'Our target is to generate I 0 per cent of our business from outside India within the next five years,' chairman G. N. Bajpai told the media in the southern Indian city of Bangalore. At present, our overseas business accounts for just around 0.5 per cent of the total. The decision to foray into the US, Australia, New Zealand and Canada is intended to help meet the target,' he continued.

As for LIC's existing UK operations, based in London, Bajpai said they are being 'recast' to tune business to the requirements of the European market but did not elaborate. Of all the foreign operations of LIC, the one in neighboring Nepal seems to be the most successful.

'We see very good potential in Nepal,' Bajpai said. Having recently started business in the Himalayan kingdom, LIC has sold 1,000 policies so far and targets I 0,000 in its first year. The operation in Nepal is a joint venture with the locally based Vishal Group which holds a 25 per cent stake, Of the remaining 75 per cent, 55 per cent is held by LI C, and the rest by the general public.Bajpai said LIC is also strengthening its operations in Africa through its Mauritius branch. Fiji, a country with a huge population of Indian origin, is also being developed. And through it joint venture in Bahrain, the company is catering to the large community of Indian expatriate workers working in the Persian Gulf. LIC - which has been holding its for-t very effectively against the invasion by multinational insurance giants - has been operating in overseas markets for many years now. It has largely been targeting clientele of Indian origin, but this is now expected to change.

A manager from one of the many foreign insurance companies that have recently entered India told: 'For a long time, LIC has falsely projected itself as a global operator. If you operate abroad yet keep your focus on Indians living in the particularly country, you remain very much an Indian company despite your geographical spread. Now, it seems, however, that LIC wants to don the mantle of a truly international company. Good luck to them.'

REINSURANCE rates for projects the world over, including India, are all set to shoot UP, following terrorist attacks on the US, which witnessed the crashing jet-liners into the twin towers of the World Trade Center m New York and the Pentagon in Washington W.

"It is quite natural that insurance companies, which would have taken a hit running into billions of dollars, would increase their rates in order to make up for the huge losses," said D Sengupta, managing director of General Insurance Corporation of India (GIC), the Indian national reinsures

"They would simply have no option but to hike premiums. And this step will affect all countries, including India. Corporate, especially those putting up mega-projects, will be hard hit and will witness an increase in their costs as reinsures jack up rates."

Reinsurance in India is carried out by Indian insurers with American, British, Swiss and Japanese reinsurance companies.. Almost all major industrial projects in India, plus aircraft in the fleets of the state-owned carriers Air India and Indian Airlines, are reinsured by GIC with overseas-insurers.

Some of the large private sector insurers like Tata-AIG and Max New York Life, which are Indian joint ventures with foreign insurers, are expecting their partners to clock up big losses back home.

"It is too early to say anything at the moment, but looking at the kind of carnage induced by the collapse of the twin towers of the World Trade Center in New York, you could easily expect a large hole in the pockets of the American insurance outfits," said a senior official of Tata-AIG.

Most of the "liquid funds", like foreign institutional investors, are likely to invest back in the US treasuries - a step that would affect both the Indian currency and portfolio investments.

"Ultimately, it would be the consumers who would be the losers," said Ashok Kapur, Mumbai chief of Rabobank.

The proposed 'terrorist pool' supposed to give insurance protection in event of terrorist damage, has been formally structured. For one, a single exposure, per location and per event has been pegged at Rs 175 core against 200 core as earlier planned.

General Insurance Company (GIC) and New India Assurance will each contribute Rs 50 core to the pool. The other three nationalized insurance companies, National Insurance, Oriental Insurance and United India Insurance will commit Rs 20 core each. And, six private sector companies will chip in Rs 2.5 core separately.

Senior insurance industry sources said at a recent meeting between insurance companies and the Insurance Regulatory and Development Authority (Irda), it was decided to cap the maximum annual e exposure at Rs350 core.

The corpus of the 'terrorist pool, to be managed by the GIC will be enhanced each year. The pool will also be protected by an 'excess of loss' cover. For this, GIC is also working out overseas reinsurance arrangements.

The need to charge a separate premium (industrial and non-industrial for 'terrorist damage' from next month was decided by the insurance regulator and the Tariff Advisory Committee (TAC) early this month. Terrorist covers will now be treated separately from its earlier clubbed status as RSMTD (riot, strike, malicious and terrorist damage). The need to do so was being increasingly felt with most reinsures refusing to underwrite terrorist risks.

Under the new scheme, a separate Premium will be charged for the 'terrorist' component and 'RSMD'. This Premium amount will be collected by all Indian private and public insurance companies and go to this '100 per cent terrorist pool'.

'The small amount collected as premium will necessitate GIC to work out overseas reinsurance arrangements, said sources. Although the retention with GIC is yet to be decided, insurers take a guess at Rs 50. Core out of the total Rs 175 core. The intention is to phase out excessive dependence on reinsurance covers in future years.

The terrorist pool, which will function almost as an insurance entity, will have its own accounting, investment norms and profit and loss statement, sources said. In the event of non-occurrence of claims, the pooled amount will be enhanced in the successive years.

The 10 percent surcharge on all fire and engineering policies introduced in October last year will discontinue under the new scheme of things.