Sixth International Conference on Insurance : Emerging Horizons in The Indian Insurance Industry
October 15-16, 2001, New Delhi

Welcome Address by Shri Rajendra S Lodha, President Elect, FICCI

Hon'ble Finance Minister, Shri Yashwant Sinhaji
Shri N Rangachary, Chairman, IRDA
Dr Ashok Chauhan, Chairman, Amity School of Insurance and Actuarial Science

Mr N N Joshi, Chief Representative, ING Insurance
Other Distinguished Panelists & Friends

A very warm welcome to all of you.

It is indeed an honour and privilege to have amidst us, the Hon'ble Finance Minister, Shri Yashwant Sinhaji, who is the key architect of the Insurance Industry Reforms.

The Insurance Bill as we all know had been hanging fire for several years in Parliament and but for the strong will of our Hon'ble Finance Minister, the privatisation of Insurance Sector would have remained a dream.

Sir, you will be happy to observe that your 'baby' is growing well and an upto date report card indicates many 'A' Grades -

• Thanks to Sri N. Rangachary and his dedicated compact team of 4 members and 16 officers we have in IRDA a World Class Regulator - efficient, transparent and responsive, with total credibility.
  
• The Consumer is King getting more choices, better rates and services. With Sri Ranagachary's announcement of the discontinuance of the TAC administered pricing in general insurance in 4 years, there would be even more healthy competition, pricing and service.
  
• Private insurers are designing attractive products. All of them are investing heavily in research and technology.
  Improvement in Quality of Agents with key emphasis, on training and minimum education level and the emergence of Customer Servicing as a key focus area.
  
• The existing companies are busy transforming themselves to meet the challenges of competition. For instance, the pride of India LIC is gutsily and zealously reinventing itself. For fiscal year 2000-1 its first premium income from new business shot up by a record 65% - the last best performance of 44% on a much smaller base was achieved 13 years ago! It sold 20m. policies and has designed innovative landmark Savings products like the Bima Nivesh Scheme.
  

A fine job has been done.

Though in terms of reach a good 22% of the insurable population is covered, the per capita spent on insurance in India is low at $6 compared to $63 in Malaysia and $770 in Singapore. There is thus a high growth potential that lies ahead and latest estimates indicate that by 2005 the life insurance market could be worth US $16 bn reflecting an average growth rate of 14% p.a. and the non-life market US $4 bn.

There are some issues of concern which industry feels, if implemented would further facilitate the desired growth. I would quickly like to state a few :

• Clearance of the Amendment Bill lying with the Standing Committee.
  
• Absence of Insurance Brokerage and corporate agents which is somewhat hindering the growth of market.
  
• Lack of clarity on the entry of Co-operatives in Insurance Business.
  
• Expediting Pension Reforms.
  
• Some taxation issues are under the consideration of Eradi Committee and a quick resolution would help.
  

And lastly, it is hoped that the Government will take a view on the existing foreign equity limit of 26 per cent once the benefits of liberlisation become evident.

A quick word on Rural insurance. You will indeed be happy to know that according to a FICCI study, most of the new entrants are upbeat on the potential of this market. However, the problems relating to creation of infrastructure and of putting together an effective distribution network could pose problems in achieving the actual potential.

Let me now move from the economic security of the 'individual' to the economic security of our Country for a moment. Growth has slowed down, investment has dried up and faith in an upswing turnaround, is evaporating. A grim situation could get grimmer in the days ahead. Economic recovery will hinge crucially on revival of confidence and your recent reassuring statements in this context have been encouraging, even though not fully appreciated by some. I believe if you lose the battle of the mind then you have half lost the battle & what you are doing to help win this battle is laudable. Sir, your agenda for revival would acquire more teeth - if you please take action on the following fronts:

• Further deepening of your effort on project implementation and raising public investment in infrastructure
  
• A renewed and strong focus on Rural Housing, Roads and Construction sector : leveraging credit and special fiscal windows for a multiplier effect.
  
• How use these huge food stocks in the best possible manner and to ensure no huge wastage
  
• Lower Excise Duty to boost demand off take in a manner that fully compensates revenue loss.
  
• A few striking moves on government expenditure cuts a la Gita Krishnan Report and getting the Fiscal Responsibility Bill passed.
  
• Perhaps your leaning on Reserve Bank for deeper cats in interest rates
  
• Can we not initiate another effort to bring in large resources, hidden today in the grey & black markets of India - Is it the optimum time for a new scheme linked to stimulating
• Housing & Construction.
  

Even in the best of times the job of the FM can be somewhat thankless. In difficult times you have, (through your real cool, total sincerity, integrity and hardwork), demonstrated that Tough Times do not last but tough people do.

We need to tackle deeper systemic maladies through intensive dialogue amongst the diverse stakeholders. We all need to grow and consolidate, during this downturn and in the background of the current challenges, by being nimble in seizing all opportunities that come our way - by making key segments of our economy more efficient. When the crisis blows over and the world picks Itself up and begins to run, our economy is also prepared to join the race — with a sprint and not a limp.

We promise you, Sir, that FICCI and the private sector are fully committed to work with you to rebuild confidence in the economy - to take it to a higher growth trajectory. We trust you 100% from our side.

Sir, as the song goes. "Let us all just do it".