Posted on Jan 26, 2012 by Sergio Ulloa
In an attempt to capitalize on the increased spending power of India's sizable overseas workforce, HDFC Life, one of the country's leading private life insurance
companies, announced this week that they have opened a representative office in Dubai - the company's first international operation, with more to come.
It is estimated that of India's 1.3 billion population, more than 25 million are now currently living and working abroad. Indian expatriates make up a significant proportion of the working class across the MENA region, with many moving to the rich Gulf States during the oil boom to work in construction and in other more specialized fields. The Gulf has proven to be an attractive destination for South Asian migrant labour due to the higher incomes available, employment opportunities as well as the relative geographical proximity to India. Nowadays, roughly 40 percent of the United Arab Emirates' population is of Indian descent. This considerable demographic development has however presented a problem for the Indian diaspora
, as citizenship and residency rights are seldom granted to immigrants in these Gulf countries. Maintaining affordable access to necessary services like healthcare
and retirement planning thus becomes an issue for many non-resident Indians.
Announcing the launch at a press conference in Dubai on Wednesday, Anup Rau, HDFC Life Executive Vice President and Head of Sales and Distribution, told reporters that the insurance firm would use their new representative office in Dubai to more effectively target the estimated 1.7 million non-resident Indians (NRIs) currently living and working across the United Arab Emirates, and forecast Rs300 million (US$5.9 million) in premiums by the end of the first business year. HDFC Life predicts significant growth as demand for insurance products will continue
to increase in conjunction with rising personal incomes and demands for greater protection, investment and savings, and retirement needs.
HDFC Life has officially been operating out of Dubai for nearly three months now and, according to company officials, has already witnessed strong interest from the local Indian workforce for its life insurance products. "There were inquiries from NRIs to buy HDFC products estimated at Rs50 million (US$1 million) in the first three months," Rau told attendees, adding that the company's prime target will continue to be "white-collar NRIs returning home for some reasons." Observing this considerable demand, the company has already hired nine people to work its Dubai office, with more to come if need be.
HDFC Life decided that Dubai would be the host of its first overseas subsidiary as the city-state is currently home to the largest population of NRIs in the Middle East. The insurer will then use their new representative office in Dubai to properly test the Gulf insurance market and adjust their regional business strategy accordingly going forward. HDFC Life plans to enter other GCC countries are on hold due to Indian industry regulations, which do not allow locally domiciled insurers to launch full operations or set up joint ventures in international markets without exhaustive regulatory procedures. However, as Rau explains, the success of the Dubai branch will ultimately decide HDFC Life's international expansion plans going forward, both within the Gulf region and globally. "The launch of our operations in Dubai is the beginning of HDFC Life's expansion into the region. The objective of this office would be to serve our existing policy holders and further understand their financial needs better," Rau said.
HDFC Life is a joint venture established in 2000, between Housing Development Finance Corporation Limited (HDFC Ltd.) and Standard Life Assurance Company, one of the United Kingdom's leading financial services firms. The joint-venture company has been quick to expand in its home market over the past decade, and now boasts one of the largest distribution networks for an Indian private insurer with over 500 branches servicing customer needs in some 700 cities and towns across the populous South Asian country. While there is still considerable scope for insurers in India
to increase their coverage in a country with a population exceeding a billion people, most uninsured, HDFC Life believes that now is the time to look outside the country and will leverage its strong brand presence and existing clientele to market to and eventually through the sizable global Indian diaspora. "HDFC Life is a preferred and trusted brand in India and has diverse product portfolio catering to the different life stage needs of an individual," Rau explained, adding that "with a strong brand proposition, well balanced product portfolio, need-based selling approach, long-term investment philosophy, and above all a strong lineage, HDFC life aims to successfully establish its presence in the [GCC] region within the next few years."
Commenting further on HDFC Life's strategy and reasons for continued international expansion, M.I. Taher, Vice President and Head of International Business, noted that entering Dubai at this time was a crucial step in the evolution of the company, one which could put HDFC Life on course to compete with more prominent multinational insurance companies
in the near future. "The objective of our operations in Dubai is the first step towards understanding the Gulf market, the customer segments, apart from serving our existing policy holders and further understanding their financial needs," Taher said. HDFC Life's products are aimed at Non-Resident Indians in the UAE in order to better cater to their insurance needs, and needs of their families back home. "Our presence in this region will help us research the market better and devise new products catering to the specific needs of the NRI's here," Taher concluded.
Insurance Company Mentioned
HDFC Standard Life Insurance Company Ltd
HDFC Standard Life Insurance Company Ltd. is one of India's leading private life insurance companies, which offers a range of individual and group insurance solutions with a strong base of financial consultants. The company provides a line of protection, retirement, savings and investment, children, health, and group plans. It is a joint venture established in 2000, between Housing Development Finance Corporation Limited (HDFC Ltd.) and The Standard Life Assurance Company, a leading provider of financial services from the United Kingdom.