L&T has received initial approval from IRDA and may start its general insurance business in the first quarter of FY11
Engineering and construction major Larsen and Toubro Ltd (L&T) is likely to start its general insurance business in the first quarter of the next fiscal following preliminary approval from the Insurance Regulatory and Development Authority (IRDA).
IRDA member R Kannan told PTI that the insurance watchdog had given its initial R1 approval to L&T and the company would take at least three-four months to start the venture.
"In its board meeting, IRDA has given R1 approval to L&T for its general insurance venture," Mr Kannan said.
According to L&T's senior vice president (financial services) N Sivaraman, the venture would be operational in the first half of the next fiscal subject to regulatory approval.
The proposed insurance firm would begin operations with paid-up capital between Rs110 crore and Rs120 crore, he said. "We expect that the share capital to go up to Rs500 crore in the next five years depending on business growth," Mr Sivaraman added.
L&T has already put in place top management for the proposed venture. Joydeep Roy will head L&T General Insurance Co.
R1 is the preliminary approval given by IRDA, wherein the regulator evaluates the promoters. There are three stages of approval required for getting a licence for an insurance company.
In the second stage (R2), IRDA looks into the business model of the company and in the third (R3), at the formation of the company.
There are currently 22 non-life insurance players, including four public sector companies, in the country.
Besides, the IRDA gave R2 approval to health insurance company Max Bupa Health Insurance, Mr Kannan added. Max Bupa is a joint venture between Max India and UK-based Bupa Group.
Max Bupa is likely to start operations from next month after getting the R3 approval. The company had received initial approval in November last year.
It would be the third company to provide only health insurance after Star Health-Allied Insurance and Apollo Munich Health Insurance.