LIC puts up a brave face

quot;Internationally, people who have later entered the market have not been able to eat into existing players in a big way. I don8217;t think anything different will happen in India because of our inherent strength, network and brand equity,quot; he said.

India nationalised its insurance business in 1956 after a series of failures which eroded public confidence in the sector. India hopes that by opening its doors to private insurers it will generate funds for long-term investment in the sector8217;s creaking infrastructure and that competition will bring greater efficiency.

LIC alone employs around 125,000 people in 2,048 branches around the country. LIC has also been hamstrung by severe restrictions with government rules forcing it to invest 75 per cent of its premium income in so called quot;socially orientedquot; schemes, which means funding low yield infrastructure projects and government debt.

Krishnamurthy said LIC had a very large customer base with over 90 million individual policies and 23 million group insurance policies. But over 75 per cent of the policies are for sums assured of less than 50,000 Rupees 1,150.

Including the general insurance segment, India8217;s annual premium collections exceeds 8 billion and a government official has estimated it could rise to 20-25 billion in a decade.

Experts generally welcomed the passage of the Insurance Bill in Rajya Sabha. Said Sangeeta Purushottam, research head, SG Asia Securities India: 8220;It is an important piece of legislation to take the reform process forward after it had been stalled for some time. It is very positive. It helps to build upon the India story.quot;

Said R Metzelaar, chief representative, ING Insurance: quot;I am delighted. The passage of the bill is very good news for Indian industry and more so for the consumer as it will bring to him better service and products. Once we get our license from the Insurance Regulatory and Development Authority, it will take us 3-6 months to start operations.quot;

Sandy Davidson, representative for India, CGU Life, said 8220;the long wait has yielded a very positive result. I nowlook forward to the issue of all the regulations. We hope to sell our first policy by end of next year8230;late 2000.quot;

Dalip Verma, Chief Executive-India, American International group, said 8220;the speed with which the government has moved with its stated legislative programme is a sure proof of its commitment to the ongoing process of reforms and can only benefit both the country and the consumer. The move will stimulate foreign direct investments in thecountry and put an investor friendly face of India on the world map.quot;