A good health or travel insurance policy protects its owner against unlikely but potentially significant future events — a description that for years seemed just as apt for India's long-delayed attempts to open up its own insurance sector to greater foreign investment
But after nearly a decade of political wrangling, Narendra Modi, the prime minister, last month passed legislation allowing foreign players to increase their stakes in local joint ventures from 26 percent to 49 percent, kicking off a scramble for exposure to India among the world's insurance groups.
About $3 billion could flow into the sector if the five largest foreign life insurers in India take up the full 49 percent increase, according to Kotak, a broker. Other estimates suggest at least as much again could come in, if other smaller foreign players with local life and general insurance partners do likewise.
Higher foreign limits are also expected to prompt a round of new flotations, led by Britain's Standard Life, which this month is likely to finalize plans for a mooted listing of about 10 percent of its joint venture with the housing finance group HDFC.
"There are maybe four or five large players who can go for an IPO over the next two years, and we are one them," says Amitabh Chaudhry, chief executive of HDFC Standard Life, the country's second-largest private sector life insurer.
Many analysts expect market leader Prudential of Britain will also look to float its tie-up with ICICI, India's largest private sector bank by assets. State Bank of India, another large player, this week said it planned to sell off 10 percent of its insurance arm, giving its French partner, BNP Paribas, the first right of refusal — a move that could act as a step towards flotation.
This foreign enthusiasm may at first seem odd. India's life insurance sector has shrunk in recent years, hit by a wider economic slowdown and a regulatory crackdown following worries over mis-selling.
International players might also have been forgiven for giving up on India, given that higher ownership had been promised almost since the sector was first liberalized in 2000, allowing private entrants to compete with the state-backed Life Insurance Corporation, which controls more than half of the market.
Even so, India's economic rise combined with low insurance penetration means future growth is now likely to be rapid. The sector could expand as much as fourfold by 2025, according to the consultants McKinsey, reaching $250 billion in annual premium payments and becoming one of the world's 10 largest markets.
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"Global growth in insurance will come from Asia over the next few decades," says Renny Thomas, McKinsey's head of financial services in India. "And India and China will be most of that. So if you are a global insurance player looking for growth, India shows up quickly."
That is equally true in non-life insurance. In health, for instance, the UK's Bupa is one of a number of players planning to take up the higher 49 percent limit. Last month's rule changes also open the way for global reinsurers, with the likes of Lloyd's of London and Swiss Re now planning to enter India for the first time.
None of this means growth will be easy. Many foreign players have existing deals allowing an increase to 49 per cent, but could still face battles over the price they pay to do so.
"Some Indian insurers are in no mood to let their foreign partners scale up cheaply, so there will be fierce negotiations," says Ravi Trivedi, a consultant and former head of financial services at KPMG in India.
The recent tightening of Indian insurance regulations makes it harder to sell policies through agents, disadvantaging foreign players without an Indian retail bank tie-up.
Yet in spite of these difficulties, India's growth potential could still prove irresistible to global insurers grappling with slowing growth in their home markets, raising the prospect that more capital could flow in via foreign newcomers.
"There are still lots of insurers in established markets — the Japanese, the Dutch, the Spanish, the Koreans — who aren't here but might decide it's worth the risk," Mr Trivedi says.
"I would expect half a dozen new entrants to come in and find new partners or buy out old ones . . . though whether they can make a go of it is another issue."