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Wednesday, March 2, 2011

Buffett enters India with insurance


Buffett enters India with insurance

TNN, Mar 3, 2011, 03.14am IST

MUMBAI: Warren Buffett's Berkshire Hathaway has made an entry into India through the insurance distribution business. Berkshire will directly market motor and other retail insurance products of private insurer Bajaj Allianz through a corporate agency. 

Berkshire Hathaway, which is better known for its promoter, is a diversified holding company with subsidiaries that include GEICO, National Indemnity, and various other insurance and manufacturing businesses. The corporate agency is expected to be modelled on the lines of GEICO which is a direct insurance company and sells policies over the net and through telephone calls . Berkshire India, a majority-owned unit of Berkshire Hathaway Inc has been incorporated and has received a corporate agency licence form the IRDA to sell and distribute general insurance products in India through their online distribution portal. Initially, the focus will be on motor insurance, but the company will then update its business model to include other retail products such as life, health and householders insurance. Incidentally a corporate agency is the only format in which multinationals are allowed controlling stake. Every other insurance business whether it is insurance or insurance broking requires the shareholding to be 74% Indian. 

"Buying financial products directly over the internet is a relatively new and growing opportunity in India. We will engage directly with the consumers using the online platform to provide insurance products efficiently." said Arun Balakrishnan, CEO, Berkshire India. 

Nebraska headquartered Berkshire Hathaway is a holding company which owns, property and casualty and a reinsurance company. It also has investment in utilities and energy, freight rail transportation, finance, manufacturing, services and retailing. The annual turnover of the company comes to over 100B USD with staff of over 250,000 employeesSpeaking on their foray into the growing Indian insurance market, Kara Raiguel, director of, Berkshire India said: "We have been watching the Indian insurance industry for a long time. Berkshire Hathaway has been very successful in the online and direct distribution model in the US and as a corporate agent of Bajaj Allianz, we would like to replicate that success in India as well." 

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