Scores of firms who were earlier eyeing the life insurance segment will be forced to shift their focus to general insurance as life segment under the new dispensation becomes a costly affair. Life segment was preferred because it was less risky and assured quick returns.

"There was a possibility of 10 new entrants in the life insurance sector and five in general insurance in the first round. We may now see lesser number of players evincing interest in life insurance," industry experts said.

The increase in capital requirement along with a decrease in foreign players' contributions as a result of the cap on 26 per cent of foreign investments will only enable existing state-owned banks andfinancial institutions to make forays into insurance industry, sources said.

``I am preparing myself for the life insurance business,'' State Bank chief GG Vaidya said. The SBI will shortly announce its partner's name, he said.

The extensive modification in some of the key provisions in the Insurance Regulatory Bill, effected by the standing committee on finance on Thursday, has gone against the very idea of liberalisation in the insurance industry, industry watchers said. The new provisions will restrict the competition as fewer players will be interested and making the products expensive."Any increase in cost for setting up a company for undertaking insurance business will ultimately be borne by the customer,'' a leading industry said.

Reacting to the changes in the IRA Bill, some of the players said that they will prefer to wait till final draft of the new bill is officially published. Along with a bigger question as to whether the Government will be in a position to pass the IRA bill during thecurrent session of Parliament, doubts like whether a company can undertake both life and general insurance business by floating two subsidiaries or whether health insurance business can be undetaken by both general and life insurance companies are still lurking in the minds of the private sector players.

"We hope that the Parliament will be able to take a decision within this session,'' Royal & SunAlliance Insurance (India operation) chief executive officer Anthony Jacob said.

Among the banks and financial institutions which are now in the process of finalising their plans to foray into life insurance business are ICICI (with Prudential), HDFC (with Standard Life), Unit Trust of India, Bank of India, Bank of Baroda and Vysya Bank.Other financial instutions including IDBI, IFCI are planning to enter general insurance business. Among the major industrial houses which are planning to enter the life insurance segment are Reliance Industries, the Aditya Birla group, the Tatas and the Hindujas.

Except forthe Tata group which has an exisiting tie up with US major AIG, the rest of the corporates are still scouting for partners. Among the prominent non-banking finance companies, Kotak Mahindra is interested in both life and as well as non-life sectors (for the non-life business, the company has tied up with Chubb of the US) while Twentieth Century Finance--with a tie-up with Canada Life--is planning its foray into the life insurance segment and Alpic Finance is looking into the non-life sector.