Kolkata-based Magma Fincorp Ltd is one step closer to getting its general insurance venture operational. After almost three years Magma has got R2 licence from the Insurance Regulatory and Development Authority (IRDA).
In July 2009, Magma had signed a joint venture agreement with Germany-based HDI-Gerling International Holding AG for its foray into general insurance business.
The joint venture company — Magma HDI General Insurance Company Ltd — had received Reserve Bank of India's approval in October 2009. The company also received R1 licence from the IRDA in April 2011.
The licences
R1, R2 and R3 are the three approvals required by an insurance company to kick-start operations in the country.
While R1 is an in-principle approval which basically means the company's business plans will be considered by the regulator for approval, R2 is cleared only when the regulator is satisfied with the company's strategy, business plans and credentials.
R3 is the final step, which, once granted, allows the company to start operations.
Magma's stake in Magma HDI General Insurance, set up at an initial investment of Rs 110 crore, is 76 per cent while HDI-Gerling holds the balance 24 per cent.
Magma is a non-banking finance company into asset financing. The company has a strong presence in vehicle finance segment, including commercial, car and utility vehicles.
So, clearly motor insurance will be a focus area for the general insurance company. The company would also provide insurance for other assets financed by Magma, such as construction equipment and SME (small and medium enterprise) loans.
This apart, the company would also look at providing health insurance to its customers, its Vice-Chairman and Managing Director, Mr Sanjay Chamria had said after the signing of the joint venture agreement with HDI in 2009.
Customers, branches
Close to 77 per cent of Magma's branches and 63 per cent of its customers are in the rural and semi-rural areas, which are generally underserved markets for insurance products.
HDI-Gerling is wholly owned by the Talanx Group and is ranked third among German insurance groups. The company has operations in over 25 countries, with a particular focus on emerging markets such as Brazil, Chile, Mexico, Poland, Turkey, Bulgaria, Slovakia and Ukraine.