Union finance minister P Chidambram has a promise to keep in seeing through the delayed Insurance Regulatory Authority Bill (IRA), during this winter session beginning November 19.

Though the issue of liberalising the insurance sector was one of the provisions in common economic programme at the time of forming the coalition government, the 13 political parties that formed the government have failed to lift controls in this crucial sector. Chidambaram, who introduced the bill has failed to ensure the passage of it during the monsoon session this June due to non-cooperation of left wing parties and the right wing Bharatiya Janata Party (BJP) that once supported the move. The minister now has to wait for the winter session to begin the task all over again. The main opposing BJP has no objection to the bill but wants certain changes to prevent foreign insurance companies foray into this sector.

But the failure during the monsoon session was not because of such opposition but due to a lack of political will. There was a lack of coordination amongst the supporters of the bill, mainly the members of parliament (MPs) belonging to the Congress Party. The bill was put to vote, but the Congress MPs, upon whom Chidambaram relied for majority support, opted to attend the annual session of their party in Calcutta instead.

Thus, India is now the only country, apart from Cuba, not to have allowed private competition Duncan G West, chief executive officer, Royal & Sun Alliance Insurance, said. The debate on introducing reforms to this sector is at a time when the country has already initiated liberalisation six years ago. An undeterred Chidambaram, nevertheless asserted that a reformer should have patience and his ministry assured that the bill would be reintroduced in the Lok Sabha during the winter session of the Parliament. Though the withdrawal of the IRA Bill did not go well with the representative of foreign companies who had assembled during that time in New Delhi a cross section of representative of global insurance majors felt that such a set backs are inevitable in a democracy. However, the basic fact remains that insurance market accounts to less than the one per cent of current GDP and is considered as one of lowest in the world thereby leaving its tremendous potential to expand untapped.

Given the present Rs 6,000-crore turnover in terms of premia, the turnover could reach Rs 20,000 crore by the turn of the century if the vast potential of the middle and lower income group are tapped. And this is possible only if the IRA Bill is passed, the sooner, the better.

Today, even big insurance companies find it difficult to handle the the rising demand for insurance cover, and unless the politicians wake up and keep petty things at bay, liberalising this sector will remain a dream."Tell me which of the existing public sector company can underwrite a $200-million policy by itself," a senior official at GIC remarked.

"I fully agree with them (politicians), in their concern about the growth of the General Insurance Corporation after more players are allowed, but this would not happen for a long time. The GIC may not be at ease for a while but will cope up after some teething problems," he says.

The existing insurance companies -- General Insurance Corporation and Life Insurance Corporation--are financially strong and have created extensive infrastructure in terms of professional talent and marketing and servicing networks, they are in a position to face competition.

GIC and its subsidiaries have over 160 different policies, but much still needs to done especially with the advent of high technology products and large growing financial markets.

Concerns that foreign insurers will dominate or outflow of money and that there will be a massive reduction in the number of people employed and prices will go are nothing but myths.

In the eight countries, including Japan, Indonesia, Malaysia, the foreign share of the market does not exceed 10 per cent and in all but two of these cases the market has been open for over 20 years. Why should India be different from this?

The forces preventing insurance liberalisation are effectively standing the oxygen hose of an economy increasingly constrained by inadequate infrastructure which requires about Rs 1,100 billion by 2005-06 to take care of total investments. The sooner insurance liberalisation the sooner increasing insurance investments become a vibrant part of India's capital markets.

The governments worldwide do not maximise the economic returns from the assets they own. Globally, studies show that the returns on government- owned assets are two to three per cent at best.

India should take its own time but opening up of the sector is inevitable as it is the need of the hour. While the `swadeshi' club may disagree with this line of thought, the consumers and the providers of the insurance service support cause of liberalisation.

Also it is worth reminding our legislators that giving statutory status to the present IRA is not an end itself but a mean to regulate the insurance market which is already overdue from efficiency point of view.