Australian insurer QBE has made its first incursion into the $10 billion Indian insurance market.

QBE, Australia's largest global insurer, announced last week it will invest $7 million establishing a joint venture general insurer with the Rajan Raheja Group (RRG) - one of India's most diversified companies with interests stretching across construction, hospitality, petrochemicals, mutual funds, media and retail.

The deal, which pales in comparison to QBE's recent billion dollar purchases of Winterthur and Praetorian in North America, lands QBE a beachhead in one of the world's fastest-growing markets.

The Indian insurance market is thought to be worth about $10 billion at present, yet only 20% of the population has insurance.

With growth of about 15% per annum, the Indian insurance market was opened to foreign competition in 1999, with QBE one of about 20 companies granted licences to operate in the country.

Government-owned insurer Life Insurance Corporation (LIC) still controls about 70% of the market.

QBE will hold a 26% share in the joint venture with RRG, but has an option to increase its holding to 50% following a loosening of foreign ownership rules.

The Australian insurer will nominate the CEO and provide the technical knowledge, while RRG will nominate the chairman and assist in distribution.

CEO Frank O'Halloran says QBE is enthusiastic about the market's opportunities.