Commercial Mortgage Insurance

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The Indian commercial mortgage insurance industry until recently was an unorganized sector. But today, the mortgage loans sector in India is witnessing steady growth. The size of the commercial mortgage insurance sector in India is estimated to be US $ 18 billion industry. Huge real estate requirements and its subsequent development has fueled tremendous growth of this industry. Previously, the activities of the Indian mortgage industry was limited to financing of housing and real estate properties only but today it has extended to all possible immovable property mortgage funding business.

The market leaders in organized Indian commercial mortgage insurance sector are housing finance companies like LIC Housing Finance, HDFC, ICICI Home Finance etc. According to sources, the estimated size of the commercial mortgage insurance industry in India account only for 25% of the total housing investment in India and the majority of these were being facilitated by the Indian housing finance companies. And the commercial banks, both national and foreign banks along with cooperative banks and other non-banking financial companies had a paltry share in the aforesaid industry. Recent trends suggests that these institutions are also registering steady growth of 20-50 %, on year-on-year basis, from the year 2000 onwards.

Further, the age old trend of mortgaging housing properties only is changing at fast pace. Today, the Indian industry has spread its wing and offering commercial mortgage insurance for commercial physical properties like the following -

  • Amusement parks
  • Bowling centers
  • Casinos
  • Auto care centers
  • Auto dealerships
  • Car washes
  • Parking garage
  • Truck terminal
  • Conveniences stores
  • Distribution centers
  • Fitness centers
  • Franchises
  • Funeral homes
  • Gas stations
  • Golf courses
  • Malls
  • Retail (anchored, single tenant, unanchored)
  • Mobile home arks
  • Movie theaters
  • Resort
  • Restaurants
  • Hotels
  • Motels
  • Hospitals
  • Medical clinics
  • Medical offices
  • Nursing homes
  • Rehabilitation facilities
  • Skilled nursing facility
  • Special purpose property
  • Child care centers
  • Independent living facilities
  • Mixed use properties
  • Single family
  • Offices (multi-tenant, single tenant)
  • Warehouse
  • Industrial parks
  • Industrial buildings
  • Land developments
  • Mini warehouses
  • Office buildings
  • Outlet centers
  • Educational institutions
  • Training institutions
Although, investment in Indian commercial mortgage insurance market has grown substantially over the past 15 years but still a lot is needed to help it grow and fulfill its huge requirements. This Indian industry needs indirect Government participation, as a guardian and facilitator for the growth of the commercial mortgage insurance. Further, more private investments and removal of FDI ceiling in insurance industry should be encouraged to see this industry grow to its full potential.

Last Updated on 5/26/2011