Concern only if HDFC, Chubb part ways, says Irda chief

C S Rao, chairman, Insurance Regulatory and Development Authority of India (Irda), has indicated that there could be a cause for concern if the HDFC Chubb General Insurance joint venture falls apart.

HDFC had recently expressed its intention to end its joint venture with the Chubb Corporation in the general insurance business due to differences in their respective risk appetites. The fate of the joint venture is likely to be decided in two months.

Rao told Business Standard, "The HDFC Chubb issue does not come under the regulatory purview at this point of time. The company's business is running as usual and it is meeting its obligations. At present, there is no cause for concern with regard to the policyholders' money. A problem will only arise when either of the joint venture parties decides to withdraw."

HDFC and Chubb have had differences over the business model of the insurance company, with the low-risk appetite of Chubb giving rise to friction between the two.

Chubb is learnt to have been selective in its choice of business due to which it kept its exposure to the commercial business segment limited.

Rao said that if the joint venture fell apart, the regulator would have to come into the picture. "We will have to do due diligence with regard to the new partner that comes in. Whether the new partner meets various criteria to run the general insurance business in India is something that we will have to look into," he added.

HDFC is a leading financial group with entities operating in housing finance, asset management, banking and insurance space. With more than $30 billion in assets, The Chubb Corporation is one of the world's largest non-life insurance companies.

As per 2005-06 numbers, HDFC Chubb ranks 11th among the 12 general insurance companies in India, with a market share of less than one percent in terms of premium collection.