In an interview to The Indian Express, New York Life International president Michael J Nocera said as soon as the IRDA Bill is cleared by the Parliament, the Indian life insurance industry will witness arrival of leading players in the world and the resultant competition will reduce premium significantly. ``As it happened all over the world, the premiums will become cheaper to buy a life insurance,'' he said. Some of the world's biggest companies like AIG, Allianz and Prudential have already announced their plans to enter the Indian market with local partners. New York Life has tied up with Max India to float a new insurance venture in India.

He said perceptionabout life insurance will also change as people will not look at only the income tax saving angle of the business. ``With better products and efficient services, the private players will compete for the Indian market of 350 million middle class which is higher than United States population,'' Nocera said.

Life Insurance Corporation -- which has the monopoly in the market -- will see its market share going down significantly though the volumes will certainly grow. ``In whichever country, the insurance sector has been deregulated, the State companies transformed into better players. With this, consumers will become more important and demand higher quality of services than what is being offered at present,'' he said.

At present LIC's corpus, made up of premium income and investment income, is as high as Rs 120,000 crore and the private sector companies are targeting to get a part of this huge pie.

The insurance penetration will also increase as new players will grow the market instead of poaching LIC'sclients. ``We are more interested in getting new business rather than poaching LIC... though we are of the view that a customer should have the option of all the products,'' Nocera said.

In India, insurance premium is one per cent of the Gross Domestic Product (GDP) which is lower than US's seven per cent and Japan's 8 per cent. Even in Taiwan, insurance penetration grew to three per cent from one per cent as soon as insurance industry was thrown open. ``We are expecting that the Indian insurance industry will also grow to three per cent of GDP in the next five years as new players will bring innovative and newer products into the country,'' he said.

Although LIC will remain a dominant player in the market but due to its inherent weaknesses like red tape, government intervention in investment decisions and lack of consumer focus, the Corporation will face the onslaught of competition.

Max India sets up NBFC
MUMBAI: Max INDIA, belonging to Analjit Singh of the Max group, has set up anon-banking financial institution to invest its Rs 320 crore realised from the sale of its stake in telecom venture Hutchison Max Telecom.

The new company, Max Corporation Ltd, has received an amount Rs 220 crore from Max Telecom to begin its NBFC business. The company has invested Rs 94 crore, 39 per cent of its total corpus, into short term secured and unsecured debts and invested Rs 56 crore in mutual funds. Of the total Rs 551 crore realised from Max Hutchison venture, the company has given a special dividend of Rs 100 per share last fiscal year which resulted in a total outgo of Rs 117 crore.