mumbai warren buffetts entry into the indian insurance market is not happening through a big bang takeover of a company or acquisition of a strategic stake in a private firm instead berkshire hathaway the company promoted by the worlds most famous investor is making a modest entry into the indian insurance market through a corporate agency berkshire hathaway will set up a whollyowned subsidiary in india which will acquire a corporate agency licence from irda to sell auto insurance policies from bajaj allianz general insurance the subsidiary will sell motor insurance online and make investments of close to rs 50 crore to set up a support structure including a call centre sources close to irda confirmed the development a spokesperson for bajaj allianz general insurance refused to comment on the issue the decision to get a corporate agency was taken by ajit jain who heads berkshire hathaways reinsurance businesses and is regarded as a possible successor to warren buffet mr jain is a regular visitor to india and his company has been underwriting reinsurance contracts of indian companies for years although berkshire itself is a reinsurance company it has significant interests in direct insurance us direct insurer geico formerly government employees insurance company is a whollyowned subsidiary of berkshire geicos speciality is that it sells covers or insurance policies either through the internet or the telephone considering the high cost of distribution in retail geico is able to generate substantial savings by selling online and pass on the savings to buyers in the form of discounts the companys tagline in all its advertisement is 15 minutes can save you 15 according to sources berkshire is using this route because the low foreign direct investment limits in all other insurance business make it unattractive to the us giant whether it is life or general insurance or even insurance broking current regulations do not permit foreign investors to hold more than 26 equity stake in the business corporate agency is however an exception under current regulations any entity including a foreign bank or any foreignowned finance company can become an insurance agent by acquiring a corporate licence a corporate agency however has its limitations for one every individual selling insurance in a corporate agency firm has to undergo training secondly the agency can sell products for only one company a corporate agency can however look forward to decent margins with commissions going up to 15 of the premium amount in the past buffett has been extremely bullish about the direct marketing insurer in his 2009 letter to shareholders buffet said as we view geicos current opportunities tony geico chief tony nicely and i feel like two hungry mosquitoes in a nudist camp juicy targets are everywhere