CIGNA Preparing for Indian Joint Venture
By Ben | Published January 05, 2012
International medical insurance company Cigna is planning on opening a joint venture in India in the next couple of years, creating a partnership with local Indian Conglomerate TTK Group in forming a standalone Indian medical insurance company.
According to the WHO’s World Health Survey 2011, around 74.4 percent of private healthcare costs are paid out of pocket in India. Given that India’s middle class is growing at around 10 percent a year, alongside the historically low penetration of medical insurance products in the country, many analysts believe that the private health insurance industry in India will see robust growth in the near future with a projected compound annual growth rate for the industry of around 30% for the next 5 years.
Cigna is the latest foreign investor to commence the establishment of a standalone medical insurance joint venture in India and also the first American company to do so. Having already started the approval process with the Insurance Regulatory and Development Authority (IRDA) in India, Cigna and TTK intend to complete their filing in 2012 and obtain their license in 2013.
Cigna’s local partner TTK Group is a family-owned conglomerate that has business interests in a wide variety of business sectors, including both durable and nondurable goods, biomedical devices and a wide range of business and healthcare services. Based in Chennai and Bangalore, TTK operates retail locations that are soon thought to number over 1,500 throughout the country which would be a great leg up for Cigna in marketing their health and wellness insurance products across India.
If Cigna can enter the market with a portfolio of health and wellness insurance products and solutions that are inviting to relevant market segments then they stand a good chance of doing well in the largely untapped Indian health insurance market. This would further add to Cigna’s burgeoning international business.
Cigna is currently limited to 26 percent ownership of the joint venture with TKK in accordance with Indian regulations, however should the limit on the stake foreign firms can own in Indian-based companies be raised, Cigna may avail themselves of the opportunity to own a greater share.
CIGNA Health Insurance is a global health service company dedicated to helping people improve their health, well being and sense of security. CIGNA Corporation’s operating subsidiaries provide an integrated suite of medical, dental, behavioral health, pharmacy and vision care benefits, as well as group life, accident and disability insurance, to approximately 46 million people throughout the United States and around the world.
Founded in 1928 by T. T. Krishnamachari, TKK is an Indian conglomerate that is largely based out of Chennai and Bangalore. It now runs several businesses in different industries including white goods, pharmaceuticals, biomedical devices, consumer products and assorted business services.