Insurance sector faces structural shift as FDI norms change: Deven Choksey

The government’s move to allow up to 100% foreign direct investment (FDI) in insurance is set to structurally reshape the sector, creating a clear segmentation between large-ticket underwriting and micro-insurance opportunities, according to Deven Choksey, Managing Director of DRChoksey Finserv Private Limited.Following the Lok Sabha’s approval of the insurance amendment bill, Choksey said the reform is a “structurally positive move for the sector as a whole.” He expects foreign insurers with large balance sheets and global networks to dominate big underwriting businesses, while Indian companies are well placed to capture the micro-insurance and smaller-ticket segments, which he believes could see significant growth.

Choksey added that despite the provision for 100% foreign ownership, overseas players are still likely to seek Indian partners and enter the market through strategic alliances. He said this inflow of foreign capital and expertise could also accelerate the introduction of new insurance products in India.

From an investment perspective, Choksey said companies with balanced product portfolios are likely to be relatively better positioned in the initial phase of the reform-led transition. He named HDFC Life Insurance Company and SBI Life Insurance Company as insurers that could “remain relatively stronger” as the market evolves.

Also Read: SBI Life’s Amit Jhingran sees 100% FDI as a growth catalyst for insurance sector

However, Choksey singled out Bajaj as a potential “surprise winner in this entire game,” citing its strong footprint and ability to tap into the emerging micro-insurance opportunity. He said his outlook on these companies is “distinctly positive,” though much will depend on how product offerings develop over time.

In the non-banking financial company (NBFC) space, Choksey stated that the overall environment remains supportive. Commenting on Shriram Finance ahead of its board meeting and market speculation around a potential Japanese investor, he said he would “wait for the event to unfold.”

When asked about investment preferences within the NBFC segment, Choksey said his comfort remains with Bajaj Finance. “The larger amount of focus stays with the likes of Bajaj Finance in our portfolio. So, we probably remain more comfortable over there vis-à-vis the other set of stock,” he said.

For the entire interview, watch the accompanying video

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