Hopefully, the most politicised of economic issues in the history of India’s liberalisation will draw to a close soon with the passing of the IRDA Bill. The only other countries keeping India company in this respect are North Korea, Rwanda Burundi, Cuba and Myanmar.There is more than one reason why we should open up now.With most high potential markets having reached saturation point, India, with its low levels of insurance penetration, premium as a percentage of domestic savings and GDP, and per capita premium is appearing to be an excellent opportunity, right now.

The other pressing issue is that the Rakesh Mohan Committee on Infrastructure estimates projects a huge funding shortfal. The pensions sector, which meets a large portion of the infrastructure funds the world over is almost dormant here. Although it is difficult to gauge the exact potential of insurance markets which are dependent on selling techniques, social norms and many other extraneous factors, economic indicators,indicate a huge untapped potential. The stymied growth of the market has largely been on account of non customised products, poor selling practices and inadequate customer service for the most part. This is the most pressing reason for competition to come in. For new players, the most formidable challenge is meeting public sector competition head-on; while they point out that privatisation will lead to competition, they openly acknowledge that the public sector will continue with its hegemony, although in a much larger market. The lack and cost of trained intermediaries, rigid investment norms and absence of reliable statistics are the prime challenges they are gearing up to face.

On their part,public sector giants GIC and LIC are also bracing up for the competition. If the global scenario is replicated here,the competition might hit non life harder, although LIC cannot go unscathed either. Both LIC and GIC are on an upgradation spree—in terms of technology, training, customer service, the works.A level playing field is important in this aggressive arena.But divestment of government stakes seems to be the one important tenet of the Malhotra Committee report that is being ignored,skewing the balance unfavourably against GIC and LIC. However, if global experience is anything to go by, they need have very little to fear, provided they keep up their upgradation exercise—in very few countries, even where 100 per cent foreign equity stakes have been allowed, have private sector players been able to capture large marketshares.Marketshares may fall, but volumes will grow in a larger market.