Jun. 21 – Warren Buffett’s conglomerate Berkshire Hathaway has confirmed its entry to the Indian market via a wholly-owned subsidiary that will use a corporate agency license to sell motor insurance policies offered by Bajaj Allianz General Insurance.
The modest entry into India will involve the company investing Rs. 500 million, or about US$11 million, to build a support structure that will include a call center.
The corporate agency license option is another way for foreign investors to enter the insurance market as an agent since India currently caps foreign ownership in insurance companies at 26 percent. A corporate agency is also an attractive choice because of profitable margins that can be as much as 15 percent.
Bajaj Allianz General Insurance itself is an example of government restrictions on the industry. The company is a joint venture between local company Bajaj Finserv Limited and French company Allianz SE, with Bajaj Finserv Limited having a majority 74 percent stake in the company and Allianz holding 26 percent.
Berkshire Hathaway in India will be tied to selling only Bajaj Allianz General Insurance policies as a corporate agency and required to train all its sales staff.
