According to a white paper on private sector participation in the insurance industry, prepared by the Bombay Chamber of Commerce and Industry (BCCI), new entrants in the insurance business will need at least five years to get established in the Indian market.

"Insurance PSUs could use the time available for adequately strengthening themselves by a variety of measures aimed at improvement in efficiency and service quality," the report has said. BCCI has said that the key steps which the insurance PSUs should adopt are the full-scale implementation of IT systems for improvement in operational efficiency and customer service apart from product development, pricing and other technical areas.

It has also suggested organisational restructuring to improve the speed and effectiveness in decision making. Thesesteps would be crucial in improving productivity, controlling costs and improving customer service. BCCI has also pointed out to the need for insurance companies in the public sector to improve their training systems for agents, surveyors, technical and marketing personnel.

The BCCI paper has said that the government needs to take certain steps in the interim period before allowing private sector players, in order to ensure a healthy growth of the insurance market. The chamber has also said that insurance PSUs should be given functional autonomy by disinvestment.

The chamber, in its paper on the insurance industry, has said that the government should give a token job assurance to insurance PSU employees and ask trade unions to support PSU managements in making the much-needed organisational changes.

Life insurance and pension funds are expected to play a dominant role in raising the funds required for infrastructure as they are of long tenor. If private sector players are allowed into the insurancesector, the market for long-term debt instruments is likely to pick up.