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Budget Proposals Are Confusing: Insurance Industry
[Posted by: InsuringIndia News on Friday, July 18, 2014 12:00 AM]
The union budget presented recently by the Finance Minister Mr. Arun Jaitely has promised to table the long awaited Insurance Laws (Amendment) Bill, which proposes to raise foreign direct investment cap to 49 per cent from current 26 per cent, in the current session of the Parliament. It is encouraging for the industry but has also created a state of confusion within the industry on some points.

The budget proposals have imposed a withholding tax of 2 per cent on payment made by insurance companies to their policy holders. The logic of imposing such tax has not been defined.

Further, Mr. Jaitely announced that the composite FDI ceiling in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 percent, with full Indian management and control, through the FIPB route. In which, terms composite ceiling, full Indian management and control are not clearly defined.

The industry wants to know whether full Indian management and control would be achieved through differential voting rights, or through compelling the insurers to have their board majorly with Indians and the company to be headed only by an Indian.

Also, the industry is apprehensive about routing the FDI proposals through Foreign Investment Promotion Board (FIPB) instead of the current automatic route.

"In the banking sector FDI up to 49 percent is under automatic route. There are lots of checks and balances in the insurance sector. With stiff solvency norms policy holders will not lose their monies. There need not be any differential treatment between these two sectors," a senior industry official said.


Bajaj Finserv Plans To Sell Stakes In Insurance Biz
[Posted by: InsuringIndia News on Thursday, July 17, 2014 12:00 AM]
Bajaj Finserv Limited (BFL), a leading financial services company of the Bajaj Group, is considering selling part of its stakes in insurance joint ventures to its foreign partner Allianz once the Insurance Laws (Amendment) Bill is passed.

The Insurance Laws (Amendment) Bill, which proposes to raise foreign direct investment (FDI) in insurance to 49 per cent from current 26 per cent, is pending in Rajya Sabha, the upper house of the Indian parliament, since 2008.

Bajaj Finserv is present in insurance businesses through 74 per cent stake in Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance.

Both the life insurance business and the non-life insurance business were generating funds to sustain themselves and no further capital infusion was required, said Bajaj Finserv Managing Director Mr. Sanjeev Bajaj.


Exide Life, Magma HDI General Unlikely to See any Foreign Investment Despite Govt Approval
[Posted by: InsuringIndia News on Tuesday, July 15, 2014 12:00 AM]
Two private sector insurance players - Exide Life Insurance Co Ltd and Magma HDI General Insurance Co may not seek foreign direct investment (FDI) flowing into their companies anytime soon even if the long pending Insurance Laws (Amendment) Bill, which proposes raising FDI ceiling to 49 per cent, is passed.

"We are well-capitalised and not looking at any investments through FDI route in our businesses in the short term. However, in the long term, Exide Industries intend to induct a new foreign shareholder," said Exide Life Insurance MD and CEO Mr. Kshitij Jain.

While Banglore-based Exide Life Insurance Company is fully Indian company with 100 per cent holding owned by Rahejas-controlled battery maker Exide Industries, Magma HDI General Insurance is 74 per cent stake owned by Magma Fincorp with remaining 26 per cent being held by Germany partner HDI-Gerling Industries Versicherung.

The Modi-led NDA government has said that it will table Insurance Laws (Amendment) Bill in the current session of the parliament. The foreign investors are waiting for the bill to be passed.


HDFC Life Eyeing To Double Its Revenue In 2 Years From Online Sales
[Posted by: InsuringIndia News on Tuesday, July 15, 2014 12:00 AM]
Riding on the growth of internet reach in the country, private sector leading insurer HDFC Life Insurance Company is expecting to double its revenue from its online sales by 2016. It is seeing 10 per cent of its new insurance business coming from the online sales in just about two years.

"While the offline insurance premiums have a renewal rate of about 70 per cent, we are seeing over 95 per cent renewals for online insurance," said Executive Vice-President & Head (Strategy and Technology) for HDFC Life, Mr. Subrat Mohanty.

The insurer has grown 20 folds to Rs 300 crore since 2012, when it started online sales.

The online channel of insurance sales is more convenient as it does not require any agent’s involvement, and customers can themselves compare and choose best suited policies for themselves using different web aggregator present in the market. Also, online policies comes 20-25 per cent cheaper as there is no middleman involved in the transaction. Most of the websites selling online insurance do not charge brokerage but just a small commission for passing on the lead.

HDFC Life is facing resistance from agents for its offline business. The agents fear loss of business to the online channel. However, the insurer is trying to convince them to move online. The insurer is planning to launch a mobile app by October this year to enable customers to buy and get information about various product offerings from the company on the go.

HDFC Life Insurance is a joint venture between Housing Development Finance Corporation (HDFC) Limited, one of India’s leading housing finance institution and Standard Life Plc, a renowned financial savings & investments services provider of United Kingdom.


Health Insurance Cos To Extend Cover Purview With Feature-Rich Policies
[Posted by: InsuringIndia News on Monday, July 14, 2014 12:00 AM]
In order to bridge the gap between the total cost of healthcare incurred and the amount covered by health insurance companies, health insurance companies have come up with comprehensive plans by adding up some extra features to their existing plans that would cover more than just hospitalisation expenses.

These feature-rich policies would be able to compensate policyholders the total actual cost occurred in healthcare, including hospitalisation reimbursement, pre-hospitalisation expenses such as out-patient department (OPD) and wellness services.

In addition, these companies would also be providing Worldwide Emergency Cover, disease- specific covers, value-added services in the form of discounts, health maintenance benefits and consultation charges for second opinion.

Conventional health insurance plans, especially the hospitalisation reimbursement category that exists in the market today, have been restrictive in terms of coverage, Bajaj Allianz General Insurance Managing Director and Chief Executive Officer Mr. Tapan Singhel said.


Govt To Put Insurance Laws (Amendment) Bill In Parliament Soon
[Posted by: InsuringIndia News on Friday, July 11, 2014 12:00 AM]
The Union Finance Minister Mr. Arun Jaitley in his maiden budget speech on Thursday announced that the pending Insurance Laws (Amendment) Bill, which proposes to raise the FDI (Foreign Direct Investment) ceiling to 49 per cent from current 26 per cent, will immediately be brought for consideration before Parliament.

This move will help the sector in two ways - First, this help companies access capital more easily, which is huge positive, given that the insurance sector is capital intensive. And second, this could act as a trigger for listing of insurance players, which will provide a better yardstick to value these companies.

In his speech, Mr. Jaitly said benefits of insurance in India have not reached to a large section of the people as insurance penetration and density are very low. He assured that the government would work addressing this situation in multi-pronged manner with support of all stake holders concerned.

The voting rights of foreign stakeholders shall not exceed 26 per cent in the aggregate and the CEO of the said Indian insurance company, to be appointed by its Indian stakeholders, and the majority of the company’s directors shall be Indian nationals.

The Insurance Laws (Amendment) Bill was first mooted by the previous Congress-led UPA government, and has been pending in the Rajya Sabha since December 2008, as the BJP didn’t support it arguing that raising the FDI ceiling to 49% would expose the sector to global vulnerability.


Insurance Cos To Propose Limited-Liability Third-Party Auto Policies
[Posted by: InsuringIndia News on Thursday, July 10, 2014 12:00 AM]
Seeking permission to issue compulsory third-party (CTP) motor cover with limited liability, general insurance companies have sent a proposal to the government. For the high-risk commercial vehicle segment, an option for additional liability limit covers is proposed, which will provide a sum over and above the basic motor policy.

According to a leading newspaper, the General Insurance Council and non-life insurance companies, led by the industry body, have sent a proposal to the Road Transport and Highways Ministry to consider third-party covers with fixed limits, similar to the pre-determined liability limits for air and train accidents.

The implementation of this model will need an amendment to the Motor Vehicles Act which currently does not stipulate any limit on the liability of vehicle owners. Non-life insurance companies say, due to this law, an increase in claim awards by courts is seen every year.

At present, combined ratios in the motor insurance segment stand at 140-150%, owing to losses in the third-party motor segment. According to an estimate, payouts by insurance companies to individuals for motor third-party related accidents have climbed 15-20%.


Magma HDI General PlansTo Launch Prepaid Health-Card
[Posted by: InsuringIndia News on Wednesday, July 09, 2014 12:00 AM]
New entrant in the general insurance business in the country, Magma HDI General Insurance is all set to launch a prepaid health card to facilitate payments at OPD (outpatient departments) and day-care facilities of hospitals.

This electronic health card can be used like any other debit or credit card but only in hospitals, the company said.Mr. Swaraj Krishnan, Managing Director and Chief Executive Officer of Magma HDI (MHDI), said, “Pre-paid health card is a step forward from the cashless concept.”

“The ‘hospital cash facility’ or prepaid health card will be linked to the company’s upcoming health insurance products in the individual, family and group categories. The amount of cash equivalent in the card will be based on the policy value of the user”, Mr. Krishnan said.

The company has applied to the Insurance Regulatory and Development Authority for necessary regulatory approval. It is expected that the product will be available for customers by September this year.

Magma HDI General Insurance is a joint venture between India’s Magma Fincorp and Germany’s HDI Gerling Industrie Verischerung AG. Magma Fincorp holds 74 per cent stake in the JV, while remaining 26 per cent by HDI Gerling Industrie Verischerung AG.


New India Assurance Pay Rs 220 Cr Dividend To Government For FY’ 13
[Posted by: InsuringIndia News on Tuesday, July 08, 2014 2:27 PM]
State-run general insurance firm New India Assurance has paid a dividend of Rs 220 crore to the government for the fiscal year which ended on March 31, 2014.

As per an official, Chief Managing Director of New India Assurance Co. Ltd Mr. G. Srinivasan presented a dividend cheque of Rs 220 crore to the Union Finance Minister Mr. Arun Jaitly on Thursday.

The state-owned general insurance companies- New India Assurance, National Insurance Company, United India and Oriental Insurance Company Ltd have jointly registered a growth of 10 % in gross premium during the fiscal year 2013-14 and have projected a 100% increase in the next five years.


AEGON Religare Life Wins ‘E-Business Leader’ Award For Second Consecutive Year
[Posted by: InsuringIndia News on Monday, July 07, 2014 12:00 AM]
Leading private sector insurer AEGON Religare Life Insurance (ARLI) Company has been conferred with the ‘E-Business Leader Award’ for the second consecutive year, under the category of Overall Insurance Industry Awards by the Indian Insurance Award in a function held in Mumbai on June 25, 2014.

The jury members were SB Mathur, Former Secretary General, Life Insurance Council; R Krishnamurthy, Senior Advisor, Towers Watson; Mr R Chandrasekaran, Secretary General, General Insurance Council.The E-Business Leader award is given to an insurance company that has deployed the online insurance channel effectively for sales, marketing and lead generation for the business. This also needs to commend an insurance company bringing special focus on this revolutionary distribution model.

Speaking on the occasion, Sri K.S. Gopalakrishnan, Managing Director & Chief Executive Officer at ARLI said, “AEGON Religare Life Insurance is extremely proud and happy to be honoured as the E-Business Leader Award for the second year in a row. As pioneers in the online business in life insurance in this country, it gives me immense pleasure to accept this well-deserved award. It further strengthens our leadership position.”

“Introducing India to a digital distribution channel for life insurance was a challenge and I believe ARLI overcame this hurdle by simplifying the buying process and introducing the customers to e-friendly products like ‘AEGON Religare iTerm Plan’ and ‘AEGON Religare iGuarantee Plan’. We wish to keep our focus on the E-Sales distribution channel and further strengthen our online presence”, he added.

AEGON Religare Life Insurance (ARLI) Company is a joint venture between AEGON (26%), an international life insurance, pension and investment company; Religare Enterprises Limited (44%), a global financial services group; and Bennett, Coleman & Company (30%), India’s largest media.


 

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