Insurers get more airspace to push their wares

Insurance companies will no longer need to resort to accounting jugglery if they are keen to air their TV commercials on foreign satellite channels.

Cricket matches, international football matches, tennis tournaments "" the spate of sporting events which garners a lot of enthusiastic fan support - could not earlier be capitalised by the Indian insurance industry with the exception of a handful of players.

Many used to resort to accounting jugglery showing export earnings by way of servicing their foreign partners.

New insurance players used to knock on the doors of the Reserve Bank of India (RBI) seeking regulator approval to air their TV commercials on private foreign channels as most sport tournaments tend to be aired on satellite TV "" for instance the Australian Open on Star Sports, the Football World Cup on TenSports and the VB Cricket Series on ESPN and Star Sports.

"We want to advertise where our target audience is. If they are watching cricket, then we would like to ensure our presence even though it happens to be on ESPN," said a senior insurance official who had sought RBI permission earlier.

Since the government has lifted the ban that used to allow only companies with at least Rs 10 lakh export earnings to advertise on these channels, this openly allows insurance companies as well as other non-exporters to air their commercials on foreign channels. Insurance companies see this as a good move, said OM Kotak Mahindra Life CEO Shivaji Dam.

The government's decision follows the liberalisation measures on current account transactions in the wake of India's burgeoning foreign exchange reserves position now pegged at over $ 104 billion.

The government on Friday dispensed with the need for RBI nod on several current account transactions and will shortly make amendments to the Foreign Exchange Management Act (FEMA).

Some companies used to show export of consultancy services as forex earnings. "Alternatively, a company used to also try to convince the RBI that they could earn forex in the future based on their business model," said the vice president of a foreign TV channel.

Some insurers used to get their foreign partners to remit the funds to the TV channel from overseas. However, not all global insurance entities are willing to adopt this route. Allianz was one of the few which did so.

"Our books are separate and we have to maintain this. Else it would be seen as pumping in additional funds into the venture and the local Indian partner would also need to do so in accordance to the 26:74 shareholding ratio," said a senior official from a European-based insurance company. Today, however, all this accounting jugglery is now passe.