American insurer Cigna has announced its debut in India's underpenetrated health insurance sector, in a joint venture with south Indian conglomerate TTK Group, according to the Wall Street Journal.
The two partners have invested $22 million in the venture, which will start operations with six branches in major Indian cities, according to Sandeep Patel, chief executive officer of CignaTTK Health Insurance Co, the WSJ report added.
"India is an important market for us," Jason Sadler , Cigna's global head of individual insurance business, told The Wall Street Journal in a phone interview.
India spends only around 3.9% of its gross domestic product on health care, according to the World Health Organization. Also, only 14% of total private expenditure on health in India is covered by insurance, leaving a large gap that health insurance companies can fill.
However, India's insurance sector has been hard to crack.
India has allowed foreign companies to own stakes in insurance firms since 2000, but limited that investment to 26%. Several major global insurers have entered India in the last decade through joint ventures.
But many of these joint ventures are still unprofitable, because a slowing economy and changes in regulations have hurt the growth of insurance sales.
These ventures need additional capital to expand, which local partners have been reluctant or unable to provide and which the foreigners aren't allowed to give. A bill proposing to increase the foreign investment limit in insurance companies to 49% has been pending for years.