Auto-to-finance conglomerate Mahindra & Mahindra has joined hands with Manulife Financial Corporation to establish a 50:50 life insurance joint venture in India.
Earlier this year, Allianz had signed an agreement with Mukesh Ambani's Jio Financial Services for a larger insurance play.
India's insurance market is growing. New business premiums in the life insurance space have grown at a 12 per cent compounded rate over the past five years to surpass $20 billion. Still, the market is vastly under-penetrated at under 4 per cent, and the protection gap remains high.
According to a report by consulting firm McKinsey and Insurance Brokers Association of India, the country's insurance industry is expected to more than double from around Rs 11 lakh crore in 2024 to Rs 25 lakh crore by 2030.
The sector has attracted foreign direct investment of over $6.5 billion in the past decade, on the back of rapid growth expectations and supportive government policies.
Mahindra and Manulife already have a venture in the mutual fund market. Mahindra Finance is also a major player in the NBFC (non-banking finance company) space, which it can leverage as it looks to make inroads in insurance.
It said the vision is to be the number one life insurance company for rural and semi-urban India, and to serve urban customers through leadership in protection solutions.
"Mahindra brand strength, deep distribution capabilities in rural and semi-urban India and execution excellence make life insurance a logical extension towards our goal of building a comprehensive financial services portfolio," said Anish Shah, group CEO and MD at Mahindra Group.
Earlier this year, Allianz and Jio Financial Services formed a JV to set up a reinsurance business in the country. The two also have non-binding agreements to start equally owned life and general insurance companies. Allianz was earlier present in India's insurance market through a partnership with the Bajaj Group, where it held a 26 per cent stake in life and general insurance companies. Bajaj acquired that stake to take full control of the life and general insurance businesses.
Phil Witherington, president and CEO, Manulife, said that the entry into one of the world's fastest-growing insurance markets will further strengthen its diverse portfolio and position it for "tremendous growth" in a mega economy of the future.
"We have a trusted partner in Mahindra Group, with whom we already have a successful asset management collaboration, and we see tremendous opportunity to build on our efforts by leveraging their deep distribution network alongside our industry-leading agency distribution and insurance expertise," he said.
Following the agreement, Mahindra and Manulife will now apply for an insurance license.
The life insurance industry has two dozen companies in India. However, the state-owned LIC continues to dominate the space.
According to the India Brand Equity Foundation, LIC has over 57 per cent share in the first-year premium share of life insurance.