Standard Life eyes larger India footprint

British insurer Standard Life is keen on a bigger footprint in India despite having to deal with mounting losses in its life insurance joint venture with HDFC said Chairman of Standard Life, Gerry Grimstone in an exclusive interview with CNBC-TV18's Avni Raja. Once passed, the insurance bill will allow British insurance giant Standard Life to hike its stake in its Indian joint venture with HDFC to 49%. It will also modernise the legal insurance framework in India, thus giving Standard Life the chance to expand its presence in India. This is something it is keen on doing. But Gerry Grimstone says this expansion would fall into place, once the sector is further opened up to foreign players.

He said, “I have never seen why India should not want to have more foreign capital deployed in its insurance industry. I can certainly understand why the Indian government wishes the sector be controlled by the Indian partners. But the difference between 26% and 49% I have never really understood. There's a huge difference between 49% and 51%, perhaps not a very big difference between 26% and 49%.” He’s very optimistic that the law will go through and believes this would benefit the Indian insurance industry.

Gerry Grimstone said, “Every growing insurance company has losses to start with. This is because of the nature of the business.” He feels it was important for India to move away from high front end commissions, to more sustainable charging structures. “Unless you treat customers fairly in the insurance industry, in the long term savings industry they won’t stay with you.”

Grimstone adds that there is a pressing need for rationalisation of commission structures in the Indian insurance sector and if this happens, the sector can clock faster growth.

“I think the commission structure is too complicated here. I think the customers do not understand it and that leads to mistrust. I think certainly if you pay too much commission at the point of sale as opposed to commissions that's paid over a number of years there's always a risk that the point of sale practices won't be as robust as they should be.”