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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (8644)	10/20/1999 2:04:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

AIG to pump $1bn into India in 1 year Sharif Rangnekar (FE) NEW DELHI 19 OCTOBER US-BASED insurance and investment major AIG plans to invest over $1bn in the country. The investments would be routed through its Asia Fund, based in Hong Kong. Frank Wisner, vice chairman (external affairs), AIG, in an interview to The Economic Times, said the Hong Kong fund has over $5bn stocked for the Asian region. Of this, over a billion dollars have been put aside for India and would be infused over a period of time. " There is no specific time-frame. If the situation demands, it can come in less than a year," Mr Wisner said. To date, AIG has pumped in $250m. AIG is looking forward to a further opening up of financial markets. Provident funds, infrastructure financing through pension funds, the insurance sector and forms of risk insurance are areas of growth. "There is a market there and money to be made," said Mr Wisner. In all this, obviously, insurance would be one market which AIG and many others are waiting to enter. Even though many foreign investors are waiting in the wings, there are many impediments which have to be removed before the sector is opened up. For example, said Mr Wisner, the norms for distribution would have to be changed. While corporates, world over, act as agents and add value to product distribution, the Indian norms allow only individuals and not corporates to be agents. Similarly, the Banking Act does not permit banks to sell insurance instruments or even market them. Banks would be a major tool in the Indian scenario but may remain untapped if the requisite changes are not made in the law, said Mr Wisner. A common refrain of many players is that commission is mandated, which limits the play of any player. "Let the market forces decide the level of commission and the rate thereof," he said. AIG is ready to take big risks in India and one of the big areas it sees is house insurance and critical illness. Life would also be tapped, if legislation permits. According to Mr Wisner, "There is low penetration in house insurance and health and hence there is a huge market to be tapped." At the same time, packages like risk insurance which would include risk transfers or management could be offered. "Products would increase as the landscape improves with more players," he said. Like most private players, AIG feels that the speed of service is as crucial as the product. "If an ordinary claim is not tackled within 10 days, then we have a problem," Mr Wisner said.