Risk Factors May Scupper Gics Middle East Hopes

The General Insurance Corporation of India's (GIC) plans to set up a representative office in the Middle East to tap the potential in the region is likely to come a cropper.

The September 11 terrorist attacks on the US and the subsequent war in Afghanistan may force the GIC not to go ahead with the plan as it could endanger the lives of its staff.

A senior GIC executive said: "We do not want to endanger the lives of our people in view of the political situation".

The upcoming GIC board meet will take a decision on whether or not to open a representative office in the Middle East. Also on agenda is GIC's plans to open a second representative office overseas, this time in Moscow.

GIC -- the designated National Reinsurer -- has targeted an inward reinsurance premium well in excess of $400 million in the coming 2-3 years. In order to achieve this target, GIC had decided to foray into the overseas market directly by setting up representative offices. At present, it has a representative office only in London.

According to top officials, GIC expects to mop up at least $100 million in premiums during the current fiscal. The Union finance minister had visualised India to become the hub for reinsurance in the Asian continent, based on GIC's strong financials, well-balanced investment portfolio and technical expertise.

While GIC is looking at markets in the Middle East and the Soviet block, it is refraining from tapping developed countries such as Europe or the United States, as large companies are already present there.

The Rs 22.93-billion GIC has devised a marketing strategy in terms of setting up representative offices in targeted areas, which will then become actual offices to get business subsequent to the company having met the stipulated local regulations in those countries. Its senior management team has made a number of visits abroad, scrutinising the best possible opportunities available.