Over the last few weeks, rumour has been rife over the tug-of-war between IRA and the insurance division of the ministry on this issue. According to senior ministry officials, the controversy was started by some Delhi-based.N Rangachary, chairman, IRA, hinted that the controversy is now settled.

Referring to the the government's ownership in both LIC and GIC which currently have a complete monopoly of the insurance market, Rangachary said,``regulation and ownership must be delinked for efficiency in the system.''

Rangachary announced that an ombudsman would be appointed on the lines of the banking industry. This assumes significance to avoid the clashing of operations as in case of Trai and DoT. An ombudsman will be the arbiter between the two bodies.

Chaturvedi announced that the government plans to table the necessary legislation for opening up the sector in Parliament in two or three months time. The government was ready table the legislation last month but could not do so as the necessary clearance could not be obtained from the Union cabinet, he said.

He also announced the sector would be opened up in the life and general sectors. The two sectors will not be opened city-by-city as has been in certain countries, he reiterated. Also, the government will not pre-determine the number for licences to be issued for either the life or non-life sector, he said.

Giving a glimpse of how the IRA proposes to screen applications, Rangachary said initially a window will be opened for receiving applications which will be open for a period of 90 days. Thereafter, the IRA will take about three to four months to study the applications. On receiving the nod, the companies will have to start operations within a period of nine months to a year. Extensions for starting business may be provided in some cases, operations will definitely have to kick-off in 15 to 18 months, he said.

Licences will not be transferable. Under no circumstances will the IRA permit trafficking of licences, he underscored. To ensure fair pricing, IRA will monitor the pricing structure. The IRA, however will initially adopt the procedure of `file and use' whereby companies will file the product structure with IRA and the regulator will allow marketing in good faith.Touching on the thorny issue of new companies doing business in rural areas, Rangachary said rural business barring crop insurance does not have to be necessarily loss making. It depends on whether the companies have the necessary expertise in non-traditional insurance or not, he said.