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Pvt insurers may go for soft-launch in Jab/Feb

Our Bureau

CALCUTTA, Dec. 5

THE handful of private sector companies, which have received licences from the Insurance Regulatory & Development Authority (IRDA), are likely to begin their activity with soft launches of select products, both in the life and general categories, either in late January or February 2001, according to the assessment of insurance industry circles.

Informed industry sources cite two reasons in support of their assessment. First, traditionally the insurance sector in the country picks up in the last two months of a financial year, that is, February and March. It has been noticed that 70 per cent of the renewable premiums under the general insurance category, are paid during this period. The private sector players would be aiming for a chunk of this business.

``There is no point in getting down to business in April, May or June as these are the lean months. So, the private players would like to have a go in the last two months,'' sources said.

Secondly, the solvency norms of a private sector insurance company for a particular financial year would depend on the amount of business it generated in the previous fiscal. Hence, the private sector players would prefer do some amount of business durin g 2000-01 itself, sources clarified.

However, a major problem of the private sector players for the February and March operations would be to make arrangements for the back-to-back re-insurance agreements, which are called treaties. Globally, re-insurance agreements are signed for a period of one year from April to March. No leading re-insurance company such as Swiss RE, British RE, Asian RE, Zurich RE or Singapore RE would enter into a short-term agreement.

The public sector general insurance companies already have re-insurance arrangements. And the market scenario will change once GIC begins full operations as the national re-insurer. The private sector players are in the process of announcing their busine ss plans.

Sources also said that private sector players would be entering into a number of arrangements with players from other sectors such as banks and mutual funds.