Larsen & Toubro is likely to start its general insurance business in the first quarter of next fiscal and has got preliminary approval from the Insurance Regulatory & Development Authority (Irda).
Irda member R Kannan told said the insurance watchdog has given its initial R1 approval to L&T and the company would take at least three-four months to start the venture.
"In its board meeting, Irda has given R1 approval to L&T for its general insurance venture," Kanan said. According to L&T senior vice-president (financial services) N Sivaraman, the venture would be operational in the first half of the next fiscal subject to regulatory approval.
The proposed insurance firm would begin operations with paid-up capital between Rs 110 crore and 120 crore, he said, adding, "We expect the share capital to go up to Rs 500 crore in the next 5 years depending on business growth." L&T has already put in place top management for the proposed venture. Joydeep Roy will head L&T General Insurance Company.
There are three stages of approval required for getting a licence for an insurance company. R1 is the preliminary approval wherein the regulator evaluates the promoters. In the second stage (R2), Irda looks into the business model of the company and in the third (R3), at the formation of the company. Besides, Irda also gave R2 approval to health insurance company Max Bupa Health Insurance, Kannan added.
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