[Posted by:
InsuringIndia News
on
Monday, February 25, 2013 5:34 PM]
The Chennai-based state-run general insurer United India Insurance Company Ltd announced that it will recruit 7,000 agents in the next three months. The insurer has also lined up plans to hire about 400 officers and 600 clerks next year.
Mr. Milind Karat, Chairman and Managing Director, United India Insurance Company Ltd said, “Our agent force is 53,000 now. We will have 60,000 agents before the end of current fiscal year.”
"Our focus is on retail segment to drive growth in the future. As part of the strategy, we have opened 410 micro offices in rural areas”, said a senior company official.
Furthermore, Mr. Karat said, "We are increasing our agent strength and tying up with self-help groups to reach out to more people. The agents as well as its own staff will be used to increase retail business in rural areas.” “The growth drivers will be health and motor insurance,” he added.
On the company’s performance in health insurance sector, Mr. Karat said the growth in the segment was 25-30 % with 90 % incurred claim ratio. “We have reached break-even in this segment,” he added.
United India collected Rs 8,179 crore business last year, and is targeting to touch the landmark of Rs 10,000 crore in the current fiscal.
[Posted by:
InsuringIndia News
on
Friday, February 22, 2013 5:41 PM]
In view of remove muddiness and bring better clarity on various terms used in health insurance, the insurance watchdog Insurance Regulatory and Development Authority (IRDA) has finalized the guidelines for standardisation in health insurance.
There were regular complaints from the policy holders due to various interpretations in the health insurance sector. Hence, these guidelines will be applied to life insurers, non-insurers, standalone health insurers and third party administrators.
In an elaborate circular addressed to life insurers, non-life insurers, stand-alone health insurances and third party administrators (TPAs), the regulator has defined 46 commonly used terms and standardised 11 critical illness terms. These critical illnesses include Cancer, first heart attack, open heart replacement, coma, kidney failure, stroke, major organ transplant, paralysis of limbs and multiple sclerosis.
“Standard terms would reduce ambiguity, enable all stakeholders to provide better services and enable customers to interact more effectively with insurers, TPAs and providers. All insurers shall adhere to the stipulated definitions, while defining these 46 core terms in all health insurance policies,” said the circular.
The guidelines will be effective from July 1, 2013 for group products and October 1, 2013 for other products.
[Posted by:
InsuringIndia News
on
Friday, February 22, 2013 5:39 PM]
Former LIC Chairman Mr. T S Vijayan took over as the chairman of the Insurance Regulatory and Development Authority (IRDA) replacing Mr. J Hari Narayan, who retired on Wednesday.
The government had invited application for the post in October last year.
He will be joining the Hyderabad office, said sources in IRDA.
Mr. Vijayan takes over the charge at the time when industry is facing a slowdown which will be a great challenge for him. He also faces the task of taking insurance to the rural market and simplification of insurance products will be another challenge for him.
1953 born Mr. Vijayan started his career in Life Insurance Corporation (LIC) of India as Direct Recruitment Officer in year 1977. He graduated from Kerala University and holds a diploma degree in management.
The earlier three chairmen of the Insurance Regulatory and Development Authority were from public services. Mr. Rangachary was from Indian Revenue Service (IRS) while Mr. C S Rao and Mr. J Hari Narayan from Indian Administrative Service (IAS).
[Posted by:
InsuringIndia News
on
Tuesday, February 19, 2013 4:29 PM]
The government is likely to appoint former Life Insurance Corporation (LIC) of India chairman T S Vijayan as the new chairman of the Insurance Regulatory & Developmental Authority (IRDA).
Mr. T S Vijayan would succeed current chairman J Hari Narayan, who will retire on February 21.
Under the rules, the chairman’s tenure is five years from the date of entering office but not beyond the age of 65 years.
According to the industry sources, he has been proposed by the Union finance ministry and the application sent for final approval. Though the Central Vigilance Commission (CVC) had cleared Vijayan's name for the post last month, the Appointments Committee of the Cabinet (ACC) has yet to approve. Usually, the ACC doesn't turn down a name once the CVC clears it.
According to a government circular, for being eligible for the post of IRDA chief the person should have at least two years of residual service on the date of vacancy, it means he/she should not be more than 63 years of age as on this Thursday, when the position will become vacant.
By the IRDA Act 1999, its head chairperson and members would be appointed from persons of ability and integrity with experience in life insurance, general insurance and allied fields useful to the Authority. For being eligible, an individual would need to have 30 years of experience and should have worked as secretary to the Union government or its equivalent in a state government or other institutions.
[Posted by:
InsuringIndia News
on
Monday, February 18, 2013 5:43 PM]
There is a good news for life insurance policyholders, as the Finance Ministry has given an indication that the ministry is considering a proposal to wave off service tax on first premium and create separate exemption limit for pension schemes in the three-months long upcoming Budget session beginning on Thursday.
Besides, the tax authorities are examining whether service tax may be assessed on realisation basis as against the current practice of levying duty on the premium on accrual basis.
As present, service tax is paid on dues or receipt of amount, whichever is earlier. However, some of amounts due are never received; similarly amounts received in advance with proposal are not converted into policy. Industry has demanded that service tax liability should be on the basis of receipt of amount and subsequent conversion as premium.
Under the existing Income Tax Act, Rs 1 lac income tax deduction is allowed on the premium paid along with other approved investments. The industry is expecting from the ministry to make an announcement in this regard which will benefit the consumers as well as the life insurance industry.
According to the sources, various incentives are being considered by the government for boosting life insurance industry including higher incentives for agents selling policies.
The Central Board of Direct Taxes is also considering whether the total sum paid for post-retirement medical scheme could be made eligible of income tax deductions.
The Finance Minister Mr. Chidambaram has been batting for the need to push savings in financial instruments than in assets like gold. He pronounced such type of assets ‘unproductive’. “The spurt in gold imports has aggravated the current account deficit,” he said.
Concerned over subdued growth in the insurance sector, Finance Minister Mr. Chidambaram had said, "In my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products. If you want to sell insurance to India, you must sell simple products and must make it absolutely clear to agents and other officers that they should not mis-sell.”
[Posted by:
InsuringIndia News
on
Friday, February 15, 2013 2:32 PM]
The government is all set to include granting permission for foreign direct investment (FDI) up to 26% in the insurance broking sector under the automatic route in the consolidated FDI policy scheduled for a review in March this year.
According to the sources close to the development, the policy would make the FDI issue through a press note entry clear. The department of economic affairs (DoEA) has referred the matter to department of industrial policy and promotion (DIPP) to make necessary amendments in the FDI policy.
The FDI policy is currently silent on the issue, but Reserve Bank of India (RBI) has so far not objected to such investment on the advise of Insurance Regulatory and Development Authority (IRDA). The insurance regulator has allowed FDI up to 26% in broking and issued licences on the basis of insurance brokers regulations 2002. This regulation applies same principles for broking as is applicable for the insurance companies where provision for 26% FDI is available both in regulations and FDI policy.
Mr. Akash Gupt, ED, tax and regulatory practise, PwC India said, “The move shall rationalise the long standing dichotomy between the treatment accorded to insurance companies and insurance intermediaries under the FDI policy. Insurance broking, falling under the latter category, has been categorised as ‘other’ financial services (outside the list of 18 permitted activities), thus, requiring prior FIPB approval irrespective of the extent of FDI.”
“This issue is long pending with the government. It needs a clarification as IRDA allows 26% FDI in broking considering it an insurance activity. Any clarity on this issue is a welcome step as investors are showing keen interest in the sector,” said Krishan Malhotra, head of tax and expert on FDI with corporate law firm Amarchand & Mangaldas.
Under the current consolidated FDI policy, DIPP has allowed entry to insurance business only and has not mentioned any intermediary services, including broking for getting FDI under the automatic route. It is now expected DIPP 2012 circular would be modified to include broking as one of the permissible areas for getting FDI.
“Lack of clarity on the policy results in delays in processing applications for FDI inflows in the insurance broking sector and also makes investors wary of putting money here. No one wants to be caught in regulatory issues after making investments,” said an official of insurance broking firm.
At present, there are about 250 insurance brokers in India, out of which 4-5 are international players participating through Indian insurance broking firms.
[Posted by:
InsuringIndia News
on
Wednesday, February 13, 2013 5:36 PM]
Insurers can now be able to hold up to 15 % equity stake in any company, up from existing10 %, as the Insurance Regulatory and Development Authority (IRDA) has permitted raising of the investment ceiling.
The decision comes on the back on Finance Ministry pitching for raising equity investment limit for country’s largest insurer Life Insurance Corporation of India to up to 30 %.
The regulator, in a statement said, “Insurance companies will now be allowed to increase their exposure in equity in a given company from the present level of 10 per cent to a higher level of 12 % and 15 % depending upon the size of the Controlled Fund of any given insurer.”
This is commensurate and appropriate given the size of funds under consideration without adversely affecting the prudential management of investments, it said.
IRDA also approved the health insurance regulations that will enable development of a more robust, consumer friendly insurance system in the country.
Further, the board has referred the matter to insurance advisory committee to have more clarity on bancassurance regulation. The board also approved a standard proposal form to capture full details of a policyholder in accordance with the KYC norms for sale of life insurance products which would be mandatory after six months.
This would improve the service levels to prospective policyholders and to further minimise the chances of mis-sale, the regulator said.
The regulator, however, had spoken out against the move, calling it 'imprudent' while stating that LIC should be treated at par with all other private insurers. As per the Insurance Act, 1999, an insurance firm is allowed to hold up to 10 % equity in a company.
[Posted by:
InsuringIndia News
on
Tuesday, February 12, 2013 4:28 PM]
On Monday, the Puducherry Health Department in association with the New India Assurance Company rolled out a health insurance scheme for cashless treatment for BPL (below poverty line) families in Mahe and Yanam regions.
Under the scheme, a cashless treatment facility, particularly for life threatening diseases is provided. The insurance cover is up to Rs. 1.5 lac for the beneficiary in the network hospitals identified by the health department. The scheme was very popular in Karaikal, an official source said.
The Director of Health and Family Welfare Services Dr K V Raman and the Chief Regional Manager of the New India Assurance Company signed a memorandum in the presence of the Chief Minister N.Rangasamy.Chairman-cum-Managing Director of the company G.Sreenivasan and Puducherry Welfare Minister P.Rajavelu were also present.
The SKOCH Group in the Ministry of Finance, New Delhi, an evaluator company, selected the health insurance cover under micro insurance project which is among the fifty projects launched on priority basis in 2012.
[Posted by:
InsuringIndia News
on
Monday, February 11, 2013 5:30 PM]
Insurance Regulatory and development Authority chairman Mr. J. Hari Narayan has said that the idea of financial conglomerates is flawed, and financial services companies, including insurers, should be kept out of banking when new licences are given.
Further, he said, while all financial services may appear to have similar goals, they are not driven by same values. Banking, insurance and mutual funds should be run as independent businesses with different set of shareholders and one should not venture into the other.
Speaking to the reporter, Mr. Narayan said, "I think one of the biggest mistakes we have made in opening up is to allow banks to set up insurance companies. Fundamentally, it is a bad idea. The fundamental approach to money is different. Confusing the financial system is the worst business you can do. It is quite mysterious, and we all will suffer the ill-effects of it."
The move to issue new bank licences has prompted conflicting reactions. While the idea of conglomerates floating banks has been welcomed as they have the financial muscle, there is also the fear that they could manipulate it to further their business interests and compromise depositors' interest.
"Insurance and banking must be boring businesses and real jazz must be in investment, mutual fund and venture capital funds," says Hari Narayan, who will hang up his boots on February 20 after a three-year tenure that saw a public spat with the securities market regulator.
"It is a question of mental and financial hygiene. We can have both, but should not be in the same place. It is a thoughtless idea."
[Posted by:
InsuringIndia News
on
Thursday, February 7, 2013 12:50 PM]
Leading public sector bank Punjab National Bank (PNB) and US-based MetLife India, on Monday, signed a deal wherein the former picked up 30% stake in the insurance company for an undisclosed amount. The new insurance venture has been re-branded as PNB MetLife India Insurance Company Ltd.
Finance Minister P Chidambaram, on the occasion of brand launching, said, “For a successful life insurance business, it is important to bring simple products to market that are easy to understand. Also, insurance companies should make sure that there is no mis-selling at any level.”
With the change in shareholding pattern, Jammu and Kashmir Bank will hold 5 per cent, Shapoorji Pallonji 17.15 %, Elpro Group 21.46%, while MetLife would continue to hold 26 % cent stake in the joint venture.
“Partnering with MetLife will give us access to global products and the risk management expertise of MetLife. The acquisition would make PNB Metlife ninth largest insurance company in India in terms of new business premium,” said K R Kamath, Chairman & Managing Director, Punjab National Bank.
Apart from PNB, MetLife India has two other banks, Karnataka Bank and Jammu and Kashmir Bank as their distribution partners.
“At present, around 60 per cent of business is coming from bank channels. We expect it to go up over the next few years. Also, it would be significant as the volume of business grows,” said Rajesh Relan, MD and country manager of PNB MetLife India Insurance.
[Posted by:
InsuringIndia News
on
Wednesday, February 6, 2013 3:40 PM]
Distracted over the misleading nature and selling of high NAV (Net Asset Value) -guaranteed life insurance products, the Insurance Regulatory and Development Authority has decided to put an end to such products.
These products give an impression that returns offered are linked to market performance. At present, such products account for about 20% of life insurance sector’s new premium income.
Speaking on the sidelines of a programme organised by the Institute of Insurance and Risk Management (IIRM) and ICICI Lombard in Hyderabad, J Hari Narayan, chairman, Insurance Regulatory and Development Authority, said, “The high NAV guaranteed products are discouraged in several markets since they result in an easy miscommunication... What is deemed to be highest NAV should not be confused with what is the highest index or how the market is performing. Highest NAV products tend to become debt products in order to maintain the guarantee whereas while marketing such products, the consumer is left with the feeling that it grows along with the value of the market itself.
According to the IRDA chairman, total assets under management for the insurance sector, which has posted a healthy growth, is expected to touch 20 lac crore by March 2013 against 18 lac crore a year ago. “When I took charge, the total asset under management was at 8 lac crore. Last year, it was 18 lac crore... and by March it may touch 20 lac crore,” he added.
Further he said the new product regime, as and when they come into force with different dates to stagger the implementation, gives time to insurance companies to readjust their processes.
"In the new product regime, we don't envisage clearing highest NAV products. But existing products of that nature can continue to be serviced to give whatever benefits the scheme had promised till the end of the policy tenure," said Hari Narayan.
Though a formal order withdrawing the products is yet to come, the regulator is believed to have been discouraging the companies from filing such products for approval. “The new product guidelines were considered by the advisory committee in its last meeting and the authority is set to meet on February 8 after which they will be gazetted,” he said.
[Posted by:
InsuringIndia News
on
Tuesday, February 5, 2013 3:50 PM]
South Korea’s largest insurance company,Samsung Life Insurance is in talks with DLF -Pramerica to buy Pramerica's 26% stake in the insurance joint venture to enter India. Even after the exit of ING from Indian insurance sector by selling off its 26% stake in joint venture ING Vysya Life Insurance, several foreign players are eying to enter India.
Along with DLF merica, Samsung Life is also in talks with joint venture partners such as Bharti Axa to acquire the 26 % stake owned by Axa in the Joint Venture.
However, Samsung Life Insurance company has not yet begun any activities in its Mumbai office. No company spokesperson was available, neither in India nor its headquarters in Seoul, South Korea to comment on the matter.
Samsung Life, with an underwritten premium (excluding corporate pension) of 12.05 trillion KRW-South Korean Won (approximately Rs 58,000 crore) during the six months ended November 2012, has strong presence across Asia, excluding the Indian market. Samsung has registered a 25.4 % growth in six months, compared to the same period in 2011.
DLF-Pramerica is a 74:26 joint venture between DLF and American insurer Prudential International Insurance Holdings, a wholly-owned subsidiary of Prudential Financial. Pramerica is the trade name used by Prudential Financial. When contacted, the company declined to comment on the same.
According to an insurance industry expert, prominent insurance players from South Korea, Japan and other Asian nations are actively looking to expand their presence in India. At a time when some partners in JV insurance firms are looking to exit, this means positive news for these foreign players and consumers as a whole.
Asian insurance giants such as Nippon Life and Mitsui Sumitomo have already set up presence in India through buyouts in joint ventures Reliance Life and Max New York Life Insurance respectively.
[Posted by:
InsuringIndia News
on
Monday, February 4, 2013 4:27 PM]
Dutch banking and insurance group ING has said it will exit ING Vysya Life Insurance Company by selling its 26% stake to domestic partner Exide Industries, the second foreign insurer after New York Life to exit a competitive sector in India this fiscal year.
Exide Industries, which currently holds 50% stake in the joint venture will also buy another 24% from two promoters- Hemendra Kothari Group and Enam Group. Post acquisition, the leading batteries producer will become 100 % owner of the life insurance company.
Exide further said that it will look for a new foreign partner for its life insurance company.
Exide proposes to pay about Rs 550 crore for 50% stake, thereby valuing the ING Vysya Life at about Rs 1,100 crore.
India's insurance business was full of promise when it was thrown open to competition in 2000, but has instead been brought to its knees by losses, regulatory change, uncertainty and a sharp slowdown in economic growth.
ING in a statement, said, “ING's exit from the Indian life insurance joint venture is part of the previously announced divestment of ING's Asian Insurance and Investment Management businesses. The deal is subject to regulatory approvals and, the transaction is expected to close in the first half of this fiscal year.”
“The sale of its stake in ING Vysya Life Insurance does not affect ING Vysya Bank , a listed Indian bank in which it has a 44 % stake, nor ING's fund management operations in India,” said the statement.
