Participating in a discussion on "Opening up of the insurance sector: Implications for developing nations" here on Wednesday, Cronin said the insurance sector globalisation had picked up momentum in the last couple of years with liberalisation of trade and integration of financial services.

The entry of foreign companies in the Indian insurance business would improve the servicing levels and help increase the domestic savings rate as competition within the industry intensified, he said.

The pre-requisite for the growth of the industry was a "solid regulatory framework" which would protect consumer interests and enable insurance companies to grow onrealistic "solvency margins", he said.

The president of the Indian Chamber of Commerce, Aditya Vikram Lodha, said the Indian insurance market was one of the least insured markets in the world. "It is ranked 57th among 60 countries with $5 per capita gross premium compared with Thailand at $30, Taiwan at $407 and South Korea at $732," he said. The domestic market lacked depth and an "appropriate range of products" that are available internationally which blunt the competitiveness of Indian companies, he added.

Quoting a recent study made by a multinational company, he said the insurance sector is estimated to grow from the present 15 per cent to 30 per cent by 2003. "This would imply a market worth $10.5 billion," he added.

Giving a cost-benefit analysis of the US industry, Cronin disclosed that the US budget for the insurance sector regulation and administration was $750 million. The revenues generated by the states in the US from about 7,000 insurers amounted to $9.6 billion. Out of the revenues, $8.6billion came from taxes on insurance companies.