"Insurance is a service industry which should follow without international barriers," Rangachary said, adding that the participation of the foreign insurance companies should not be construed as an intrusion in the country.

At present, even countries like Cuba, Burma, North Korea, which are against the entry of foreign firms, has selectively allowed the entry of foreign companies.

Delivering the keynote address at the MN Choksi Memorial Endowment Lecture on "Future of insurance in India" organised by Indian Merchants Chambers in the city on Saturday, Rangachary allayed fears that the foreign companies, if allowed, will take over the domestic insurance business.

"They are unlikely to account for more than 10 to 15 per cent share of thedomestic market, if and when it is opened up, because the sheer size, goodwill and vast infrastructure of the LIC and GIC will ensure they hold about 80-85 per cent market share," he said. But it is necessary to expose these monolithic organisations to competition, so that they will shed the slovenly ways, if any, in their mode of functioning.

Rangachary also ruled out that foreign insurance companies will repatriate all the premium incomes, leaving the country high and dry.

"Indian laws require them to reinvest all the premium incomes in the country," he said.

"Which domestic entrepreneur is prepared to block Rs 100 crore as net worth and pump in another Rs 100 crore in second, third and fourth year and earn no profit for the first eight years," said the IRA chief on the current insurance scenario. "I am yet to see a domestic company which can undertake this," he said. On the other hand the foreign investor would bring into the country his contribution to the share capital that would be blocked withoutearning a paise for the next eight years, Rangachary said.

The IRA would allow insurance companies the facility of "file and use," he said, adding that an insurance company need only file a new product with the regulator who would ensure that the method of pricing would not be adverse to the company or the customer.

The regulator would also prescribe a series of regulations for solvency and furnish to the authority periodical reports of solvency position, he said.

"Since the insurance business involves a fiduciary relationship, we must ensure that the business is solvent," he said. The IRA will shortly announce the setting up of ombudsmen in the insurance sector to focus on settlement of claims, application of tariff and the documentation process.

The ombudsman scheme would be launched within a month or two and would be open to individuals with a claim ceiling of Rs 25 lakh, Rangachary said. The ombudsmen would be appointed by a committee comprising members from the IRA, Rangachary said.

Keyparameters that the regulator would consider before granting license would be the track-record of the joint venture partners, along with the top management team, their business plan that should ensure easy availability of additional capital, as and when required, and quality of the management. The IRA has also proposed to set up statutory institutes of actuaries, surveyors and intermediaries soon on the lines of the Institute of Chartered Accountants of India. A bill to set to these institutes will be introduced in parliament soon, he said.

Rangachary, who has been chairman of Tariff Advisory Committee, said that he will bring transparency in the functioning of the institution.

IRA Chief's Wish List