CHENNAI: For the first time since the opening up of the insurance sector, a stand-alone health insurance company by the name and style of Star Health and Allied Insurance Company Ltd. has been formed by a group of Indian industrialists with 26 per cent foreign direct investment (FDI) from Oman Insurance Company and a couple of others.

Headquartered in Chennai, the new company will have a capital base of Rs. 105 crore. Former chairman and managing director of United India Insurance Company, V. Jagannathan, will be the Managing Director of the joint venture. Syed Mohammed Salahuddin, who will hold eight per cent, will be the Chairman. Essa Abdullah Al Ghurair, a businessman in the U.A.E., will also hold eight per cent. Oman Insurance Company will have a ten per cent stake.

A majority of the Indian component of the equity (around 68 per cent) will be held by a special purpose vehicle (SPV) to be called Star Health Investment in which 10-12 people willhave equity participation. Mr. Jagannathan himself holds around three per cent. There will be a few other individual equity holders.

Addressing a press conference here on Monday, Mr. Jagannathan said the Insurance Regulatory and Development Authority (IRDA) had given the `certificate of registration' for the company. He was hopeful of launching its maiden product by the middle of April.

He said the country required a stand-alone health insurance company especially since health upkeep was proving costlier by the day. Further, he said only three per cent of the Indian population was covered by health insurance. The health insurance market had the potential to write a premium of at least Rs. 15,000 crore. It could, however, tap a premium of just around Rs. 1,700 crore up to 2004-05, he said.

The claims experience in the South was better he said. The company initially would focus on the South and Pune. Mr. Jagannathan was confident that the company would write a premium income of Rs. 50 crore in the first year of its operations. He expected that by the second year, the company would post profit.

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