"LIC is planning to form joint ventures with local partners in these markets. LIC will spend Rs 200 crore (Rs 2 billion) of the amount given by the government in 2005-06 itself," said Atul K Shukla, chairman of LIC.
Banking giants Citibank and HSBC have also shown interest in teaming up with LIC for its overseas foray. "We are talking with these banks and we will see whether they can be our partners or corporate agents," said Shukla.
"We need to join hands with locals to get more business. Local people have the power to easily convince their compatriots. We don't have any problem with the Indians staying abroad as they have faith in LIC, but we need to ensure that local residents should get attracted towards us," Shukla said.
The government has agreed to part with 50 per cent of the dividend income it receives from LIC to fund the public sector life insurer's global ambitions.
This is because the IRDA does not allow use of policyholders' funds for overseas expansion. "The government is finally ready to release capital whenever we require, this will be helpful for us in expanding our global business," Shukla said
LIC has not decided on the amount of stake it will allow local partners to hold in the joint ventures. It will mostly be driven by the need of the local company.
LIC have asked General Insurance Corporation and global reinsurers, Munich Re and Swiss Re, to identify joint venture partners for it.
It will rely on the local partners for dealing with the respective regulators every country has it own regulatory process.
The regulations are easy in New Zealand, whereas Australia has three-four regulators and the regulations are very strict. The procurement cost in New Zealand in the first year is as high as 160 per cent of the first year premium.
Shukla said, "We are looking for a small office in New Zealand with a business process outsourcing arm in Fiji to reduce cost.
In Fiji, we are also looking for a local partner who will help to get more business." Shukla said wherever composite insurance (both life and non-life within one company) is allowed, LIC will rope in New India Assurance for the foreign ventures.
