Counselling the US delegates to be patient with the pace of reforms on account of the democratic set-up, he said that privatisation of the sector was inevitable to provide for better inflows of infrastructure and deeper penetration. However, once liberalised, unlike China, there would be no restriction on area of operations or nature of business, except that life and general businesses would be clubbed together by any company, he said.

Speaking about the opportunities and roadblocks for private players, he said that``the insurance industry here is now moribund.'' Despite the strength of the monoliths, the industry was growing at a rate of 15 per cent, which would be actually 7 per cent discounting inflation. The rate of penetration is a mere 1.9 per cent, and if this is taken as an index of growth, it was a very low figure, hesaid.

While in the US, the growth was negative in insurance. Over here, there was still a vast potential and the need for specific products. The premium was also paid upfront, ensuring that the industry is cash-rich. Herein lies the opportunity. However, private players would require a lot of capital, which would involve a payback period of a minimum five years. And if the premium exceeded a particular limit, then the regulator would insist on a further flow of capital (perhaps doubling the initial Rs 100 crore) in the next five years to ensure that solvency margins are maintained.

Besides private players have to counter the might of LIC and GIC and their network and still be lucky in cornering 10 to 12 per cent of the market.