LONDON (Reuters) - India is swimming against the tide and its citizens will miss out on investment opportunities if it does not allow overseas insurers to invest more in the country, Britain's biggest insurer Aviva said on Friday.
Aviva has a life insurance joint venture with Indian consumer goods maker Dabur , but its holding in the partnership is limited to 26 percent by foreign direct investment (FDI) rules.
"It's swimming against the tide. They do need to make steady progress on relaxing those unnecessary constraints," Richard Harvey, Aviva chief executive, told Reuters in an interview.
"Obviously we entered the Indian market in the expectation the government would be increasing those (FDI) shares in line with opening up that market and it is a matter of frustration to us."
Aviva said its life business in India, which has nearly 6,000 sales agents and around 1,700 staff, was growing strongly but it was keen to invest more.
India's ruling coalition would like to raise the foreign investment limit in the insurance sector to 49 percent from 26 percent but faces opposition from its communist allies.
"The government needs to be aware that the growth rate of the industry will be constrained, I believe, if further international capital is not allowed to come into the market place.
Amid sluggish growth in the UK market, Aviva has focussed on sealing distribution deals with banks in continental Europe to boost its life and pensions business. Scott said further joint venture deals were likely.
"We see them in a number of marketplaces particularly if we look at our big businesses in France, Spain, Italy we think there are, over the next three to five years, opportunities to leverage our current position with further distribution," Scott said in an interview at Reuters' global headquarters.
Aviva operates in nine Chinese cities with its joint venture partner, the state-owned body Cofco, and aims to have a 10 percent share of the life market in 10 Chinese cities by 2010.
"Our strategy in China is a rapid organic growth strategy," Scott said. "We feel the way to compete is to bring modern international products with modern processing and compete by aggressively growing the business organically, competing against local companies."
It said Switzerland was not a country it planned to enter (see story ), despite being seen as a possible bidder for Credit Suisse's insurance unit Winterthur.
"What we are seeing around the world is an increasing number of banks saying we do not want to do this ourselves, we do not need to deploy our own capital to run an insurance business, it's better to strike a formal partnership where there is an appropriate specialisation," Harvey said.
Over the past five years, Aviva has spent around 1.5 billion pounds on bancassurance agreements across Europe and Asia, homing in on banks whose insurance units are underperforming and gaining key access to retail savers.
Around 90 percent of Aviva's Italian revenues are generated from bancassurance agreements, including via a joint venture with Unicredito , and Harvey said he hoped that Unicredito's takeover of Germany's second-biggest bank HVB would benefit it in the future.
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