Explaining the concept, IRA officials said the guidelines would limit the rate of increase in the cost of repairs or health care from year to year by protecting the quality and accessability of hospital care and repair-related services available to the policy-holders

According to the IRA, this is intended to promote the public interest. The guidelines would encourage service providers to make the most efficient use of the resources available to them in providing quality services, the officials said.

At present healthcare insurance is available to the Indian public through mediclaim insurance and personal accident insurance, but it is not sufficiently developed and the market reach is very poor.

Insurance authorities said that they wanted to ensure that with the entry of private operators - both domestic and foreign - into the insurance sector, the insuringpopulace does not find itself shortchanged by the companies.

Two years back, the then finance minister, P Chidambaram while announcing the opening up of the insurance sector had said that the government intended to allow private operators in the health insurance segment first, but after that there were no further initiatives in this regard.

Cost containment is closely allied to rate making, and IRA will have the responsibility of determining whether the premium rates are reasonable or excessive.

According to the IRA definition ``a rate shall be termed excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if the expense provision included therein is unreasonably high in relation to the services rendered.''

With the entry of more players in the sector, IRA envisages undercutting of rates and inadequate rates are also not permissible as ``a rate shall be inadequate if it threatens the solvency of the insurance company or has the effect of substantiallylessening competition or the tendency to create monopoly in any market.''

In effect, in order to garner clients, insurance companies cannot afford to quote too low a rate. IRA will also be issuing regulations to establish specific standards of full and fair disclosure of insurance policies including terms of renewability and termination of insurance among others.