According to GIC chairman D Sengupta, the inward acceptances by way of forex earnings on account of re-insurance done overseas was just Rs 200 crore in fiscal 1997-98. The figure is likely to cross Rs 400 crore in the current financial year.

The apex body for non-life insurance business in India is planning to tap the lucrative Asian reinsurance market in a big way. Outlining GIC's business strategy, chairman Sengupta told The Financial Express that GIC will have a largely enhanced focus on re-insurance and infrastructure insurance, conditional to the passing of insurance bill and the decision on the possible structure for GIC and its four subsidiaries once the insurance sector is opened up.

According to industry analysts, once the IRA Bill is passed, the centre might convert GIC into an exclusivereinsurance body with the existing regulatory role going to the IRA. In this context, GIC has decided to tone up its expertise in re-insurance business to take on the global challenge, analysts said.

"In addition to domestic re-insurance, GIC will be spreading its wings across the globe. To start with, we will focus on the re-insurance business from within the country and from Asian countries for which GIC possesses the necessary financial strength and also has a reasonable presence," Sengupta said. "This would mean a substantial jump in foreign exchange earnings for the country," Sengupta said.

Incidentally, the Reserve Bank of India caps the forex exposure on account of inward acceptance (overseas re-insurance) based on the solvency margin of the insurance company.This move will bring GIC at par with international reinsurers, especially in Asian countries, which is presently dominated by a handful of international reinsurers.

Market sources confirmed that the GIC has asked the government to considerthese plans and decide on its organisational structure prior to opening the insurance sector for foreign and private participants, as suggested in the Malhotra committee recommendations for this sector.

As a first step, GIC will soon prune its list of more than 150 products to around 50-odd only, including some new products linked to risk inspection and savings related schemes, Sengupta said. "GIC aims at reviving its `Loss Prevention Association' (LPA) for risks inspection and has hand picked 12 engineers and chartered accountants from within the organisation for this purpose," he added.

A senior executive from National Insurance Company confirmed that currently 20 per cent of the risks underwritten by the four GIC subsidiaries are automatically re-insured with the GIC, though the parent organisation is only notionally credited with this fraction of the premium.

Commenting on the imminent competition in this business, the GIC chairman said that the corporation's focus will now shift to identifyingthe customer demand and gearing up its infrastructure, particularly computerisation of the operations. "We are fully geared up to take on the competition, and will offer service quality at par with the best in the country," Sengupta said.