Indian Insurance - New Conditions For Foreign Companies

While the Government had expressed keenness in retaining a say in the matter, the IRA had argued that the powers should ideally rest with the regulatory body. In fact, the private insurance companies waiting to enter the Indian market, comprising mostly foreign insurers, have also argued in favor of IRA being empowered with licensing. They felt it would result in a more transparent procedure for selection. The insurance industry has been keenly following the tussle over licensing, since it is expected that only a limited number of private companies would to be allowed entry into the Indian insurance market in the initial stages of liberalization.

Most of the Indian companies welcoming privatization did not feel the need to invite foreign partners. However, lot other people had divergent views in this regard. Some feel that even if we are to privatize, before privatization, autonomy should be given to the present companies to promote competition among themselves. The industry people also feel that privatization will result in more and more bogus claims as the new private players will try to keep their customers happy. They also won't have the fear of audits similar to that of CAG, which the national underwriters are afraid of.

The insurance unions have been against privatization of the industry. They were assured that the existing industry's ownership will not be changed. The unions opposed entry the multinationals because they feared competition. When it was apparent that the IRA Bill was to be introduced in Parliament, the unions went soft on their opposition to opening up of the sector.

General feeling is that privatization will bring in innovative products, customer-focused service and competitive pricing. It will also bring in market-friendly policies and openness and transparency in the tariff structures which will ultimately benefit the customers and development of the industry.

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