India's biggest farm equipment maker Mahindra & Mahindra plans to venture into general insurance business

Mahindra & Mahindra Group , the biggest farm equipment makers in the country, is planning to tie-up with an experienced company to venture into the Rs. 40,000-crore general insurance business, which is growing at around 20% a year. 

The group, which has a lending business in Mahindra & Mahindra Financial Services Ltd , has mandated consultants KPMG to find a partner who would have technical experience in running a general insurance business, including writing covers for industrial accidents and automobiles. 

Mahindra Group, a $12.5-billion multinational conglomerate, has presence in automotive industry, aerospace, consulting services, defence, energy, financial services, logistics, real estate, retail, and two-wheelers industry. "Mahindra is entering into the insurance segment. It makes sense for a conglomerate like them to look at this space. For this the company has given out the mandate to KPMG," said a source. 

Ramesh Iyer, MD and CEO of Mahindra Finance , denied the development. Queries sent to the company remained unanswered. The group is present in the insurance broking business through Mahindra Insurance Brokers . Magma is the last NBFC to enter into non-life space by manufacturing insurance products. 

Magma Fincorp and its associate company, Celica Developers , have formed a joint venture with German insurer, HDI-Gerling to foray into insurance. Another conglomerate L&T has started an insurance subsidiary last year. The general insurance arm of the company is a 100% owned subsidiary of L&T without a foreign partner. 

Mahindra will be the 24th non-life insurer in the industry. There are 23 non-life insurance companies, of which four are public sector insurers. The entry of new players could put pressure on premium rates. 

"Every time a new insurance company comes, premium drops. Initially companies offer high discounts and lower premium to grab the market," said a senior executive of a non-life insurance. The industry had posted a 22% growth in gross premium income during 2010-11, compared with a year earlier. (ET)