It was felt, that apart from money, the foreign companies did not have anything special for India. As a result, the Cabinet further postponed a decision on this crucial issue.

Unfortunately, the opponents of foreign entry forget the advantages which will accrue to customers because of competition. Apart from years of expertise developed in this fast-changing services sector, the entry of foreign companies will expose Indian customers and the domestic players to the best practices adopted by insurance firms.

A recent study done by UK-based Royal and Sun Alliance has compared the response time for an insurance company across different categories. It shows the difference in attitude andspeed of decision-making. In the case of motor insurance for instance, it will take at least 45 days for any reimbursement to be made to the owner of a car involved in an accident. In the developed world the insurance company will immediately offer a replacement while the claim is being processed. And unless there is extensive damage to the car the original car will be repaired and sent back within four days.

If an accident occurs because of the negligence of one car driver, then both the drivers will place their claims on the insurance company of the negligent driver. This ensures that the one company has an overall view of the situation and expedites the claims faster. In India, each driver would file a claim with his or her own insurance company.

In another crucial difference, the premium for both drivers will go up after the accident in India. But in the developed world, the premium will be raised only for the person who caused the accident. The victim of the accident will not have to suffer a higherpremium for another person's mistake.

In the case of fire insurance, the procedures and the differences are even more stark. A comparison of the best case scenario exemplifies the difference. In one case when a storm hit Ottawa, Canada, the company received a call at 8 a.m. about a house which had burnt down because of an electrical mistake. A surveyor was with the insured family in half-an-hour. After a quick inspection of the house, the family was given an on-the-spot cheque of $5000 to tide them over the crisis. Even if one were to take this case as an excellent but rare example of speed and efficiency, such a scenario can't even be imagined in India. Here offices don't open before 9.30 a.m. Even if a claim is heard over the telephone, a surveyor will take at least half-a-day to reach the site. He will have no authority to issue cheques, but only to inspect the fire site. Documentary evidence about proof of ownership of house, contents of house, depreciation figure would be brought into play. It wouldtake 15 to 90 days for a report on the case to be prepared. In a large claim it could take a year. Once the report is received, the insurance company will seek fresh information before it is convinced about the case.

The actual time between date of fire and final claim would be two months for a small claim to two years for a larger one.

These issues would be taken up for discussion in the next Cabinet meeting on foreign investment in the insurance before arriving at a final decision.