Posted on Jul 22, 2010 by Sergio Ulloa
On the 19th July 2010, the Indian based company Larsen & Toubro (L&T) received final approval from Indian insurance regulators to start commencing business through it's subsidiary, L&T Insurance. The newly formed general insurer is supported by L&T, valued at US$9.8 billion. The Indian conglomerate - L&T - will have 100% equity in L&T Insurance.
Larsen & Toubro is one the largest private sector conglomerates in India, and the decision to enter into the insurance industry comes at a time when L&T aim to strengthen their position in the Indian financial service industry. Already established in the non-banking financial sector, with L&T Finance Ltd, the move into the general insurance sector meets L&T's aim to diversify the company's financial services offerings, and create a bigger corporate presence in the Indian financial market.
Mr Joydeep Roy, CEO of L&T said that "we should begin operations within the next six to ten weeks". L&T Insurance are waiting for the necessary license from the Regulatory Authority to enable business to commence. L&T Insurance intend to offer more than 20 insurance products, including the provision of high quality health insurance coverage with which they plan to support gaps in the existing Indian healthcare sector. However, L&T do not plan to enter into the life insurance market at this time.
With health insurance as the key focus of its entry to the insurance business, the company plans to emphasize the importance of their offerings in this area. As such, the long term aim for L&T Insurance is the development of its own health insurance claim management team.
Initial plans are for L&T Insurance to open branches in the major cities of India, identified as 'Tier-One' locations, which include: Delhi, Mumbai, Pune, Coimbatore and Kolkata. Plans include expansion into Tier-Two and Tier-Three Indian cities at a later date. L&T Insurance will initially employ 100 staff, increasing that number to 300 by the end of 2010. L&T Finance already has a presence in 230 locations throughout India, including rural and sub-urban areas, meaning that the company is well placed to leverage their existing assets in order to capitalize in the consumer uptake of the India health insurance market.
Senior Vice President of L&T, Mr Sivaraman, said "As a part of our long term vision, we identified general insurance operation in India. ½We identified general insurance business as a vital component for profitable growth."
Larsen & Toubro (L&T) is a multinational conglomerate company, with its headquarters based in Mumbai, India. Predominately a construction and engineering firm, L&T's venture into the non-life insurance sector comes at a time when the company's financial subsidiaries - L&T Finance (LTF), L&T Infrastructure Finance (LTIF) and L&T Mutual Fund - are recognized as key parts of this leading non-banking financial company in India. L&T Finance Ltd has penetrated the non-banking financial sector throughout India, with a national distribution network.
L&T Insurance entered into the non-life insurance sector, which is comprised of 22 competitors, including 4 public sector companies.
Insurance Company mentioned:
L&T Insurance is a subsidiary of Indian based Larsen & Toutbro (L&T). L&T Insurance received approval from the Indian regulatory authority in July 2010 to commence trading in the insurance sector. L&T insurance will become a general insurer, with no plans to enter into the life market.