Harish Palaniappan's

As part of Bush's visit to India, an Economic forum was held in Hyderabad in which many of India's notable CEO's met a CEO delegation who travelled to India with Bush. Also present was the indian Finance Minister.

The Finance minister P.chidambaram said, "India is biggest untapped market in the world. Hardly 10% of India's population is insured. There's a lot that foreign markets can reach. I invite foreign investment in the sector, and assure that the parliament can be convinced if any policy changes or amendments in laws are required"

This is a very ridiculous invitation.

Insurance is the most easiest way for a company to make money... you only need to sell it, money can be locked up until there is an insurance claim, and even accrued amounts in endowment plans need to be paid back only after many years. The money that goes into insurance is not recoverable as and when needed...people cannot close the account and rollback.. that's the whole idea.

Allowing international insurance companies to set-up wholly owned business here is Foreign Investment only for the first few years, after that its a lot of your money going out of the country as insurance premiums paid to foreign companies...that too for nothing, not even a cup of coffee, just nothing until they pay-back date comes or a claim occurs.

Already there are many insurance companies in India which enter the market in a partnership mode where they get to own upto 70% of the company with the indian partner... such companies are ING-Vysya (Vysya is indian), Tata-AIG (Tata is indian, AIG if foreign partner), Bajaj-Allianz .. etc.,

Also, to my knowledge, many of these companies showed respectable results in 2004 and 2005. Historically, the Indian government reserved the insurance sector for public goernment-owned companies for a very long time until only recent few years where these companies have been marketing hard. Now inviting foreign companies is good for may be the government but not for people who are already finding big confusing differences with policies of existing large number of players.

Only things possible with international competition in insurance sector, are probably,
> Could make insurance cost lesser (but international companies don't enter a market to cost cheaper for customers..so they won't go too cheap to trigger an big drop)
> Could bring many more kinds of insurance... and lot of things that indian companies don't do like insuring computers against viruses could become possible..

But, money paid to insurance companies is like 'lost money', which becomes 'lost-n-found' only when the insured dies... or, if it is some kind of endowment plan or pension plan, 'lost-n-found' on maturity which will be many years away for all plans. Its easy money into pockets of insurance companies which need to do only marketing much of the time.

Its more of 'Investment by India into foreign companies', than 'Foreign Investment into India'. Is Mr.Chidambaram crazy?