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N.S.Vageesh

Chennai , April 22

WOULD you enter a business where all the new entrants are making losses? Not likely.

Yet this is the scenario in the life insurance industry, where more players seem willing to jump in. According to Mr Graham Morris, Director of Watson Wyatt, a leading insurance and financial services consulting firm, "There are at least 15 potential entrants in the life insurance business. A couple of them have evinced interest in getting into this business and have been talking to us for engaging our services."

None of the 12 private life insurance companies, which have been in the business for four to five years, have yet turned in profits. In fact, the dozen companies have posted losses of nearly Rs 1,000 crore in 2003-04. Industry experts say that it takes between 6 and 7 years for a life insurance company to break even.

Will we see more players entering the fray any time soon?

Mr C.S.Rao, Chairman of the Insurance Regulatory and Development Authority (IRDA), said, "There is only one application from a prospective insurance company pending with the IRDA. It has no information whether more players would enter the fray."

It was recently reported that the Reliance group had not yet used the licence that it had secured for its proposed life insurance venture three years ago.

Interestingly, Mr Rao said "There is room for more players in the insurance industry."

When asked, if the IRDA would consider revising any of the entry norms, based on the experience of dealing with the existing players in the industry, Mr Rao answered, "There is no need to revise any of the entry norms/barriers for the prospective entrants."

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