current insurance regulations. IAG is an international general insurance group, with operations in Australia, New Zealand, the UK and Asia. IAG's businesses underwrite around $7.4 billion of premium per annum.
The general insurance industry is undergoing major changes following the freeing of tariffs in the sector. Although the segment hasn't been opened up completely, it is expected that the next three years will be challenging for all established players. At present, there are 14 general insurance players along with four specialists in health, agriculture and credit insurance. More entrants like Australia's QBE along with the Rajan Raheja group, among others, are awaiting approval from the insurance regulator.
SBI has a joint venture with Cardiff SA of France for a life insurance company. SBI Life utilises the SBI and its associate banks network to sell insurance products across the country. SBI has over 9,000 branches across the country. The general insurance venture is expected to focus initially on SBI's corporate clients.