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

Currently there are three countries -- Cuba, Burma and North Korea -- which do not allow the entry of foreign companies, he said, adding that even they have selectively allowed their entry.

Delivering the M N Choksi Memorial Endowment Lecture at the workshop on ``Future of insurance in India'' organised by Indian Merchants Chambers, he brushed aside the fears that foreign companies, if allowed entry, will take over the Indian insurance business. ``They are unlikely to havemore than 10 to 15 per cent share of the Indian market if and when it is opened up.

Because of the sheer size, years of goodwill and vast infrastructure, LIC and GIC will ensure market share of 80 to 85 per cent,'' he said, "But it is necessary to expose these monolithic organisations to competition, so that they will shed the solvenly ways, if any, in their mode of functioning." Rangachary also ruled out foreign insurance firms repatriating all the premium incomes, leaving India high and dry.``Indian laws require them to reinvest all the premium incomes in the country,'' he said. Pointing out the reality of insurance operations, the IRA chief asked,``Which Indian 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?''

On the other hand, the foreign investor would bring into the country his contribution to the share capital that would be blocked in India without earning a paise for thenext eight years. 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. The IRA would 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 ombudsmen scheme would be launched within a month or two and would be open to individuals with a claim ceiling of Rs 25 lakh, he said.The ombudsmen would be appointed by a panel of IRA members.

Key parameters that the regulator would consider before granting licence to do insurance 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 and quality of management.

The IRA hasalso proposed to set up statutory institutes of actuaries, surveyors and intermediaries on the lines of the Institute of Chartered Accountants of India. A bill for this will be introduced in Parliament soon. Rangachary who has been chairman of Tariff Advisory Committee said he will bring transparency in its functioning.

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