Mumbai: Former State Bank of India (SBI) chairman Arundhati Bhattacharya is looking to start a general insurance business, along with Sunil Mehta, former country head and chief executive of American insurer AIG, and Deepak Ishwarbhai Amin, a former director of SBI, a person aware of the development said on condition of anonymity.
On 3 September, Bhattacharya and Mehta registered their company, Welmo Fintech Pvt. Ltd. The insurer has a paid-up share capital of ₹1 lakh, according to data from the ministry of corporate affairs.
“They will soon be approaching the insurance regulator to obtain an R1 approval," the person said. R1 is the first stage of approval by the Insurance Regulatory and Development Authority of India (Irdai) to start an insurance company. It is followed by R2 and R3 approvals.
Welmo will, however, be required to have a minimum of ₹100 crore as paid-up equity share capital to obtain the second stage of regulatory approval.
“They are looking to raise capital from venture capital investors," said the person cited earlier.
While Bhattacharya declined to comment, emailed queries sent to Mehta and Amin remained unanswered.
After stepping down as SBI chairperson in 2017, Bhattacharya had stints as directors of seven Indian companies, including Ajay Piramal-led Piramal Enterprises Ltd and Mukesh Ambani’s Reliance Industries Ltd. She is an additional independent director at rating agency Crisil Ltd and an adviser to homegrown private equity firm ChrysCapital Advisors Llp.
Recently, Irdai granted licences to a host of general insurers, mostly promoted by insurance veterans. In 2017, four companies—Go Digit General Insurance Ltd, Acko General Insurance Ltd, DHFL General Insurance Ltd and Edelweiss General Insurance Co. Ltd—secured regulatory approvals.
Former Bajaj Allianz chief executive officer Kamesh Goyal’s Go Digit General Insurance is backed by Canadian billionaire Prem Watsa’s Fairfax Financial Holdings. Acko General Insurance, started by Varun Dua, the founder of online insurance broking firm Coverfox, has also received its licence from Irdai.
In April, Irdai gave preliminary approval to Indiabulls General Insurance Ltd, a subsidiary of Indiabulls Integrated Services Ltd.
As of March last year, 68 insurers were operating in India, including 24 life insurers, 27 general insurers and six health insurers. As of 2017, general insurance penetration in India was a meagre 0.93%, compared to 2.76% for life insurance, according to Irdai.
The penetration of general insurance, measured as the ratio of premium (in US dollars) to gross domestic product (in US dollars) stood at 2.8% globally in 2017, more than three times that of India—a clear indication that the country has a vast growth potential considering its large population.