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| Change in single-pay plans on cards: Irda
Single premium product, which has caught the fancy of the life insurance industry after the change in regulations around unit-linked insurance products, may be in for some reform.
"We need to think about the need of insurance as long-term business. Focus had shifted to three-pay or four-pay products and, even worse, to single-pay products. Industry based on single premium is not good," said Irda chairman J Hari Narayan. "We need to re-emphasise insurance as a long-term business. The marketing and selling of products (like single premium) have de-emphasised the long-term nature of the business." Single-pay products are insurance policies where policyholders need to pay premium only once while he or she is covered for the term of the policy. In 2011-12 so far, the total single premium , including group and individual , has gone up by 46% compared to 49% in 2010-11. Pointing to the decline in business, Hari Narayan said that this is not a function of regulatory changes but because insurance companies have not build the kind of trust required. Internationally, however, he said that de-growth has been even sharper. He said that 2012 is going to be worse than 2011. "Therefore, 2013 is going to be better. The best way to go forward is to start from absolute bottom. Future is going to be better than what the immediate past has been," he said. The life insurance industry has seen a 17% fall in new business premium income in April-December 2011 compared with the same period last year. He noted that there are difficulties in pension products. Such as lack of certain long-term instruments to hedge. Though insurance companies are allowed to invest in interest rate derivatives, it is only for a short period. Hari Narayan said that there are indications that we would like to develop derivatives market on debt front like RBI has come out with swap in corporate debt. A high-level committee of regulators has suggested that all long-term products should be given tax incentives in order to underpin and strengthen the industry, he said. Icall Soft Source : The Economic Time |
| HDFC Life launches first international operations in Dubai
HDFC Life, a private life insurance company from India, has launched its first international operations with the opening of its representative office in Dubai.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC) and Standard Life plc, the leading provider of financial services in the United Kingdom. "The launch of our operations in Dubai is the beginning of HDFC Lifes expansion into the region. The vast NRI population would be able to closely understand the benefits of HDFC Lifes wide ranging product portfolio catering to their protection, investment and savings, and retirement needs. "The objective of this office would be to serve our existing policy holders and further understand their financial needs better," Anup Rau, Head, Sales and Distribution, HDFC Life said at a press conference here. Commenting on the strategy and reasons for international expansion, M I Taher, Vice President and Head, International Business - HDFC Life said GCC is an important region for the companys growth and UAE with a large NRI population base, is key to this growth. "The objective of our operations in Dubai is the first step towards understanding the Gulf market, the customer segments, apart from serving our existing policy holders and further understanding their financial needs. Our presence in this region will help us research the market better and devise new products catering to the specific needs of the NRIs here," he said. Icall Soft Source : The Economic Time |
| New business income for life insurance companies down 17%: IRDA
Sales of life insurance policies continue to decline even during the tax-saving season. According to the data released by the Insurance Regulatory and Development Authority, or Irda, new business premium income for life insurance has fallen by 17% to Rs 71,953 crore during April-December, 2011, from Rs 86,698 crore a year ago.
While private sector saw a drop of 20.34% in income from sales of new policies during the first nine months, state-run Life Insurance Corporation registered a 15.86% fall. Large private insurers like SBI Life and ICICI Prudential witnessed a drop of 19.82% and 33%, respectively. Industry experts blame non-availability of pension products, curbs on guaranteed products and delay in product approvals for the drop in income from insurance. The only private sector insurer to register an increase in income was Metlife. The company recently sold its stake to the second-largest public sector lender Punjab National Bank. It has done a business of Rs 150 crore through the bank. The company has applied to the insurance regulator for approval of the deal. The regulator is reviewing the proposal and is likely to announce the deal in a month. The volatility in the market has also acted as a deterrent for the sales of policies, especially Ulips. Icall Soft Source : The Economic Time |
| Insurance companies tie up with banks to lure customers
One cant have the cake and eat it too, but public sector banks can do it, thanks to their solid brick and mortar business model and decades-long sticky customers who can be a perennial source of revenue for insurers.
Max New York Life, Sumitomo and Birla Sun Life are queuing up at the doors of Bangalore-based Syndicate Bank, offering a stake in their insurance ventures, and also hundreds of crores to own that stake, turning known business principles on their head. Max New York is offering a 4% stake in the company and Rs 400 crore to Syndicate Bank to become a monirity stakeholder that can open the doors for selling life cover to lakhs of the uninsured middle class in more than its 2,500 branches, said two people familiar with the offer. Sumitomo is dangling the carrot of Syndicate Bank not having to invest capital for seven years but keeping its stake stable, while the Japanese company keeps investing funds to grow the business, said people requesting anonymity. "Whenever there is demand in the system and supply is limited, there is acute competition," said Rajesh Sud MD and CEO, Max New York Life. "The need for low-cost distribution has increased in the new regime." Budding private insurers, who battle a Goliath called Life Insurance Corporation with an army of 15 lakh agents, are leaving no stone unturned to tap the vast emerging market where incomes are rising. One popular way to reach out to new customers without investing on overheads is to tie up with banks which have lakhs of customers, who could be lured to buy insurance as well. HDFC Life, ICICI Prudential and SBI Life are among insurers who have effectively used the bank channel to grow. "The key issue is that insurance companies cannot sustain without banks," said Ravi Trivedy, partner KPMG. "Banks bring with them ready infrastructure and customer base. This is the sweetest deal any bank can think of," he said. The life insurance industry which was growing at 30-35% on an annual basis is struggling after regulatory changes slowed the sale of the so called Ulips. For private insurers, nearly a third of their new premium income came from the so called bancassurance where banks sell insurance policies to individuals. If a deal happens between Syndicate Bank and any one of the insurers, it will be the second such instance where banks are paid to take a stake in an insurer, said the sources. In September 2011, MetLife India, the Indian unit of the US insurance firm, paid around Rs 350 crore to PNB to own a 30% stake in the company, making the state-run lender a JV partner. Icall Soft Source : The Economic Time |
| Punjab National Bank waiting for IRDA nod on Metlife deal
Awaiting regulatory approval for its proposed acquisition of a 30 per cent stake in insurance company Metlife, Punjab National Bank (PNB) has said it will not disclose the rationale behind the move or the financial details until IRDA gives its nod.
"We are waiting regulatory approval from the Insurance Regulatory and Development Authority (IRDA) for the deal and unless that comes through, we will not disclose the details and strategy," PNB Chairman and Managing Director K R Kamath told PTI on the sidelines of the 100-year celebrations of the banks operations in the eastern region. Kamath said PNB does not foresee any hurdles in the way of the deal, which was announced five months ago, and would unveil the transaction details after approvals were in place. If the proposed deal goes through, PNB would become the largest shareholder in the insurance company. Speaking about overseas expansion, Kamath said the bank is awaiting approval from the Canadian authorities for setting up a subsidiary in that country, besides the regulators nod in Oslo, Norway. "We have applied with Reserve Bank of India for Maldives and after receiving positive feedback from a survey, we will soon move to our regulator to foray into Bangladesh," he said. Singapore, Brazil and South Africa are also on PNBs radar, he added. To a question, Kamath said there was stress on the banks asset quality, but declined to provide further details. The bank is targeting total business worth Rs 6,66,000 crore during 2011-12. As of December, the bank has achieved business worth Rs 6,21,000 crore. Icall Soft Source : The Economic Time |
| Life insurers income falls for first time in a decade investor indifference to Ulip the main reason
Indias life insurers face the prospect of growth faltering this fiscal - for the first time since the opening up of the industry - as a combination of regulatory restrictions and investor indifference to unit-linked insurance products, or Ulip, hurt sales of what was once the industrys best-selling product.
The slide in Ulip sales and a lack of pension products in the market have had an impact on the industrys total premium income, which has been negative year on year so far this financial year. "For the first time since the sector was opened up, the total (year-on-year) premium is negative," said SB Mathur, secretary general, Life Insurance Council. "Very few Ulip products are selling. People are looking for guarantees," he said, summing up the state of the industry and investors. The rate of increase in renewal income has dropped from 10% to 4% this year. There has been a fall in the number of policies sold, too. While the industry had sold 4.8 crore (480 million) policies in 2010-11, it has been able to sell only 300 million so far this year. With just two months to go for the financial year to end, insurers say it is unlikely that they will be able to match previous years sales figure. In 2010-11, the average premium on policies rose from about 5,000 to about 15,000. The total premium income was, therefore, positive even though there was a decline in the number of policies sold. The tide started changing for insurance companies from September 2010, as policyholders started opting for conventional policies, such as moneyback and traditional pension policies, due to a change in regulations that rendered Ulips unattractive. Under the new rules from insurance regulator Irda, policyholders have to stay invested in a Ulip for five years, compared with three years earlier. The bearish sentiment in the stock markets has also hurt Ulips popularity, since they were unable to post decent returns, putting off investors Icall Soft Source : The Economic Time |
| Cigna TTK Health insurance planning expatriate insurance policy
Now, Indians going abroad for a longer period can buy mediclaim and personal accident and for different countries.
Cigna TTK Health insurance, which is in the process of applying for health insurance licence to the Insurance Regulatory and Development Authority or Irda, is planning expatriate insurance policy. This is a joint venture between- Cigna International -US based Health Insurance Company and Chennai based TTK group. As per the law, foreign partners can have 26% stake. Cigna will look to increase its stake to 49% as and when the laws are relaxed. "We are talking to employers and see what the product can do to India. The idea around the product is to make it global, As part of R2 we need to be clear about our products," said Sandeep Patel managing director Cigna TTK. The company will look to target employers like IT companies, who send their employees on an onsite visit for a couple of years. The product will be customer centric based on their lifestyle. "Every individual is different so each ones need is going to be different. We have been talking to the regulator. Irda is emphasising on simple product," Patel added. Cost of healthcare in US is higher, so people planning to stay in US will have to shell our higher premium than people travelling to other parts of the world. Cigna has got over 9,000 providers in the world. Other companies like Tata AIG General Insurance has business travel accident cover, which insures people visiting to countries outside but for a limited time that is 180 days. The size of this market is around Rs 100 crore. The joint venture plans to start operation by the first quarter of 2013. It has a break-even target of 5 years. To foray into the health insurance space, TTK has exited from its TPA business. "We will be selling health insurance products through 400 retail outlets and 1,00,000 pharmacies," said TT Jagannathan, chairman TTK group of companies. The company is in the process of hiring people. Cigna would be selling products through different channels like direct marketing and internet, said David Cordani CEO of Cigna Corporation. Icall Soft Source : The Economic Time |
| Now, workers in unorganised sector under health insurance scheme
The union cabinet Thursday brought workers in the unorganised sector under the cover of Rashtriya Swasthya Bima Yojana through which they are entitled to smart card-based cashless health insurance cover of Rs.30,000 per family every year.
The cabinet extended the benefits of the scheme to building and other construction workers, the Mahatma GandhiNational Rural Employment Guarantee Scheme ( MGNREGS) beneficiaries, street vendors, beedi workers and domestic workers, an official release said. The beneficiary family will have to pay Rs.30 per annum per family as registration/renewal fee while the administrative cost is borne by the state government. Under the scheme, the central government contributes 75 per cent of the annual premium while the state governments contribute 25 per cent. In the northeast region and Jammu and Kashmir, the premium is shared in the ratio of 90:10. The decision was taken after the cabinet reviewed the implementation of the Rashtriya Swasthya Bima Yojana, launched Oct, 1, 2007, as the health insurance scheme for families living below the poverty line. It was operationalised in April 2008. Icall Soft Source : The Economic Time |
| Irda imposes Rs 20 lakh fine on Future Generali
The Insurance Regulatory and Development Authority today imposed a fine of Rs 20 lakh on Future Generali Life Insurance for procuring business through unlicensed agents.
Irda in its investigation found out that unlicensed individuals have solicited business for an entity "Insurance For You (Future)" that has not been approved by the Authority as Corporate Agent. "The Insurers contention that the business booked by the individual agent was inadvertently categorized under corporate agency is not acceptable. The Insurer has also not been able to explain to the satisfaction of the Authority, the reasons for signing of the Agents Confidential Report by persons other than the agent," Irda said in a circular. The regulator said this is a substantive violation where the Insurer has permitted various unlicensed individuals to solicit and procure business through Insurance For You (Future) when the entity itself was not licensed. The company is asked to pay the fine within 15 days. Icall Soft Source : The Economic Time |
| Irda slaps Rs 2 lakh fine on MetLife India
The Insurance Regulatory and Development Authority has penalised MetLife India Insurance for delay in communicating and processing a life insurance policy.
In order to protect the interests of the customers including the timely commencement of insurance coverage, Irda has mandated that all proposals should be processed by insurers with speed and efficiency and all the decisions should be communicated in writing within 15 days from the date of receipt of proposals. The regulator has issued a show cause notice to the company in August 2011. During its investigation, Irda observed that the insurer did not pay sufficient attention in promptly communicating in writing and refunding the proposal deposits collected from the complainant within the prescribed timelines Icall Soft Source : The Economic Time |
| Smart things to know about Surrender value
Surrender value is the amount an insurance firm pays a policyholder if he opts for voluntary termination before the policys maturity or occurence of the insured event.
It is that part of the premium payment which goes into an investment account and earns a return. It is also known as cash value or policyholders equity. Surrender values are available in investment-cum-insurance policies, such as endowment plans, money-back plans and Ulips, since they originate from the investment component. The surrender charges applicable for the first four years have been fixed by the Irda and are computed as a fixed percentage of the annual premium or fund value, whichever is lower. Surrendering a policy is not recommended, especially in early years, since the cash value of the policy may not have grown in value in a limited time and, therefore, may be in the negative. Policyholders can take a loan on insurance policy against the surrender value. Insurance companies certify the amount of surrender value. Icall Soft Source : The Economic Time |
| LIC lays claim to no.1 spot in settlements
Life Insurance Corporation remained well ahead of private rivals in living up to the purpose of insurance by settling 97.03% of claims in 2010-11, helping the state-run giant retain its market dominance even a decade after its monopoly ended.
Settlement of claims at LIC rose from 96.54% in 2009-10, the Insurance Regulatory and Development Authority said in its annual report. For the private sector, where the premia on policies are lower than for LIC, the claims-to-settlement ratio was 86.04%, up from 84.87% in 2009-10. Higher the ratio of settlement to claims, the more customer-friendly a company is. The regulator does not provide statistics for individual private firms. "Insurers should take all steps to ensure the incidence of claim repudiation is reduced to the barest minimum," the regulator said in its annual report. "For this to happen, they should adopt measures to explain to the parties upfront the exact coverage and exclusions." LIC, which controls nearly three-fourths of the market, scored on another front: its repudiation of claims declined to just 1% in FY11, from 1.21% a year earlier. The remaining claims are under dispute. For private life insurers, repudiation rose to 8.90% of claims from 7.61% in FY10. Settlement of claims is the key factor that decides customer satisfaction and a companys profitability. While genuine claims are usually settled by both private insurers and LIC, private players see more disputes. Stricter due diligence means more fake claims are detected at private companies, while LIC is relatively lax in rejecting fake claims, reducing its profitability. "Insurance is not what you sell, but deliver," said AK Dasgupta, MD, LIC. "People trust LIC because of our strong claims settlement record. They know we have the ability because of our balance sheet and intention. People need insurance for two reasons - uncertainty and good return." In 2010-11, life insurance companies settled 8.13 lakh claims on individual policies, with a total payout of Rs 7,595 crore. As many as 17,350 claims amounting to 336 crore were repudiated. Icall Soft Source : The Economic Time |
| IndiaFirst Life Insurance ties up with Vidharbha Kshetriya Gramin Bank
Private insurer IndiaFirst Life Insurance today said it has tied up with Vidharbha Kshetriya Gramin Bank - a regional rural bank sponsored by Central Bank of India, to reach out to its customers in the hinterland of Maharashtra.
"This new tie-up will help us serve our customers in rural areas in a better and effective way. There is an urgent need in the country to not only take financial services to the rural populace but also to make them financially literate for true development to take place," IndiaFirst Life Insurance Managing Director and CEO P Nandagopal said in a release issued here. The insurable population of the functional area of Maharashtra is about one crore, from which the company expects to cover nearly 1,00,000 accounts in three years. Through this tie-up with Vidharbha Kshetriya Gramin Bank, IndiaFirst will reach over 100 branches across five districts. IndiaFirst is already present in Maharashtra through over 455 branches of Bank of Baroda and Andhra Bank with Maharashtra contributing approximately 12 percent of its total business. Vidharbha Kshetriya Gramin Bank launched the Group Term Plan today that provides a life cover of Rs one lakh for mere Rs 264 per year and Group Credit Life Insurance to cover home loan, personal loan and educational loan for its existing and as well as new loan customers. "We are keen on spreading protection to the five districts of Maharashtra -- Akola, Amaravati, Wasim, Buldana and Yavatmal -- through the saving and loan accounts of Vidharbha Kshetriya Gramin Bank," Vidharbha Kshetriya Gramin Bank Chairman M A Salam said. IndiaFirst is promoted by two public sector banks - Bank of Baroda and Andhra Bank along with UKs leading risk, wealth and investment company Legal and General. Bank of Baroda holds a 44 per cent stake in IndiaFirst, while Andhra Bank and Legal General hold a 30 per cent and 26 per cent stake respectively. Icall Soft Source : The Economic Time |
| Now, you can insure marriage against losses!
Marriages are made in heaven, but they can very well turn sour on this earth, by way of getting cancelled or not proving to be fruitful after being consumed.
Seeing a business opportunity here, the insurance companies have come out with an innovative proposition, wherein they would insure the weddings against their postponement of cancellations for certain reasons. The catch is that the insurer will not pay for marriages turning sour due to personal differences between the bride and the groom, and the claims would be entertained only for losses due to external factors like accidents, catastrophes or unintentional man-made disasters or disruptions. At least two Indian insurance companies, ICICI Lombard and Bajaj Allianz, have come out with the exclusive Wedding Insurance products, while some others are providing similar coverages under their more generalised insurance policies. Experts say that the wedding insurance covers are currently being availed mostly by HNIs (High Net Worth Individuals) and celebrities, given the high costs attached with their weddings, but insurers also want to tap others for these policies as wedding bills are as such on rise across the board. Accordingly, Bajaj Allianz is offering wedding insurance with premium payments of as low as below Rs 4,000, and as high as close to Rs 15,000. As per its website, it has four insurance options -- Rs two lakh, Rs four lakh, Rs six lakh and Rs eight lakh and the indicative premiums for these four options range from Rs 3770 to Rs 14276. The policy covers "wedding cancellation/postponement due to fire or any natural disaster, accident of bride/groom, accident of blood relations resulting within seven days of the wedding date, damage to property including the venue, burglary and even cases of food poisoning at the function." Noting that wedding is an expensive, but once in a lifetime event, Bajaj Allianz said that any postponement or cancellation involves a certain risk of monetary loss, and its wedding insurance acts as a safeguard against "unforeseen events that could postpone or cancel your wedding." ICICI Lombard, on its part, provides insurance cover for the wedding cancellation, material damage to the property such as wedding venue, personal accident cover for insured person (bride or the groom) and any public liability arising out of the cancellation. ICICI Lombards insurance product covers cancellation or postponement of the wedding ceremonies due to factors ranging from fire, earthquake or burglary and theft at the venue. Besides, it also covers for "sudden, unexplained, unintimated failure" of the bride or the groom to appear for the wedding ceremonies due to reasons like, death, personal injury or any major illness. The expenses that would be covered include those for printing of cards and the advance payments for the venue, caterer, decorations, music, hotels and travel. However, it would not cover the wedding cancellations due to factors like Bandh or civil unrest, any act of terrorism, kidnapping, complete breakdown of transportation services. Also, any non-appearance of the bride or the groom coming on an air flight, other than as a passenger in a licensed commercial aircraft, without the knowledge and consent of the insurer, would also not be covered. Any unexplained or mysterious disappearance or shortage in respect of the venue would also not be covered, neither the damages to the property that is "caused intentionally by the Insured or at insureds direction," ICICI Lombard says. Icall Soft Source : The Economic Time |
| Insurance Regulatory and Development Authority finally junks third-party motor insurance pool
The Insurance Regulatory and Development Authority has dismantled the four-year-old thirdparty motor insurance pool blamed by private insurers for their losses, but is replacing it with a smaller one that may force state-run companies to improve efficiency.
The new plan provides an option to insurance companies to choose the liabilities they would bear totally, meaning they would pay up 100% of the claims. Where they see high claims, such as on trucks, they can dip into the pool, where every insurer contributes depending on its market share. "The existing Indian third-party motor pool shall be dismantled," the regulator said in a note on its website. The third-party pool, introduced in 2007, has been criticised by private insurers saying they are forced to bear the burden for sloppy due diligence done by public sector general insurers. But the state-run insurers say their presence across the nation, even in smaller towns unlike private ones that cherrypick customers in cities, make them vulnerable to disproportionate claims. "Earlier, everything was going to the pool," said Gaurav D Garg, managing director and CEO, TataAIG General Insurance. "It had become the biggest insurance company in itself. Efficiency of managing claims was low. Now, overall size will reduce and become equitable." The latest move by Irda will enable insurers to decide on whether they want to write the thirdparty liabilities in a policy involving a Maruti car, or a Mercedes Benz, or a Tata truck. They could choose to pay up claims in cities where accidents may be less frequent, while transferring to pool those coming from hinterland, where there are more accidents. This, in insurance parlance, is called declining risk pool. New India Assurance had plunged into losses last year for the first time in 91 years due to third-party motor pool. The current pool is likely to see around 4 lakh claims this year, and is forecast to get a contribution of around Rs 5,400 crore. But the payout may be around Rs 8,000 crore, inflicting losses on every insurer. Public sector general insurers have lost more than Rs 25,000 crore in the past 20-30 years. "The new pool structure is an important first step towards addressing the issues around commercial vehicle third-party insurance and reforming them," said Ritesh Kumar, chief executive at HDFC ERGO. "The structure is simple to implement and ensures there are no supply-side constraints on availability of insurance covers." The declined pool would be extinguished at the end of every underwriting year by transferring the risks at par to members who have not fulfilled their mandatory obligations. Every insurer will have to underwrite a minimum percentage of standalone commercial vehicle motor thirdparty insurance, the regulator mandates. This would be in proportion to the sum of 50% of the companys percentage share in total business, and 50% of the total motor premium of the industry in a current year. Icall Soft Source : The Economic Time |
| Motor insurance premium set to rise from April
Motor insurance premium is set to jump by up to 20 per cent from April 2012, with the IRDA today deciding to scrap the common pool used by insurers to settle accident claims.
"The Authority hereby orders the dismantling of the existing Indian Motor Third Party Pool System with effect from March 31, 2012," an order by the Insurance Regulatory Development Authority (Irda) said. "The general insurers who have issued the policy shall also be responsible for servicing them and settling the claims as and when they arise," it said. The dismantling is being done as part of reforms in the Indian Motor Third Party Pool system, the regulator said. According to analysts, the scrapping of the fund pool system will lead to rise in motor insurance premium. "Pricing would go up for bad risk and the good risk would actually benefit from lower pricing. But overall I would expect the price to go up by 20 per cent in the long run," Bharti AXA General Insurance CEO Amarnath Ananthanarayanan said. According to ICICI Lombard General Insurance MD CEO Bhargav Dasgupta said, "Pricing of the pool is inadequate now. The dismantling will bring in more efficiency." The pool was formed in early 2007 to ensure availability of third-party cover for commercial vehicles that had been refused third-party insurance. Third-party insurance cover protects the vehicle owner from any financial liability in case of damage to life or property in an accident to the third person. The major public and private sector insurance players have been demanding abolition of the third party insurance pool, saying that the arrangement for sharing claims was denting their profits. Icall Soft Source : The Economic Time |
| Videocon general insurance to get R2 license by December end
Videocon General Insurance- a joint venture between US based Liberty Mutual group and Videocon one of the largest player in the consumer electronics and home appliances space is likely to get R2 licence by the end of this month.
R1, R2 and R3 are different phase of approval given by the regulator before a company can begin operation. While R1 is given after carrying out due diligence of the promoters and basic plans of the company, R2 is granted after the regulator clears the strategy of the company. R3 licence is the final one which leads to commencement of the business. "Large concentration of general insurance business is in motor and health. We are going to mirror the market. We will apply for R3 after we get R2 license," said Roopam Asthana chief executive Videocon General Insurance. The company had formed the joint venture in November 2010. To start with, both promoters are going to infuse Rs 300 crore into the business. This is the second time Liberty Mutual is looking to enter the Indian non-life space. Earlier, in 2008 Liberty had tied up with FMCG major Dabur to form a general insurance venture. However, they parted ways due to the economic slowdown. Icall Soft Source : The Economic Time |
| Government moves to fill up MDs position at Life Insurance Corporation
As the appointment process of CMD at LIC reaches the last leg, the government has also started the process to fill up the post of managing director, which will get vacant after AK Dasgupta superannuates in January. Senior executives such as Sushobhan Sarkar, AK Sahoo, DD Singh, RR Dash and SK Roy have been interviewed for the position.
AK Roy has taken charge of state-run Agriculture Insurance Co. He was general manager at General Insurance Corp of India. The post was vacant after M Prasad, former CMD, retired in October. AK Saxena may join new india assurance board first The government is looking to first appoint AK Saxena on the board of New India Assurance and then as chairman and managing director of the largest general insurance company. The finance ministry had cancelled the appointment within an hour of signing him as CMD on November 25. Sources said there was some legal hitch as he is not on board, which is a necessary criterion to head the state-run firm. Grads, post-grads line up for clerks job at banks Heres an interesting statistic that the chairman of the board of Indian Banking Personal Selection, or IBPS, had to reveal at a recent conference. Though the minimum qualification for a clerk in a bank was XIIth grade pass, nearly 85% of the applicants were graduates and about 20% of them were post-graduates. This very well indicates the level of disguised unemployment in the country. Public sector banks in search of top honchos The government has issued a notification for vacancies of CMDs arising up to February 2012 in public sector banks. Bank of India executive director BA Prabhakar will move to Andhra Bank on January 1, 2012, when R Ramachandran retires. In February, Narendra Singh, executive director of Corporation Bank, will move to Bank of Maharashtra when AS Bhattacharya retires. However, the government has yet not filled the post of executive directors as there are vacancies at Andhra Bank and Indian Overseas Bank. Icall Soft Source : The Economic Time |
| 10-year-old insurers must list within a year, says Irda
Promoters of life insurance companies may have to make a public offer within a year of completing a decade of operations with the regulator keen on nudging these companies towards a diversified ownership.
"Insurance companies will be required to list within six to nine months of completing 10 years. The idea is to have diversified ownership. This is in line with what the Reserve Bank of India had done to new private sector banks," said a senior official at Insurance Regulatory Development Authority (Irda). The regulator has come out with the final guidelines for life insurance companies to raise funds from the public, charting different disclosure guidelines due to the nature of the business that involves policyholders money. The official, however, added that the first set of companies which have completed 10 years will get some leeway in terms of listing timeline. Irda is yet to suggest a standard way for valuating an insurance company. The regulator has asked the Institute of Actuaries of India to suggest a method. "It will most likely be market-consistent embedded value that involves factoring future profits," the official added. However, many companies are likely to oppose the proposal given the market conditions and ownership restrictions in the sector. "The intention of the government is that local shareholders should dilute their stakes. If the 26% foreign direct investment cap is not relaxed, insurers will have to largely look for domestic investors. But the valuation would be different without FIIs participating," said Amitabh Chaudhary MD and CEO HDFC Life. The biggest roadblock to listing the shares is amendment to the Insurance Act, which includes raising foreign direct investment (FDI) limit to 49% from 26%. The proposed legislation is pending before the parliamentary standing committee. "Most foreign partners are looking to increase their shareholding to 49%. They are unlikely to agree on a stake dilution," said a partner with a consulting firm. "No insurance company will be interested in a domestic IPO and the market may not have the appetite either," he said. At present, an insurance IPO will not attract FIIs as the FDI limit is capped. The IPO norms allow loss-making insurance companies to raise funds from public, provided their embedded value is double the share capital. There are 24 life insurance companies. According to a Goldman Sachs report for the first quarter, most large insurance companies like SBI Life, ICICI Prudential and Bajaj Allianz have an embedded value that is twice the share capital. HDFC Life and Reliance Life have expressed their willingness to list. Icall Soft Source : The Economic Time |
| IRDA asks LIC to settle death claims within 6 months
To ensure prompt settlement of claims, IRDA has asked Life Insurance Corporation of India (LIC) to complete all claims-related investigations within the stipulated time-frame of six months.
"The Authority advises the LIC to expeditiously complete all the claim investigations within the stipulated time frame and also put in place effective systems to settle the claims promptly," the IRDA said. The Insurance Regulatory and Development Authority (IRDA) said that while examining the documents submitted by LIC it found there were 300 cases as on March 2010 where investigations were pending beyond six months. "Despite huge number of death claims being handled by LIC, there is still scope for LIC to improve the claim settlement performance and adhere to provisions of regulations," IRDA said. The IRDA Regulations warrant an insurance company to complete investigation within of death claims in 6 months from the date of lodging of claims. Further, a life insurer has to pay or dispute the claim giving reasons for the same within 30 days of receipt of all relevant papers. In September, IRDA had asked insurance companies not to mechanically reject claims on technical grounds, like delay in filing claim documents. IRDA has issued these directives following complaints that claims are being rejected on grounds of delay in intimation and submission of documents to insurers. Icall Soft Source : The Economic Time |
| Bharti ends talks with Reliance to sell insurance JVs stake
Bharti Enterprises said on Friday it has mutually agreed to terminate negotiations with Reliance Industries to sell its stake in two insurance joint ventures that it has with Frances AXA .
Bharti and AXAs life insurance and general insurance joint ventures will continue to develop their operations in India, Bharti said in a statement. Reliance, Indias largest-listed company, had announced in June that it would buy out Bhartis stakes in the two insurance joint ventures, as it sought to build on moves beyond its core energy business. Icall Soft Source : The Economic Time |
| IRDA plans to limit insurers bank tie-ups
In what would affect the businesses of bank-led insurance companies like ICICI Prudential and SBI Life, the insurance regulator is proposing to limit the insurers bank tie-ups in big cities. The IRDA has suggested state-wise regulatory changes, dividing the country into three zones.
The draft norms have proposed to limit insurers to tie up with not more than nine states or union territories in Zone A and six states or union territories in Zone B. Zone A has 13 states and cities, including Maharashtra, Gujarat, Kerala, Andhra Pradesh, Mumbai, Delhi, Chennai and Hyderabad. IRDA has asked for comments by December 12, 2011. This means that companies with pan-India presence will have to shut down their businesses in four out of 13 places. The idea behind opening up state-wise channel is to ensure better use of banks infrastructure. This is expected to increase insurance outreach in the number of bank branches. As per an IRDA study, 7,000 bank branches out of 80,000 sell any kind of insurance product. According to the exposure draft, IRDA said that one bancassurance agent should not tie up with more than one life, one non-life and one standalone health insurance company in any of the states, in addition to one each specialised insurance company. Also IRDA has proposed a limit on insurers to tie up with any bancassurance agent to only nine states or union territories in Zone A and six states or union territories in Zone B. If the general insurer does not have any health product to distribute, the bancassurance agent may tie up with one more general insurance company, carrying on exclusively business of health insurance. Any licence would be in force for three years and thereafter renewed. "Due to recent changes in charge structure in unit-linked products, a number of insurers have exited semi-urban and rural areas as direct agency channels have become increasingly unviable. Allowing banks to enter in to multiple tie-ups will facilitate insurance companies to reduce the cost of distribution," said Aviva Life MD and CEO T R Ramachandran. Icall Soft Source : The Economic Time |
| False accident insurance claim lands four in 3 years jail
A court here has sentenced four persons to three years rigorous imprisonment on the charge of cheating the state-owned National Insurance Company by making a false accident insurance claim of Rs 10 lakh.
Chief Judicial Magistrate(CJM) Joseph David held the four guilty of submitting bogus records in making the claim with the National Insurance Company in 2005. The Magistrate also slapped a fine of Rs 2,500 each on K K Karupasamy, T Karupasamy, V Karupasamy and V Madasamy of Tirunelveli district in Tamil Nadu. According to CBI, which investigated the case on a direction from the Madras High Court, the four had entered into a criminal conspiracy to cheat the National Insurance Company by filing the fake claim. Fake documents were produced to show that T. Karupasamy sustained injuries involving a vehicle owned by V.Karupasamy and driven by V. Madasamy with K. Karupasamy in the pillion. The claim was made before a motor accident claims tribunal in Tirunelveli. Investigation revealed that K. Karupasamy, who did not have driving licence, had sustained injuries in a self-inflicted accident, caused by his own two-wheeler sans insurance cover. Cases were filed under various IPC sections before the CJM court. Icall Soft Source : The Economic Time |
| Federal Bank signs agreement with LIC for maturity proceeds
Federal Bank has signed an agreement with Life Insurance Corporation of India for paying maturity proceeds of LIC policies.
Hitherto the maturity proceeds were paid by cheques from the respective branch offices of LIC across the country and it used to be sent to the beneficiaries one month prior to the due date. Now the proceeds will be credited directly to the beneficiarys account by way of NEFT on due date. Apart from reducing costs for LIC, the policy holders need not wait for the cheque to get cleared, since the payment is credited directly into the account. Question of cheques getting lost in transit or fraudulent encashment etc. would not arise in the newly introduced system. Federal Bank is among the few banks which have signed agreement with LIC. The bank also has a strong IT backbone. Commenting on this occasion Mr. Antu Joseph - Deputy General Manager of Federal Bank says "the alliance will create a win- win situation for all parties involved also giving the customers a hassle free convenient claims option. Icall Soft Source : The Economic Time |
| Life insurers premium income down 21 pc in Apr-Sept
The premium income of life insurance companies declined by 21 per cent in the first six months of the 2011-12 fiscal on account of a lower number of products hitting the market.
The total gross premium of the 23 players in the life insurance market declined by 21 per cent to Rs 49,046 crore in the April-September period of the current fiscal, as per Insurance Regulatory and Development Authority (IRDA) data. The figure stood at Rs 62,361 crore in the April-September of 2010. The countrys largest insurer LIC, which enjoys a 75 per cent share of the total life insurance market, saw its premium income dip to Rs 36,721.4 crore in the six-month period. This was 20 per cent lower than the Rs 45,691 crore premium LIC earned in the corresponding period last year. Experts said life insurance players are not coming out with new products and hence, the new business premium income of these companies is declining. A lower number of unit-linked products (ULIPs) in their product basket is also reducing their policyholder base, they said. Private players also witnessed a 26 per cent decline in premium income to Rs 12,325 crore during the six-month period ended September 30. Industry players said the second half of this fiscal would be comparatively better, as the new guidelines on pension products would help increase sales of regular premium unit-linked pension products. Yesterday, insurance regulator IRDA asked all insurers selling pension products to disclose maturity benefits in the policy documents. The new guidelines replace the earlier requirement of providing a minimum guaranteed return of 4.5 per cent on all pension products, which did not find favour with life insurers. On the other hand, the non-life insurance industry witnessed a 26 per cent increase in gross premium collections during the April-September period to over Rs 28,600 crore. The four PSU general insurers -- New India Assurance, United India Insurance, National Insurance and Oriental Insurance -- witnessed a 25 per cent increase in premium collections during the period. Icall Soft Source : The Economic Time |
| Central Bank of India to hold decision on life insurance biz till March
Public sector lender Central Bank of India is likely to hold its decision of entering into life insurance business for the next six months (till March, 2012) in the wake of uncertainty over capital infusion from the government.
"We are unlikely to take any decision regarding our foray into life insurance business for next six months as there is a lack of clarity on the proposed capital infusion from the government," a top bank official told PTI here. Earlier, the bank has evinced interest to enter into the life insurance business and even invited bidders to forge a partnership in this regard. The official said the public sector lender had received offers from about a dozen interested parties for setting up a life insurance venture. "Though we have received offers from close to dozen interested parties, who are willing to enter into partnership with us, we are not going ahead with the plan as of now," he said. Central Bank of India, which has a tier-I capital of less than eight per cent, has requested the government for a core capital infusion of around Rs 700 crore. "Our priority is to take the tier-I capital to more than eight per cent through the capital infusion and will not invest into any new venture for next six months," he added. Central Bank of India posted a 35 per cent decline in its net profit to Rs 244.25 crore in the second quarter of the current fiscal owing to higher provisions. Net profit of the bank stood at Rs 379 crore in the same period last fiscal. Total income of the bank increased by 34.5 per cent to Rs 5,234 crore during this period. Icall Soft Source : The Economic Time |
| IRDA directs motor insurance companies to ensure nomination papers are duly filled
Insurance regulator IRDA has warned non-life insurers against evading claims on the mandatory personal accident cover that these companies are required to provide with each motor insurance policy.
IRDA has written to the insurers, directing them to ensure that nomination papers for personal accident cover are duly filled in at the time the policies are sold, an official who did not wish to be identified said. The directive follows complaints that insurers have evaded crores of rupees in claims, because either the consumers were not informed or the nomination papers were not properly filled in. The Lucknow bench of the Allahabad High Court had, in April, asked IRDA to ensure that personal accident cover is duly provided with each policy. "We have written to the nonlife insurers to ensure that nomination forms are dully filled while selling the policies. We will introduce stricter penalty clauses if there are complaints against insurers," the official said. Motor insurance constitutes the largest non-life insurance segment, with a share of about 48%. Non-life insurers collected a total premium of Rs 28,604 crore during April-September 2011, compared with Rs 22,744 crore in the corresponding period last year. Under motor insurance, nonlife companies have to provide a personal accident policy cover of Rs 2 lakh to four-wheeler owners and Rs 1 lakh in the case of two-wheelers. Insurers charge an additional premium of Rs 100 from four-wheeler owners and Rs 50 on two-wheeler insurance policies. A finance ministry official told ET: "As far as state-run insurers are concerned, we can take action on our own, but for the whole industry IRDA should assess the amount that is pending," the official said. Insurance activist and lawyer Dhruv Kumar, who had filed a public interest legislation in this regard, however, said: "IRDA has taken too long to take any action. The Lucknow bench had directed the regulator to ensure that the law is followed in letter and spirit." Non-life insurers, meanwhile, maintain that they are doing no wrong. ICICI Lombard said it had introduced the nomination facility in the proposal form for both liability only and comprehensive motor cover for all classes of vehicles since September 2010. "Post recent directive from IRDA, we will start printing nominee details in the policy and shall introduce nominee change options at various customer touch points especially during renewals, transfer of ownership," said Amitabh Jain, vice-president, customer service ICICI Lombard. Bajaj Allianz General Insurance motor insurance head Vijay Kumar said: "We encourage our customers as well as intermediaries to provide complete information when they submit their proposal form." Icall Soft Source : The Economic Time |
| Now gift your live-in partner a mediclaim
This September, Mumbai-based IT services firm iGATE Patni allowed its employees to include their live-in partners for health insurance benefits. Within a month, 36 employees filed such requests. A declaration by the employee and details of the partner were the only requirements to avail a health insurance cover of Rs 2.5 lakh each.
Only the spouse or immediate family were entitled to these benefits till recently. "We want a global image and would like to give employees more options," says S Kandula, HR head, iGATE Patni. The company employs 26,000 people. Six Indian companies, mostly IT and financial services firms, have also asked for such covers for livein partners of employees, according to Metis Insurance Brokers, a Mumbai-based firm that acts as an intermediary between companies and insurance firms. "Queries started pouring in at least three years ago, mainly from American firms with branches in India," says Mallika Sheth, director, business development, Metis Insurance Brokers. Now, Indian firms are also offering this. The law allows live-in partners to avail insurance benefits if they have stayed together for a long duration (the number is not mentioned) and this has helped companies broaden insurance cover. Riders differ across firms Metis officials say some Indian firms have lock-in periods where an employee can get his /her partner covered only after staying together for couple of years after applying for the insurance. These riders however differ across firms, says Sheth. "When I am paying for an insurance cover, who cares whether it is a legally-wedded nominee or a partner," says R Elango, HR Head of Bangalore-based IT services provider Mphasis. The company plans to include their live-in partners from February onwards when the insurance comes up for renewal. "Maternity benefits to have a child out of wedlock have also pushed some to go for an insurance cover," says Sudhir Sarnobat, CEO of Medimanage Insurance Broking. The Mumbai-based insurance broking firm has worked around employees who wanted to have a child out of wedlock and get the company to foot the bill like just another insurance cover. "Our online drop box only specifies spouse and we fill in the same for live-in partners as well," says Sranobat. Those who demanded such provisions were from the junior and middle management and medical insurance was about Rs 3 lakh on an average. It is Corporate Indias attempt to mirror an inclusive and global approach. But not all companies are game yet. The HR Head of a Mumbai-based logistics firm feared that such a change would not be accepted by his employees. Bangalore-based IT firm Wipro allows its employees in US to get their partners insured but is not looking to do the same in India. "There the law forbids you from asking personal questions like the relationship status of the employees etc which is not the case in India," says Samir Gadgil, compensation and benefits head for Wipro. For the Essar group, companies have ability to negotiate on insurance covers only when the size is large and the number of employees who would come out in the open to declare the live-in status are very few. Complicated documentary evidence is a deterrent that prevents the company for going for this option. Insurance brokerages have received many queries on cover for same gender partners as well. This is still not possible in India. Icall Soft Source : The Economic Time |
| IRDA may end third party insurance pool
The insurance regulator is contemplating scrapping the third party motor pool from which claims of all accident victims are settled, possibly doubling the insurance premium for millions of automobile buyers. "The industry has been demanding it for sometime, said J Hari Narayan, Chairman of the Insurance Regulatory and Development Authority.
``This can be one way of going about it," Narayan told ET, after meeting insurance companies. Third party motor pool - a corpus of funds created by general insurance companies - has been opposed by private sector insurers, who allege they are being forced to contribute disproportionately to the corpus. State-run insurance companies, such as New India Assurance, which dominate auto insurance with nearly half the market share benefit from the pool as the liability is socialised. This is one segment where the regulator decides the tariff to ensure that millions of customers are not left without cover, which is mandated by law. Insurers would prefer not to provide cover since it is not profitable. "Fundamentally, we want the pool to be dismantled, said HDFC Ergo General Insurance MD CEO Ritesh Kumar. ``It is not benefiting anyone and pricing has to be corrected." The third party corpus stands at Rs 5,500 crore. General Insurance Corp, which manages both motor and terrorist pools, said the claims surged to 153% of the pool, from 127% a year ago. But it did not disclose how many are settled. This issue is such a vital one for the survival of many private insurers that top executives, such as ICICI Bank managing director Chanda Kochhar, Housing Development Finance Corp chairman Deepak Parekh, AIG country head and chief executive officer Sunil Mehta and New India Assurance and United India Insurance chairman and managing director G Srinivasan met insurance regulator last week to lobby for scrapping it. "Issues around third party motor pool were discussed," said one of the promoters. "Various options like dismantling the pool, declined risk pool or increasing the provisioning were discussed." But the regulator has been pleasing insurers by allowing periodic rise in the premium. In April, third party premium for commercial vehicles was raised as much as 70%, drawing protests from truckers who said it would squeeze their margins. It was raised 150% four years before that, but had to be rolled back to 60% due to protests. The pool also requires more capital from the promoters. Higher third-party pool allocation reduces their solvency margins, the funds an insurance company sets aside for potential claims. This is equivalent to capital adequacy for banks. Icall Soft Source : The Economic Time |
| Irda may allow agents to sell products of more than one insurance company
The Insurance Regulatory and Development Authority (Irda) plans to allow agents to sell products of more than one insurance company, allowing private insurers to access the vast army of agents selling products of the market leader - the Life Insurance Corporation (LIC).
Agents can sell products of only one insurer under existing norms, but Irda Chairman J Hari Narayan said the current global trend was to do way with tied agents, who can retail products of only one company. "The idea is to allow agents to sell products of more than one company. This model has been tried in Hong Kong. In England, tied agents have vanished," he said. The capping of charges on unit-linked insurance plans (Ulips) in September 2010 had reduced the income of agents, resulting in many exiting the sector and forcing the regulator to consider opening up alternative avenues of income. More than 3 lakh agents have exited the insurance business after the regulator introduced stringent norms. The new norms led to more than 100 products becoming ineligible. The number of agents came down from 3 million in 2009-10 to 2.65 million in 2010-11, according to data compiled by the Life Insurance Council. LIC has 13.5 lakh agents distributing its products. "The move will increase earnings of agents. Though consumers buy Ulips of private insurers, when it comes to life products they only go for LIC. This would help us bolster our sales," said Renu Dhavan, an agent with ICICI Prudential. Private insurers have largely followed the bancassurance model, in which banks distribute insurance products. However, access to LIC agents, particularly the bigger ones, will increase the reach of private insurance companies. LIC had a market share of around 76% in terms of new business premium for the financial year up to August 2011 while the remaining was divided among 23 private insurance companies. The state-owned insurer has been increasing its market share mainly because of its strong base of traditional products, which were unaffected by the change in regulations, and its group retirement plans. New Norms The new regulations introduced a year ago increased the lock-in period and quantum of life insurance cover while capping charges that could be paid out as commission to agents. Before September 2010, bulk of the premium paid in the first year was passed on by the insurer as commission to the agent responsible for bringing in the client. This created an incentive to sell new policies while existing ones were often surrendered after the initial years. The intent of the new rules was to encourage consumers to buy more protection against accident or death. The Indian insurance market is dominated by Ulips -investment products with a nominal life cover that compete with mutual funds. Irda had also made it mandatory for agents to retain 50% of their business in the second year. This regulation, known as persistency norms, refers to the percentage of business retained without lapsing or being surrendered. Many agents have found it difficult to meet these norms and operate in a scenario where the commission payable has come down. The difficulties being experienced by agents were one reason for the insurance regulator to consider allowing them to diversify their portfolio. Icall Soft Source : The Economic Time |
| Listing guidelines for non-life insurers by March: IRDA
Insurance regulator IRDA today said the guidelines for listing of non-life insurance companies will be issued by March, 2012.
"General/non-life insurance listing rules will be issued by March," IRDA Chairman J Hari Narayan told reporters here. According to the Insurance Act, promoters with 26 per cent stake can offload equity after 10 years of operation. The legislation also empowers the government to reduce the mandatory period. As far as the life insurance companies are concerned, the draft norms for listing have already been issued by the Insurance Regulatory and Development Authority (IRDA). As per the draft norms, only insurance companies that have completed 10 years of operation and have strong financial will be allowed to access the capital market. Currently, there are 24 players in both the life and non-life insurance industry. Icall Soft Source : The Economic Time |
| Delayed settlements only to those who withold info: HDFC Life
Private insurer HDFC Life, which has been penalised by the regulator Irda for delayed settlements, on Friday said it clears all claims on time unless there is a non-disclosure of material facts and that in all such cases it pays penal interest to the affected party.
"HDFC Life has a philosophy of paying all claims (on time) unless and until there is a non-disclosure of material fact or a fraud against the company (claimant). We have a practice of investigating such claims, which involve additional information," the company Chief Executive Officer, Amitabh Chaudhary, said in a statement here. "However, HDFC Life pays penal interest for compensating policyholders as specified in the regulations, wherever these delays take place," he stated. The delay in investigation in cases, which were part of the showcause notice by Irda, was due to non-cooperation of the claimants, hospitals or other public authorities to provide the requisite information or evidence, he said. Earlier in the week, the regulator had imposed a penalty of Rs 5 lakh on HDFC Life for delaying settlement of claims and has asked the insurer to streamline its processes. The watchgod had also directed the insurer "to put in place (within 15 days) effective claim settlement procedures and take all such measures that deem fit for both pro-active and timely settlement of all types of claims." The order was issued on a complaint filed with the Insurance Regulatory and Development Authority (Irda) in April 2009 for delay in settlement of death claims by HDFC Life. Icall Soft Source : The Economic Time |
| Irda brought in largescale changes in the charge structure of unit-linked insurance plans After the Insurance Regulatory and Development Authority ( Irda) brought in largescale changes in the charge structure of unit-linked insurance plans, many life insurers had to restructure their products. Sensing the importance of long-term commitment from policyholders to ensure product profitability, companies started promoting the loyalty additions feature in their policies. Loyalty additions are meant to act as incentives to policyholders to remain invested in the policy over the long-term. Even some endowment plans and universal life plans carry this feature. As the name suggests, loyalty additions are offered in addition to the total maturity proceeds as a reward to a policyholder for sticking with the policy. They are usually offered as a percentage of the annual premiums paid after completion of a certain number of years. Or, they could come in the form of a specified percentage of your fund value at the end of a certain period. However, depending on the amount of premium, product and the company, there could be several variations. Since they are meant to encourage long-term participation, most companies tend to bring them into effect after 10 or more years of the policys inception. However, some plans do promise additions even earlier, although they are payable only at the completion of the policy tenure. They could either be added to your corpus annually, at the time of maturity, or at specific intervals of say three or five years. Typically, they are paid out to the insured along with the policys maturity proceeds. While loyalty additions as a percentage of annual premiums could range from 2.5% to 7.5% of the premium paid, those linked to fund value could range from 0.25% to 3% of the corpus at maturity or at pre-specified intervals. For an individual buying a Ulip or any other investmentcum-insurance plan, the loyalty additions could seem like bonuses that add value to the corpus without attracting any extra cost. However, one must remember that there are other factors, too, that need to be taken into account while choosing a Ulip, or any financial product for that matter, over others in the market. In other words, loyalty additions should never be the sole ground for selecting a particular product. It is best to consider, among other things, the charge structure, performance of the fund and the companys track record for settling claims before making a decision on buying a Ulip. Icall Soft Source : The Economic Time |
| PAN must for payment of premium above Rs 50,000 in cash, says insurance regulator Irda
Insurance regulator Irda on Thursday said that quoting PAN number would be mandatory for making cash payments of more than Rs 50,000 in insurance premium, a move which would help the authority track sources of funds.
"With a view to ensuring that premiums are paid out of clearly identifiable sources of funds, it has been decided to permit premium/proposal deposits remittances in cash beyond Rs 50,000 per transaction subject to the customer quoting PAN," Irda said in a circular. The guidelines, which aim at curbing money laundering and dealing with the menace of terror financing in the insurance sector, would take effect from November 1. Irda said it would be the responsibility of the insurers to verify the details of Permanent Account Number (PAN), which is issued to tax payers. In view of increasing threat of terror financing, the Insurance Regulatory and Development Authority (Irda) said, "It becomes imperative to obtain the details of the person or entity funding the premium." It further said that any cash transaction above Rs 10 lakh, and integrally connected cash transactions above Rs 10 lakh per month, should be reported to the Financial Intelligence Unit-India (FIU-IND) by 15th of the every succeeding month. Insurers, it added, should also lay down proper mechanisms to check any kind of attempts to avoid disclosure of PAN details. Icall Soft Source : The Economic Time |
| Auto, taxi drivers to get health cover under RSBY
After extending health cover under Rashtriya Swasthiya Bima Yogana (RSBY) scheme to domestic and beedi workers and porters among others, Government has now decided to bring auto and taxi drivers under its ambit.
A cabinet note on the issue has been prepared and sources in Labour and Employment Ministry said the move was initiated in view of the swelling number of auto and taxi drivers in the unorganised sector. They said the ultimate aim of the Ministry would be to bring everyone in the unorganised sector under the flagship RSBY programme, under which beneficiaries are entitled to hospitalisation coverage up to Rs 30,000 for most of the diseases that require hospitalisation. About 4,500 private hospitals and 2,000 government hospitals are empanelled under the scheme. The sources indicated that the modalities of the scheme including payment of premium would be marginally different in case of auto and taxi drivers. At present, beneficiaries need to pay only Rs 30 as registration fee while central and state government pays the premium to the insurer. The state government would be identifying the auto and taxi drivers and the help of the regional transport offices would be sought. RSBY scheme was originally envisaged to cover BPL families, but was subsequently extended to MGNREGA workers, construction workers and domestic workers among others. A budgetary allocation of Rs 350 crore was made for the RSBY in the current fiscal. Icall Soft Source : The Economic Time |
| Chola MS Generral Insurance bags Financial Insights Innovation Award
Chola MS General Insurance, a joint venture of the $3.8 billion Murugappa Group and Japan based Mitsui Sumitomo Insurance Group, has bagged the " Financial Insights Innovation Award" at the recently held Asian Insurance Congress, Singapore.
The award was presented to Chola MS for their innovation by doing claims survey process in a mobile phone thus reducing time, increased productivity and fraud prevention, Chola MS General Insurance said in a statement. "This is a great achievement wherein technology has collaborated with the claims in delivering a workable, cost-effective and simple solution to a complex issue of claims management and reduced turn around time..", Chola MS Managing Director S S Gopalarathnam said on the award. About 68 insurance companies from Asia-Pacific region participated in the The Financial Insights Innovation programme to demonstrate innovation in the customer engagement, channel enhancement and product development, the statement added. Icall Soft Source : The Economic Time |
| IRDA to tighten criteria for appointment of actuaries
In a bid to enhance scrutiny of financial impact of risk and uncertainty in insurance business, the Insurance Regulatory and Development Authority, or Irda, is working on tightening the criterion for appointment of actuaries or experts who assess and price risks.
In a draft of the proposed norms sent to insurance companies, a copy of which is available with ET, the regulator has said that an actuary should be an employee of the company and below 65 years of age. Currently, actuaries, particularly in general insurance firms, work as consultants and are above 65 years. Around 5-6 general insurance companies have fulltime actuaries who are employees, while the remaining 17 companies work with parttime consultants. The draft norms come at a time when the regulator has failed to fill up the post of Member Actuary, a key person to take a call on product approvals at Irda. The post is lying vacant for the past four months. Actuaries are business professionals who provide expert advice on pricing of products, assumption of future profits and valuation of businesses by determining probability of an event based on mathematics and mechanisms. "Though the eligibility criteria needs to be more refined, but the circular is in the right direction," said Liaquat Khan, president, Institute of Actuaries, the sole professional body of actuaries in India. In an effort to protect interest of policyholders and insurance companies, the regulator has come up with several regulatory changes in the past one-and-a-half year, including capping of charges such as fund management, premium allocation and policy administration, increase in life cover, portability in health insurance products, capital protection in pension products and increase in third party motor premium. Private sector non-life insurance companies have an actuarial team of 6-10 members, while most state-owned insurers appoint individual consultants. Life insurance companies have bigger actuarial teams of 10-35 members. Until October 2012, a qualified actuary should not be more than 70 years, the regulator said. From 2013, an actuary to be eligible for appointment by an insurance company will have to be below 65 years. Also, an actuary should have 10 years experience in the industry and a minimum two years service in a life or general insurance company, which can then appoint him for the role. He must have five years of experience after getting actuary fellowship, the draft said. Although there are 129 qualified actuaries in the country, industry sources said that only 5-8 will fulfill the criteria laid down by Irda in the general insurance space. Given the crunch in the number of qualified actuary professionals, it will be difficult for non-life insurers, as the sector has a shortage of skill sets to evaluate data, said GN Agarwal, a member of Institute of Actuaries and chief actuary of Future Generali Life Insurance. The lack of skill sets results in inaccurate pricing and higher underwriting losses. Icall Soft Source : The Economic Time |
| Syndicate Bank ties up with Tata AIG Life Insurance
Syndicate Bank has tied-up with Tata AIG life Insurance Company Ltd to provide group life insurance solution to its existing and new housing loan customers.
Under this tie-up, Syndicate Bank would offer Tata AIGs Total Suraksha plan to its housing loan borrowers across all its branches in the country on payment of one-time premium, it said in a statement. "....Total Suraksha facilitates comprehensive insurance solution by covering death due to any cause. The product is designed to cover outstanding balance of the loan over the remaining term of the loan," it said. The plan comes with propositions to the principal borrower and co-borrower such as reducing or level sum assured options, group premium rates, simple enrollment process and faster and simple claim process. Moreover, it has 24/7 worldwide coverage and also qualifies for tax exemption under Section 80 C of Income Tax Act 1961, the statement added. K Devananda Upadhyaya, General Manager, Syndicate Bank said, "The legal heirs of the insurer need not carry the burden of repaying the loan in the event of an unfortunate happening for the borrower". Earlier this year, Syndicate had tied-up with Tata AIG to provide insurance solution in the form of micro insurance to its customers covered under financial inclusion programme across all its branches in the country, it added. Icall Soft Source : The Economic Time |
| Reliance Capital, Nippon Life to explore broader tie-up
Reliance Capital and its Japanese partner in life insurance, Nippon Life Insurance, will explore strategic tie-ups in finance, initially in the asset management and private equity businesses of the Indian group.
Any strategic collaboration would boost Nippon Lifes presence in India, while giving Reliance Capital better access to capital and expertise, analysts said. Reliance Capital, controlled by billionaire Anil Ambani, manages assets of over $23 billion across mutual funds, pension funds, managed accounts and hedge funds. Its other businesses include insurance, broking, consumer and commercial finance. Reliance Capitals chief executive Sam Ghosh told Reuters the two firms would initially explore partnerships in asset management and the private equity business, whereby Nippon Life could pick up a stake in the Indian firms businesses. Reliance Capital is looking to manage assets for Nippon Lifes funds in India and also partner with the Japanese firm in other growth economies, he added. The two firms will also explore possibilities for a distribution tie-up in India for Nippon Lifes funds, Ghosh said. "We will discuss all areas," Ghosh added. Deven Choksey, CEO MD of brokerage KR Choksey, said: "Everybody wants to establish themselves in other geographies, especially Japanese companies because of saturation at home." Japanese companies are stepping up the pace of their overseas expansion after the devastating March 11 earthquake provided another spur to escape a moribund domestic economy. "Reliance Capital is Indias No.1 AMC (asset management company) in size, so that gives Nippon an advantage of getting into this business as it is already established," Choksey said. Reliance Capitals asset management unit lost market share in the quarter to end-June, but is still the industry leader. "Capital cannot be the sole criterion why they are going to Nippon. They probably want a strategic partner," said Jagannadham Thunuguntla, head of research at SMC Global Securities. "If an equity deal works out, Reliance Capital will benefit from the Japanese firms product innovation and brand value," Thunuguntla added. Reliance Capitals net profit in the June quarter more than halved with income across its core businesses dropping. Last month, brokerage ICICI Direct said it expected the firms asset management business to improve due to a greater focus on the retail segment while Citigroup said stiff competition, sluggish inflows, and weak recovery prospects would hurt in the near-term. In March, Nippon, the worlds No.7 life insurer, agreed to pay $680 million to buy a 26 percent stake in Reliance Life Insurance, valuing the business at $2.6 billion. Indian rules bar foreign firms from owning more than 26 percent in insurance joint ventures with local firms. Reliance Capital saw a 59-percent fall in its annual premium equivalent in its insurance business for the quarter to end-June, but analysts expect the fund infusion by Nippon to boost its valuation. Shares of Reliance Capital have fallen about 43 percent in 2011 so far, but analysts see this as a good opportunity to buy. Shares in Reliance Capital closed up 1.8 percent at 384.2 rupees in a firm Mumbai market on Tuesday. Indian markets remained closed on Wednesday and Thursday for religious holidays. Icall Soft Source : The Economic Time |
| Online insurance is simple and cheaper
More than 100 million people have internet connections in India today. We spend more time on the internet than watching TV. We are the third-largest users of social networking sites like Facebook.
These are interesting factoids. But what does this mean for financial services? It is an indication where this sector is headed in terms of distribution of its products and services. More than 45% of internet users search for financial services and insurance as a category. Already, most of us are using net banking. We make our fixed deposits and mutual fund investments online, transact and pay our bills through net banking. And insurance is not far behind. From a humble beginning, like the banking sector, with online transaction facilities for existing customers, insurance companies are now rapidly moving towards selling products online. The India growth story for e-commerce is on a fast track. The market for e-commerce grew from 8,146 crore in 2007 to 46,520 crore in 2011. E-commerce is catching up due to competitive pricing and the facility to compare products, and also because of reliable reviews of friends and peers and convenience. From the initial baby steps with only simple term products, the industry is now exploring the online market for slightly more complex endowment products on the Ulip platform. Online as a medium has a lower distribution cost. Therefore, products offered through the internet are cheaper than the offline products, ensuring better IRRs. There are currently seven insurance companies in India offering online term plans. Buying a plan online is a fairly simple process. All companies offer the option on their official websites. There are many comparator sites a prudent customer can visit to search on parameters of cost and features and buy the product that suits his/her requirement. In case of a high cover, the company will insist on a medical test for the customer, and the required documents, like income proof, nationality, etc, are to be uploaded. The biggest advantage, perhaps, of buying an online plan is that it is very cost effective and the process is fairly simple. For example, a 30-year-old non-smoker can get a cover for as much as 1 crore in a term plan for an annual premium of as low as 8,000. The only off-line step is getting a medical test done. Secondly, given the large section of urban population using net-based services and options to save time and effort, this can prove to be an ideal option for a more evolved and financial-savvy customer. Usually, the insurance companies give all the required information related to the plan online and many have online helplines to guide any potential or existing customer. The online term plan is cost-effective as it works on the principle that you are literate, have researched and made an informed choice and the information provided is completely accurate. Hence, the quality of life covered is a lower risk. The distribution cost is negligible as the product is available directly from the company website. Do keep in mind that the cover and claim settlement depends on the authenticity and accuracy of the information given when buying the plan. One of the cons of buying a term policy online is that customers may often unintentionally or to lower the premium, withhold any medical condition or other critical information that will result in complications or rejection of claims in future. It is best to disclose things like any pre-existing medical conditions, habits, like consumption of tobacco and alcohol, etc, to ensure smooth and quick processing. Also, since the product has been developed keeping the internet platform in mind, it may not be available for customers in all places, but only in select urban cities with considerable internet penetration and usage. To sum up, online is a great platform for you to get better deals even when buying a simple life cover. So start surfing, not just to plan your next holiday, but also to insure your life - the premium for your life cover may be cheaper than your next air ticket. (The author is CEO MD, Aviva India) Icall Soft Source : The Economic Time |
| Maharashtra Government plans insurance scheme for higher education students
Maharashtra Government is working on an insurance scheme for students of higher and technical education courses which will ensure that their studies are not hampered in the event of the death of their guardians.
Higher and Technical Education Minister Rajesh Tope said the scheme will be applicable to all professional degree and diploma courses like engineering, pharmacy, MBA and hotel management that fall under the purview of his ministry. He said that either the students can pay a nominal premium on their own or colleges can pay from the Students Welfare Fund to the LIC. "In case of death of a students guardian or the head of the family, Rs 4.5 lakh will be given, whereas, in case of the death of a student, the family will get Rs one lakh," he said. According to the minister, the insurance scheme would prove beneficial in respect of the security of the students educational prospects. Icall Soft Source : The Economic Time |
| New India Assurance chairman M Ramadoss suspended
The government has suspended New India Assurance chairman M Ramadoss for alleged violations in issuing insurance cover to an airline during his stint as head of another state-run insurer. The Central Bureau of Investigation (CBI) is examining Ramadoss role in irregularities in granting credit insurance cover to Paramount Airways when he was chairman and managing director of general insurance firm Oriental Insurance.
"We have suspended Ramadoss till the time the investigation is on. Further decision will be taken once the investigation is over. In the meantime, Srinivasan, chairman of United India Insurance, will hold the interim charge," a senior government official told ET. A CBI official confirmed the development saying, "We are looking into the matter. The residence of Ramadoss was raided." This is the second instance of action being taken against a head of a public sector insurance firm. Earlier, TS Vijayan, the chairman of the countrys largest insurer, Life Insurance Corporation, was denied an extension after complaints against him surfaced. Oriental Insurance, which said the company did not make any loss on Paramounts account, had cancelled the policy when it came up renewal in April last year over apprehensions on the underwriting judgment and risk factors. The government started looking into the affairs of New India Assurance, the countrys largest general insurance firm, after it posted a net loss of Rs 421 crore last fiscal, the first time in 90 years of operations. "Given the current situation, it was required that the companys decision should not come under further scrutiny," the government official said. ET had reported the finance ministry had sought explanation over the losses made by the insurer. New India Assurance reported a loss of about .`300 crore on account of natural disaster-related claims in Australia and New Zealand. Icall Soft Source : The Economic Time |
| Govt approves 26% stake sale of Reliance life insurance to Nippon
The government has allowed Anil Dhirubhai Ambani Group firm Reliance Life Insurance to sell 26% stake to Japans largest life insurer Nippon Life Insurance. But it has asked the insurance regulator to frame a common policy before approving the deal, a source familiar with the development told ET. The deal, announced in March, is worth $680 million.
This means Nippon Life valued Reliance Life Insurance at $2.6 billion. The Insurance Regulatory Development Authority (IRDA ) had sought government approval for the Reliance-Nippon deal as it did not satisfy conditions prescribed under Section 6AA of the Insurance Act of 1938. This section says that any Indian promoter holding more than 26% stake in an insurance firm can divest his stake only after 10-years of operations . Reliance Life will complete 10 years of operation in January next year. Sister firm, Reliance Capital, holds 100% stake in Reliance Life. IRDA, however, said the companies did not need to seek permission from the Centre and the regulator itself has the power to clear the deal. "We dont see any major hurdle and have almost cleared the deal for Nippon to buy 26% of Reliance Life Insurance," said IRDA chairman J Hari Narayan . "I cannot affix a definitive timeline for the deal to be cleared as it is contingent on the time taken by Japanese insurance regulator to certify Nippons credentials and other procedural issues," he added. Reliance Life refused to comment on the story. In a circular issued last week, IRDA had said that any company can transfer its shares or issue capital, which would result in a change in shareholding pattern under Section 6A of the Insurance Act with prior approval of the regulator. Section 6A did not cover issue of new capital. Sources in the company and the insurance regulator told ET that IRDA can go ahead and give its clearance to the deals under Section 6A of the Insurance Act. Narayan told ET that under Section 6A, the 10-year stake dilution limit will not apply. "What it meant (Section 6AA) was that after 10-years of operation, a promoter of an insurance company shall not hold more than 26% stake. The interpretation of the law was creating confusion and that is why IRDA has come out with a new circular," said an industry expert on condition of anonymity. Reliance Life is looking to double assets under management (AUM) in the next three years. Icall Soft Source : The Economic Time |
| Only 33% of vehicles were insured in FY10: Insurance Information Bureau
Only a third of the vehicles in India were insured in 2009-10, according to an information bureau, set up by the regulator.
Of the 12 crore automobiles and two-wheelers on Indian roads, less than four crore vehicles had any type of insurance cover in 2009-10, according to data available with the Insurance Information Bureau (IIB), which was set up by the Insurance Regulatory Development Authority (Irda) in 2009 to provide data to researchers and policy makers. "Customers do not renew their car policy. This is partly because the value of the vehicle comes down," said ICICI Lombard motor insurance head Sanjay Datta. Vehicle insurance has two components - own damage cover, which is triggered when the vehicle is damaged in an accident and third-party liability, which covers any injury or damage caused to another person or vehicle. Driving an uninsured vehicle is prohibited under the Motor Vehicles Act, 1988. Violation is punishable with imprisonment for three months, or a fine of Rs 1,000 or both. Datta said there should be fine mechanism to enforce third-party insurance covers, adding that vehicle owners generally do not renew policies after five years. "New vehicles do not go without a cover. About 3-4 year-old vehicles are insured, but as they get older, people stop renewing the policy. Penalty is not serious, whereas if you are caught without one in a foreign country, there is a chance of losing ones licence," said Gautam Modi, a dealer at Ford. The claim ratio in the own-damage segment is significantly lower compared to third-party covers. Although third-party insurance is mandatory in India, 40% of vehicles on road did not have this cover in the year under review. Incurred claim ratio in the thirdparty segment was nearly 98% at.`4,380 crore. For the own-damage segment, it was 55%. The insurance regulator has recently increased provisioning towards the third-party motor pool, following which companies have infused capital to boost their solvency margin. A senior executive of Oriental Insurance Company said: "Insurance is a must for registering vehicles, so no vehicle is sold without insurance. Things are compulsory but not enforced." Incurred claim ratio is the claims paid during the year plus closing provision at the end of the year and is expressed as a percentage to the premium. Icall Soft Source : The Economic Time |
| Insurance cover for very senior citizens IRDA examines proposal by Apollo Munich
If your parents are above 80 years it is impossible for them to buy a fresh health insurance cover. This may change if a new plan filed by a health insurance company and currently being examined by the Insurance Regulatory amp Development Authority (Irda) is cleared. The policy from Apollo Munich Health Insurance is aimed at senior citizens and places no limit on the age at which it can be bought.
"We have recently filed a health insurance policy with the Irda that will have no upper age for entry. Anyone can buy the cover at any age, be it 70 years or 91 years. We hope that the policy will be cleared by the insurance regulator by end of August and we may be able to start selling it by beginning of September," says Antony Jacob, chief executive officer of Apollo Munich Health Insurance. The new plan signifies a major shift in the way senior citizens are covered by medical insurance. Most health plans cover a person till 75-80 years. Some policies offer lifelong renewal, but this is possible only if the cover is bought early. The Varishtha Bima Yojana from public sector insurer National Insurance can be bought by anyone between 60 and 80 years of age and renewals can be done up to the age of 90. Apollo Munich itself has a policy that covers an individual for a lifetime, but the policy should be bought before 65. Other PSU insurers also offer health covers to senior citizens, but there are a host of restrictive conditions and all have an upper age of entry. No Bar for Very Senior Citizens Apollo Munichs new plan promises to break this ceiling, allowing even very senior citizens (above 80) and nonagenarians to buy the cover. The cover, however, will have a fat price tag. A Rs3-lakh cover for a 70-year-old will come at Rs19,000 a year. At 80, it will costRs32,000 a year and at 90, Rs57,000. Add the 10.3% service tax and the total yearly cost is more than 20% of the cover. "These are tentative figures submitted to the regulator the final figures may change marginally when the product is finally cleared," says Jacob. The conditions dont end there. Theres a waiting period of one year before the plan covers all diseases, and a long four-year wait for covering pre-existing diseases. Also, senior citizens wont get all the facilities of a normal cover. "There will be a co-payment clause as well as sub-limits in the policy," Jacob clarifies. The co-payment clause requires the buyer to shell out a percentage of the claim (normally 20%). Under the sublimit clause, there are limits on expenses incurred under various heads, such as room rent, doctors fee, nursing charges and cost of medicines. However, this applies to all patients irrespective of age. "There are limited options from four public sector insurers for buying health covers for seniors, but there are no policies that allow entry at any age or lifelong renewal. No doubt this policy will come at a premium," says Rahul Agarwal, managing director, Optima Insurance Broking. For Apollo Munichs existing policy that allows lifelong renewal, one has to pay Rs16,797 a year for covering an individual between 61 and 65 years for Rs3 lakh. The premium rises to Rs21,615 for 66-70 years and to Rs24,039 for over 70 years. Icall Soft Source : The Economic Time |
| Hero Cycles to tie up with insurance firms to cover poor
The worlds largest bicycle maker Hero Cycles on Monday said it is in talks with insurance firms to provide health cover to its rural customers as part of its initiative to uplift the poor.
The company, which has tied up with Allahabad-based Sonata Finance for financing bicycle by providing loans of Rs 100 per week in rural areas, is considering to pay health insurance premium for the poor customers on purchase of the companys bicycles. "About 500 million people in India cannot afford to buy a bicycle. We want to give them mobility and for that we have tied up with a micro finance firm to offer loans. Now, we want to secure their lives," Hero Cycles Managing Director Pankaj Munjal told PTI. Without sharing details, he said the company is currently talking to one public sector and one private sector health insurance provider to tie up for this purpose. When asked if the company would also pay the premiums for the insurance products, Munjal said: "These are very poor people of our country. Though we have not decided yet, we may do something for paying the premiums for the poors." The company will introduce the health insurance services from next month onwards, he added. "Hero Cycles want to contribute with its limited strength by giving them a sense of security. These people will be given health insurance policies when they come to buy our bicycles," Munjal said. Hero Cycles mass-level bicycles are available between Rs 1,800 and Rs 3,000 through about 2,400 multi-branded dealerships across the country. Out of its total sales of 53 lakh units last fiscal, 65 per cent came from the rural areas. Even as the company is focusing on the rural market, it is not ignoring the premium segment bicycles market. Last week Hero Cycles had said that it will foray into the premium segment by launching products in Rs 3,000-Rs 20,000 range by November this year and will set up exclusive outlets for selling them. The company is setting up a dedicated unit for Rs 50 crore to roll out the premium cycles at Ludhiana. The facility will have a capacity to produce five lakh units annually. The existing plant rolls out 19,000 units every day. It is also scouting for partners in the US, Germany, Japan and the UK to export the cycles under a contract manufacturing deal. The company at present exports a small quantity to Spain, African region and Poland. Hero Cycles is aiming at pushing up its revenue to over Rs 2,000 crore in 2011-12 from Rs 1,650 crore in last fiscal. Icall Soft Source : The Economic Time |
| Government employee cannot be denied medical reimbursement due to delay
The Madras High Court bench here has ruled that a government employee could not be denied medical reimbursement just because he had delayed the claim.
Justice Vinod Kumar Sharma, allowing a writ petition by S Govinda Rao, said the 60 day period (for applying) prescribed by the government in an August 8 2000 letter could not be held mandatory to deny the right of reimbursement to which the employee was entitled under service rules. He quashed the Thanjavur District Elementary Educational Officers May 10, 2005 order, rejecting the petitioners plea for reimbursement and directed the official to process the application and release the payment within two months. The Petitioner said he underwent the surgery in a hospital in Thanjavur district in March 1999 and filed the claim on Jun 16,1999, seeking reimbursement of 75 per cent of the expenses recurred on the surgery Icall Soft Source : The Economic Time |
| IRDA to do away with mandatory 4.5% return on pension schemes
The insurance regulator IRDA on Monday proposed doing away with the assured 4.5 per cent return norm for pension schemes and introduced mandatory disclosure of assured benefits upfront to the customers.
"A pension product shall have an assured benefit disclosed at the time of sale...in absolute terms which becomes payable on the vesting date," the Insurance regulatory and Development Authority (IRDA) said in a draft guideline for pension products. The IRDA proposed to modify the guidelines as the earlier norm of assured 4.5 per cent return did not find favour with life insurance companies. Since the implementation of the guidelines on pension products from September 1, 2010, only five out of 23 life insurance companies came out with pension or ULIP product. The regulator has said that the insurance companies would provide a "minimum return on the premiums paid during the period of contract, which shall be disclosed at the time of purchase of contract." The insurance company at the time of sale of policies would have to make an illustration of the returns which it is expected to provide, in the range of 4-6 per cent, to the policyholders. Icall Soft Source : The Economic Time |
| New India Assurance under government scanner for over Rs 421 crore loss
The government is looking into the affairs of the countrys largest general insurance firm, New India Assurance, after the firm posted a net loss of Rs 421 crore in 2010-11.
"Its a matter of concern that a public sector firm is reeling under losses. Naturally, an explanation needs to be provided," a senior government official told ET. The company has posted losses for the first time in 90 years of its operations. A senior official withNew India Assurance confirmed to ET that thefinance ministry has also sought explanation over the losses made by the insurer. He, however, said it was a normal process. "We have already made the presentation to the board. We have a senior finance ministry official, and head of a public sector bank on our board," the official said. "About Rs 300 crore of the loss was from international operations." Department of economic affairs Secretary R Gopalan is on the companys board. "We were re-insures for some companies in Australia and New Zealand, both countries suffered from natural disasters in form of floods and earthquake," he said. A finance ministry official also confirmed to ET that the government has expressed its concern over the losses posted by New India Assurance. E-mails sent to New India Assurance remained unanswered till the time of filing this story. The companys chairman and managing directorM Ramadoss is already under an investigation by the Central Bureau of Investigation for irregularities in distribution of credit insurance cover to Paramount Airways. Ramadoss was theCMD ofOriental Insurance when the credit insurance cover toParamount Airways was approved. ACBI official confirmed to ET that the investigation in Paramount Airways case is on. "But we are not looking into other financial transactions that have been or are approved by Ramadoss," the official clarified. A senior official with Oriental Insurance said the company has not made any losses on Paramounts Account. "The policy had come for renewal in April 2010. We had apprehensions on the underwriting judgment and risk factors and hence decided to cancel the policy," the official clarified. The official further said the investigation agency has not approached the company and the enquiry is being carried out at the level of individuals. "If the finance ministry asks us for explanation, we will provide," he said. Icall Soft Source : The Economic Time |
| Insurance companies force hospitals to refund money and trim hefty bills for patients
Vishal, a marketing professional, underwent heart bypass surgery last month at a multi-specialty hospital in NCR and was billed Rs 2.60 lakh. When he approached the insurance company for reimbursement, the hospital was made to refund Rs 35,000 while the insurer paid Rs 2.25 lakh, the rate fixed for the procedure.
Until last year, several hospitals had a dual billing structure where patients who were covered under insurance were subject to a higher tariff. The insurance industry responded to this dual billing by introducing its own rate card and created a panel of approved hospitals for cashless treatments which they termed as the preferred provider network (PPN). After the big face-off betweeninsurance companies and hospitals last year, patients are beginning to benefit from the standardized cost structure introduced for common medical procedures. Now increasingly, insured patients do not have to bear any part of the hospitalization cost, unlike in the past. In cases of inflated billing, insurers are getting hospitals to refund the overcharged amount to patients. The other positive fallout is that the claims bill for insurance companies has come down and this in turn will reduce the pressure onhealth insurance rates and keep them in check. Public sector insurers, who control up to 60% of the health insurance business, have managed to bring most major hospital chains into the preferred provider network (PPN), where treatment rates are fixed for at least 42 medical procedures. These include open-heart surgery, cataract, knee replacement, gall bladder operation and childbirth. "A lot of health spending today is being done through health insurance which is a Rs 11,000 crore business. The four public sector companies have joined together which has increased our bargaining power," said G Srinivasan, chairman,United India Insurance and also head of theGeneral Insurers Public Sector Association. He added that with health accounting for 26% of general insurers business, they had done a lot of groundwork in calculating treatment costs and developing standardized rates. Cashless treatment, which had run into problems during last years upheaval, is back as well. It is currently being provided in 456 hospitals across Delhi-NCR, Mumbai, Bangalore and Chennai. In Delhi-NCR, where 188 hospitals including all major names except Apollo are on board, cashless transactions now account for almost 80% of all health insurance reimbursements. In Chennai, the figure is 60%, in Bangalore 55% and in Mumbai 20%. The percentage is low in Mumbai because none of the major tertiary care hospitals with high footfalls of insured patients have agreed to be on PPN, although the city has 114 hospitals providing cashless facility. Starting this month, Kolkata, Ahmedabad, Hyderabad and Chandigarh have been added to the list of cities with cashless facility. In all, 100 hospitals are on PPN in these four cities. Sources in the insurance business said all major hospitals are charging standardized rates for insured patients though the bills vary for patients who do not have mediclaim. Icall Soft Source : The Economic Time |
| CCI clears Reliance Industries buyout of Sunil Mittal-headed Bhartis stake in insurance JV
Competition Commission of India (CCI) has cleared Reliance Industries buyout of Bharti groups 74 per cent stake in insurance joint ventures with AXA of France.
"The monopoly watchdog has cleared the deal within 14 days of application as there was no anti-competition issue involved," a source said. The Sunil Mittal-headed Bharti group had exited from its financial services joint ventures and sold its entire 74 per cent stake in both general and life insurance businesses to Mukesh Ambani-led RIL for an undisclosed amount. As per the competition law effective from June 1, the high value deals need to have clearance of the monopoly watchdog CCI. The merger deals will come underCCI radar if the combined turnover of the two companies is Rs 4,500 crore and above. The Reliance-Bharti AXA deal is first such deal to be cleared since June. Bharti had entered into joint ventures with the AXA group in 2006 and held 74 per cent stake in both these ventures - BhartiAXA Life Insurance and BhartiAXA General Insurance. RIL and its subsidiaryReliance Industrial Infrastructure (RIIL) would own 57 per cent and 17 per cent respectively in both the insurance companies and would become AXAs JV partners in India. AXA holds 26 per cent stake in the JV in line with the foreign direct investment ceiling in the sector. Icall Soft Source : The Economic Time |
| Some insurance companies include ayurveda under their cover
Till some time back, health insurance policies used to cover only allopathy treatment while ayurveda , homeopathy, naturopathy and unani treatments were left out of the ambit. Despite having a comprehensive health insurance plan, individuals who preferred such systems had to pay out of their own pockets.
These policyholders can now breathe easy as some insurance companies have started including alternative forms of treatment under their cover, especially ayurveda. "Ayurveda being the most prevalent of the alternate systems, we have designed a product to cover treatments under ayurvedic hospitalization," says S S Gopalarathnam, MD, Cholamandalam MS General Insurance. While some insurers only offer it under their group policies, others have started offering it to individual health insurance seekers. PSU insurerNew India Assurance and standalone health insurance provider Star Health and Allied Insurance are other insurance firms that have started covering ayurvedic treatments under individual policies.ICICI Lombard General Insurance covers it under government scheme and Future Generali Insurance offers it to corporate group insurance buyers. "Our policies as such do not cover any other line of treatment besides allopathy . However, in group policies, we do offer tailor-made packages to corporate clients to cover ayurvedic treatment subject to certain conditions," saysShreeraj Deshpande, head of health insurance at Future Generali. Few insurance policies cover unani treatment How did the need to cover alternative forms of medicine in health insurance arise? According to S S Gopalarathnam, managing director, Cholamandalam MS General Insurance , "During various focus group discussions with customers and agents, we found that for chronic ailments like spondilytis, arthritis and epilepsy, many people preferred alternate streams of treatment such as ayurveda, siddha and homeopathy , etc." Though the coverage has been expanded, there are curbs on the amount and situations under which it can be claimed. New India Assurances extends cover to individuals undergoing treatment with the help of Ayurvedic, homeopathic and Unani systems of medicine. "Such claims will be covered only to the extent of 25% of sum insured. Also, they need to have availed of the treatment at a government hospital to be eligible for the claim," informs Segar Sampathkumar, deputy general manager, New India Assurance. Similarly, Star Health also covers non-allopathic treatment, except Naturopathy , costs under itsUnique Health Insurance Policy, "up to 25% of sum assured or a maximum of Rs 25,000 per occurrence, per year." Chola Individual Health line Insurance policy provides coverage for ayurveda during hospitalization, prior and post hospitalization. A policy holder can get treated in any of the government registered ayurveda hospitals across the country and claim if hospitalized for more than 24 hours. Naturopathy treatments are excluded in all policies, while few cover unani and homeopathic. This is because other forms of treatments have no standard treatment protocols and highly varied costs thus making it difficult to actuarially compute the cost to be covered. Even under ayurveda, select procedures are covered to ensure people do not misuse a policy for a basic rejuvenation procedure. "We do not cover the unani system of medicine. Under ayurveda, hospitalization for panchkarma (five actions) meant to purify the whole body by eliminating accumulated toxins, is covered on a case to case basis," explains Deshpande. It is important to note that there is no standalone cover available for covering alternative treatments. You will have to buy a standard health insurance cover from these select insurers and others who start offering the non-allopathic coverage. Before you head for alternative treatment and make a claim, see whether the treatment is listed in the insurance policy document. Icall Soft Source : The Economic Time |
| Ayurveda too comes under mediclaim cover
Till some time back, health insurance policies used to cover only allopathy treatment whileayurveda, homeopathy, naturopathy and unani treatments were left out of the ambit. Despite having a comprehensive health insurance plan in place, individuals who preferred such systems had to pay out of their own pockets.
These policyholders can now breathe easy as some insurance companies have started including such alternative forms of treatment under their cover, especially ayurveda. "Ayurveda being the most prevalent of the alternate systems, we have designed a product to cover treatments under ayurvedic hospitalization," says S S Gopalarathnam, managing director, Cholamandalam MS General Insurance. While some insurers only offer it under their group policies, others have started offering the facility to individual health insurance seekers. PSU insurerNew India Assurance and standalone health insurance provider Star Health and Allied Insurance are other insurance companies that have started covering ayurvedic treatments under individual policies. ICICI Lombard General Insurance covers it under government scheme and FutureGenerali Insurance offers it to corporate group insurance buyers from which employees of the covered company can benefit. "Our policies as such do not cover any other line of treatment other than allopathy. However, in group policies, if requested for we do offer tailor-made packages to corporate clients to cover ayurvedic treatment subject to certain conditions," explains Shreeraj Deshpande, head, health insurance, Future Generali. How did this need to cover alternative forms of medicine in health insurance arise? Gopalarathnam, explains, "During various focus group discussions with customers and agents, we found that for chronic ailments like spondilytis, arthritis and epilepsy, many people preferred alternate streams of treatment such as ayurveda, siddha and homeopathy etc." Though the coverage has been expanded, there are curbs on the amount and situations under which it can be claimed. New India Assurances extends cover to individuals undergoing treatment with the help of Ayurvedic, homeopathic and Unani systems of medicine. "Such claims will be covered only to the extent of 25% of sum insured. Also, they need to have availed of the treatment at a government hospital to be eligible for the claim," informs Segar Sampathkumar, deputy general manager, New India Assurance. Similarly, Star Health also covers non-allopathic treatment, except Naturopathy, costs under itsUnique Health Insurance Policy, up to 25% of sum assured or a maximum of Rs 25,000 per occurrence, per year. It is important to note that there is no standalone cover available for covering alternative treatments. You will have to buy a standard health insurance cover from these select insurers and others who start offering the non-allopathic coverage. Icall Soft Source : The Economic Time |
| Soon, your visit to doctor too could be covered by insurance
A government health insurance scheme providing hospital cover to over 23 million poor households will also pay for visits to the doctor and medication if pilot projects currently underway prove feasible. The labour ministry, in collaboration with the International Labour Organisation (ILO) andICICI Foundation, has launched the first Rashtriya Swasthya Bima Yojana (RSBY) pilot project in Puri, Orissa, this month, covering both outpatient and inpatient care for the beneficiaries of the flagship scheme, which has been extended beyond BPL families to unorganised sectors such as construction workers, beedi makers, domestic workers and street vendors.
The pilot will focus on the viability of the proosal which has a higher risk profile and needs closer monitoring. "It will be followed by another pilot inMehsana, Gujarat, in October and a couple of more pilots over the next few months," said Pompy Sridhar of ICICI Foundation, which is partly funding the project. Under the the proposal, RSBY beneficiaries can make 10 free visits a year to empanelled hospitals and doctors and get free medicines. "The poor often hesitate to go to the doctor for smaller ailments...which sometimes results in bigger problems requiring hospitalisation. Outpatient cover would give them greater relief and in the long term bring down hospitalisation claims," said Anil Swarup,director general, labour welfare department. The pilot scheme entitles empanelled doctors and hospitals inPuri to insurance claim of Rs 50 for every visit by RSBY beneficiaries. It covers medicine costs too, though up to a limit that would be prescribed later depending on bids put in by insurance companies. To ensure that medicine costs do not push up the insurance cover, the labour ministry is working with the National Rural Health Mission on a list of cheap generic medicines that the doctors will have to provide. "The list would include about 300 essential drugs, 30 of them frequently used ones, with prescribed rates to push low-cost generics," Sridhar said. The extension of the scheme is feasible as the government would have to give only about Rs 200 more annually for each beneficiary family, Swarup said. This would be over and above the premium charged currently by insurance companies for the RSBY scheme. It varies in each state, averaging around Rs 500 per family. What needs to be tested, however, is the practicality of implementing the scheme because it would be more difficult to monitor than the hospitalisation scheme as here patients would walk away after being treated. "When we started the RSBY scheme (in 2008), we did not want to get involved with outpatients because of the monitoring problem. But now we are in a position to explore if the smart-card technology could be used to cover outpatients," Swarup said. All empanelled doctors and hospitals that do not have the required systems in place have been given a three-in-one machine with a biometric card scanner, a service reader and a printer connected through a laptop to the central server. When a patient comes for consultation, his card is swept in the scanner and his ailment, diagnosis and medication fed into the reader. This data is then transmitted to the central server and monitored by insurance companies and the government. The patient is given a printout of the details of visit and treatment. "We are hoping to identify the pitfalls in the model through the pilot projects before we develop the final scheme," Swarup said. The RSBY covers a family of five for a token registration fee of Rs 30 and provides annual hospitalisation cover of Rs 30,000. Icall Soft Source : The Economic Time |
| Shiv Nadar-controlled HCL may buy out stake in DLF Pramerica Life Insurance Company
The Shiv Nadar-controlled HCL Group is in advanced discussions with real estate major DLF to acquire a substantial stake inDLF Pramerica Life Insurance Company Limited, for around Rs.450 crore in a two-phase transaction.
The acquisition will be done through a privately-held company and will represent Nadars first diversification outside the IT business. Nadar set up HCL in 1976 and the two listed IT companies of the group -HCL Technologies andHCL Infosystems - have a combined market capitalisation of Rs.35,828 crore or $8 billion. While spokespersons for both HCL and DLF declined comment, a person with direct knowledge of the talks said the HCL group company will first acquire a 44% stake in the insurance joint venture by buying fresh shares of the company and at a later stage, buy out DLFs residual 30% stake in the company, subject to approval of regulator Irda. Regulatory Hurdle At present, DLF holds 74% stake in the joint venture with Prudential Financial, the second-largest life insurer in the US, holding the remaining 26%. DLFs share holding in the insurance joint venture will fall to 30% after HCLs investment. The transaction could face a possible regulatory hurdle as current guidelines stipulate that the original partner in a life insurance joint venture cannot sell its stake in the company during the first ten years of operations. Last month,Reliance Industries announced that it was buying Bhartis entire stake in BhartiAXA Life Insurance, and if the insurance regulator gives the goahead for that sell-off, it will smoothen the way for this transaction as well. "Given an option, DLF would like to sell its entire holding in shot," said the person involved in the transaction. Icall Soft Source : The Economic Time |
| India up 10 places in 10 yrs on insurance chart
India has overtaken Spain to become the 11th largest insurance market in the World. But while the Indian market has jumped up 10 places in the last decade, Indian companies individually are yet to make their presence in global rankings because of their localized operations.
According to a report on world insurance markets in 2010, compiled bySwiss Re, total premium volume in the world market rose to $4339bn in 2010 - a growth of 2.7% after falling for two years after the global financial crisis. Indias inflation adjusted growth which was only 4.91% in 2010-11 is still twice the growth recorded by global markets following a decline in US and several European markets. In the decade since the opening up of the insurance sector the domestic protection industry has overtaken several developed markets. The gain in market share has accelerated after the crisis largely because of the shrinkage in several European markets. In the life insurance business alone India has raced ahead of ten major markets in the last decade. These include - Australia, Switzerland, Spain, Belgium, Sweden, Ireland, Netherlands, Canada, South Africa and Taiwan. While the Indian market has grown, Indian companies are yet to make it to the top 20 list either in sales or market capitalisation. According to Ashvin Parekh Partner Ernst Young, Indian insurers have managed to grow by riding on the performance of the stock markets. "India per se is a strong savings economy and insurers have tried to capture this aspect by designing products around savings. And in order to render higher return they have designed products that are riding on the performance of other financial markets" However, while the saving products give them the topline it does not necessarily translate into profits. "Although the margins are in the protection products, the real effort to push protection has not happened" said Mr Parekh. He points out that while the insurance companies have been successful in capturing the behavioural aspect of Indians when it came to finance they have willy-nilly shifted orientation to medium-term instead of having a long-term focus. "From 2000 onwards, the Indian insurance markets has grown seven times. But at the same time the number of companies has grown four fold with around 45 insurance companies" said Monish Shah, director, Deloitte India. According to Mr Shah, the structural changes introduced by the regulator which will enable companies to raise capital from the markets and merge will be good for the industry. "In the medium-term there should be some consolidation and we will see some global size players from India" he said. Most of the smaller markets like Canada, South Africa, Australia have companies that are giants compared to Indian companies. In terms of market capitalization, the top two life companies in the world are Chinese - China Life and Ping An Life Insurance. LIC which has marketshare of over 80% in total premium has revenues of less than $50bn, which keeps it out of the top 10 list. Icall Soft Source : The Economic Time |
| Insurance regulator slaps Rs 70 lakh fine on SBI Life
Insurance regulator Irda on Friday imposed a fine of Rs 70 lakh on SBI Life Insurance for paying excess commission to the agents in violation of the group insurance guidelines.
"Considering the gross and continued nature of the violations, the Authority has come to the conclusion that it is just and proper to impose a penalty of Rs 5 lakh each for such payments made in 14 instances to Corporate Agents and Master Policy Holders totalling Rs 70 lakh," Irda said in an order. The Insurance regulatory and development Authority (Irda) said that as per the guidelines, SBI Life was required to pay group administration expenses to Master Policyholders. Under the guidelines, insurers can pay commission only to agents or corporate agents within the limits prescribed by the Authority. SBI Life, Irda added, has paid commission to 14 master policyholders in violation of the guidelines. "The insurer has failed to adhere to the guideline every time such payment is made," added the order, issued by Irda Chairman J Hari Narayan. SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif. SBI owns 74 per cent of the total capital and BNP the remaining 26 per cent. Icall Soft Source : The Economic Time |
| Proposed new insurance norms may adversely impact mergers
Indias insurance regulator may be attempting to override legal provisions while also seeking to prevent promoters from exiting ventures within 10 years of starting operations, experts feel.
Their cause of concern is the recent draft guidelines issued by the Insurance Regulatory and Development Authority -- formally titled the IRDA (Issues of Capital and Disclosure Requirements for Life Insurance Companies) Regulations, 2011. The proposed regulations are to govern the initial public offering by life insurers or for dilution of stake by the promoters. The insurance regulator has called for comments and views on the draft regulations before finalising the same. "According to its apparent tenor, the proposed regulations would prevent promoters from exiting their venture or roping in new partners within 10 years of operations," said D. Varadarajan, a Supreme Court lawyer specialising in company and insurance laws. As per the draft regulations, promoters of life insurance companies can dilute or divest their holdings after 10 years of operations by: - issuing capital under the inter-corporate deposit regulations - divesting equity through inter-corporate deposit regulations and - issuing capital or divesting through other means. The catch lies in the fact that under the proposed norms, the 10-year operations clause may become mandatory for insurance companies proposing to raise capital through a public issue under inter-corporate deposit norms, or if a promoter intends to reduce stake. Experts maintain while the Insurance Act does not bar insurers from going public within 10 years of operations, the regulator may interpret the new norms as though the 10-year operations clause is mandatory, which could hit their future plans to raise money. The Insurance Act has two sections on transfer of shares. Section 6A requires prior nod for transfer of stakes above five percent and Section 6AA deals with public issue or divestment by promoters after 10 years to bring down their holding to 26 percent. "Section 6A of the act expressly provides for transfer of shares when the shareholding is below five percent, without the permission of the regulator. Any transfer in excess of five percent requires the regulators permission," an insurance expert said. But the draft regulations, if they come into force, may restrict any stake transfer during the first 10 years of operations. "The ambit of Section 6A is entirely different. For all purposes, a lock-in period of 10 years as proposed by the insurance regulator as per norms cant be stipulated here," Varadarajan told IANS. He further said Section 6AA comes into play only when insurance companies go for public issues or when promoters have to dilute their holdings after 10 years of operations. Industry officials conceded as prudent the licensing regulation that bans promoters from transferring or diluting their stakes during first five years of operations to ensure that only serious players enter the business. Icall Soft Source : The Economic Time |
| Japan earthquake and nuclear catastrophe leaves a Rs 400 crore hole in GIC books
The General Insurance Corporation of India (GIC), the designated national reinsurer, has seen a claim of Rs 400 crore from the catastrophe in Japan. Japan was hit by an earthquake on March 11 this year. This was followed by tsunami and fire outbreak that lasted for close to a week. The entire catastrophe has taken the total economic loss to the extent of $409 billion. "We have seen a loss to the extent of Rs 400 crore from the crisis in Japan," said GIC chairman and managing director Yogesh Lohiya. He said the total economic loss was estimated at around $409 billion.
The insured loss, however, is estimated to be around $40 billion, he added. GIC had mainly reinsured the property risks for catastrophic events. Mr Lohiya said that the entire loss to commercial properties is borne by insurance companies against 80% of the damage to the residential properties absorbed by the government in Japan, while the remaining 20% is with insurance companies. The recent catastrophic events such as floods in Australia, quakes in New Zealand and tsunami in Japan had led to reinsurers to raise rates. Though India has not suffered any major losses in the last couple of years, the market saw a marginal hardening of 5% during the April 1 renewals. For instance, New Zealand has seen an increase of over 300% in premium rates on catastrophic risks. Mr Lohiya said: "Indian corporates have seen a marginal increase of 5% during the April renewal." Similarly, the New Zealand quake loss is estimated at around $12 billion. Since the catastrophe covers are negotiated with their reinsurers in March, there was an impact on the rates. Now the rates have moved further. The Federation of Afro-Asian Insurers and Re-insurers has mandated GIC to set up a pool to reinsure risks arising out of natural calamities in Asia and Africa. There are around 200 members from Asia and Africa. However, Mr Lohiya said there was not much progress on the pool. Icall Soft Source : The Economic Time |
| Now, buy term insurance even at 85
For the first time in India, senior citizens up to 85 years will be able to buy term insurance without any medical checks. Companies are realizing that while it makes sense to catch them young, it is the seniors who have the investible funds.
IDBI Federal Life Insurance-the three-way joint venture between public sector IDBI Bank, Federal Bank and European insurers Aegis- has floated a whole-life policy which allows individuals as old as 85 to buy insurance cover. While whole-life policies are not new to the Indian market, most providers, including Life Insurance Corporation, restrict maximum age at entry at 60 years. "To our knowledge, we are the first company to offer this cover to those as old as 85," said G Nageswara Rao, MD, IDBI Federal General Insurance. Typically, life insurance is bought with the objective of providing income protection to dependents and since most people retire in their sixties the target market for life insurers is the working population. "We have found that there is a large section among senior citizens who want to buy insurance because they would like to bequeath an inheritance for their relatives," said Rao. He said that another of the impediments was the medical checks which are required from all senior citizens. IDBI Federals policy requires no checks. However, the policy does restrict maximum sum insured to Rs 5 lakh and limits the benefit to 125% of the sum insured if there is death in the first two years. IDBI Federal is the second company to target late entrants. Earlier, Max New York Life introduced a fast-track policy which allows those who missed out on buying insurance earlier an opportunity to build up a retirement corpus within a short time. According to Rao, the limits on death benefits in the first two years of the policy would take care of any adverse selection by people suffering from serious ailments. The cost of cover also increases along with age. While the person who buys insurance at 50 will end up paying only Rs 3,300 an 85-year-old will pay 10 times that much. "While the premium may be high you have to bear in mind the average life expectancy for those entering at the maximum age," said Rao. According to the World Health Organization, life expectancy at birth for Indian males is 63 while for females is 66. Insurers, however, dont go by general life expectancy but at the longevity of the insured population, which tends to be better than the rate for the general population. IDBI Federal plans to bring down the cost of the product by selling it directly to customers. "Initially, we will offer the product to customers of IDBI Bank and Federal Bank. But in the near future we will start marketing this product to everybody," said Rao. In the west whole-life plans are popular way of estate planning because it enables the inheritors escape estate tax. However, in India this is not a driver since inheritances are tax-free. Icall Soft Source : The Economic Time |
| IRDA fines six general insurers for non-adherence to corporate agency norms
The Insurance Regulatory Development Authority (IRDA) has fined six insurers Rs 5 lakh each for tying up with corporate agents of Maruti Suzuki India Ltd the passenger car major.
According to the insurance rules, only one license can be granted to one group provided the group does not have any other insurance activity. However, IRDA after a hearing concluded that Maruti Suzuki had floated six separate corporate agents and each one tied up with one insurer although the parent (Maruti Suzuki) held 99.9% stake in each of corporate agent entities. According to IRDA, Maruti Insurance Business Agency Ltd, tied up with National Insurance, while Maruti Insurance Distribution tied up with Bajaj Allianz General Insurance and Maruti Agency Network tied up with Royal Sundaram Alliance Insurance. Maruti Insurance Agency Solutions tied up with New India Assurance, Maruti Insurance Agency Services roped in IFFCO Tokyo General Insurance and Maruti Insurance Agency Logistics tied up with ICICI Lombard as their corporate agents. All these corporate agents, IRDA said in its ruling, are 99.9% subsidiary of Maruti Suzuki India and therefore they cannot tie-up with separate insurers. The rules also stipulate that any application from a company for corporate agency license to an insurer should be referred to IRDA when any other group company of the agent is into insurance activities. The corporate agency also needs to make a solemn affirmation about any insurance related activities of any members of the group. According to IRDA the six insurers failed to verify the compliance by the corporate agents while granting and renewing license to them. The regulator feels they also failed to exercise due diligence in renewal of license and they did not obtain the solemn affirmation for the corporate agents about any other insurance related activities by the group neither did they refer it to the regulator. Icall Soft Source : The Economic Time |
| Naming of RILs insurance venture will be interesting
With Reliance Industries buying out Bharti Enterprises 74 percent stakes in two insurance joint ventures -- Bharti Axa Life Insurance and Bharti Axa General Insurance, the question that begs an answer now is how the acquirer would rename the two companies.
With the Bharti group exiting the insurance companies, its name normally will not figure after the acquisition is completed. The deal between Bharti and Reliance Industries will not disturb the French group Axas 26 percent holdings in the two insurance companies. Names of major ventures of the Reliance group always start with the word Reliance. But the Mukesh Ambani-led Reliance Industries will find it difficult to rename the two acquired insurance companies with the word Reliance as a part, industry sources told IANS preferring anonymity. The Anil Dhirubhai Ambani Group (ADAG) led by Anil Ambani, younger brother of Mukesh, already operates life and general insurance companies under the name Reliance Life Insurance Company Ltd and Reliance General Insurance Company Ltd. According to Company Law, similar sounding names will not be permitted for usage. It is more so in the case of financial services business that deals with long term savings of the people. "The word Reliance has good brand equity in the business field. It will be interesting how Reliance Industries plans to leverage that brand equity. Perhaps RIL Axa could be one way out," sources said. Meanwhile, employees of Bhartis two insurance companies have been intimated about the stake sale. According to industry sources, the insurance regulator has also been intimated about the stake sale. Icall Soft Source : The Economic Time |
| RILAXA deal brings Ambani brothers into direct competition
Nearly a year after scrapping the noncompete agreement between them, the Ambani brothers today came into direct competition with each other with the elder sibling Mukeshled groups entry into the insurance business.
Younger brother Anilled groups Reliance Life Insurance and Reliance General Insurance are already among the leading private sector players in their respective businesses. The two companies already compete with Bharti AXA Life Insurance and Bharti AXA General Insurance , in which Mukesh led Reliance Industries group has acquired a majority stake from Sunil Mittalled Bharti group. As per a deal announced today, Bharti group would exit from its joint ventures with AXA ventures sell its stakes to the RIL group. The two ventures would now be run in partnership between RIL and the French financial services major AXA group. About a year ago, the two Ambani brothers had decided to bury their differences and announced on May 23, 2010 a truce deal, that also involved scrapping of a nearly fiveyearold noncompete agreement between their groups. Soon after that, the Mukesh Ambani group had started its planning for entry into financial services business. Earlier this year, it announced a joint venture with global private equity firm DE Shaw group. However, it has not yet been finalised yet what businesses would be undertaken by the RILDE Shaw venture, while the deal to partner AXA group is specifically for the insurance business. So far between the two brothers, the financial services business has been a domain of Anil Ambani. Before their separation, Anil was considered an expert on financial matters and Mukesh has a reputation of rolling out businesses of unheard size. RIL is also said to be planning to enter mutual fund and private equity businesses as well. Anil Ambani group is already present in a host of financial services businesses, including insurance, mutual funds, brokerage and nonbanking financial services. RIL has already set up a few subsidiaries for financial services business, namely Reliance Retail Finance Ltd, Reliance Retail Insurance Broking Ltd , Reliance Financial Distribution and Advisory Services Ltd and Reliance Retail Travel and Forex Services Ltd. Speculations had started building up for RILs financial services foray after the DE Shaw deal was announced and there were expectations for some announcements in this regard for the companys AGM earlier this month. However, Mukesh Ambani was silent on specific details for financial services business at the AGM. The billionaire industrialist, still, mentioned that RIL would partner world leaders for entering new businesses in the country. Icall Soft Source : The Economic Time |
| Beedi workers to get medical insurance benefits
About 55 lakh beedi workers will soon get medical insurance benefits under the Rashtriya Swasthya Bima Yojana (RSBY) by 201314 under a proposal approved by the Union Cabinet on Thursday.
A meeting of the Cabinet, chaired by Prime Minister Manmohan Singh , decided to extend the insurance cover to the beedi workers spread across the country, with the government spending an estimated Rs 311.25 crore on it. "It is proposed to cover ten lakh beedi workers in the current financial year and 100 per cent of the total beedi workers by 201314", Labour and Employment Minister Mallikarjun Kharge told reporters here. Information and Broadcasting Minister Ambika Soni described the decision as "a significant and important agenda of the UPA government ". Under the scheme, the worker and his family of five would benefit with a medical insurance cover of Rs 30,000. Any claim beyond this amount would be reimbursed directly by the Welfare Commissioner to the concerned hospital through existing procedures, Kharge said. Smart cards would be issued for availing benefits under the scheme, he said, adding that all beedi workers would be brought under the net of the RSBY to get cashless benefits in any of the ESI or empanelled hospital throughout the country. Kharge said the beedi worker would have to contribute Rs 30 towards a smart card. The annual premium is estimated to be Rs 750 per annum, of which 75 per cent would be the share of the Centre and the remaining of the states. Icall Soft Source : The Economic Time |
| Religare in talks with foreign players for general insurance JV: CEO
Financial services group Religare Enterprises Ltd is in talks with two foreign insurers for a joint venture to offer general insurance services in India.
"We are in discussion with a few players," chief executive officer Sachindra Nath told Reuters in an interview on Friday. He did not give a timeframe for a deal or the launch of general insurance services. Religare already operates life insurance business in partnership with UKbased Aegon and is awaiting the regulators approval for offering health insurance Icall Soft Source : The Economic Time |
| Cholas MS gets best insurance company award
Chola MS General Insurance part of the USD 3.8 billion Murugappa Group has received the Best Insurance Company award from the Union Labour Ministry for its "in time" claims settlement under the Rashtriya Swasthya Bima Yojana Scheme.
This award has been given for settling the claims "in time" for the hospitals offering cashless treatment facilities to the below poverty line ( BPL )) families in various districts across the country, a company statement here said. The Chennaibased company received the award from Union Labour Minister Mallikarjuna Kharge at a function held recently in Raipur. Chola MS General Insurance was the only company to receive this award, it said. "Its a very proud moment for us that the Government has recognised our claims service for its promptness and responsiveness. It is another milestone in our journey towards customer centricity. ", Chola MS Managing Director S S Gopalarathnam said. Cholamandalam MS General Insurance Company is a Joint Venture between Murugappa Group and Mitsui Sumitomo Insurance Group of Japan. The company has 113 branches and 7,500 agents across the country, the statement added. Icall Soft Source : The Economic Time |
| LIC using revenue stamps arbitrarily in receipts: CIC
Several branches of the countrys largest insurance company Life Insurance Corporation of India are allegedly causing huge loss to exchequer by issuing receipts without affixing revenue stamps.
The matter came to light during a hearing before the Central Information Commission which directed the LIC to make public details of all the revenue stamps purchased by the Corporation between 200610. The case relates to an RTI applicant who sought to know from the LIC details of revenue stamps purchased by it during the last five years along with other queries but the request was denied saying compiling of information would divert the resources disproportionately. When the matter came before the transparency panel, applicant Madan Mohan Tiwari produced documents received by him from LIC Divisional office, Patna which showed that over a lakh receipts, requiring revenue stamps, were issued by Buxar Branch without affixing them, a fact not refuted by officials representing the LIC during hearing. Tiwari with the help of information gathered from just one division of the LIC managed to prove before the Commission that number of offices are using "arbitrary practice" of pasting revenue stamps on receipts thus causing immense loss to exchequer. "A perusal of this document clearly brings out that the total number of revenue stamps purchased by the Buxar branch office for the abovementioned period (200610) was 35,980, while the total number of receipts which were over Rs 5000 on which revenue stamp was required to be pasted was 1,58,389 which clearly brings out that revenue stamps were not pasted on as many as 1,22,409 receipts thereby resulting in loss to the exchequer," Information Commissioner Deepak Sandhu noted. She said the revelations are serious enough to merit action under the public interest override clause of the RTI Act and dismissed the arguments of the LIC that compiling of information would disproportionately divert its resources. Giving LIC 16 weeks to compile the information, Sandhu said, "Undoubtedly, the practice being followed by some of the offices of the LIC to arbitrarily decide as to which receipt should be affixed with revenue stamp is in complete violation of the law in this regard." This practice has caused huge financial loss to the exchequer and must be highlighted so that the top bosses of the Corporation can take cognisance of the matter and take corrective action, she said. Icall Soft Source : The Economic Time |
| IndiaFirst Life crosses Rs 900 cr in new business premium
IndiaFirst Life Insurance, a joint venture between Bank of Baroda and Andhra Bank along with UKs leading risk, wealth and investment company Legal General, today announced the company had crossed Rs 900 crore in new business premium in the first 500 days of operations.
"With Rs 703crore of new business in 201011 and Rs 200 crore in the 4.5 months of 200910, IndiaFirst crossed Rs 900 crore of total new business in exactly 500 days of commencement of business operations on November 16, 2009. IndiaFirst Life Insurance MD CEO P Nandagopal told reporters here. "This is the fastest run rate by any life insurance company in the country," he said. IndiaFirst is the fastest to achieve Rs 100 crore in just 100 days of operations, Rs 200 crore in 4.5 months of operations, and over Rs 300 crore in under nine months from inception, resulting in the highest ever startup phase productivity in the industry. The company has covered 1.2 million lives during this period. The Total Assets Under Management (AUM) with the company at the close of 500 days was Rs 1,000 crore, Nandagopal said. The company plans to launch health insurance plan and pension plan shortly. "We had pension plan till September. Now we intend to launch new pension plan in Q2 FY12 subject to new guidelines in place, Nandagopal said. The company is also looking at launching health insurance plan shortly, he said. The company aims to double its business in FY12 through increase in number of agents and branch network. IndiaFirst has 350 licensed agents which will be increased to 1,000 agents. The company has further extended its distribution reach to all 4,800 branches of its partner banks to leverage the banks existing database of over 50 million customers across 1000 cities/towns. The company launched Ask Apply Get (AAG) an innovative and customer friendly overthecounter process to buy life insurance in the most hassle free manner over the counter in three minutes across its partner bank branches of Bank of Baroda and Andhra Bank. It also plans to launch its alternate distribution channel to further strengthen its reach. Bank of Baroda holds a 44 per cent stake in IndiaFirst, while Andhra Bank and Legal amp General hold a 30 per cent and 26 per cent stake, respectively. Icall Soft Source : The Economic Time |
| ULIP business down by 15% during 201011: IRDA
Amid a row between Sebi and insurance regulator IRDA over control of unit linked products, the ULIP business declined by 15 per cent during 201011.
"The proportion of sale of ULIP products has certainly come down. When compared to last year, ULIP business has gone down by about 15 per cent," IRDA Chairman J Harinarayan told reporters on the sidelines of FICCI National Conference on Insurance. ULIPs which are hybrid insurance products in which a portion of the investors premium is invested in equity became a subject of controversy after market regulator Sebi in April last year banned private life insurance companies from issuing such schemes. Soon after, IRDA issued a order asking insurers to ignore Sebi order. After the government directed that IRDA would have jurisdiction over ULIPs, the insurance regulator came out with new guidelines for such equitylinked products in September last year. ULIPs, which used to be around 60 per cent of life insurers business prior to the guidelines, saw a decline as agents shifted focus to traditional products. As per the new IRDA guidelines, the commission paid to distributors and expenses charged by insurers will no longer be frontloaded and will be distributed over the lockin period of the schemes, which has been raised to five years from three years earlier. Though the new rules will benefit policy holders, reduce the firstyear agent commission and help in curbing rampant misselling, insurance firms will be required to underwrite more losses, infuse more capital and cut costs to sustain ULIP sales. Furthermore, IRDA has fixed the floor on guaranteed returns from ULIP pension plans at 4.5 per cent, which will greatly benefit policyholders saving up for retirement. Along with these changes, the regulator has fixed stringent minimum disclosure guidelines for insurers. Under the new disclosure norms, agents cannot take policyholders for a ride, as they can now see the financial position of the company over the website and do not need to depend on agents, said an industry expert. The life insurance industry has grown 8fold in the past decadefrom a total premium income of Rs 34,892 crore in 200001 to about Rs three trillion in 201011. Over Rs one lakh crore of total premium is estimated to have come from ULIPs in 201011. Icall Soft Source : The Economic Time |
| Insurance industry to be worth $400 bn by 2020: Report
Indias insurance industry will outpace economic growth and is likely to reach $350400 billion in terms of premium income by 2020, making it among the top three life insurance markets, an industry report revealed.
India will also be among the top 15 nonlife insurance markets by 2020, according to an industry study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the USbased Boston Consulting Group. The report points out that penetration of the insurance industry, premium as percentage of the countrys gross domestic product (GDP), has increased from 2.3 percent in 2001 to 5.2 percent in 2011. In addition, there has been a vast increase in the coverage of insurance. The number of life policies in force has increased nearly 12fold over the past decade and health insurance, nearly 25fold. Better terms and availability of a wide variety of products, like unitlinked products, whole life, maximum net asset value (NAV) guarantee, auto assistance, auto pay per km insurance, disease management and wellness, have boosted the growth of the industry. "While the industry has come a long way over the past decade, the big challenge is profitability. Private life insurers have accumulated losses of over Rs.16,000 crore till March 2010," said Alpesh Shah, partner and director of Boston Consulting Group India, the author of the report. "The nonlife insurance industry has cumulative underwriting losses of nearly Rs.30,000 crore," he said. Commenting on the report, FICCI Director General Rajiv Kumar said: "The report estimates the total insurance premium at approximately Rs.17 lakh crore to Rs.22 lakh crore in 2020, with life insurance being Rs.15 lakh crores to Rs.20 lakh crores." "This growth will have a significant impact on Indias ranking in the global insurance industry and is based on strong fundamentals," said Kumar. The report will be formally released at the 14th Insurance Conference in New Delhi Monday, FICCI said in a statement. "The report highlights the importance of insurance in Indian economy, the progress made in the last decade, key challenges associated with the sector and an action agenda for insurance companies and the government," said Sandeep Bakhshi, chairman of FICCIs insurance and pensions committee and managing director and chief executive of of ICICI Prudential Life Insurance. Icall Soft Source : The Economic Time |
| Berkshire India to sell Bajaj Allianz products Billionnaire investor Warren Buffett’s Berkshire Hathaway will enter India’s insurance turf as a corporate agent for Bajaj Allianz General Insurance (BAGI), the company said in a statement on Wednesday. Berkshire India, which is a Berkshire Hathaway subsidiary, will sell and distribute general insurance products through its online distribution portal and a telemarketing channel on behalf of BAGI. It will initially focus on the motor insurance space. Berkshire India plans to offer topoftheline services at attractive rates in distributing insurance products. If the market is receptive, it will try to expand its product portfolio to include health insurance, life and travel insurance and other personal lines as well. “We’ve been tracking the Indian insurance turf for years and are thrilled about the emerging retail insurance opportunity. Berkshire Hathaway has a successful online and direct distribution model in the US and as corporate agent of Bajaj Allianz, it would like to replicate that success in India,” Kara Raiguel, Berkshire India director, said in a statement. Berkshire India CEO Arun Balakrishnan said: “Buying financial products directly over the internet is a relatively new and growing opportunity in India. We will engage directly with consumers using the online platform to provide insurance products efficiently. Building an easy to use website and offering a hasslefree way to buy insurance with superior customer service will be the company’s core focus. Bajaj Allianz and Berkshire India share a common goal of providing exemplary customer service.” “BAGI has some 40 corporate agents who contribute nearly 40% of its premium income. The tieup will help expand our customers base,” a BAGI spokesman said. Icall Soft Source : The Economic Time |
| Insurance cos working on drive less pay less policies
Drive less, pay less. Thats going to be the selling point of at least three motor insurance companies . Modelled on the popular model followed in Italy, this policy lets you pay the premium according to the miles you drive. If you are not a frequent user of your vehicles, you get to pay less premium when your motor insurance policy comes up for renewal.
Bajaj Allianz, ICICI Lombard and Bharti AXA General Insurance are working on versions of the socalled payasyoudrive policies. ICICI Lombard has, in fact, initiated a pilot project under which it has installed tracking equipment on a set of vehicles a mix of ownerdriven and commercial. The equipment are currently tracking data like distance traversed, condition of roads used, driving time like day or night. "We started the pilot project some six months ago and are now collecting data. Once the volume of the data reaches a critical level we will engage our actuaries persons who do all the mathematics while designing an insurance product, to design a payasyoudrive policy," said Amitabh Jain, head motor customer services at ICICI Lombard. Amarnath Ananthanarayan, CEO, Bharti AXA General Insurance said: "We are looking at a renewal discount model. While the premium charged in the first year will be like any regular vehicle cover, we will offer discounts and rebates on subsequent renewals on the basis of the distance travelled by the car in the first year of cover. The policy, however, is still on the drawing board and we hope to launch it late this year." aa Icall Soft Source : The Economic Time |
| HIV may get medical insurance soon
India could soon see a national medical insurance policy for people living with HIV (PLHIV).
In a meeting with insurance companies and the Insurance Regulatory Development Agency on February 3, the National Aids Control Organisation (NACO) will press them to make insurance "inclusive and universal for PLHIV". Currently, HIV is excluded from all insurance policies available in the country "violating the national mandate of providing stigma free care and support services". Union health ministry officials said that HIV/AIDS which was earlier regarded as a "incurable disease" has now become a "manageable health problem" and, therefore, should be included in medical insurance policies. "Right now, there are individual health schemes in some states which cover certain healthcare related costs of PLHIV. Many health insurance policies exclude services to PLHIV and there is need for a package designed specially for such people. We will discuss global best practices to see how a viable insurance policy can be created for them," joint secretary Aradhana Johri told TOI. Another ministry official said, "Those living with HIV are living longer and have less morbidity cases, thanks to the increase in antiretroviral therapy (ART) coverage. With timely initiation of ART, PLHIV may live a normal life up to 20 more years. Companies need to realize that covering HIV patients with a medical policy is no more a loss making proposition." India with a HIV prevalence rate of 0.31% is home to the third largest number of people living with HIV/AIDS in the world 23.9 lakh. Some countries with higher prevalence rates of HIV have already taken measures to mainstream HIV through commercial health insurance cover. These include South Africa (17.8), Namibia (13.1), Uganda (6.5), Guyana (1.2) and United States (0.6). K K Abraham , chief of Indian Network of People Living with HIV, said, "Insurance is life saving for us." At present, only Star Health and Allied Insurance has an insurance policy for PLHIVs in four states Karnataka, Maharashtra, Andhra Pradesh and Tamil Nadu. More than 7,000 PLHIVs have subscribed to this insurance which provides a health cover of Rs 30,000 with a yearly premium Rs 1,511. NACO says that with about 89% of all HIV/AIDS infections being in the 1549 age group, it effects in the most productive years. Currently, the financial burden of treatment and care is shared by NACO and PLHIVs. While NACO pays for ART, PLHIVs face economic burden of travel, nutrition and loss of wages. Recently, India launched the national health insurance scheme, Rashtriya Swasthya Bima Yojana (RSBY), for BPL. It is to be rolled out in 366 districts in 29 states. As on December 23, 2010, a total of 22,354,462 smart cards have been issued across 260 districts in 27 states. NACO says, "HIV has been taken out from the exclusion list making it possible for poor PLHIVs to be covered under health insurance, which can make them entitled to one time hospitalization for nearly 700 inpatient procedures with costs up to Rs 30,000 by paying a minimal registration fee of Rs 30 per annum." Icall Soft Source : The Economic Times |
| New norms fail to dent insurance income growth
Insurance regulator’s revised norms on unitlinked products did not have a major effect on the life insurance industrys first premium income growth. At least, that’s what the data for new premium income during AprilDecember 2010 period shows.
Data released by the regulator show that the life insurance industry registered a 28% growth in first premium income during AprilDecember 2010, against an achieved growth of 29% during the previous corresponding period — a marginal 1% fall. Average premium paid during the period per policy has, in fact, increased to Rs 2,825 from Rs 1,996 in the previous period — a 41% rise in average premium paid. For private players, the average premium per policy was Rs 3,139 during AprilDecember 2010, against Rs 2,342 in the previous period — a 34% jump. LIC managed to increase its average premium per policy by almost 47%. Premiums may have witnessed a marginal fall, but the number of policies sold has taken a beating. The industry as a whole sold 9% less policies during the period than in the previous period. LIC sold 4.76% less, while private companies saw a 20% decline in number of policies sold. Interestingly, the private players — 22 of them — managed a higher growth at 7% against 2% in the previous period, but they cumulatively lost 6% market share to the Life Insurance Corporation of India (LIC), the only public sector insurer. LIC now holds a 71% market share while the private players held 28% of the market share during the period. Private players managed to mop up a total first premium income of Rs 24,980 crore during AprilDecember 2010 against Rs 23,379 crore in the previous period. LIC, however, witnessed a more than 10percentage point decline in growth rates to 40% during the period under review against 50% in the previous corresponding period. It registered a first premium income of Rs 61,718 crore during the period, against Rs 44,178 crore in the previous period. Insurers feared a drop in growth rates since they were forced to withdraw at least 208 unitlinked policies (Ulips) from the market during August. Only about 42 new Ulips were launched from September. “Brokers and insurers felt the market will witness a rationalisation in terms of the number of Ulips and every insurers practice of launching a host of policies will be replaced with 35 Ulips per company. Some felt the current situation is creating a dearth of investment options for investors as far as Ulips are concerned,” an insurance analyst said. Ravi Trivedi, executive director at KPMG, however, feels that the number of Ulips on offer will gradually rise, but may not match the number of products that were withdrawn. “Insurers will focus on rationalisation and retention of clients. With all the new guidelines that cap commissions and surrender values, insurers now need more time to design their products,” he said. Bajaj Allianz, ING Vysya, Reliance Life, Birla Sun Life, Aviva Met Life were among those which saw a decline in premium income during the period. Icall Soft Source : The Economics Times |
| IRDA asks insurers not to outsource core activities
Issuing guidelines on outsourcing, insurance regulator IRDA today said that insurers should not outsource core activities like investment and grievance redressal as it may dilute internal controls.
The Insurance Regulatory and Development Authority (IRDA) has outlined the business verticals of insurance companies which would fall under core activity. They include underwriting, customer identification and fund accounting among others. "The insurer shall ensure that outsourcing arrangements neither diminish its ability to fulfill its obligations to policyholders nor impede effective supervision by IRDA," IRDA said in a circular to all insurers. Insurers therefore have to take steps to ensure that the service provider employs the same standards in performing the services as would be employed by them if the activities were conducted in house. "Accordingly, insurers should not engage in outsourcing that would result in their internal control, business conduct or reputation being compromised or weakened," it added The noncore activities outlined by IRDA include payroll management, claim processing over overseas medical insurance, call centre and house keeping among others. IRDA said the guidelines will take effect immediately and insurers would have to terminate all contracts, which does not comply with the norms by June 31, 2011. Icall Soft Source : The Economics Times |
| AP plans suicide cover, wants MFIs to foot the bill
The Andhra Pradesh government is planning a legislation that would make it mandatory for microfinance companies to pay a compensation of Rs 5 lakh to families of borrowers who commit suicide because of debt burden.
This would raise the liabilities of microfinance companies and compound their problems which they already face in slowing loan repayments after curbs on loans and recovery. “A proposal to this effect is currently under consideration,” said D Manikya Vara Prasada Rao, rural development minister. “Our estimates suggest that about 3540 people committed suicides due to the coercive practices adopted by MFIs. Now villagers are asking for compensation as they need money to repay their debt as borrowing was not made under a single individual’s name. It’s a household borrowing and the existing members of the family will have to cough up the money.” No final decision has been taken. Andhra Pradesh, which accounts for nearly a third of the industry, triggered a debate on how microfinance has to be regulated when it enacted recovery and lending rules last October following suicides and unethical practices by lenders. The Reserve Bank of India appointed a committee under YH Malegam to suggest regulations, whose report was made public last week. The sector is on the verge of collapse due to wilful defaults, which the industry blames on the AP Act. “As we think MFIs are responsible for these suicides, they need to compensate the families of victims,” said Mr Rao. “The proposal is currently under the consideration of ministry of pensions, selfhelp groups women development, child disabled welfare and a final call will be taken on it soon.” The state government was under pressure from opposition parties to offer compensation to suicide victims. The latest proposal is expected to help it pass the buck without any pressure on the exchequer, which is already finding it difficult to finance various welfare schemes. “The government’s move will affect the entire sector and its goodwill,” said Anurag Agarwal, vicepresident , Intellecap. “It will give an impression that the sector was responsible for forcing people to commit suicide, which is a crime. This kind of a perceived notion will make investors wary of investing in the sector and in the long run can affect fund capital raising plans of MFIs,” he added. Individual companies declined comment on the plan. “The proposal is under consideration and it will not be appropriate for us to respond to it now,” said Alok Prasad , CEO of Microfinance Institutions Network — a selfregulatory lobby group of the industry. Icall Soft Source : The Economics Times |
| PNB to decide on fresh foray into insurance business in 2 months
Stateowned Punjab National Bank is likely to take a decision on a fresh foray into the insurance business by Marchend, after its earlier attempt to enter the sector in tandem with USbased Principal fell through.
"By Marchend, something should emerge, like which model suits, which model would give best value to the bank," a senior PNB official said. The bank has received an expression of interest (EoI) for a strategic partnership in the life insurance and nonlife insurance business from various companies. The bank will evaluate these opportunities and then float a Request For Proposal (RFP) as a next step toward finalising a partner, the official said. Subsequently, the bank may form tieups with interested parties, the official said, adding that PNB has a strategic interest in the insurance business and is looking at a longterm partnership. Last year, the bank decided to part ways with two of its partners in a planned life insurance joint venture. PNB bought the entire 26 per cent stake held by Principal Financial Group and the 32 per cent participating interest of domestic firm UK (Berger) Paints in Principal PNB Life Insurance Company Ltd. PNBs stake in the proposed joint venture was 30 per cent, while that of Vijaya Bank was 12 per cent. Postrestructuring, the stake of PNB in the venture would go up to 88 per cent. Principal PNB Life Insurance was incorporated in 2005 with an authorised capital of Rs 110 crore. The paidup capital of the company stood at Rs 2 crore, of which PNBs stake was Rs 0.6 crore. For picking up the 58 per cent stake held by Principal and Berger, PNB had to shell out Rs 1.16 crore. Meanwhile, PNB reported a 7.8 per cent rise in net profit to Rs 1,090 crore for the third quarter ended December, 2010, from Rs 1,011 crore in the same quarter of the previous fiscal. The banks total income rose by 27.9 per cent to Rs 7,976 crore during OctoberDecember, 2010. However, its Gross NonPerforming Assets (NPAs) also increased to 2.03 per cent of total credit from 1.69 per cent at the end of December, 2009. Net NPAs also rose to 0.72 per cent of total assets from 0.48 per cent at the end of the third quarter last fiscal Icall Soft Source : The Economics Times |
| GIC to provide Rs 600 cr insurance cover to ESPN for World Cup
Stateowned reinsurance firm General Insurance Corporation of India (GIC) today said it will provide a Rs 600 crore terror and weather insurance cover for the Cricket World Cup to international sports broadcaster ESPN.
"We have finalised on providing Rs 600 crore terror and weather insurance cover for the Cup to ESPN on Rs 9 crore premium," GIC ChairmancumManaging Director Yogesh Lohia told reporters on the sidelines of the 4th India Rendezvous on Reinsurance here. This is a record cover for any sporting event in the country and is three times more than the Rs 200 crore cover for the Commonwealth Games in Delhi. The 2011 World Cup will begin on February 19 and end on April 2. India will host 27 matches in the 2011 ICC Cricket World Cup at eight venues Bangalore, Chennai, Delhi, Mumbai, Kolkata, Punjab, Gujarat and Nagpur. The insurance cover will compensate for any broadcasting loss arising from cancellation due to adverse weather conditions and terror attacks. However, GIC is still working on the modalities of providing insurance coverage to the World Cup event with the BCCI. Meanwhile, with regard to claim ratios, Lohia said in the first half, the incurred claim stood at 7080 per cent, which is expected to go up during the second half of this year. He said floods in Brazil and Australia are likely to hit the margins of the company. "We are getting reports of losses, however, we not sure if it is the company loss or insured loss. But it may hit the profitability of the company," he added. On the occasion, Minister of State for Finance Namo Narain Meena said there was exponential growth in premium collections in the general insurance industry to USD 8 billion in 2010 from USD 3.5 billion in 2003. "After managing the Indian Terrorism Insurance Pool and now working for the establishment of the Indian Nuclear Insurance pool, the time is right to pursue the target of creating an Asian reinsurance hub in India," he said. GIC is currently working on details for establishing the Indian Nuclear Insurance Pool that will provide insurance protection from nuclear accidents. Icall Soft Source : The Economics Times |
| Motor insurance set to get costlier
Motor insurance will soon cost more. Car and bike owners will have to pay about 10% more on new covers, while truck owners will have to shell out around 80% extra under the new price structure proposed by the insurance regulator.
The Insurance Regulatory and Development Authority (IRDA) has published its proposed new tariff for third party motor insurance—the cover which compensates accident victims and has to be mandatorily purchased by all vehicle owners. The IRDA, however,has not notified the date when the tariff comes into force. The IRDA has set January 17 as the deadline to receive comments from all stakeholders, after which it will announce the date on which the new prices will become effective. The regulator has revised prices considering that third party motor insurance faced a deficit that could touch Rs 2,000 crore. While the premium for private vehicles will rise, it will not be as steep as that for trucks. For a sub1000 cc vehicle, the increase will be from Rs 670 to Rs 740, while for cars up to 1500cc the premium will rise from Rs 800 to Rs 880. In the case of trucks weighing up to 7500 kg the premium will go up from Rs 5,580 to Rs 10,040. “For a truck, the proposed increase is less than Rs 500 per month. For a transporter, the insurance cost is a fraction of the total expenditure and the increase is less than the rise in other operating expenses such as fuel,” said K G Krishnamoorthy Rao, CEO, Future Generali India Insurance. He added that the deficit in third party motor insurance is being met by all other policyholders who end up paying more. The IRDA has also recommended to the government that the concept of limited liability, which was discontinued in 1988, should be reintroduced. The regulator has recommended that Motor Vehicle Act be amended to introduce a limitation period for filing compensation claims. Third party insurance is the only business where rates are fixed by the regulator. This is also the only policy where insurance companies receive a fixed premium but their liability is unlimited as claims are paid on the basis of compensation awarded by the motor accident claims tribunal. Four years ago, the IRDA had revised rates on third party insurance substantially to wipe out the deficit. However, the regulator was forced to roll back the increase by 70% after a nationwide stir by truckers sent food prices soaring. Premium on third party insurance has been a contentious issue. Icall Soft Source : The Economics Times |
| Insurance cover for nuclear accidents likely
Insurance regulator IRDA is in the early stages of drafting a regulation for covering nuclear accidents.
The move assumes significance as India is expected to be a major player in this sector after its nuclear deal with US is operationalised. "We are in early stages (of the regulation). This thing involves large amount of risks. We will have to first constitute a pool which will be a member of the larger global pool (of nuclear accident insurance). That is yet to be figured out," Irda Chairman J Hari Narayan said. Speaking to reporters on the sidelines of the IBAI summit here, he also said that the reinsurer General Insurance Corporation ( GIC )) is working on the details to provide insurance protection to such accidents. It is felt that the ambitious programme expected under the IndoUS nuclear deal may not materialise to the desired extent unless there is insurance protection for nuclear accidents. According to USIndia Business Council (USIBC) the IndoUS nuclear deal could open up investment opportunities to the tune of USD 500 billion over the next decade. As of now, nuclear power accounts for just three per cent share of the total power produced in India from different sources. However, by 2020 this source is expected to provide 20,000 MW of power against little over 4,000 MW currently. Icall Soft Source : The Economics Times |
| US health insurers vie for cashless service in India
American health insurance giants Aetna and United Healthcare are in the race to provide cashless service under health insurance in India. The two companies are among nine that have been shortlisted by governmentowned general insurers which control close to 80% of the cashless mediclaim market.
The health giants are among the 24 that have responded to a request for joint venture proposals by the General Insurers Public Sector Association (GIPSA) that represents four of the largest health insurers —New India Assurance, National Insurance , Oriental Insurance and United India Insurance. These stateowned companies plan to float a captive thirdparty administrator (TPA) for managed healthcare services. GIPSA is seeking a partner that will provide technical support in networking and negotiating with healthcare providers. The other companies shortlisted include Patni Computers and French Coris International , which provides claims management services . Cambridge Solutions and Lason , two BPO firms which are keen on diversifying into healthcare, are in the list. Among the existing TPAs, emeditek and Medi Assist have been shortlisted. Speaking to TOI, G Srinivasan , chairman, United India Insurance who also heads GIPSA, said that he expected a decision to be taken on a partner in two months. The four companies have taken an inprincipal approval from their boards to set up a TPA firm. He said that the objective of setting up a captive was to bring down losses in health insurance. “When there are many TPAs we are not able to bargain better rates from healthcare providers. We hope to get lower prices for policyholders and also expand the reach of cashless claims service,” said Srinivasan . Last year, GIPSA took a tough stance on managing claims by drawing up a list of maximum charges it would pay under various heads. TPAs were asked to create a preferred provider network which would include only those hospitals that adhered to the tariff. This stance affected thousands of policyholders as most of the tertiary care hospitals refused. Since then, things have changed. “In Delhi, most of the large hospitals have joined the network, including Batra, Gangaram , Saint Stephens. We are waiting for the corporate chains of Apollo, Max and Fortis,” said Pawan Bhalla, MD, Raksha TPA. In Mumbai of the five large tertiary care Hospitals Jaslok is agreed to have joined. Existing TPAs have been up in arms against GIPSA’s decision to have a captive firm. Their main concern was that such a firm would put them out of business. The association of TPAs had filed a complaint with the Competition Commission of India (CCI) that such a captive firm would create a monopoly. A decision by the CCI is expected next week. However, the initial antagonism appears to have worn off a bit considering that the health insurance market is growing at 3540 % and most TPAs have their hands full managing the business. Also , there are indications that GIPSA may not hand over its entire health insurance business to the captive company to manage. “We have always said that we will not transfer 100% of health business from day one. We will start with a part of the business,” said Srinivasan. Icall Soft Source : The Economic Times |
| Mergers must protect policyholders: Irda
The insurance regulator will allow mergers in the sector only if they protect the interests of policyholders and create a stronger insurer.
“Any MA should enhance the value of the merged entity. There is no point in a merger if one plus one equals two. It should be more than two,” Irda Chairman J Hari Narayan told ET in an interview. A proposal on the merger of Reliance General Insurance—a fullyowned subsidiary of Anil Ambanicontrolled Reliance Capital—and Royal Sundaram Alliance is pending before the regulator. But no decision has been taken because the existing Insurance Act empowers the regulator to approve only mergers of life companies. “We are legally examining how we can permit MAs in nonlife companies within the extant law,” Hari Narayan said. Valuing an insurance company is much more complex than a listed manufacturing company. The value of a manufacturing company is generally based on the priceearning multiple—a measure of the price paid for a share relative to the profit earned per share. A high PE multiple suggests that investors expect higher earnings growth in the future. In contrast, the profit of an insurer can fluctuate because claims and yield on investments could spike in a year. So, a commonly accepted benchmark will be crucial when Indian partners dilute their shareholdings in insurance joint ventures through an initial public offering (IPO) at the end of the tenth year of operations. HDFC Standard Life and ICICI Prudential feature—the insurance arms of mortgage lender HDFC and ICICI Bank—top the list of life companies that qualify to tap the market. “The accounts presented by the company should be a fair statement of its assets and liabilities,” he said. Hari Narayan also said there could be a review of a recent regulation that asked insurers to guarantee a 4.5% return on pension plans. It is also examining the feasibility of structuring annuity products better to give investors a clear idea of a minimum they would get as monthly income after retirement. Annuity products promise a regular income after payment of premium for a certain number of years. Investors are also set to get more time to renew their Ulips even if they miss the last date to pay the premium, he said. The assets of life insurers in India are estimated at over Rs 10 trillion. Icall Soft Source : The Economic Times |
| Global agencies offer help to promote insurance for poor
A number of international agencies have stepped in to help the government expand the scope and improve the performance of rashtriya swasthya bima yojana , an insurance scheme that covers 22 million poor families in the country.
Agencies such as UNDP, Unifem, Unicef, GTZ and DFIT will support the government’s plan to extend the scheme meant for families below poverty line to cover other vulnerable groups free of charge and to general public on payment of a premium, a labour ministry official said. The agencies have had a preliminary round of discussions with the labour ministry on the role they intend to play in popularising and improving the scheme. The RSBY scheme kicked off in 2007 and has resulted in a sharp increase in the poor’s access to hospitals, government data show. “Our latest data show that while access to hospitals for every 100 poor persons is just 1.70, in the case RSBY card holders the number increases to 3.18,” said Anil Swarup, DG, labour and welfare. Roping in international agencies will help the government spread awareness about the scheme in areas where it cannot reach out on its own. “The international agencies have their own organisations at the field level. They have offered to leverage these institutions to spread awareness about RSBY,” Mr Swarup said. Some, like UNDP, World Bank and Germanybased GTZ, have also offered to share their technical expertise in improving the performance of the scheme. The labour ministry has now opened the scheme to the general public provided they register as groups and pay the full premium fixed by insurance companies. In the case of BPL families and vulnerable groups, the government pays the premium while the beneficiaries have to pay only a registration fee of Rs 30. The Centre pays threefourths of the costs incurred on the scheme while states pay the remaining amount. “Since the insurance company already has its required infrastructure in place, an increase in number will only serve to bring down the premium,” Mr Swarup said, adding that premium charged by insurance companies this year was actually lower than in the previous year. Earlier this year, ILO and UNDP had selected the scheme in its list of best performing social sector schemes in the world. According to GTZ, the main challenge for the scheme was to spread awareness among the beneficiaries about these services and how to access them. “Awareness about these services among the other stakeholders, like Panchayati Raj Institutions, which can guide the beneficiaries, is important,” a GTZ official said at a recent RSBY workshop. The figures given by the labour ministry on increased access to hospitals by RSBY card holders is supported by an independent survey carried out by the Indian subsidiary of Westat US, the largest statistical services research corporation in the US. According to the study, as many as 97% of the surveyed RSBY patients receiving care in hospitals reported that they decided to get treatment for their conditions or sickness because they had an RSBY smart card. The survey also highlighted the level of patient satisfaction amongst cardholders was high. Icall Soft Source : The Economic Times |
| Life Insurance cos ask IRDA to go slow on regulatory changes
Concerned about the fast pace of regulatory changes being brought into the sector, the life insurance industry has approached sector regulator IRDA to go slow in its approach, sources said.
In turn, the Insurance Regulatory and Development Authority (IRDA) has assured industry players that it will go slow in bringing regulatory changes from next year, a move that will bring some respite to the players, the sources added. Ever since the controversy over the regulation of ULIPs was sorted out by the Government through an Ordinance in July, which was later made in to an Act this year, IRDA has brought about a lot of changes in the life insurance sector. The regulator has also made unit linked products (ULIPs) that give customers lifecover along with returns from investment in the capital markets, a longterm product so that it could be distinct from any other investment product. Besides, ULIPs has a mandatory lockin period of 5years, unlike the past practice where policyholders had the option to surrender their ULIPs after three years. IRDA also had most insurance companies reduce the first year commission of their agents. Earlier practice had some insurance companies distributing commission to agents over certain period to allow them income on a regular basis. However, IRDAs decision to reduce insurers income from the premium, has made several agents look for alternative income sources. Prohibiting life insurers from selling universal life plans like ULIPs that have greater flexibility over traditional plans, minimum assured sum for subscribers, allowing insurers to sell life policies online, besides giving customers an option to purchase life insurance policy without the help of an agent are the other changes ushered by IRDA. Sources said the insurance industry conveyed to the regulator that rapid pace of changes in the sector was hurting their business. In turn, IRDA has assured it that most of the big changes for the industry are already done, so 2011 will see somewhat less number of changes, they said. Despite the new changes, the business of life insurance industry has been growing. The life insurance companies mopped up new premium of Rs 69,706 crore during AprilOctober this year, up over 49 per cent from Rs 46,689 crore in the corresponding period last fiscal. Icall Soft Source : The Economic Times |
| ICICI Lombard to provide weatherbased cover in 8 states
Private general insurer ICICI Lombard on said it will provide cover for weatherbased crops to farmers in Madhya Pradesh, Bihar, Tamil Nadu, Karnataka, West Bengal, Chhattisgarh, Jharkhand and Himachal Pradesh
"We have been given the mandate by the respective state governments to provide weather based crop insurance for Rabi season (201011). It will cover 69 districts, 30 loanee districts (farmers who have taken loans) and 39 nonloanee districts," ICICI Lombard General Insurance said in a statement here. The major crops that the private insurer would cover for Rabi season (201011) are winter paddy, cotton, wheat, mustard, barley, maize, onion, potato, tomato, lentil, peas, arhar, jowar, fenugreek, coriander, cumin, methi, isabgol, brinjal, it said. ICICI Lombard had insured over 29 lakh farmers and over 19 lakh acres across 14 states in 200910. Of this, 242,000 farmers and nearly 16 lakh acres of land were covered during Rabi season (200910), it said. "The rural economy faces economic strain due to the variability in agriculture production and weather insurance protects the farmer against financial loss arising out of adverse weather conditions. We consider it to be our privilege to have been chosen to provide weather based crop insurance farmers in 10 states," ICICI Lombard General Insurance Director (Corporate) Alok Agarwal said. ICICI Lombard GIC is a 74:26 joint venture between ICICI Bank and Canadabased diversified financial services firm Fairfax Financial Holdings . Icall Soft Source : The Economic Times |
| IRDA fines Tata AIG
Tata AIG Life Insurance has been penalised Rs 5 lakh by the insurance regulator for failing to adhere to guidelines relating to management expenses.
In a statement issued on Thursday, Irda said management expenses of the life insurer for 200809 was 114.90% of the premium, which is beyond permissible limits under Section 40B of the Insurance Act, 1938, read with Rule 17D of Insurance Rules, 1939. Following this, the regulator directed Tata AIG on October 2009 to bring down its expenses of management below 110% by the year 200910 and below 100% by 201011. However, the company expenses ratio actually increased to 117.28% for the year ended March 2010. Irda subsequently issued a notice to the company asking why action should not be taken for violating norms. Tata AIG Life’s explanation was that the company was compliant with the limits in the initial years and had started relatively late expansion and heightened focus on expenses rationalisation. While the expenses of management are applicable to all companies, the regulations are applied only after a few years of operations. Tata AIG, however, has been in operation for close to a decade. Icall Soft Source : The Economic Times |
| IRDA to come up with MA guidelines for nonlife companies
Insurance Regulatory Authority of India (IRDA) will formulate guidelines for mergers and acquisitions (MA) for nonlife insurance companies, IRDA chairman J Harinarayana said here on Tuesday.
Speaking to reporters after formally launching a SMSbased customer grievance redressal system of SBI Life, Harinarayan also said that the IRDA was evaluating MA proposals from two nonlife companies. He, however, did not name them. At present, the Insurance Act provides for the MA pertaining to life insurance companies only. "The two proposals, once examined, might serve as a blueprint to formulate guidelines on mergers and acquisitions in nonlife sector," Harinarayana said. There are 22 life insurance companies and 21 nonlife insurance companies operating in the country. The proposed M A norms are expected to spur consolidation leading to fewer but stronger players in the insurance sector. Meanwhile, referring to the impact of new UnitLinked Insurance Plans (ULIPS) which came into force from September 1, this year, the IRDA Chairman said the Authority would review the situation next year. "September this year was not as bad as September last year. But overall impact will be known only after the end of the year. It will take time to stabilise and the position will be better by FY 11," he said. M N Rao, Managing Director and Chief Executive Officer of SBI Life said the company was hopeful of maintaining 40 per cent growth in new business premium adding the company had opened 138 branches and recruited 1200 new staff in the last six months. Icall Soft Source : The Economic Times |
| Kotak Life Insurance launches einsurance
The options for those looking to fulfill insurance needs on their own are widening. Kotak Mahindra Old Mutual Life Insurance launched its online term insurance product this month. As the company doesnt incur expenses to reach out to a customer to sell the product, including the agents commission, it is priced 10% cheaper than the term insurance cover available through the companys agents and distributors.
The buying procedure is almost similar to the rest of the online products namely ICICI Prudential Life Insurances iProtect Term Insurance and Aegon Religare Life Insurances iTerm plan. While ICICI Prudential and Aegon Religare Life Insurance offer only yearly options of payment, Kotak has monthly, quarterly, halfyearly and yearly options of payment. The maximum age at maturity under ICICI Prudentials iProtect is 75 years, 65 years under Aegon Religares iTerm, but 70 years under Kotak Lifes einsurance. The company also offers a facility of teleunderwriting wherein customers are asked questions and in case answers are satisfactory, then no medical tests are required. For sum assured of `30 lakh, no tests or teleunderwriting is applicable. If you need medical tests, you will have to go to the hospital to get the tests done. Rest of the documents are picked up from your residence. Though Kotak Life and ICICI Prudential offer a maximum term of 30 years, Aegon Religare Life offers a maximum term of 25 years. The premium for the lower term is higher for Aegon Religare than the other two players in the nonsmoker category. But is lower than the Kotak premium in case of a nonsmoker. Aegon Religare does not distinguish between a smoker and a nonsmoking female, while deciding the premium. Kotak Life actually prices premium for smokers higher than any of the online players. Unique Option: One feature offered here is the stepup life cover, where you are in a position to pay higher premium and realise you need a higher sum assured, you can opt for it. However, there are charges for taking the stepup option, which is dependent on the premium and the term. In case the policy is taken for less than 15 years, then you have to pay 3% of the basic premium, while 5% of the basic premium is levied in case the term is above 15 years. No medical tests are required if you opt for the stepup option. Why Go For It?: If you are a nonsmoking woman, then the online term cover of Kotak Life is the cheapest in the market. Why Not?: The policy pegs risk for smoking customers much higher than other similar options. Premium for smoking men and women is higher by 726% visàvis other players. Icall Soft Source : The Economic Times |
| IRDA imposes Rs 10 lakh fine on Reliance Life
IRDA has fined Reliance Life Insurance 10 lakh for paying excess referral fees and selling policies before they have been approved by the regulator.
In a circular issued on Tuesday, the regulator said Reliance Life had been given an opportunity for a personal hearing where Reliance Life president Malay Ghosh and his team were present. Among the irregularities detected during inspection, Irda has listed the opening of new offices without permission, delay in issue of licence to agents, outsourcing of key jobs, paying high referral fees and violation of the file and use policy for new insurance products. The regulator has issued warnings in a couple of cases but has decided to fine the company 5 lakh for violating the guidelines on referrals fees and for selling products before approval. In the personal hearing, Reliance informed the regulator that it had not opened any new office without approval but merely generated MIS for locations which were not on Irda list for internal monitoring on sales units, which were identified prior to opening a formal office. This explanation was not accepted by Irda. “However, as this is the first time such an instance has been noticed, Irda will merely issue a warning to the company not to repeat such practice,” the regulator said. On the subject of delay in issue of licences, Reliance Life said the time lag was due to nonsubmission of certain requirements by the applicants . The company confirmed in more than 90% of cases it has issued the licences within 48 hours of the declaration of results. This explanation was accepted by the regulator. On outsourcing of key jobs, the life company said cosourcing of licensing process was a legacy of AMP Sanmar Life Insurance Company, which was acquired by Reliance Life a few years ago. It said it has stopped the outsourcing process after it has transitioned the entire process to Mumbai and since then has not outsourced any of the activities related to licensing. On paying excess referral fees, Reliance Life admitted the lapse and said the fees were paid in anticipation of business volumes to be generated as per initial commitments. Since this is in violation of the laid down provisions of the guidelines, Irda has directed Reliance Life to pay a penalty of ‘5 lakh for the violation. The regulator also did not accept the company’s argument for selling policies before they were approved and fined them an additional 5 lakh. Icall Soft Source : The Economic Times |
| Keep watch for fake insurance salesmen: IRDA
The Insurance Regulatory and Development Authority (IRDA) has warned the public to watch out for unscrupulous persons selling insurance policies by claiming to be the regulators representatives.
IRDA has asserted that it is a regulatory body not involved directly or indirectly in the sale of insurance and financial products. As such, it said complaints should be lodged against persons claiming to be its representative for the purpose of selling insurance policies. "Any person making any kind of transaction with such individuals or agents will be doing the same at their own risk. If any member of the public notices such instances, he or she may lodge a police complaint in the local police station," IRDA said in a public notice. It said it has observed that the general public are receiving calls from individuals claiming to be IRDAs representatives, who offer insurance policies of different insurance companies with various benefits. Meanwhile, in view of the large quantum of unclaimed insurance settlement amounts lying with the insurers, the IRDA has asked all insurers to reflect such sums in its balance sheet under the head, current liabilities. At present, such unclaimed amounts are not disclosed separately. These unclaimed amounts include claims settled but not paid to the policyholders or insured persons and excess premium or tax or any other charges that are refundable to the policyholders, among other things. Icall Soft Source : The Economic Times |
| LIC gets RBI nod to issue prepaid cards to clients
In a move that will create a new business opportunity for India’s largest insurer, the Life Insurance Corporation of India’s card division has received permission to issue prepaid cards into which policy benefits will be credited.
The RBI on Thursday said that banks may issue prepaid instruments to LIC for credit of either onetime or periodic payments by the Corporation to its customers. Speaking to ET, SC Singh, chief executive, LIC Cards said that the Corporation has been eyeing prepaid cards as a business opportunity. Besides saving the Corporation remittance cost, it would also enable it to acquire card customers. “There may be people who are more comfortable with using a prepaid instrument. This will also aid financial inclusion as it will allow payment cards to be issued to those without bank accounts and who are not ‘cardable’ at present,” said Mr Singh. According to RBI, the prepaid instruments can be loaded by the bank by debiting to LIC’s bank account and the maximum amount that can be loaded in a single card is Rs 50,000. LIC entered the credit card business in March 2009 by floating a whollyowned subsidiary — LIC Card Services . The ‘LIC Cards’ are managed by Corporation Bank and the Visa is the payment service provider. “We entered the business when the credit card industry had turned cautious and have not been aggressive so far. But we will soon be entering the next phase when we will start growing the business,” said Mr Singh. Currently, LIC Cards offers Gold and Silver cards which are ‘life time’ free for those who apply before March 2011. Among financial institutions, LIC has perhaps the largest customer base with over 20 crore policyholders. A couple of years ago, the Corporation set out on a data mining programme, where it sought to consolidate policyholder information into a common folio. Icall Soft Source : The Economic Times |
| Irda bans universal life plans
The Insurance Regulatory and Development Authority (Irda) has announced an overnight ban on all universal life insurance plans (ULPs). The regulator has told insurance companies that all current universal life plans will cease to exist from October 22.
Universal life plans are traditional life insurance products. However, unlike typical endowment products, the returns under these plans are not linked to ‘bonuses’ announced by the company. Also, these have similarities to unitlinked insurance plans (ULIPs) in terms of flexibility. Only four companies — Max New York Life, Aviva Life, Bharti Axa Life and Reliance Life — offer these plans. One reason why ULPs have come under fire is because they are seen to offer a regulatory arbitrage to life companies. While it offers flexibility to ULIPs, there are no restrictions on charges that ULIPs are subject to. The result: Companies have built in high commissions into these plans. In a way, they also contain the shortcomings of both traditional and unitlinked insurance plans — high costs and curbs on returns. In a circular to all insurance companies on Thursday, Irda released draft guidelines for new ULPs and informed companies that all current ULPs would cease to exist from the close of business on Friday. Irda has issued draft guidelines for new ULPs (variable insurance plans) and sought to get comments from companies before the end of the month. Irda chairman had earlier made it clear that ULPs would be the next target of regulation. The move, however, has caught some companies offguard. “It is very difficult to implement an order overnight since there are lakhs of agents, and policies would be at various stages of acceptance,” said an official of a private life insurance company. Companies selling ULPs are expected to make a representation to the regulator seeking to buy time. However, some CEOs feel the move merely aligns guidelines for ULIPs with those of ULPs and does away with the regulatory arbitrage that some companies had been taking advantage of. Another CEO of a private life company pointed out that in the past whenever Irda asked companies to stop selling a month or so in advance, companies have taken undue advantage of this and have actually pushed these products by positioning them as a “limited period offer”. One tricky issue while regulating ULPs was they are not really a separate category of products like ULIPs and it was only certain characteristics that set them apart from other traditional plans. The literature provided with existing ULPs does not describe them as a “universal life plan”. Irda has plugged this loophole by coming out with a definition in its exposure draft. Icall Soft Source : The Economic Times |
| Indian insurance industry to have stable profitable growth
The Indian life insurance industry is at the threshold of having a stable profitable growth, says a study.
"The insurance companies are poised for a quantum leap in performance with unprecedented growth opportunities, notwithstanding a temporary sliding growth curve," says a study by the Confederation of Indian Industry (CII) and Ernst and Young (E and Y). According to the study, most large insurance players are expected to decelerate the pace of distribution growth and increase their focus on the retention of channel partners and improve channel productivity. India is fast emerging as one of the worlds most dynamic insurance markets with significant untapped potential, it says. The study shows that during the third phase the role of the insurance regulator the Insurance Regulatory and Development Authority (IRDA) will become more critical and it is in the finalisation stage of its regulations, which would be instrumental in navigating the future course of the insurance industry. IRDA has introduced certain regulations to help improve disclosures, profitability and capital as well as to ensure consumer protection. Further, the regulator is amid finalising the norms for the initial public offer (IPO) of insurance companies. According to the study, there are large untapped areas which have not yet benefitted from the upside of insurance. Imparting financial literacy, incentivising Indian households to transfer savings from physical assets to financial assets and taking the distribution network to rural areas are expected to help bring more and more individuals within the insurance ambit. While insurance penetration in India is higher than that in countries such as China and Brazil, it still has a long way to go. Indias growing consumer class, rising insurance awareness and increasing domestic savings and investments are among the most critical factors that have positively driven the market penetration of the insurance products among its consumer segments. Risk management also plays a very critical role in the insurance business. The study also says that with the rising competition, the industry might also witness consolidation among smaller players and emergence of some large players. The regulator is in the process of finalising guidelines for mergers and acquisitions in the insurance space in India. Icall Soft Source : The Economic Times |
| HDFC Standard Life hopes to breakeven in FY12
Insurer HDFC Standard Life Insurance Company Ltd expects to breakeven in the 2011/12 financial year, helped by an increase in premium income and reduction in operating costs, its chief executive said.
The joint venture between Indias top mortgage lender, HDFC, and Britains Standard Life, had posted a loss of 2.75 billion rupees ($62 million) in the year ended March 2010, lower than 5.03 billion a year ago and is expected to stay in the red this year. "If the premium continues to see the growth we are seeing and if we are able to manage the costs well, we should be able to breakeven next year," Amitabh Chaudhry said in an interview late on Wednesday. HDFC Standard Life could launch an initial public offering in the second half of 2011 if an insurance bill, which proposes raising the foreign holding in insurance firms to 49 per cent from 26 per cent, is approved by the Indian parliament. Icall Soft Source : The Economic Times |
| Insurance policies to be available at post offices
Post offices can now distribute insurance products with IRDA, allowing each circle of the Department of Post (DOP) to act as a corporate agent of insurers.
"Each Circle of India post should be treated a separate unit in order to grant independent corporate agent licence with various insurers," insurance regulator IRDA said while granting permission to postal circles to distribute insurance products. It, however, said that in the case of metropolitan areas, head of Circle may approach IRDA for prior approval of further division in the circle as separate units to obtain licence to act as corporate agent in view of the large population. The DOP has divided the whole country into 22 postal circles for providing postal services. The Insurance Regulatory and Development Authority (IRDA) allowed each circle to tie up with two nonlife insurance companies, two life insurance companies, one agricultural insurance company and one stand alone Health Insurance Company for this purpose. Corporate agents act as insurance agent for insurers and procure business on behalf of the insurance companies through its executives. The sector watchdog had last month sought views from insurers for granting corporate agency licence to the DoP to promote financial inclusion. An expert committee on Harnessing the India Post Network for Financial Inclusion had earlier recommended that the low cost platform of India Post be used for strategic partners like microfinance institutions (MFIs), mutual funds and insurance companies. It also suggested expanding the role of Post Office Savings Bank as an agent of Ministry of Finance to play a larger and direct role in financial inclusion. However, IRDA has disallowed the head office of India Post to engage in the distribution of the insurance products. "In its individual capacity the Head/Corporate Office of India Post shall not obtain license to act as Corporate Agent of any insurance company. The Head /Corporate Office of India Posts shall not engage in the distribution of insurance products of any insurance company registered with IRDA in any other capacity," it added. Icall Soft Source : The Economic Times |
| Life Insurance Council seeks time from IRDA over ULP ban
Life Insurance Council has voiced concern over the overnight ban imposed by insurance regulator IRDA on sale of universal life policies (ULPs) and has asked it to allow companies to continue with their sale till month end.
"We have voiced its concern to the IRDA on Friday. We have asked IRDA to allow companies to continue usual ULP business till October 31," Life Insurance Council secretary general SB Mathur said. On October 21, the Insurance Regulatory and Development Authority (IRDA) had asked insurers to stop selling ULPs till November 4 on the face of alleged violations in sale of these products. "An overnight ban is harsh for insurance companies. They (the insurers) have to adjust claim payments and premiums that are due from policyholders," Mathur said. ULPs are basically hybrid products between unitlinked policies and traditional plans, providing policyholders the flexibility to ULIPs while investments are more like traditional plans. ULPs are still in the evolving stage in India, and only four companies Reliance Life, Bharti Axa Life, Max New York Life and Aviva Life offer these plans. IRDA has issued draft guidelines for variable insurance plans (which would now govern the ULPs) and sought comments from companies before the end of the month. After overhauling the ULIP policy with new guidelines effective from September 1, IRDA chairman had made references that ULPs would be the next in line for a regulatory change. Insurance industry response was, however, mixed with some companies saying that the ban should have been imposed on companies, which were found violating norms. "The norm should be different for different companies. It should have been a direction for companies, which have violated norms. Putting a ban overnight would disrupt the business functioning," Max New York Life MD and CEO Rajesh Sud said. So far there are no clear guidelines for governing the functioning of ULPs. Although these products are not treated as a separate category like ULIPs, they have certain features that differentiate them from other traditional plans. Icall Soft Source : The Economic Times |
| Bharti AXA gen insurance to infuse Rs 60 cr by Oct: Official
AXA general insurance is planning to infuse Rs 60 crore this month taking the total to Rs 460 crore and has six products in the pipeline, which are awaiting regulatory approval, a top company official said.
"We plan to infuse Rs 60 crore capital this month end that will take the total to Rs 460 crore. Over the next two years we, Bharti and joint venture partner AXA, will infuse Rs 200 crore or more in line with the ratio of our stakeholding," Bharti AXA general insurance CEO and Managing Director Amarnath Ananthanarayanan told PTI on the sidelines of a function here. Bharti AXA is a joint venture between Bharti that holds 74 per cent equity and AXA with 26 per cent. He said the company has six products in the pipeline which are waiting for Insurance Development and Regulatory Authority (IRDA) approval. Of those, three products are under the health category, one a mix of health and retirement and another under motor. Currently, the company, which enjoys 3.5 per cent of the market share, has over 56 products. The company collected Rs 320 crore premium last year and is planning to increase it by 70 per cent this fiscal, he said. Going forward, he said, the company is planning to focus on health segment and increase it to 26 per cent from the current 20 per cent of the total business. Icall Soft Source : The Economic Times |
| Dept of Posts wants IRDA to regulate its insurance plans
In a first significant step towards consolidating similar financial products under one regulator, the department of posts (DoP) is exploring the option of handing over the regulation of its insurance products to the sector regulator, Insurance Regulatory and Development Authority (IRDA), a move prompted by the ugly spat between the insurance regulator and the stock market watchdog, Securities and Exchange Board Of India (SEBI), over the regulation of unitlinked insurance products (ULIPs).
The DoP has sought the law ministry’s opinion on whether the insurance schemes run by it could be brought under the regulatory ambit of the IRDA. It has also proposed to create a corporate entity to handle the schemes. The decision to refer the matter to the law ministry was taken after the IRDA expressed its inability to regulate financial activities of the government (the DoP), which controls the insurance business of India Post, a government official told ET. The finance ministry has favoured setting up of a corporatelike identity to handle India Post’s insurance business that can be regulated under IRDA norms, said the official, requesting anonymity. While the IRDA is not opposed to the idea, it wants greater clarity on the matter as it will require changes to the legal framework that govern the insurance policies of the postal department. The opinion of the law ministry could pave the way for bringing the insurance business of the postal department under the IRDA’s jurisdiction. The department, which sells policies under the postal life insurance and rural postal life insurance schemes, acts within the framework of the Insurance Act. The IRDA has also pointed out that with the premium calculations of the postal department not on an actuarial basis, the postal life insurance schemes could be notching up serious deficits. The postal department feels that an IRDAregulated framework will allow it to make the scheme more flexible. The DoP, which acts as an agent of the finance ministry for its insurance schemes, lacks autonomy required to introduce new schemes or even providing attractive discounts to lure customers. “The department is required to seek direction from the finance ministry for all policy matters like extension of scope to cover other clients and introduction of new products,” said an official with the ministry of telecommunications and IT. Even as the debate on regulatory control of postal life insurance goes on, the department has also requested for greater autonomy to its insurance schemes as it looks to expand its financial services business. “Corporatisation of the life insurance business will enable the postal department to compete with private insurance players on a level playing field,” said the postal department official. Private players have welcomed the move. “The move will help bring consistency in norms and activity pertaining to life insurance business,” said Kapil Mehta, MD CEO of DLF Pramerica Life Insurance Company of India. He added that the proposal , when implemented, will provide the postal department a level playing field as regards right products and schemes into the rural segment, which has been the primary focus for private players as well. Icall Soft Source : The Economic Times |
| Insurance: Nonlife business now enters growth phase
After playing second fiddle to the life insurance industry for several years, the nonlife business has roared back into growth mode. In the first six months of the current fiscal, the industry has recorded 23% growth and there are signs that profitability has improved as well.
“In a stable price environment, the nonlife industry should grow by 22 .5 times the rate of GDP growth. What we are now seeing is some stability in pricing coupled with opening up of hitherto untapped sectors because of government schemes like the Rashtriya Swastha Bima Yojana,” said ICICI managing director Bhargav Dasgupta . The growth rate in the first half is almost twice the 13% growth recorded in the whole of 200910 . The last time the nonlife industry saw such growth was in 200506 . After that, the insurance regulator freed pricing on all lines of businesses which led to a fall in prices. While the reduction was as high as 80% in the property insurance, the competition also ensured that prices of health and motor insurance — the fastest growing segments were kept under check despite high claims ratio. “Pricing has improved in health, but in parts of motor insurance, it continues to remain very competitive ,” said Mr Dasgupta. What has kept the price war alive was the continuous entry of new players in the market who were willing to sacrifice margins to build up an underwriting book. For the first half of the current fiscal, private insurers have recorded total premium of . 9,204 crore against . 7,312 crore in FY10 — recording a growth of 25.9%. Stateowned insurers have collected total premium of . 14,500 crore in the first half of FY11 against . 11,184 crore in the previous year — resulting in a 21% growth. While health insurance continues to be a major driver of growth — with a 40% rise in health premium in the first half of FY11, all other segments, barring property insurance have recorded a healthy growth. Health insurance today accounts for more than onefifth of total premium in the country. Aviation insurance, which has seen some price hardening, coupled with an increase in fleet size, has grown by 40% in the first half. Marine Cargo, which is a reflection of trade in goods, grew 26.3%. Among companies, HDFC Ergo continues to be one of the most aggressive growing by 49%. ICICI Lombard General Insurance — leader among private companies — has grown 32%. Tata AIG General has also managed a 33% growth despite its foreign parent’s troubles internationally. Reliance General Insurance , which is currently in merger talks with Royal Sundaram General Insurance is the only private insurer to have shown a drop in premium income (24 %). Icall Soft Source : The Economic Times |
| Reliance Life targets Rs 12kcr premium in 5 years
Reliance Life Insurance , a part of Anil Dhirubhai Ambani group , is targeting a new premium income of Rs 12,000 crore in five years, a top company official said.
"We are growing 20 per cent each year. We intend to earn a premium income of Rs 12,000 crore in five years time," president and executive director of Reliance Life, Malay Ghosh said. Launching Reliance Lifes maiden health insurance product in the city today, Ghosh said in the current fiscal, the target premium income is Rs 5,000 crore. In FY10, the company earned a new premium of Rs 3,921 crore. Ghosh said that from the health insurance product, the company is eyeing a premium of Rs 150 crore in the first year, which is likely to touch Rs 2,000 crore over the next five years. Out of Rs 12,000 crore, life insurance premium would be around Rs 10,000 crore. Referring to health insurance, Ghosh said that the maximum age which a person can take a cover was 75 years. "As per wish of chairman Anil Ambani, we are thinking whether this can be made lifelong. We need to have the relevant data for that," he said. Icall Soft Source : The Economic Times |
| National Insurance pips Oriental to become 3rd largest insurer
Staterun National Insurance has pipped Oriental Insurance to become the third largest nonlife insurer in terms of premium collection.
According to IRDA data, National Insurance Company has mopped up Rs 2,376 crore premium during AprilAugust this year compared to Rs 1,847 crore in the corresponding period last fiscal. Oriental Insurance collected Rs 2,225 crore in the first five months of the current fiscal against Rs 1,956 crore mopped up during AprilAugust last year. Overall, the general insurance industry grew 22.53 per cent in the first five months of the current fiscal by collecting Rs 17,423 crore premium. The highest premium of Rs 3,051 crore was collected by staterun New India Insurance, which grew by 20.11 per cent during AprilAugust, while United India mopped up Rs 2,571 crore, an increase of 24.03 per cent over a yearago period. The four public insurers mopped up Rs 10,224 crore in the first five months of the current fiscal, an increase of 21.46 per cent, compared to the yearago period. The private insurers collected Rs 7,198 crore in the first five months of the current fiscal against Rs 5,801 crore in the corresponding period last year. Among private insurers, ICICI Lombard collected Rs 1,755 crore premium during AprilAugust this year, an increase of 27.61 per cent over a year ago period. Besides, Bajaj Allianz mopped up Rs 1,198 crore in the first five months of the current fiscal, an increase of 15.26 per cent, compared to the corresponding period last year. However, Reliance Generals premium declined 21.34 per cent during AprilAugust this year to Rs 689 crore. Icall Soft Source : The Economic Times |
| ULIPs to charge for fund switching
The new regulations of IRDA have been introduced. It will deal with the new unitlinked plans.
It has also been informed that some of the life insurance companies have also stared levying fund for the purpose of the charges in switching for new issue of ULIPs under their arm. As per the new regulations, the insurance companies of the country have revised the charge fees and it will vary from Rs 50250. This will be charged on every switch made by customers. So the IRDA has squeezed the margins of the life insurance companies. Now it has also been apprehended that now the insurers may cut some of their value added services that they used to provide to their customers. Star Union Daiichi Life Insurances Mr. I Sambasivarao has informed that the customers of the company now have to pay Rs 100 for each switching between funds. But earlier, there were almost two to three fund switches that the company used to offer to its clients. Even HDFC Standard Life Insurance has also informed that it is going to charge Rs 250 for each switching of fund on the request of the customer for the same. Icall Soft Source : TopNews.in |
| Reliance Life bets on renewal premium to break even next fiscal
Reliance Life Insurance is expecting to break even next fiscal when renewal premium is expected to outstrip new business premium. The company also plans to increase its paidup capital by around Rs 260 crore during the current fiscal.
Reliance Life Insurance president and executive director Malay Ghosh told ET the company was fully prepared in terms of documentation for its initial public offering. The promoters have invested Rs 3,040 crore in the company and will invest a further Rs 260 crore during the year, which according to Mr Ghosh would be the last line of funding the business would require. “Our breakeven target is 201112. So far this year, we are doing very well compared to our plan and there is a possibility of our breaking even this year itself, if we can continue to do the product mix of traditional and Ulip products in equal measure and achieve our growth target of 55%.” Reliance Life has managed to trim its losses from around Rs 1,000 crore in FY09 to Rs 260 crore in FY10. A few life insurance companies, including Bajaj Allianz , ICICI Prudential Life Insurance and SBI Life Insurance have already started reporting profits. “The difference between us and other large companies is that they have been around 10 years while we have crossed only four years as Reliance Life. We took over AMP Sanmar in 200506, which is why our assets under management at Rs 16,000 crore are relatively low compared to others,” said Mr Ghosh. Although Reliance took over an existing life business in 200506, AMP Sanmar had restricted its operations to TierII cities in the south and the lowest level of business among insurance companies at that time. “In terms of new business and number of policies, we have caught up with others, but other companies are much ahead of us in AUM. As a result, their income from fund management is much higher. They have policies that have been around for 10 years, which is why they have a higher denominator effect,” he said. Reliance Life has put in place preparations for its promoters diluting stake through IPO or strategic stake sale. It has got its books audited by domestic and international auditors and actuaries. “We have calculated our embedded value but Irda has not come out with a standard, which is why we are not disclosing to the public. But we do declare New Business Achieved Profit (NBAP) every quarter and it was 17.75% last quarter,” said Mr Ghosh. He added that the NBAP would come down to around 16% with the new norms. He added that although talks for a strategic divestment were on with several life insurance companies, none of them were close to concluding a deal. According to Mr Ghosh, Irda’s new norms would not impact Reliance Life’s valuation. “We were not among those companies selling pension products very aggressively. None of our products would comprise on our expectation of profitability. So while as a percentage it may go down, in volume I do not think profitability will be affected.” Icall Soft Source : The Economic Times |
| Insurers to face tough preIPO norms
While the consumer sentiment is getting better by the day and expansion is slated to happen across industries but the Insurance Regulatory Development Authority (IRDA) has recently said that it is in the process to introduce stringent disclosure norms for firms that plan to list on the stock market.
It is to be mentioned here that IRDA is a regulator for the Insurance industry and it is expected that the regulator will make it mandatory for an insurance company to disclose financial statements of the last five years before it files for an initial public offer (IPO). While the aim to raise money from the stock markets to bolster its capital base for the insurance companies is expected to get tough in times to come, it is expected that it will also facilitate comparison across different insurance companies. It may be noted here that HDFC Standard Life was the first company in the industry to disclose that it has an embedded value at Rs 3,380 crore as on March 31, 2010. It is expected that players like Reliance Life and ICICI Prudential will opt for an IPO in times to come. Icall Soft Source : TopNews.in |
| LIC settles claims worth of Rs 539540 crores
Life Insurance Corporation of India (LIC) has settled over 2.11 lakh claims during the 200910 fiscal amounting over Rs 53,954 crore.
Speaking to “The ET” here on the sidelines of opening the new office building of Bhubaneswar divisional office on Tuesday, LIC chairman T.S. Vijayan said at least 97.47% total maturity claims were settled on or before the date of maturity while 95.16 per cent of nonearly death claims were settled within 15 days of intimation. “LIC is fastest in claims settlement. Our outstanding claims – both maturity and survival benefit – ratio is just 1.13%. Similarly, our outstanding death claims stands at 1.41%,” Mr Vijayan said. Stating that the LIC has grown by leaps and bounds in the challenging and dynamic phase of the life insurance industry, the Total Premium Income (TPI) for the fisal 20092010 was Rs01,85, 986 crore and gross total income stood at Rs 2,98,721 crore,” Mr Vijayan added. To a query on the demand by LIC employees of Orissa for setting of a zonal office in the state, the chairman said the proposal was under active consideration and necessary initiatives would be taken in that regard once the zone achieve the targets of 45 lakh police holders. “Bhubaneswar office has 15 lakh policy holders. We hope to enroll 30 lakh more customers in the next couple of years,” he added. The LIC employees of Orissa have been demanding for a zonal office because of the long distance of the present office at Patna in Bihar. Elaborating about the performance of Bhubaneswar division, Mr Vijayan said it procured 198385 policies and collected Rs 150.22 crore as first premium income. “Bhubaneswar division is doing exceedingly well. Apart from good collection of first premium income, the divisional settled 104209 of claims and paid Rs 174.48 crore towards claim proceeds. In the current fiscal, Bhubaneswar division has target of 24, 0000 policies and Rs 190 crore first premium Income,” he said. Icall Soft Source : The Economic Times |
| BSLI posts its maiden profit in June quarter
New generation life insurer Birla Sun Life Insurance (BSLI) has announced its first quarter financial results for the fiscal year 201011. Birla Sun Life Insurance is the joint venture between the Indian Inc. Aditya Birla Group and Sun Life Financial Inc. of Canada.
According to the insurance firm, it has registered its maiden profit in the June quarter of the current fiscal. Birla Sun Life Insurance (BSLI) has posted a net profit of Rs 9 crore for the quarter that ended in 30th June, 2010 and this has been its first ever net profit show since its inception. The company has incurred a loss of Rs 111 crore in the previous year. Birla Sun Life Insurance (BSLI) informed this fact in a statement. According to the company, Birla Sun Life Insurance (BSLI) has managed to post a significant profit this time due to growing size of inforce book in this quarter. According to the statement, there has been an18 per cent growth in total premium income of the company. It has touched to Rs 1,143 crore during the AprilJune quarter of fiscal year 201011. Icall Soft Source : TopNews.in |
| LIC to invest Rs.2 trillion in markets
Indias biggest life insurance company which is also stateowned has said that it will be making a total investment of Rs. 2 trillion into the Indian equity and bond markets.
The announcement was made by the Chairman of LIC, TS Vijayan. He said that the total investment will be directed by the kind of premium collection that it is able to make. He said, "If the premium flow is more in unitlinked insurance policies, our incremental investment into equities will be higher and if the premiums are coming more from the traditional plans, naturally the incremental investment will be more in government securities, corporate bonds, debt etc." One must remember that some of the main disinvestments during the year were saved because of the buying done by LIC. It has not only put money into the IPOs but has also made buyouts in the bond markets as well. While Vijayan refused to tell what would be the ratio of debt and equity, he did specify that it would be lesser than the last year. It has already put in Rs.390 billion for the first quarter ending June 30. Icall Soft Source : TopNews.in |
| IRDA imposes Rs. 10 lakh fine on SBI Life
The IRDA or the Insurance Regulatory and Development Authority has introduced a fine of Rs. 10 lakh on the leading life insurer SBI Life for departing from the main point of the offer document in one of its schemes.
The imposition of this fine has been made under Section 102 of the Insurance Act, according to the IRDA. The insurer SBI Life is being obliged to pay an amount of Rs. 10 lakhs within one month, or 30 days from the day the order has been received. According to the order, one of the particular deviations that were noticed includes the addition of 2 clauses by the insurer in the policy document called ‘Super Suraksha’ after the policy document was cleared by the Authority through the process of File and Use. One of the clauses did not allow the payment of death claims in case a death occurred within 45 days from the day the policy has been commenced. Nor did it allow the other provision for disallowing the payment of a death claim after the intimation of the death claim 90 days post the death date. Icall Soft Source : TopNews.in |
| AIG to pay 725 million dollars for fraud payout
The USbased insurance firm AIG is going to pay 725 million dollars to end the fraud case running against the firm for a long time. This will be one of the biggest settlements in the history of US.
The allegations against AIG include its involvement in manipulation of stock price, fraud with the accounting and anti competitive behavior in the time period of 1999 to 2005. Because of these frauds the investors lost their millions of funds. The US court will approve this payment of 725 million dollars. After approval of the court, the first stage of payment worth 175 million dollars will be made with in some days of approval. After that the insurance giant has decided to arrange the rest 550 million dollars through issuing new shares. Currently the US government owns 80% stake of the firm AIG as the firm was given a huge bailout by the government at the peak time of the economic crisis. According to the Attorney General of Ohio, the total payouts from AIG to the investor would pass the 1 billion dollar mark including total number of settlements. Icall Soft Source : TopNews.in |
| American International Group Inc. accepts to $725m
Records have shown that U. S.based American International Group Inc. has reached a $725 million settlement in a securities lawsuit alleging insurance bidrigging.
The Wall Street Journal has reported that AIG must pay $175 million within 10 days of winning preliminary approval of a federal judge in New York and $550 million later. The longrunning civil lawsuit, filed by a group of Ohio pension funds, accused the insurer of trying to inflate its stock price and of accounting fraud that artificially boosted its insurance reserves. It has also been reported that investors in AIG pension funds filed the lawsuit after the company and its chief executive, Maurice Greenberg, were accused of wrongdoing by former New York Attorney General Eliot Spitzer in 2005. The company has not admitted any wrongdoing. The company said in a statement that the settlement will allow AIG, which was bailed out by the government in 2008, "to continue to focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders." The plaintiffs have the option of ending the settlement or recovering funds in another way if AIG fails to raise the funds before the court gives final approval. Under terms of the settlement, the insurer must pay the $550 million if it raises that amount as part of its repayment of the government bailout. Ohio Attorney General Richard Cordray told the Journal that the settlement represents "final resolution of this matter." The Journal further added that the total expected recovery for AIG shareholders through lawsuits related to the 2005 allegations has reached more than $1 billion. (With Inputs from Agencies) Icall Soft Source : TopNews.in |
| HDFC Standard Life to inject Rs.350 crore in business
On Wednesday, the promoters of HDFC Standard Life HDFC and Standard Life of UK said that they are going to invest in between Rs. 300350 crore into the business during the current financial year.
Said, Vibha Padalkar, Chief Financial Officer, HDFC Standard Life, "We will need more capital to fund new business growth. We have also increased backended charge products in our portfolio." The life insurance player was formed by the JV between the above mentioned parties and is now the fifth largest insurance player in the private sector side. The money the promoters are planning to invest is around two times more than 200809 when they injected in Rs. 170 crore. Out of the money invested, HDFC is planning to generate a new business premium of 2025 per cent and a rise in income close to 1720 per cent. It also aims at increasing the premium business from the traditional front by 2025 per cent. If it manages to grow at this pace, it will be in the list of top three. The company had faced a loss of Rs. 280 crore in 200910 and Rs. 500 crore before that. Icall Soft Source : TopNews.in |
| ING Life To Invest Rs 240 Crore On Expansion In 201011
The Netherlandsbased financial behemoth ING Life India declared that it has decided to make an investment of Rs 240 crore on its growth during the existing fiscal year.
ING Insurance chief operation officer Tom McInerney stated, "The additional capital will be utilised to expand our distribution network, improve productivity and efficiencies." With the newest infusion, the cumulative or total capital invested since ING Vysya Life Insurance Company Ltd started functioning in the Indian market in the year 2001 will be Rs 1,467 crore. The companys 5year growth plan comprises expanding its business by five times and client base to five million as compare to one million. The company amassed premium worth Rs 1,643 crore during the last financial year (200910) and manages Rs 4,500 crore. With a cumulative average growth rate (CAGR) of 40% in premium income over the last 5 years, its AUM (asset under management) attained 66% CAGR during the same period. The company is present in 232 cities across India with around 55,000 advisors and 6,500 employees. "We see our AsiaPacific businesses leading the growth in insurance worldwide. Within AsiaPacific, India is uniquely placed to be a frontrunner in this growth due to the huge opportunity its burgeoning economy offers," McInerney said. Mr. Kshitij Jain, ING Life India chief executive, stated that the company had focused on consolidating its business in the last 18 months and would concentrate on driving efficiency to attain the ambitious targets set for the next five years. (With Inputs from Agencies) Icall Soft Source : TopNews.in |
| Reliance Life Insurance Surpasses 6 Mln Policy Mark In Less Than 5 Years
Reliance Life Insurance, a part of Anil Dhirubhai Ambani Group, announced that it has surpassed the six million policy mark in less than 5 years.
The company, which is a part of Reliance Capital, hopes to attain an overall premium of Rs 20,000 crore by the next two years. Malay Ghosh, president of Reliance Life Insurance said, "We clocked over 2.3 million policies in a single year (200910), the highest by the company in any one year. We hope to achieve an overall premium of Rs 20,000 crore and more than double our assets under management to over Rs 30,000 crore in the next two fiscal." Presently, Reliance Life Insurance has AUM worth Rs 13, 677 crore and a market share of 10.2% amongst private life insurers (as on March 31, 2010). The company is eyeing a 10% overall market share by 2013 and eyes to concentrate on the health insurance sector as well. "Health insurance sector offers sizeable growth opportunity. We are strengthening our health insurance portfolio with innovative products that include total reimbursable health expenses, individual and family floater on both group and individual product platforms," Ghosh added. (With Inputs from Agencies) Icall Soft Source : TopNews.in |
| Medical claim policies to stop cashless service
One of the main reasons because of which people used to go for medical insurance is going to end very soon. The medical claim policies that promised to give cashless facilities are going to end it now.
These facilities, in particular, are not going to cover hospitals like Apollo, Fortis, Ganga Ram, Max or Medicity in Delhi, NCR and in metros like Mumbai, Bangalore and Chennai. As per the new policies, the insured person will have to pay all the money through his/her pocket and then go for reimbursement. The total money then may or may not be fully recovered from the insurer. The direct form of payment at the point of treatment has been stopped because the insurance companies were suffering heavy losses and it was becoming increasingly impossible for them to provide this service to the customers. All in all, the service has been stopped in some 150 odd hospitals in Delhi from July 1 and as many as 18 insurance companies are part of this. There are 4 public sector entities too that have taken this step. Icall Soft Source : TopNews.in |
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