The finance ministry sources said the political bosses in the ministry would be taking up the issue of restructuring seriously after the monsoon session of the Parliament.

"There have been several rounds of informal discussions among the top officials of ministry about the multiple options we have on restructuring the entire non-life industry," confirmed a top official of the ministry adding that the ministry will be able to decide within a month.

Minister of state for finance (banking and insurance) Balasaheb Vikhe Patil had in recent times chaired a conference attended by the GeneralInsurance Corporation (GIC) and Life Insurance Corporation (LIC) top officials to discuss the issue of restructuring threadbare.

"No conclusion has been possible,"said the sources. It appears certain that GIC has to be delinked from the four subsidiaries as the IRDA Act does not permit insurance and reinsurance business to be conducted by one institution. Also, General Insurance Corporation will be assuming the role of national reinsurance body, a regulatory requirement under the Act. However, the crux of restructuring the existing non-life industry which has vexed the political bosses are - whether the four subsidiaries will be merged into one entity to face the competition or made independent of each other. Whether another holding company has to be formed to replace General Insurance Corporation of India (GIC)if the present situation is allowed to continue; whether four subsidiaries can be reduced to two by effecting merger between two companies.

About the restructuring report prepared by PricewaterhouseCoopers, ministry officials felt it offers only suggestions and no solutions on the issue of restructuring.

There have been various schools of thought among professionals about the revamping of the industry. The diffidence of four non-life companies New India, United Insurance, Oriental Insurance and National Insurance to face the competition when 28 public sector banks can operate along with private sector one, is a point in question.

Secondly going by the experience, process of merger is always painful."Effecting a merger at this moment will be a self-defeating act as completion of the merger process will take a long time. This will create total chaos, resulting in the business loss," said a former chairman of New India Assurance.

Also only one institution in the public sector domain in the non-life sectorwould not be a healthy trend from the customers' point of view.

Analysts point out that more than life insurance company, the existing non-life companies will take a direct heat in their business as the tenure of the non-life policies are just for one year. The customers will have ample opportunity to shift to a new company in case they are not happy with the existing public sector company.

The Insurance Regulatory and Development Authority (Irda) has asked the four subsidiaries of General Insurance Corporation toincrease their paid-up capital to Rs 100 crore from its current level of Rs 40 crore.

The four subsidiaries are also appointing a consultant actuary to fulfill the requirement of IRDA regulations.

Also the companies have regularised the service of 2.5 agents who were earlier serving the companies informally.

Also the companies have received their boards' approval to appoint management graduates with different pay package at the entry level.