Maruti Suzuki India Limited (MSIL), the largest car maker of the country, is gearing up to enter the vehicle insurance space once again in 2012. It has formed a new company, named Maruti Insurance Broking Pvt. Ltd., in order to sell motor insurance in the market. This firm will be headed by Mayank Pareek, the Managing Executive Officer (Marketing and Sales), who verified the existence of this joint venture. In March 2010, Insurance Regulatory and Development Authority (IRDA), the regulatory authority of India, cancelled the operating license of the company's insurance brand due to non-compliance with norms.
As per a Maruti official, “Around 18 months back, in November 2010, we formed a joint venture company, Maruti Insurance Broking Pvt. Ltd, to take care of this growing insurance business.” Reportedly, IRDA awarded this company with an operating license in February 2012. It has already collaborated with insurers in order to adhere to all the mandates laid down by the national government.
In India, foreign companies are allowed to have more a 26 per cent stake in an insurance business. Therefore, MSIL had to opt for the joint venture route since Japanese auto giant Suzuki Motor holds a 55 per cent stake in it, thus not fulfilling the government's criteria. However, the company refused to disclose any details of the partnership. The domestic auto insurance market is valued at around Rs. 18,000 crores per year, with the premium on Maruti vehicles alone accounting for Rs. 1,800 crores each year.
Maruti's previous venture into this segment was shut down by IRDA as local insurers filed complaints of inflated bills by service stations, which resulted in tremendous losses. The company provided policies of National Insurance Co. Ltd, New India Assurance Co. Ltd, Iffco-Tokio General Insurance Co. Ltd and Bajaj Allianz General Insurance Co. Ltd., among others, to the customers.
