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The world’s largest re-insurer has virtually pulled out of the Indian market. Its exit was partly triggered by the low prices quoted by domestic insurers in the face of fierce competition and will stay out unless premiums increase considerably.The company’s premium income is about $50 billion per year. The re-insurer has been providing reinsurance support to both public sector and private sector non-life insurers in India for over more than 30 years.

“We have very strict risk management and pricing requirements that also apply to the Indian market. To offer stability in the long run, prices need to be risk adequate,” said Nikola Kemper, Spokesperson, Munich Re-insurer.

Re-insurance is an insurance that is purchased by an insurance company from another insurance company as a means of risk management. The insurer and the reinsurer enter into a re-insurance agreement which details the conditions upon which the reinsurer would pay the insurer's losses. The reinsurer is paid a reinsurance premium by the insurer and the insurer issues insurance policies to its own policyholders. The main reason for insurers to buy reinsurance is to transfer risk from the insurer to the reinsurer.

The price of profitable businesses like engineering and fire risk covers has fallen by 90 per cent since the deregulation of risk pricing by the regulator in 2007. Munich Re-insurer’s restricted presence was also partly on account of the record $105 billion losses it suffered due to worldwide catastrophes. The premium drops in the country have triggered fears that reinsurers’ losses will mount.

Munich Re-insurer pulled out does not mean that it has completely left the Indian market. The company is present in joint ventures HDFC Ergo General Insurance Company and Apollo Health Insurance. Its exit does not mean domestic insurers have no reinsurance support. Such support is now provided by GIC under an arrangement referred to as obligation cession. This implies that at least 10 per cent of risk business would have to be passed on to GIC to gets its reinsurance support.

Finance ministry asked state-owned insurers to hike premiums
[Posted by: InsuringIndia News on Thursday, May 31, 2012 6:07 PM]

The finance ministry has asked the state-owned general insurers to increase premiums on health insurance, motor insurance and other policies. The ministry has also suggested the insurers not to undercut premiums to get new business. The insurance regulator, Insurance Regulatory and Development Authority (IRDA) has already been asked by the government to take adequate steps to contain such tendency within the insurers and pronounced it a ‘Suicidal-Competition’ among the insurers.

In a recent letter to all 4 state-run insurers, National Insurance, Oriental Insurance, New India Assurance and United India Insurance, the ministry presented a strategy for underwriting group health insurance policies. It said premiums on all stand-alone group health insurance policies coming for renewal this year should be revised upwards, keeping in mind the total expenses. Despite growth in premium, state-run non-life insurers are seeing decline in net profit. The government asked them to restructure their premiums and turn around loss- making branches.

This move has received some sharp criticisms from the insurers. They are accusing the ministry of ‘micro-management’. They fear this move would take out premiums from their customers, resulting in loss of business to private sector insurers.

Commenting on the move of the government, a top executive with one of the companies said, “In a competitive environment, people reduce prices to get volumes. Pricing is not directed by one single player. The customer is now spoilt for choice. If some private company is giving a lower rate, he will switch over to that. Why should he pay higher premium?"

A PSU insurer won't be allowed to take business of another state-run insurance company, if the sum assured is over Rs 100 for a fire insurance policy. The instruction came after the ministry noticed fire policies were issued at a discount of 80-85 per cent. A shift within the insurance companies will not be allowed for group health insurance policies, provided the existing insurer gives his 'no-objection'. The companies have also been asked to analyse third-party motor insurance and exercise due diligence while offering such policies and increase premiums to pare losses.

The net combined losses of the four insurance companies on group health insurance were estimated at around Rs 1,500 crore in fiscal year ‘11-12. In a letter, the ministry blamed imprudent underwriting and unhealthy & self-destructive inter-company competition among these companies for these losses.

SBI Life conferred with the ‘Top Indian Public Sector Enterprise’
[Posted by: InsuringIndia News on Wednesday, May 30, 2012 7:17 PM]

Mumbai: SBI Life has been conferred with the ‘Top Indian Public Sector Enterprise’ under insurance sector in the PSU Awards 2012 by Dun & Bradstreet, a world’s leading provider of global business information and knowledge.

Mr. M. Veerappa Moily, the Union Minister for Corporate Affairs presented the award to Mr. Vincent Sussfeld, Deputy CEO, SBI Life Insurance and Mr Ashutosh Sharma, Regional Director – North 2, SBI Life Insurance, in the presence of Mr. Kaushal Sampat, President & CEO – India, Dun & Bradstreet.

Dun & Bradstreet is a Fortune 500 public company, headquartered in Short Hills, New Jersey, USA that licenses information on businesses and corporations for use in credit decisions, business-to-business marketing and supply chain management. The company maintains information about more than 205 million companies worldwide. Dun & Bradstreet maintains a database of over 200 million companies globally and over 53 million professional contact names using a variety of sources including public records, trade references, telco providers, newspapers and publications, telephone interviews and others.

The award felicitated leading PSUs through ‘PSU Awards 2012’ across various sectors and categories of business excellence.

Along with its five associate banks, State Bank of India has a strength of over 18,000 branches across the country.

LIC increases interest rates on loans against policies
[Posted by: InsuringIndia News on Wednesday, May 30, 2012 6:22 PM]

State owned insurance giant, Life Insurance Corporation (LIC), after several years, has finally raised interest rates on loans against policies. The insurer has also raised interest rates on delayed payments. Earlier, the interest rate on policy were charged 9% which provided policyholders an opportunity to earn by taking loans from LIC and putting them into some fixed deposit plans of AAA rate companies like HDFC, which return with interest rate of 9.5% on 15 months deposits. Keeping this trend in mind; the insurer decided to raise the interest rates to 10%.

Speaking on the reason why the company had not revised rates for several years, a senior official of the company said that interest rates have been largely steady in recent years. However, now volatility has compelled LIC to realign rates with the market. "The policy condition states that interest rates on loans would be revised from time to time," he said.

The EPFO allows employees to withdraw their retirement savings only for specific events, whereas Life Insurance Corporation grants loans to the policyholders against the policies for up to 90% of the surrender value of the policies including cash value of bonus with no reluctance. For the purpose, the policyholders only need to assign the policies in favour of the company.

The private sector insurers have already been charging more interest rate on loans against policies. Bajaj Allianz Life Insurance charging 10% interest rate whereas some other private sector insurers are charging even up to 12.5% interest rate. Rituraj Bhattacharjee, Head, Market Management, Bajaj Allianz Life Insurance still considers this cheaper than other personal loans. "Life insurance policies can be used as a collateral security for raising loans for some emergency funding that can be leveraged without losing the life cover. It is observed that self employed people prefer this mode for their working capital needs," he said.

In the same manner in the case of interest of delayed payments, LIC has hiked interest rates to 10%. Earlier the company was charging interest rate at 8%. Despite the hike in interest on loan against policies, the largest insurer of the country is charging lower than the interest rates charged on loan against Public Provident Fund (PPF) scheme.Under the PPF scheme loans are available at 2% over the prevailing rate, which at present is 8.8%. Also under PPF the maximum loan amount is 25% of the balance two years earlier.

Insurance ombudsmen should be strengthened: IRDA
[Posted by: InsuringIndia News on Tuesday, May 29, 2012 6:56 PM]

Insurance Regulatory and Development Authority (IRDA) may soon allow insurance ombudsmen to deal with the grievances of individual consumers involving claims higher than the Rs 20 lacs permitted at present. The scope may also be increased to cover all kinds of complaints, including mis-selling, from the issue of a policy to its maturity.

The Insurance Regulatory and Development Authority (IRDA) is looking into a proposal in this regard. Currently, an insurance ombudsman’s powers are restricted to mainly claims-related grievances concerning insurance contracts of up to Rs 20 lacs.

“Currently, 50 per cent of the complaints received by an ombudsman are outside its purview. Even ordinary people are taking insurance of Rs 50 lacs on the general side. So, there should be some reconsideration on that front,” said an executive with an insurance company.

If the scope of the insurance ambit is increased, there would be more ombudsmen required to dispose increased complaints. All major state capitals will get one ombudsman. At present there are only 12 ombudsmen- in Ahmedabad, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Kochi, Kolkata, Lucknow and Mumbai. These are drawn from the insurance industry, civil services and judicial services. “If the scope of the insurance ambit is increased, we have to see whether the existing number of ombudsmen can cope with the increased work burden or not,” an official said.

In year 2010-11, total complaints received by the ombudsmen almost doubled at 23,334 from 12,812 in 2008-09. But the same growth is not seen in disposals. Ombudsmen disposed only 17,239 cases in 2010, against 11,417 cases in year 2008-09.

The office of the ombudsman is governed under the Redressal of Public Grievances Rules, 1998.

The ombudsman can entertain complaints regarding partial or total repudiation of claims by an insurer, disputes on premium paid or payable, disputes on the legal construction of policies with regard to claims, delay in settlement of claims and non-issue of any insurance document to customers after receipt of premium.

Mahindra & Mahindra all set to enter general insurance biz
[Posted by: InsuringIndia News on Tuesday, May 29, 2012 6:56 PM]

Mahindra & Mahindra (M & M), the Indian multinational automobile manufacturer, is in talks with a leading US- based insurance company, Travelers Group to enter fast growing Indian general insurance business. The Indian general insurance business has touched Rs 40,000 crore mark. The leading auto manufacturer of India had appointed global services provider KPMG to find a partner with technical experience for operating a general insurance business.

The international player Travelers is seeking to enter Indian insurance business despite the Indian government constantly deferring decision on the much awaited & much discussed, Insurance Amendment Bill. The revised insurance law suggests to retain Foreign Direct Investment (FDI)in insurance sector at 26% from 49% proposed earlier. The insurance industry believes that the capital-intensive sector requires continuous inflow of funds for expansion. Hence, they feel the need of liberalization of the sector. But in other hand, the Standing Committee thinks that the increased role of foreign capital (49%) may lead to the possibility of exposing the economy to vulnerabilities of global markets which may lead to capital flowing outside the country and also endanger the interest of policyholders.

The Travelers Group is the largest American Insurance company by market value. Travelers has headquarters in St. Paul, Minnesota and Hartford, Connecticut with significant operations in New York, New York. It has been a component of the Dow Jones Industrial Average since June 8, 2009.

Travel Insurance premiums may go up
[Posted by: InsuringIndia News on Tuesday, May 29, 2012 1:09 PM]

A steady decline of rupee has compelled insurers of travel insurance portfolios to shake their heads. The leading general insurance companies are likely to meet the insurance watch dog, Insurance Regulatory and Development Authority (IRDA) to refile and restructure the premium charges of their products soon.

Insurance companies pay claims for outbound travel insurance in foreign currencies but collect premiums in Indian rupee; this way, the rupee’s fall has badly affected the general insurance companies in India. The Indian rupee has fallen more than 5% this year against the dollar, making it the worst performing Asian currency.

Sanjay Datta, Head (Underwriting & Claims), ICICI Lombard, affirmed that the leading general insurance company is under pressure and willing to meet the regulator to have a relook the premiums. "The rupee fluctuation has been a matter of concern for us as far as travel portfolio is concerned. Most probably, we will approach IRDA to hike premium charges soon," he added.

One of the leading state owned insurers National Insurance has also showed its deep concern over the fall of the rupee and its impact on travel portfolio. The General Manager of the company, Mr. Subir Bhattacharyya said, “It is certainly affecting our margins”.

The April-June quarter is usually the best for the travel insurance segment, but the presumption by some analysts that the rupee may fall to 60 mark in coming days, has raised the concerns of the insurers.

Traditional plans to acquire surrender value before 3 yrs : IRDA
[Posted by: InsuringIndia News on Monday, May 28, 2012 3:14 PM]

The Insurance Regulatory and Development Authority has once thwacks its regulatory knout on the insurers for the sake of policyholders’ interest. In a recent draft guideline on product design, the insurance watchdog has instructed the insurers to acquire surrender value on all traditional plans such as endowment, money back etc before completing 3 years.

“Regular pay products and limited pay products with a premium payment term (PPT) of ten years or more will acquire a GSV (guaranteed surrender value) on receipt of the third-year premium” said the regulator.

Unlike earlier, the policyholders won't have to wait to complete three years for surrender value. They can have surrender value just after completion of 2nd year getting relief of one year if they choose to surrender the policies. And if, the selected PPT (Premium Payment Term) is less than 10 years, then the policyholders would be eligible for a GSV (Guaranteed Surrender Value) by the end of second year.

Surrender value is the amount which is paid out for the policy if the policyholder either chooses to terminate the policy or stops paying the premium before the end of the term. In the case, the policyholder gets a total of 30-35% of all premiums paid minus the first year’s premium. With this, insurers offer a special surrender value which is calculated after considering the current market value of assets held against the policy.

The regulator is planning to relax surrender value norms on single premium policies too. So, if the circular comes into effect, all single premium policies will acquire a surrender value at the end of the first year.

Canada and German firms top contenders to buy Reliance stake
[Posted by: InsuringIndia News on Friday, May 25, 2012 7:12 PM]

Mumbai: Canada’s insurer Intact and German insurer HDI-Gerling International Holdings have emerged as the top contenders to buy a 26% stake in Anil Ambani owned Reliance Capital Ltd’s non-life insurance arm, Reliance General Insurance Co. Ltd.

Intact Insurance Company is the largest home, auto and business insurer, whereas HDI-Gerling International Holding AG is the third largest insurance group of Germany.

According to the sources close to the development of the deal said the deal value could be something around Rs 1,500 crore. If deal is finalized, this would make it the largest foreign investment in the insurance business in India. Reliance General has appointed UBS India as its advisors.

If sources are to be believed, the deal is almost finalized and it is only the matter of time before ‘a term sheet’ is signed by ‘Reliance Capital, Reliance General and the foreign investors.

However, a Reliance Capital spokesperson termed the news of the potential deal speculation and refused to comment. Gilles Gratton, Vice-president (corporate communication) at Intact Financial Corporation which owns Intact Insurance, also refused to comment on the deal. Martin Schrader press officer at Talanx AG that controls HDI-Gerling, termed it a market rumour and refused to comment.

Travelers companies and Samsung Fire and Marin are also among potential bidders.Recently, Nippon Life Insurance agreed to pay Rs 1,600 crore (approx.) for a 26% stake in Reliance Capital’s asset management unit. The company also owns 26 % in Reliance life insurance business, acquired last year for Rs 3,800 crore(approx.)

“The process for the stake sale in the general insurance business is also on, and once that is completed, debt should come down by another Rs.1,000-1,500 crore” said a senior executive with Reliance Capital.

IRDA to issue new guidelines on Non-ULIPs
[Posted by: InsuringIndia News on Friday, May 25, 2012 7:11 PM]

The Insurance Regulatory and Development Authority (IRDA) on Thursday announced to issue new guidelines on the non-unit linked insurance plans in a month.

There has been a situation of deadlock for two years between the insurance watchdog and the insurance companies. The new guidelines are expected to end the deadlock. “Thenew guidelines on non-unit linked insurance products would be similar to the ULIPs (unit-linked insurance plans) guidelines brought out in September, 2010” said Mr. J. Harinarayan, Chairman, Insurance Regulatory and Development Authority.

According to the Chairman, the new guidelines will bring in clarity to the products other than ULIPs. The regulator has already circulated a draft within the industry inviting comments on it and would issue guidelines after considering the inputs. The major disappointments for the industry might come on two fronts-the highest NAV (Net Asset Value) guarantee and the pension products. Mr. Harinarayan said that highest NAV guarantee is a dangerous products and is prone to be mis-sold.

Max India net loss goes down to Rs 1.39 crore in Qtr 4
[Posted by: InsuringIndia News on Thursday, May 24, 2012 5:26 PM]

New Delhi: Diversified business group Max India on Thursday has reported to reduce net loss to Rs 1.39 crore for the fourth quarter ended on 31st March’ 12 from Rs 13.47 crore in the corresponding quarter of last fiscal due to the rich growth in specialty plastic products business.

In a filing to BSE, Max India said, “In the corresponding period of previous fiscal, the company had posted a net loss of Rs 13.47 crore. However, the total income for the Qtr 4 which ended on 31st March’ 12, rose to Rs 194.43 crore against Rs 129.16 crore for the corresponding period of previous fiscal.”

The company’s specialty plastics business in the 4th quarter recorded revenue of Rs 173.72 crore as compared to Rs 117.08 crore in the same quarter of previous fiscal. The company paid a sum of Rs 24.05 crore in advance against equity investments in its subsidiary Max Bupa Health Insurance Company Ltd. On 28th March’ 12, the company acquired 7,142,857 equity shares of Rs 10 each of its subsidiary Max Healthcare Institute Ltd from S&G Investments at an acquisition price of Rs 50 per equity share aggregating Rs 35.71 crore.

For the year ended on 31st March’ 12, net loss of the company stood at Rs 15.44 crore. It was Rs 42.10 crore in the previous fiscal.

LIC to take over former UTI’s stakes in ITC, Axis Bank and L&T for Rs 37,000 cr
[Posted by: InsuringIndia News on Thursday, May 24, 2012 5:25 PM]

Mumbai: India’s largest insurer state-run Life Insurance Corporation of India (LIC), in order to ease the government’s fiscal burden, has offered to buy up former Unit Trust of India’s (UTI) stakes in ITC, Axis Bank and Larsen & Toubro (L & T) valued at Rs 37,000 crore.

The proposal to buy up these stakes was made to the finance minister officials. Currently, the possession of the stakes is with the government and they are looking for ways to bridge out the fiscal gap. If the deal is finalized, could be staggered over months or even over two years. The officials refused to tell whether the decision of LIC was a voluntary. The deal could help the government side-step hostile public investors, who turned their backs on a share sale by Oil and Natural Gas Corp, forcing LIC to bail out the Rs 12,400-crore issue.

The insurance giant, which has already breached the 10% equity limit in both ITC and L&T, believes the purchase will help give better returns to policyholders, people aware of the proposal said. The government, though, is yet to make up its mind. An LIC spokesman declined comment.

MetLife Insurance eyeing emerging markets for growth
[Posted by: InsuringIndia News on Thursday, May 24, 2012 3:26 PM]

On Monday, the largest U.S. life insurer, MetLife Inc uncovered its strategic plan which said the insurance giant is all set to refocus its U.S. business and will choose emerging markets to grow. The company expects to increase its return on equity to between 12% and 14%, and will aim for emerging markets to account for 20% or more of total operating earnings.

In a statement, Chief Executive Steven Kandarian said, “We have identified significant opportunities for us to continue our growth in a way that is disciplined, meets consumer needs and will position us to achieve return on equity expansion.”

MetLife is one of a number of companies that have submitted first round bids for the Asia life insurance business of ING. The company boosted its presence in international markets in late 2010 when it bought Alico from AIG.

In the United States, the insurer said it would mix its business mix towards protection products, such as accident and health products, and away from more capital intensive products in an effort to generate more predictable cash flows. The company will hold an investor conference on Monday. The company aims to achieve $600 million net pre-tax expense savings by year 2016. The company posted $174 million loss for the first quarter on derivative losses tied to a rise in interest rates, but operating results beat expectations. Its strongest growth came in Asia and Latin America.

AEGON Religare Life needs Rs 100 crore fresh capital infusion
[Posted by: InsuringIndia News on Thursday, May 24, 2012 3:25 PM]

New Delhi: Leading insurer AEGON Religare Life Insurance will need approximately Rs100 crore fresh capital infusion this fiscal year, including Rs 25 crore within the next few months, to meet the regulatory requirements. If sources are to be believed, there is no clarity as yet on infusion of the fresh capital amid talks of differences between the partners.

AEGON Religare Life Insurance is a joint venture between Dutch insurance giant AEGON and Indian company Religare. At its recent meeting this month, the board of the insurer asked the two major shareholders to speed up their decisions on much needed capital infusion. The board was informed that the Annual Operating Plan for the fiscal year 2012-13 calls for fresh capital infusion of approximately Rs 100 crore to meet regulatory capital requirement in which Rs 25 crore would be required to infuse by July’ 12.

In a joint statement, AEGON and Religare said, “Religare and Aegon are both committed to life insurance business and to serving the life insurance needs of the people of India. Both partners have worked together and have provided support to the joint venture in their respective area of expertise and continue to support our JV in same manner.”

“We continue to work collaboratively to ensure the best strategic course for Aegon Religare Life Company given the significant opportunities and challenges in the market today,” they added.

Oscar-laureate A. R. Rahman’s live concert insured for Rs 4 crore
[Posted by: InsuringIndia News on Wednesday, May 23, 2012 6:25 PM]

Mumbai: World renowned musician Oscar-laureate A. R. Rahman’s live concert got insured for Rs 4 crore by one of Indian’s leading private sector insurer Future Generali India Insurance Company. The concert is to be orchestrated at D. Y. Patil stadium in Mumbai on 26th May’ 2012.

Future Generali Insurance on Wednesday, finalized to insure the live concert of the music maestro A. R. Rahman. The company said it has provided Event Insurance Policy, covering the event against the various contingencies such as fire and allied perils, personal accident cover for crew and audience. Premiums on such events range from 0.20% to 0.50% of the Sum Assured.

The company has been insuring such entertainment events and looking forward towards it. It has also insured blockbuster TV quiz show Kaun Banega Crorepati, Lalbaugcha Raja during Ganeshotsav and movies like Zindagi Na Milegi Dobara.

Mr. K.G. Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance Co. Ltd, said, “Future Generali is proud to be associated with A. R. Rahman and event. The average cover for such events is Rs 50 lacs to 5 crore. The policy covers the event against calamity such as fire, personal accident.”

Kotak Life Insurance registers 109% net profit
[Posted by: InsuringIndia News on Wednesday, May 23, 2012 6:24 PM]

Mumbai: Private sector insurer Kotak Life Insurer has registered 109% net profit after tax (PAT) at Rs 211 crore for the fiscal year’12. In previous fiscal year 2010-11, the company had garnered 101 crore PAT. The main reason behind such a huge profit was lesser operating expenses. The operating expenses have reduced to 18.8% from 19.5% of previous fiscal year.

The company has swept away all its accumulated losses and added Rs. 51 crore to its net worth to stand at Rs 613 crore. The company declared bonus of 8% on participating policies with an accumulation fund resulting in total return for the fiscal year’12 for annuity policies and 7% for all other policies. The company also declared reversionary bonus of 20% on eligible products.

The Sum Assured increased by 26% to Rs 1,63,600 crore from Rs 1,29,900 crore the previous fiscal year; whereas , new business Sum Assured increased by 19% to 90,474 crore from 75,909 crore of the previous fiscal year.

LIC to bring anytime anywhere facility soon
[Posted by: InsuringIndia News on Tuesday, May 22, 2012 4:04 PM]

Coimbatore: State owned insurer, Life Insurance Corporation of India (LICI) is all set to bring ‘anytime anywhere’ facility to its customers. This feature will facilitate the customers to pay or access its services from anywhere in the country at any given time.

Speaking after the launch of LIC’s new non unit-linked single premium plan ‘Jeevan Vaibhav’, Mr. J. Chakrapani, Senior Divisional Manager, Coimbatore said, “Under the Enterprise Document Management scheme, 98% of total 34 crore policies were scanned and entered into database and once the current policies found place in the scheme, LIC would step into anytime anywhere facility.”

During the previous fiscal year, Coimbatore division settled 1.47 lacs claims, including 7,200 death claims and few lapsed policies for total worth of Rs 403 crore.

LIC launches single-premium plan ‘Jeevan Vaibhav’
[Posted by: InsuringIndia News on Tuesday, May 22, 2012 4:04 PM]

New Delhi: Yesterday, Life Insurance Corporation of India (LICI) launched a new non unit-linked single premium product ‘Jeevan Vaibhav’. The minimum premium amount for the plan is approximately Rs 95,000.

The product is based on traditional platform where sum assured is almost double the premium chosen by the policyholder. This plan offers guaranteed returns at maturity which makes this an ideal combination of insurance and savings. The plan would be available for a limited period up to maximum of 120 days.

Some key features of the plan are:-
In a statement, the state owned India’s largest insurer said, “This is an ideal plan for all groups of people, be it youngsters who want to save a nest-egg for following their passion after putting in some years of hard work and gaining experience, or parents who want to save money for funding their young child's, grand children's higher education or for financing other needs of self or children who have grown up.”

Advance payment of premium cannot be made beyond 30 days: IRDA
[Posted by: InsuringIndia News on Monday, May 21, 2012 6:15 PM]

The insurance watchdog, Insurance Regulatory and Development Authority (IRDA) has said insurers not to accept premiums in advance beyond 30 days. This circular is passed taking money laundering in view. The regulator is very much concerned over money laundering.

In a circular to chief executives of life insurers, the regulator said this move would also ensure regular payment of premium by policyholders. The circular also said that collection of advance premium under both linked and non-linked products shall not be allowed except in the case mentioned.

If you have opted for monthly premium payment mode, now you will be allowed to pay only three months premiums in advance on the date of commencement of the policy.

According to the current law, a policy holder can make a lump sum payment of premium before the due date and gets a nominal interest or discount on it; which is sometimes even lesser than the interest given by banks under fixed deposit scheme.

IDBI Federal launches its first online plan ‘Termsurance Seniors Insurance’
[Posted by: InsuringIndia News on Monday, May 21, 2012 6:14 PM]

Taking a step forward towards online insurance sale, a leading insurer, IDBI Federal Life Insurance Company has announced the launch of its first ever online product ‘Termsurance Seniors Insurance Plan’.

‘Termsurance Seniors Insurance Plan’ is a unique whole of life insurance plan for the people between 50-85 years of age. Some salient features of the product which will definitely catch the eyes of the customers are: (a) No medical test required (b) Guaranteed Acceptance (c) No need to answer any health related questions (d) Whole life cover (e) Same premiums throughout the term etc.

“There is an increasing awareness for life insurance plans sold over the internet in India, with almost 10 millions search every month”, said Mr. G.V. Nageshwar Roa, MD & CEO, IDBI Federal Life Insurance at the launch of the plan.

Reliance Life registers a profit of Rs. 373 crore for FY’ 12
[Posted by: InsuringIndia News on Monday, May 21, 2012 6:12 PM]

Private sector insurer, Reliance Life Insurance Company has earned net profit of Rs 373 crore for the fiscal year 2011-12. The company had occurred a net loss of Rs 129 crore in the previous fiscal year.

Reliance Life Insurance sold 1.1 million policies in fiscal year’ 12 and earned a total premium of Rs 5,470 crore. Now, the total fund under management reached to Rs 18,767 crore at the end of the fiscal year’ 12. The total number of agents during the fiscal year were 1.5 lacs which was a 20% lesser year-on-year. This data approves the productivity and performance of the agents.

On the other hand, the Reliance General Insurance has registered a loss of Rs 342 crore during the period under review mainly on account of strengthening the third part motor claim reserves. Reliance General Insurance gross written premium for the fiscal year’ 12 reached to Rs 1,713 crore from Rs 1,655 crore in the previous fiscal year.

IRDA sets caps on risk insurers passed on to reinsurers
[Posted by: InsuringIndia News on Friday, May 18, 2012 1:56 PM]

According to the new rule; now no insurer in India will be able to pass its majority of risks to the reinsurers. The Insurance Regulatory and Development Authority (IRDA) is all set to specify the retention limit in this regard for insurers. The regulator has said that those companies which are operational for more than 10 years would not be able to pass more than 30 % of their premiums to reinsurers. And those operational for less than 10 years would have to retain half of their risks in their books.

Presently, most of the insurers are acting as service providers rather than risk bearing insurers by transferring nearly half of their risks to the reinsurers. The regulator has shown deep concerns over the trend. It said that if, an insurer has low retention limit then such insurers only act as service providers than as risks bearing insurers. This amounts to fronting. Fronting insurers only rely on ceding commission without developing national retention capacity and underwriting expertise necessary for development of a viable domestic insurance industry.

The regulator emphasized that each insurer should formulate its retention policy for each type of products based on emerging claim experience, financial standing, underwriting capacity and so on the annual reinsurance programme it gives to the authority.

IRDA bans highest NAV guaranteed ULIPs
[Posted by: InsuringIndia News on Thursday, May 17, 2012 1:55 PM]

The insurance watchdog, Insurance Regulatory and Development Authority (IRDA) has asked life insurance companies to stop selling products with highest NAV (Net Asset Value) guaranteed. Highest NAV products are those products that guarantee to pay highest value the fund achieves during a certain period. To maintain that NAV consistently, the insurers take risk by investing in the equity and debt market and market performance is always uncertain and sometimes vulnerable.

Following the regulator’s new guidelines on ULIPs (Unit-Linked Insurance Plans); which came in September’ 2010, these highest NAV products had become hotcake and grab 20% share of total life insurance premium collection in no time.

In another move, for traditional products, the regulator has mandated minimum death benefit of at least 10 times of the annualized premiums as there were some products offering limited death benefits. IRDA has also shown its deep concern over policies offering low or insignificant life cover. IRDA has expressed reservation on three types of tradition products:-

1. Products with significantly high initial death benefits but reduce subsequently during the tenure of the policy.
2. Products where the death benefit is defined as the return of premiums (with or without interest) and
3. Products with insignificant cover in respect to the premiums i.e. products which are specially meant for savings.

IRDA said that in most of these products, customers are lured with promise of decent maturity benefits; but in case of claims, the benefits are sometimes lower than the premiums.

IRDA asks Life Council to design single insurance product to cater all needs
[Posted by: InsuringIndia News on Wednesday, May 16, 2012 2:04 PM]

Hyderabad: Soon, there may be a single insurance product to cater all your needs. The Insurance Regulatory and Development Authority (IRDA) has asked the Life Insurance Council to design such products which will be capable of covering life as well as non-life.

Basically, it is a single product to protect life and also against personal accidents. It protects against the loss of assets-cattle, vehicles.

Speaking on the sidelines of a national conference organized by ASSOCHAM on ‘Financial Inclusion & Integrating Insurance into Total Package’, Mr. J. Harinarayana, Chairman, IRDA said, “It has come to their notice that microfinance institutions were asking for high service charges on the sale of micro-insurance products.

"The whole question of bundling of insurance with other products is a major issue. Not just in India but internationally. So we are also studying this why to allow this kind of bundling. We need to examine the implications further. Then only we will be able to come out with regulatory intervention," he added.

He also released a white-paper prepared by Ernst and Young in association with ASSOCHAM on ‘Need for Financial Inclusion: An Integrated Approach.”

Bharti AXA launches traditional ‘Life Young India Plan’
[Posted by: InsuringIndia News on Tuesday, May 15, 2012 12:02 PM]

Mumbai: Private sector insurer, Bharti Axa Life Insurance, yesterday, launched its new traditional life insurance plan ‘Life Young India Plan’. This plan has targeted the young people segment.

Bharti AXA Life Insurance is a joint venture between Bharti Enterprises and AXA. AXA is a France based global insurance leader headquartered in Paris.

‘Life Young India Plan’ is a unique plan, especially tailored for younger segment; featured with money back in the form of ‘Good Times Money Back’ when required and an option to decide the extent of increase in additional protection at the time of marriage and child birth. Customer can choose any two important milestones in life for money back. It also offers up to 25 times base protection at marriage and child birth. If one opts for increased protection, he/she will not require to go for medical test again.

Lloyd’s of London to promote its business growth in India
[Posted by: InsuringIndia News on Monday, May 14, 2012 6:17 PM]

London: Lloyd’s of London, Britain’s 325 year-old insurance and reinsurance market has revealed its plan to promote business growth in emerging markets like India, China & Brazil.

According to the report, a strategy named ‘Vision 2025’ was launched on Friday at a ceremony in the Lloyd’s underwriting room. British Prime Minister, David Cameron attended the ceremony. Speaking on the occasion, Mr. Richard Ward, CEO, Lloyd’s said, “What we are trying to set out is a high-level strategy. With the growth in economies such as China and India, we need to attract capital and business from those economies. This is not something that is going to happen overnight”.

Mr. Ward also mentioned the recent deal between Lloyd’s insurer Catlin and China Reinsurance. China Reinsurance is the largest insurer in China. In November 2011, Catlin, on behalf of China Reinsurer stuck a deal to manage a new syndicate at Lloyd’s of London. This is the first ever deal in which a Chinese company has directly invested its money at Lloyd’s market.

Govt puts Insurance Amendment Bill on hold
[Posted by: InsuringIndia News on Friday, May 11, 2012 5:56 PM]

New Delhi: On Thursday, the central government postponed the decision on the much awaited politically sensitive Insurance Amendment Bill, 2008.

Playing a safe game on FDI ceiling, finance minister Pranab Mukherjee said to reporters after the meeting of the Union Cabinet, “Foreign investment in insurance companies in India is already at 26 %, therefore, the cabinet felt no urgency to approve the Bill.”

The Union Cabinet was expected to take a decision to retain the FDI (Foreign Direct Investment) cap at 26 %. The committee on finance, headed by former finance minister Yashwant Sinha in its report on the Insurance Bill, 2008, had suggested that FDI ceiling should not be increased to 49 % from existing 26 %. The report says that the increase may lead to the possibility of exposing the economy to the vulnerabilities of the global market, flight of capital outside the country and also endangering the interest of the policyholders.

The overseas insurers and their domestic partners have been demanding an increase in the FDI ceiling to 49 % to fund business expansion.

The government had first tabled the Insurance Amendment Bill in Rajya Sabha in December, 2008 with an aim to bring improvement and revision of laws relating to insurance business.

Insurers & banks should make action plan for turnaround of their loss making branches, Govt. advises
[Posted by: InsuringIndia News on Thursday, May 10, 2012 6:48 PM]

Government of India has advised the Public Sector Insurers and Public Sector Banks (PSBs) to develop an action plan for turnaround of their loss making branches. In regard to the Central Government’s financial inclusion campaign, the banks have been asked to meet all the targets of financial inclusion which is government's topmost priority.

Even though, the Public Sector Insurers and Public Sector Banks (PSBs) are governed by their board policies and the expansion or closure of branches of these institutions is decided by their board according to the norms laid down by the regulator; the central government advises the public sector insurers and PSBs as a promoter shareholder.

The Minister of State for Finance, Mr. Namo Narain Meena has given this information in a written reply to Rajya Sabha.

IRDA puts approval of pension plans on hold
[Posted by: InsuringIndia News on Wednesday, May 09, 2012 4:45 PM]

The Insurance Regulatory and Development Authority (IRDA) has put approval of pension products on hold as some fresh changes are to be made.

In December 2011, most of the insurers filed their pension products with IRDA for approval after the rollback of 4.5 % minimum guaranteed return clause on pension products. The clause was rolled back on the demand of insurance companies.

According to media reports, the insurance regulator has written to the insurance companies that the approval process has been stopped as IRDA has to take some policy decisions.

The insurers will have to restructure their products filings and go for fresh approval once the fresh changes are made. It may take another 6 months to complete the whole process. The launch of new products and delay in approvals from IRDA has been one of the main reasons for slow growth in insurance premiums. The decision to hold the approval of new pension products will add pressure on premium growth.

If the media reports are to be believed; the regulator could again bring the 4.5% minimum guaranteed return clause on pension products which could be a bad impact on insurance companies.

Third-party motor pool needed Rs 65 billion: CRISIL
[Posted by: InsuringIndia News on Friday, May 04, 2012 5:22 PM]

According to the report of a leading credit rating and information agency, CRISIL, insurers may have to provide additional Rs 6,500 crore in the third-party (TP) motor pool to comply with the insurance regulator IRDA’s directive.

“We estimate the additional provisionary at Rs 65 billion this time, which is more than twice the provisionary increase that followed IRDA’s rate hike of March’ 2011,” said Rupali Shanker, Director, CRISIL.

Recently, the Insurance Regulatory and Development Authority has increased the provisioning requirements in the third-party motor pool. The extra provisioning in the motor third-party pool coupled with high claims in the motor third-party and health insurance would impact the underwriting performance in the interim.

Industry’s overall underwriting loss is expected to exceed Rs 100 billion each in 2011-12 and 2012-13.

The Credit Rating and Information Services of India expects an annual hike in premium rates for the motor third-party segment to benefit the industry over the long term. Consequently, the underwriting losses in motor TP segment, which has the most adverse claims performance likely to reduce over time.

IRDA lifts stop order on Single-premium life policies
[Posted by: InsuringIndia News on Thursday, May 03, 2012 6:23 PM]

The insurance watchdog, Insurance Regulatory and Development Authority (IRDA) has taken U-tern in its earlier stand on single-premium life insurance policies. In January’ 2012, the regulator had issued an order to stop single-premium policies and warned that such policies were risky products and inexpedient to both the policyholders and the insurers. Now, after several debates between the regulator and the insurers, the earlier agrees to the single-premium life policies.

Single-premium life policies refer to the products for which the policyholders need to pay premiums only once at the time of the inception of the policies. In FY’ 12, the total single-premium, including group and individual, declined by over Rs 10,000 crore as insurers started shifting their focus to regular-premium with the view that those products would offer better valuations. As the result, the share of single-premium in the overall income of the life insurance industry declined by 45% to Rs 51,625 crore from Rs 62,230 crore in last fiscal year.

Mr. MN Rao, MD & CEO, SBI Life, said, “It is catering to specific segment of investors. But too heavy exposure may not be conducive for companies and may lead to lower valuation and profitability. Normally, a company would have to balance between regular and single premiums.”

SBI Life registers a record profit of Rs 556 crore in FY’ 12
[Posted by: InsuringIndia News on Wednesday, May 02, 2012 5:01 PM]

Private sector insurer, SBI Life Insurance has registered a record profit of Rs 556 crore during the fiscal year 2011-12, an increase of 52% over the last fiscal year. For the first time, since the inception in year 2001, the company proposes to declare 5% of dividend.

As per the latest report from IRDA, SBI Life Insurance is ranked number one amongst the private sector life insurers in New Business Premium (NBP) for the fiscal year ended as on 31st March’12. Among private life insurers, market share of the company increased to 19.9% in FY’12 from 19.2% in FY’11.

The New Business Premium (NBP) collection stood at Rs 6,531 crore, down by 13% as compared to private companies’ de-growth of 17% during the fiscal year. The company collected Rs 6,602 crore Renewal Premium, an increase of 23% over the last fiscal year. Consequently, the gross written premium collection of the company stood at Rs 13,133 crore, up by 1% over the last fiscal year. The Asset Under Management (AUM) jumped by 16% to Rs 46,576 crore from Rs 40,163 crore of last fiscal year.

During the fiscal year 2011-12, the company has opened 85 new branches and added 618 employees.

IRDA launched an exclusive website to educate consumers
[Posted by: InsuringIndia News on Tuesday, May 01, 2012 3:11 PM]

The Insurance Regulatory and Development Authority (IRDA) with emphasis on the importance of insurance education to the consumers, has launched an exclusive website- www.policyholders.gov.in. At the beginning, the website will be in English only but later it will be enabled in Hindi and in other languages as well.

To make people aware of insurance needs, it is significant to have portals like this. Through this portal, one can understand the basics of complex insurance terminologies. This portal will become more advantageous once it’s translated in other languages too.

In a circular, the Chairman of IRDA, Mr. J. Hari Narayan said, “The objective of having an exclusive website is to educate consumers about insurance in particular, regarding buying insurance, making a claim etc. The website is an attempt to reach out to all to give certain basic generic information on the subjects in order that consumers begin to think and seek answer to questions such as what they need to buy, whether they are being offered the right product.”

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