India Seen Taking Time To Effect Insurance Changes

It may take six to eight months to open up health insurance to private sector, a decision announced by the government last month end, analysts said. First of all, parliament has to pass the IRA bill, the managing director of a housing finance firm studying the insurance industry said, referring to a bill seeking to establish an Insurance Regulatory Authority (IRA), now pending before Parliament.

This will have to be followed up by an amendment of the Indian Insurance Act to allow opening up of areas to the private sector, he said.

I see it taking at least six to eight months for health insurance to be opened up, forget life and general insurance.

S N Mathur, member of the Insurance Regulatory Authority established by the ministry of finance, said he expected his office to start working soon after the enabling act is passed.

In his budget for financial year 1997/98, finance minister P Chidambaram said he intended to open up health insurance to Indian private sector. Many interpret this as the first step to eventual liberalisation of the entire insurance industry. Reuter

Some foreign insurance firms such as Prudential Corporation of the UK are exploring the possibility of forging health insurance joint ventures in which they could participate as minority shareholders.

But an official of Prudential said health insurance did not appear a viable investment at the moment because of the poor state of health delivery infrastructure in India.

Many prospective entrants expect a two years timeframe for India to open up life and general insurance industries. India represented the largest overseas operations of Prudential before India nationalised insurance companies. India nationalised life insurance industry in 1956 and general insurance industry in 1972.