Middle class offers immense scope for insurance business

By Our Special Correspondent

NEW DELHI, AUG. 29. The Indian insurance business has been estimated to generate a premium income of $80 billion, the Minister of State for Finance (Banking and Insurance), Mr. Balasaheb Vikhe Patil, said here today.

Inaugurating a seminar on insurance and information technology, organised by the Associated Chambers of Commerce and Industry, Mr. Patil said there were approximately 312 million middle class consumers in India who have enough financial resources to purchase insurance products such as pension, health care, accident benefit, life insurance, property and auto. As of now, only 2.5 per cent of this insurable population had been extended insurance cover of any kind, he added.

The Minister said the existing insurance companies had tapped only 10 per cent of the domestic insurance market that was by far the largest in the world.

Mr. Patil also disclosed that the expert group on information technology, under the chairmanship of the Finance Minister, Mr Yashwant Sinha, was likely to recommend measures for the insurance companies to adopt and adapt state-of-the-art techniques and technologies.

PTI reports:

GIC will be converted into

Indian reinsurer

The Government today said the General Insurance Corporation (GIC) will be "slowly" converted into the Indian reinsurer following the opening up of the sector for private players.

``As per the law, GIC will be converted into the Indian reinsurance company slowly," Mr. Patil, told reporters after a Assocham seminar on insurance and information technology.

GIC's present business includes reinsurance for existing Indian players besides health and aviation insurance.At present, all existing companies namely Life Insurance Corporation and the four subsidiaries of GIC reinsure 20 per cent of the sum assured on their policies with GIC.

Mr. Patil, however, said it would be 10 to 15 months for the GIC to be converted into the Indian reinsurer after a decision is taken by the Government. "The Government is now thinking on amending the law pertaining to gic," he added.

The law provides that there should be at least one national reinsurer, who would carry on exclusively reinsurance business and is approved by the Central Government.

Mr. Patil said the Government had not received any proposal on the merger of the four subsidiaries of GIC - Oriental Insurance, National Insurance, New India Assurance and United India Assurance.

As per the Insurance Regulatory and Development Authority (IRDA) Act, all insurance companies starting business in India would have to reinsure a specified percentage of the sum assured on each policy with the Indian reinsurers. Though the Government has not specified the percentage, the Act says it should not exceed 30 per cent of the sum assured.

GIC, which has appointed global consultancy firm PricewaterhouseCoopers (PWC) for suggesting measures to streamline operations in the wake of privatisation of the sector, was also considering various options including merger of its four subsidiaries.

The merged entity was proposed to carry out the insurance business while GIC would only take up re-insurance business.

About the time when the licences would be issued, Mr. Patil said, "This depends on how fast the companies comply with the stipulated norms of the IRDA." He also said public sector banks would also be given licences as soon as they get the clearances from the Reserve Bank of India and the IRDA.

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Section  : Business
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