In a judgement that could lead to hassle-free settlement of insurance claims, the Supreme Court has held that an insurance firm is liable to compensate for any damage of goods till it reaches the final destination.
The judgement would give relief to shipping companies engaged in imports as they can claim compensation for the stock destroyed before reaching the consignee at the final destination.
This means insurance coverage was valid till the goods were delivered to the consignees’ warehouse or other final warehouse.
A bench comprising Justice A K Mathur and Justice Tarun Chatterjee in a judgement delivered last week said the extended insurance policy would cover goods till they reached the destination in any part of the country.
The apex court dismissed United India Insurance Company’s appeal that challenged National Consumers Disputes Redressal Commission’s judgment asking it to pay Rs 4.94 crore in compensation to Great Eastern Shipping Company which lost 12,000 metric tons of sugar imported from China in 1994.
“When the coverage was extended on same terms and conditions, it would mean that the goods were covered till the same reached in any part of the country in India,” it stated.
The judges held that “while interpreting the policy the courts should keep in view the intention of the parties as well as the words used in the policy. If the intention of the parties subserves the expression used therein then the expression used in that context should be given its full and extended meaning.”
Source: PTI
Friday, July 27, 2007
Ulip managers fare poorly in Sensex test
It's a cover drive that has worked well for the insurance industry. When the captain and the vice-captain of the country's cricket squad teams up with a former captain and ask you to buy insurance, you are most likely to be bowled over.
And if this campaign has helped insurers in raising a lot of money, especially through their Unit-linked insurance plans (Ulips), no one's going to be surprised.
Good beginning. But the story's changing as the innings progress.
Though Ulips have raised more than Rs 30,000 crore as new business premium in the last financial year, a study by DNA Money shows that most of the equity Ulips failed to beat the returns generated by the Sensex in the last one year (July 25, 2006, to July 24, 2007).
Of the 23 equity Ulips from 10 private life insurance companies that the study compared, only seven managed to generate returns higher than that of the Sensex's 51.6 per cent. The average return generated by an equity Ulip during the period was 49.4 per cent.
Equity-linked savings schemes (ELSS), better known as tax-savings scheme, scored a much better 57.8 per cent.
In fact, even in a two-year period, none the 16 Ulips that have been in existence have been able to beat the Sensex return of 45.1 per cent per annum. The average return delivered by Ulips over this period is a much lower 38.8 per cent. Before you jump into any conclusion at this juncture, let's hear the Ulip side of the story.
"It is too early to compare Ulip returns with mutual funds' (MFs) as Ulips have been launched only for 3-4 years now," says Sanjay Tripathy, head, marketing, HDFC Standard Life.
Point.
But then, one should remember that individuals hand over money to insurance companies on the belief that experts handle their investments better.
An expert is deemed to have done well when he generates returns that are greater than the broad market. The Ulips, clearly, seem to have floored the experts.
Some plans, indeed, did beat the Sensex - but just by a whisker.
The pick of the lot over a one-year period has been Tata AIG's Equity Fund, with a return of 64.4 per cent. Coming close was Kotak Life Insurance's Aggressive Growth Fund, which generated returns of 59.7 per cent. Five other funds, which managed to beat the Sensex, did it by 1-2 per cent.
"We have beaten our benchmark BSE 100 by 2-3 per cent over the past three years. Not all managers have been able to do over time," says Bryce Johns, development actuary and chief investment officer at Kotak Mahindra Old Mutual Life Insurance.
Why did others fail?
"As your portfolio gets bigger, it gets difficult to beat the market. Also we can invest for a longer period, as we have no redemption pressures that mutual funds have. People save for a 20-year time horizon," he added.
What one needs to be kept in mind here is that the returns we are talking about are the returns earned on the portion of the premium that is invested and not on the entire premium paid.
Most Ulips have a premium allocation charge in the first year of the policy, which varies from 15-71 per cent of the premium paid, depending on the Ulip chosen. In the second year, this charge is around 15 per cent of the premium paid. The amount that remains after paying this charge is invested. Hence, the actual return for the investors is a lot lower.
"Most investors aren't aware and, more importantly, aren't made aware of the high upfront expense. By the time they find out, it is too late. These expenses directly eat into returns," says Sandeep Shanbhag, director, A N Shanbhag NR Group, a tax and investment consultancy.
"The damage done by high costs in the initial years by Ulips is very high. This, along with the MFs' out performance of Ulips, ensure that there is a huge lead in the initial few years in terms of the corpus," says Amar Pandit, who runs My Financial Advisor.
Insurers do not agree with this. "The entry load for an Ulip is in the range of 10-25 per cent, which is fully refunded in the form of loyalty bonus to the customer who stays for the duration of the contract. In fact, the loyalty bonus in our case can go as high as 100 per cent, if the customer stays on for 20 years," says Rajiv Kumar Gupta, senior vice-president, retail and corporate agency, SBI Life. Those cricketers don't seem to believe in one-dayers.
Source: DNA Money
And if this campaign has helped insurers in raising a lot of money, especially through their Unit-linked insurance plans (Ulips), no one's going to be surprised.
Good beginning. But the story's changing as the innings progress.
Though Ulips have raised more than Rs 30,000 crore as new business premium in the last financial year, a study by DNA Money shows that most of the equity Ulips failed to beat the returns generated by the Sensex in the last one year (July 25, 2006, to July 24, 2007).
Of the 23 equity Ulips from 10 private life insurance companies that the study compared, only seven managed to generate returns higher than that of the Sensex's 51.6 per cent. The average return generated by an equity Ulip during the period was 49.4 per cent.
Equity-linked savings schemes (ELSS), better known as tax-savings scheme, scored a much better 57.8 per cent.
In fact, even in a two-year period, none the 16 Ulips that have been in existence have been able to beat the Sensex return of 45.1 per cent per annum. The average return delivered by Ulips over this period is a much lower 38.8 per cent. Before you jump into any conclusion at this juncture, let's hear the Ulip side of the story.
"It is too early to compare Ulip returns with mutual funds' (MFs) as Ulips have been launched only for 3-4 years now," says Sanjay Tripathy, head, marketing, HDFC Standard Life.
Point.
But then, one should remember that individuals hand over money to insurance companies on the belief that experts handle their investments better.
An expert is deemed to have done well when he generates returns that are greater than the broad market. The Ulips, clearly, seem to have floored the experts.
Some plans, indeed, did beat the Sensex - but just by a whisker.
The pick of the lot over a one-year period has been Tata AIG's Equity Fund, with a return of 64.4 per cent. Coming close was Kotak Life Insurance's Aggressive Growth Fund, which generated returns of 59.7 per cent. Five other funds, which managed to beat the Sensex, did it by 1-2 per cent.
"We have beaten our benchmark BSE 100 by 2-3 per cent over the past three years. Not all managers have been able to do over time," says Bryce Johns, development actuary and chief investment officer at Kotak Mahindra Old Mutual Life Insurance.
Why did others fail?
"As your portfolio gets bigger, it gets difficult to beat the market. Also we can invest for a longer period, as we have no redemption pressures that mutual funds have. People save for a 20-year time horizon," he added.
What one needs to be kept in mind here is that the returns we are talking about are the returns earned on the portion of the premium that is invested and not on the entire premium paid.
Most Ulips have a premium allocation charge in the first year of the policy, which varies from 15-71 per cent of the premium paid, depending on the Ulip chosen. In the second year, this charge is around 15 per cent of the premium paid. The amount that remains after paying this charge is invested. Hence, the actual return for the investors is a lot lower.
"Most investors aren't aware and, more importantly, aren't made aware of the high upfront expense. By the time they find out, it is too late. These expenses directly eat into returns," says Sandeep Shanbhag, director, A N Shanbhag NR Group, a tax and investment consultancy.
"The damage done by high costs in the initial years by Ulips is very high. This, along with the MFs' out performance of Ulips, ensure that there is a huge lead in the initial few years in terms of the corpus," says Amar Pandit, who runs My Financial Advisor.
Insurers do not agree with this. "The entry load for an Ulip is in the range of 10-25 per cent, which is fully refunded in the form of loyalty bonus to the customer who stays for the duration of the contract. In fact, the loyalty bonus in our case can go as high as 100 per cent, if the customer stays on for 20 years," says Rajiv Kumar Gupta, senior vice-president, retail and corporate agency, SBI Life. Those cricketers don't seem to believe in one-dayers.
Source: DNA Money
Now, pay for insurance through a simple SMS
New Delhi: You could be soon buying insurance and other financial services with the touch of a finger. Paying the premium for your life insurance cover is now as simple as typing a text message.
ING Vyasa life insurance has tied up with Paymate India to provide the first of its kind premium payment service through a mobile SMS. The company feels, this mode of payment, will help them reach out to more customers.
"Now you can pay insurance premium via SMS. The entire base of mobile customers is very high in India and is going up rapidly. This will make it easier for customers to pay premium,” said Rahul Agarwal, Vice President - Customer Services, ING Vysya Life.
However this service is currently available only for those who hold an account with Citibank or corporation bank."We already have two banks in the kitty and we are looking forward to adding another 3-4 banks in this quarter. Very soon at least half a dozen bank customers would be able to pay their insurance premiums using the SMS service on their mobile phones,” Ajay Adiseshann, Founder & MD, Paymate said.
And while ING Vysya life insurance has gone ahead to facilitate SMS payment, others are making a start to provide financial advisory on SMS.
Aviva life insurance has tied up with Affle to enable people to get in touch with an Aviva agent, through an SMS. They plan to introduce a host of insurance guidance services over a mobile phone. Just through an SMS you can know how much damage you will do to your pocket by delaying your retirement planning.
No more cutting cheques and standing in queues to pay your premium. and no more appointments with the agent for your financial planning. Life insurance companies are now looking at innovative methods to reach out to a larger younger customer base.
SOURCE: IBNLIVE.com
ING Vyasa life insurance has tied up with Paymate India to provide the first of its kind premium payment service through a mobile SMS. The company feels, this mode of payment, will help them reach out to more customers.
"Now you can pay insurance premium via SMS. The entire base of mobile customers is very high in India and is going up rapidly. This will make it easier for customers to pay premium,” said Rahul Agarwal, Vice President - Customer Services, ING Vysya Life.
However this service is currently available only for those who hold an account with Citibank or corporation bank."We already have two banks in the kitty and we are looking forward to adding another 3-4 banks in this quarter. Very soon at least half a dozen bank customers would be able to pay their insurance premiums using the SMS service on their mobile phones,” Ajay Adiseshann, Founder & MD, Paymate said.
And while ING Vysya life insurance has gone ahead to facilitate SMS payment, others are making a start to provide financial advisory on SMS.
Aviva life insurance has tied up with Affle to enable people to get in touch with an Aviva agent, through an SMS. They plan to introduce a host of insurance guidance services over a mobile phone. Just through an SMS you can know how much damage you will do to your pocket by delaying your retirement planning.
No more cutting cheques and standing in queues to pay your premium. and no more appointments with the agent for your financial planning. Life insurance companies are now looking at innovative methods to reach out to a larger younger customer base.
SOURCE: IBNLIVE.com
Thursday, July 26, 2007
IRDA balking at migration to new solvency norms
Bangalore, July 19 Implementation of Solvency II guidelines prescribed by the International Association of Insurance Supervisors (IAIS) is likely to be delayed in the country.
The Insurance Regulatory and Development Authority (IRDA) made it clear that it was no hurry to implement Solvency II guidelines.
Its Chairman, Mr C.S. Rao, said: “We are in no hurry to immediately implement the guidelines.”
The IAIS final guidelines released in February this year address material risks that insurers face — underwriting risk, market risk, credit risk and operational risk.
Solvency margin is the excess of the value of assets and capital that non-life insurers have to maintain over the insured liabilities. Solvency regime
Under the current solvency regime, insurers are expected to maintain a 150 per cent margin over the insured liabilities. Solvency II however, does not imply any change in the margin. The new guidelines make the solvency margins dynamic.
But according to industry sources, the regulator’s balking at migration to Solvency II guidelines has more to do with the ground situation in the country. This implies that some of the insurers are simply not ready for migration. The situation is somewhat identical to the situation faced by the banking sector’s migration to the Basel II capital standards. Solvency II is the insurer’s equivalent of the Basel II.Step-by-step approach
Instead, the insurance regulator has opted for step-by-step approach. As the first step, life insurers are now expected to file their audited reports on solvency compliance on a quarterly basis effective from this financial year. For the non-life sector, the IRDA has indicated that the reporting would be done on a half-yearly basis, though this is likely to begin only after the completion of tariff deregulation.
However, the public sector Oriental Insurance Company Chairman and Managing Director, Mr M. Ramadoss, said: “We are ready for moving into half-yearly reporting. This is not an issue. It is up the regulator to decide the timeframe.”Complete transition
The migration though would still be short of a complete transition to Solvency II. This is because the asset valuation is currently done on a year-end basis. A half-yearly solvency regime would imply that the asset valuations would also have to be on similar terms.
“Yes valuation of investments would have to be done on a half-yearly basis. Equities could be done on a half-yearly basis. For Government securities we need a regulatory direction,” Mr Ramadoss said.
Government securities are still valued on a book value basis by the insurers.
Moreover, some of the western countries that have implemented advanced management information solutions (MIS) are also yet to fully accept the IAIS guidelines, the sources added.
The absence of such MIS in the Indian insurance industry is a major stumbling block for migration to new solvency guidelines.
Only the private sector is in readiness for the migration, though they account for only about 30 per cent of the domestic market.
source:Business Line
The Insurance Regulatory and Development Authority (IRDA) made it clear that it was no hurry to implement Solvency II guidelines.
Its Chairman, Mr C.S. Rao, said: “We are in no hurry to immediately implement the guidelines.”
The IAIS final guidelines released in February this year address material risks that insurers face — underwriting risk, market risk, credit risk and operational risk.
Solvency margin is the excess of the value of assets and capital that non-life insurers have to maintain over the insured liabilities. Solvency regime
Under the current solvency regime, insurers are expected to maintain a 150 per cent margin over the insured liabilities. Solvency II however, does not imply any change in the margin. The new guidelines make the solvency margins dynamic.
But according to industry sources, the regulator’s balking at migration to Solvency II guidelines has more to do with the ground situation in the country. This implies that some of the insurers are simply not ready for migration. The situation is somewhat identical to the situation faced by the banking sector’s migration to the Basel II capital standards. Solvency II is the insurer’s equivalent of the Basel II.Step-by-step approach
Instead, the insurance regulator has opted for step-by-step approach. As the first step, life insurers are now expected to file their audited reports on solvency compliance on a quarterly basis effective from this financial year. For the non-life sector, the IRDA has indicated that the reporting would be done on a half-yearly basis, though this is likely to begin only after the completion of tariff deregulation.
However, the public sector Oriental Insurance Company Chairman and Managing Director, Mr M. Ramadoss, said: “We are ready for moving into half-yearly reporting. This is not an issue. It is up the regulator to decide the timeframe.”Complete transition
The migration though would still be short of a complete transition to Solvency II. This is because the asset valuation is currently done on a year-end basis. A half-yearly solvency regime would imply that the asset valuations would also have to be on similar terms.
“Yes valuation of investments would have to be done on a half-yearly basis. Equities could be done on a half-yearly basis. For Government securities we need a regulatory direction,” Mr Ramadoss said.
Government securities are still valued on a book value basis by the insurers.
Moreover, some of the western countries that have implemented advanced management information solutions (MIS) are also yet to fully accept the IAIS guidelines, the sources added.
The absence of such MIS in the Indian insurance industry is a major stumbling block for migration to new solvency guidelines.
Only the private sector is in readiness for the migration, though they account for only about 30 per cent of the domestic market.
source:Business Line
Saudi Minister of Commerce Dr Hashim Yamani has approved the establishment of a Saudi-Indian cooperative insurance company.
Saudi Minister of Commerce Dr Hashim Yamani has approved the establishment of a Saudi-Indian cooperative insurance company.
The joint stock company is being floated with a base capital of 100 million Saudi riyals.
The founders of the Riyadh-based company have so far subscribed for 6 million shares. It will be managed by a nine-member board of directors, appointed by the company's general assembly.
The approval of the establishment of the company comes in line with the state's policy which aims at broadening the economic base and enabling the private sector to positively contribute to the process of economic development in the country
source:Financial Express
The joint stock company is being floated with a base capital of 100 million Saudi riyals.
The founders of the Riyadh-based company have so far subscribed for 6 million shares. It will be managed by a nine-member board of directors, appointed by the company's general assembly.
The approval of the establishment of the company comes in line with the state's policy which aims at broadening the economic base and enabling the private sector to positively contribute to the process of economic development in the country
source:Financial Express
Insurers face valuation hurdles
Kolkata: Call it the ‘real value’. Even as politics dogs the opening up of the insurance sector, the issue of valuation - that will determine the buying or selling of strategic stakes - is proving to be contentious.
This is more so since none of the insurance companies in the country are listed.
Increasing the foreign direct investment (FDI) cap in insurance from 26 per cent to 49 per cent is slated to infuse additional capital of around Rs 4,000 crore, either by buying out the Indian promoter’s stake or inducing fresh capital.
But as the frustration builds up, with the government yet to take a call and insurance companies not being listed, a latent discontent among different shareholders on the valuation of their respective businesses cannot be ruled out.
With most insurers, particularly life companies, exhibiting phenomenal growth in recent times, valuation is likely to emerge as perhaps the most critical aspect in unfolding the real value of the company and the relationship among the shareholders.
“Valuations for insurers are increasing rapidly and this will have an impact on the capital required to buy a stake in the future and on existing JV arrangements.
There could be disputes on valuations as different shareholders would cite different valuations,” Bert Paterson, CEO, India and Sri Lanka, Aviva said.
“We are all strategic investors and are betting big business from life - hence getting the best returns for exiting or giving up some stake is very important.
While it is early to predict what will happen, there could be arguments over the price of shares if the company is not listed.
The buyer may feel that the valuation is much lower, whereas, we as one of the Indian partners would feel the opposite,” said a strategic investor with one of the insurance companies, who did not wish to be named.
Almost echoing the same feeling, T V Ramanathan, managing director and chief executive officer, Exide Industries, which holds a 50per cent stake in ING Vysya Life Insurance, said: “If the sector sees an increase in FDI cap, there is no compulsion to sell off our stake. Valuations are very important”.
“Valuation of a life insurer essentially takes into account the embedded value, which is a combination of the NAV or book value and the in-force value along with the goodwill of a company.
In-force value is subjective and takes into account discounting of future cash flows that the current portfolio would receive,” Jean Francois Izac, director, mergers and acquisitions, Aviva said.
While most companies point out that the underlying agreement will spell the later course of action, it is for time to tell whether things will remain as they are now.
According to Merrill Lynch, the best valuation of Indian companies is assessing them on the basis of a multiple to their new business achieved profit (NBAP), which apparently is the only valuation tool that can be applied to Indian insurance companies.
NBAP is the present value of the profits arising from new business during the year.
“Although the embedded and appraised value methods are probably the best traditional measures of valuing life insurers over their life cycle, these measures cannot be applied to Indian insurers at this stage as most of them are at an early stage of their life cycle and even more importantly are still exhibiting exceptionally strong growth rates,” a Merrill Lynch report said.
Source: DNA Money
This is more so since none of the insurance companies in the country are listed.
Increasing the foreign direct investment (FDI) cap in insurance from 26 per cent to 49 per cent is slated to infuse additional capital of around Rs 4,000 crore, either by buying out the Indian promoter’s stake or inducing fresh capital.
But as the frustration builds up, with the government yet to take a call and insurance companies not being listed, a latent discontent among different shareholders on the valuation of their respective businesses cannot be ruled out.
With most insurers, particularly life companies, exhibiting phenomenal growth in recent times, valuation is likely to emerge as perhaps the most critical aspect in unfolding the real value of the company and the relationship among the shareholders.
“Valuations for insurers are increasing rapidly and this will have an impact on the capital required to buy a stake in the future and on existing JV arrangements.
There could be disputes on valuations as different shareholders would cite different valuations,” Bert Paterson, CEO, India and Sri Lanka, Aviva said.
“We are all strategic investors and are betting big business from life - hence getting the best returns for exiting or giving up some stake is very important.
While it is early to predict what will happen, there could be arguments over the price of shares if the company is not listed.
The buyer may feel that the valuation is much lower, whereas, we as one of the Indian partners would feel the opposite,” said a strategic investor with one of the insurance companies, who did not wish to be named.
Almost echoing the same feeling, T V Ramanathan, managing director and chief executive officer, Exide Industries, which holds a 50per cent stake in ING Vysya Life Insurance, said: “If the sector sees an increase in FDI cap, there is no compulsion to sell off our stake. Valuations are very important”.
“Valuation of a life insurer essentially takes into account the embedded value, which is a combination of the NAV or book value and the in-force value along with the goodwill of a company.
In-force value is subjective and takes into account discounting of future cash flows that the current portfolio would receive,” Jean Francois Izac, director, mergers and acquisitions, Aviva said.
While most companies point out that the underlying agreement will spell the later course of action, it is for time to tell whether things will remain as they are now.
According to Merrill Lynch, the best valuation of Indian companies is assessing them on the basis of a multiple to their new business achieved profit (NBAP), which apparently is the only valuation tool that can be applied to Indian insurance companies.
NBAP is the present value of the profits arising from new business during the year.
“Although the embedded and appraised value methods are probably the best traditional measures of valuing life insurers over their life cycle, these measures cannot be applied to Indian insurers at this stage as most of them are at an early stage of their life cycle and even more importantly are still exhibiting exceptionally strong growth rates,” a Merrill Lynch report said.
Source: DNA Money
‘Insurance industry will be hot bed for M&A deals’
Hyderabad: In a development that can impact the consolidation aspects of Indian life insurance industry, the valuation of industry players is increasing rapidly and will impact the capital requirement of stake holders in the existing joint venture arrangements, according to Jean Francois Izac, Director (Mergers & Acquisitions), Aviva Plc.
“Going by the current trends, Indian insurance industry will be hot bed for M&A deals once the upper ceasing on foreign direct investment is relaxed or removed,” Izac told Business Line in Prague recently.
Basic parameters
The four basic parameters of insurance value chain - distribution, risk management, administration and asset management were strong in India taking up the valuations of different companies, he said.
“Though the methodologies of valuation are not uniform, globally fundamental analysis (of discounted dividends, qualitative issues, and embedded value/appraisal value including actuarial analysis) and reality check (of comparables, competition, precedent transactions and ROI) are being taken up. The fact is that the Indian industry is staging impressive growth,” he said.
Citing a Merrill Lynch source, Izac said by FY09, the valuation of ICICI Prudential was currently at $7.2 billion, Bajaj Allianz at $3.6 billion, SBI Life at $2.3 billion HDFC Standard at $2.2 billion and Max New York Life at $1.3 million.
“While the figures are more indicative, they give a hint of what is in store for the industry ahead,” he observed.
FDI norms
Elaborating further, he said on the expected re-jig of FDI norms by the Government soon, the companies were focusing more on valuation procedures.
In countries such as the UK, the valuation was increasingly done in the embedded value method and there would be lot of action in India on this front, he added.
On Aviva’s M&A plans, Iazc said the company had been adopting joint venture and acquisition route globally.
“We are open to acquisitions in Europe,” he added.
Source: Business Line
“Going by the current trends, Indian insurance industry will be hot bed for M&A deals once the upper ceasing on foreign direct investment is relaxed or removed,” Izac told Business Line in Prague recently.
Basic parameters
The four basic parameters of insurance value chain - distribution, risk management, administration and asset management were strong in India taking up the valuations of different companies, he said.
“Though the methodologies of valuation are not uniform, globally fundamental analysis (of discounted dividends, qualitative issues, and embedded value/appraisal value including actuarial analysis) and reality check (of comparables, competition, precedent transactions and ROI) are being taken up. The fact is that the Indian industry is staging impressive growth,” he said.
Citing a Merrill Lynch source, Izac said by FY09, the valuation of ICICI Prudential was currently at $7.2 billion, Bajaj Allianz at $3.6 billion, SBI Life at $2.3 billion HDFC Standard at $2.2 billion and Max New York Life at $1.3 million.
“While the figures are more indicative, they give a hint of what is in store for the industry ahead,” he observed.
FDI norms
Elaborating further, he said on the expected re-jig of FDI norms by the Government soon, the companies were focusing more on valuation procedures.
In countries such as the UK, the valuation was increasingly done in the embedded value method and there would be lot of action in India on this front, he added.
On Aviva’s M&A plans, Iazc said the company had been adopting joint venture and acquisition route globally.
“We are open to acquisitions in Europe,” he added.
Source: Business Line
Why do ULIPs have such a high upfront charge?
Mumbai: Jignesh Mehta paid a premium of Rs 20,000 to invest in a unit-linked insurance plan (ULIP) in October 2005. At the end of one year, when he received the policy statement, he was surprised to see that the total value of his investment was just Rs 9,075. He wondered where the balance Rs 10,925 had gone.
ULIPs are insurance policies which club insurance and investment. Usually, an individual taking a ULIP has 4-6 choices, ranging from funds investing 100 per cent in equity to those investing 100 per cent in debt securities.
Other than this, the policy-holder gets an insurance cover as well, for which the insurance company levies a monthly charge.
What Mehta did not know is that the entire Rs 20,000 he had invested would not be invested.
There were expenses to be paid. In the first year of his ULIP policy, the insurance company had made an allocation charge of 25 per cent of the premium paid. What this meant was that of the Rs 20,000 he had paid, only Rs 15,000 was invested.
Other outgoes, like policy administration charge, and fund management charge, had ensured that instead of his money growing in value, it had shrunk.
The premium allocation charge in the first year of the policy varies from 15 per cent to 71 per cent of the premium paid, depending on the ULIPs chosen. So, why do ULIPs have such a high upfront charge?
“Historically, insurance commissions have always been high. The insurance industry tends to justify this practice, using the defence that selling insurance is tougher than selling other financial products.
While this itself is arguable, in any case, since these commissions are deducted from the investment, it is the investor who suffers,” says Sandeep Shanbhag, an investment consultant.
Financial planner Amar Pandit adds: “It’s a question of who bells the cat, and if an insurance company comes up with a low-cost product, they fear losing out on business.”
Investment experts complain it’s not easy to choose the best ULIP. “When I need to advise a client on which mutual fund to invest, I can check websites to know the best-performing schemes over three to five years.
But there is nothing like that available for ULIPs,” says a relationship manager with a private sector bank.
“Also, since the expense structure of each ULIP is different, any comparison between the performances of different Ulips is not possible,” says Shanbhag.
So, why do people invest in ULIPs? Last year more than Rs 31,000 crore came into ULIPs, which now account for around 56 per cent of the total new premia coming into insurance policies.
“The idea of a packaged product that offers both equity returns and insurance seduces investors,” says Shanbhag.
“The primary reason why people buy ULIPs is because of mis-selling. Agents tell people they have the option of paying a premium for only three years, when the actual term of most ULIPs is at least 10 years. It works as a good selling point,” says an investment advisor who did not wish to be identified.
Most ULIPs have a cover continuance option, which essentially ensures that even if the individual is not able to continue paying premia anytime after the first three years, the policy continues.
The insurance agents, though, have turned this into a selling point, giving an impression to investors that they have an option to stop paying premia after three years, which is really not the case.
An investor who decides to stop paying premia after three years hardly benefits; after three years, the expenses are less and more of the premium gets invested.
With a lower amount being invested, a lower initial corpus can have a huge impact on the corpus that the investor ultimately accumulates.
But there’s another reason why insurance agents tell their clients that they can stop paying premia after three years: they can sell another ULIP to them after three years and hope to make a greater commission.
If a client stays on with his/her ULIP, the agents make a much lower commission of around 5 per cent of the premium,” says an investment advisor.
“But companies are trying to curb mis-selling of this sort,” says R. Krishnamurthy, managing director of Watson Wyatt Insurance Consulting.
“One of the players has made it mandatory for the investor to sign a document, stating that he intends to invest for a longer term. However, this practice is not widely prevalent.”
Also, getting out of an ULIP, if it has not been performing well, can be a costly affair. If your tax- saving mutual fund is not performing, you can simply stop investing and move onto another scheme.
In case of ULIP, if you want to stop investing after three years and move onto another scheme, you will have to bear the high premium allocation charge of the new Ulip in the first three years.
To the detractors of ULIP, insurance companies keep pointing out that their expense structure over a longer period of 10-15 years works out to be much lower than that of a mutual fund. Hence over that period, ULIPs are more likely to perform better than mutual funds.
“In single premium products, which comprise 50 per cent of ULIPs sold, the commission is just 2 per cent. However, the cost is a little higher in regular premium products. But, it would even out in 8-10 years.
Investors need to understand that Ulips are for longer-term periods,” says SV Mony, secretary of the Life Insurance Council. But investment experts don’t seem to agree.
“Lower expenses have to match up with performance. The basic assumption that insurance companies make is that ULIPs and mutual funds will give similar returns. Actually, mutual funds have outperformed an average ULIP by a huge margin, and there is no way they can catch up in 10-15 years,” says Pandit.
“It is too early to compare the ULIP returns with mutual funds as Ulips have been launched only for 3-4 years now. Though we would not like to comment on the industry performance, our unit-linked funds have performed extremely well and are in-line with the performance of mutual funds, says Sanjay Tripathy, head marketing at HDFC Standard Life Insurance.
So what is the way out? It would be ideal to separate your insurance and investment decisions.
Investors desiring both insurance and investment should buy each product individually and avoid any combination thereof. Whenever insurance is combined with investment, it produces sub-opitmal results. So one should always buy term insurance and invest the rest of the funds in a pure investment product of choice," says Shanbhag.
Source: DNA Money
ULIPs are insurance policies which club insurance and investment. Usually, an individual taking a ULIP has 4-6 choices, ranging from funds investing 100 per cent in equity to those investing 100 per cent in debt securities.
Other than this, the policy-holder gets an insurance cover as well, for which the insurance company levies a monthly charge.
What Mehta did not know is that the entire Rs 20,000 he had invested would not be invested.
There were expenses to be paid. In the first year of his ULIP policy, the insurance company had made an allocation charge of 25 per cent of the premium paid. What this meant was that of the Rs 20,000 he had paid, only Rs 15,000 was invested.
Other outgoes, like policy administration charge, and fund management charge, had ensured that instead of his money growing in value, it had shrunk.
The premium allocation charge in the first year of the policy varies from 15 per cent to 71 per cent of the premium paid, depending on the ULIPs chosen. So, why do ULIPs have such a high upfront charge?
“Historically, insurance commissions have always been high. The insurance industry tends to justify this practice, using the defence that selling insurance is tougher than selling other financial products.
While this itself is arguable, in any case, since these commissions are deducted from the investment, it is the investor who suffers,” says Sandeep Shanbhag, an investment consultant.
Financial planner Amar Pandit adds: “It’s a question of who bells the cat, and if an insurance company comes up with a low-cost product, they fear losing out on business.”
Investment experts complain it’s not easy to choose the best ULIP. “When I need to advise a client on which mutual fund to invest, I can check websites to know the best-performing schemes over three to five years.
But there is nothing like that available for ULIPs,” says a relationship manager with a private sector bank.
“Also, since the expense structure of each ULIP is different, any comparison between the performances of different Ulips is not possible,” says Shanbhag.
So, why do people invest in ULIPs? Last year more than Rs 31,000 crore came into ULIPs, which now account for around 56 per cent of the total new premia coming into insurance policies.
“The idea of a packaged product that offers both equity returns and insurance seduces investors,” says Shanbhag.
“The primary reason why people buy ULIPs is because of mis-selling. Agents tell people they have the option of paying a premium for only three years, when the actual term of most ULIPs is at least 10 years. It works as a good selling point,” says an investment advisor who did not wish to be identified.
Most ULIPs have a cover continuance option, which essentially ensures that even if the individual is not able to continue paying premia anytime after the first three years, the policy continues.
The insurance agents, though, have turned this into a selling point, giving an impression to investors that they have an option to stop paying premia after three years, which is really not the case.
An investor who decides to stop paying premia after three years hardly benefits; after three years, the expenses are less and more of the premium gets invested.
With a lower amount being invested, a lower initial corpus can have a huge impact on the corpus that the investor ultimately accumulates.
But there’s another reason why insurance agents tell their clients that they can stop paying premia after three years: they can sell another ULIP to them after three years and hope to make a greater commission.
If a client stays on with his/her ULIP, the agents make a much lower commission of around 5 per cent of the premium,” says an investment advisor.
“But companies are trying to curb mis-selling of this sort,” says R. Krishnamurthy, managing director of Watson Wyatt Insurance Consulting.
“One of the players has made it mandatory for the investor to sign a document, stating that he intends to invest for a longer term. However, this practice is not widely prevalent.”
Also, getting out of an ULIP, if it has not been performing well, can be a costly affair. If your tax- saving mutual fund is not performing, you can simply stop investing and move onto another scheme.
In case of ULIP, if you want to stop investing after three years and move onto another scheme, you will have to bear the high premium allocation charge of the new Ulip in the first three years.
To the detractors of ULIP, insurance companies keep pointing out that their expense structure over a longer period of 10-15 years works out to be much lower than that of a mutual fund. Hence over that period, ULIPs are more likely to perform better than mutual funds.
“In single premium products, which comprise 50 per cent of ULIPs sold, the commission is just 2 per cent. However, the cost is a little higher in regular premium products. But, it would even out in 8-10 years.
Investors need to understand that Ulips are for longer-term periods,” says SV Mony, secretary of the Life Insurance Council. But investment experts don’t seem to agree.
“Lower expenses have to match up with performance. The basic assumption that insurance companies make is that ULIPs and mutual funds will give similar returns. Actually, mutual funds have outperformed an average ULIP by a huge margin, and there is no way they can catch up in 10-15 years,” says Pandit.
“It is too early to compare the ULIP returns with mutual funds as Ulips have been launched only for 3-4 years now. Though we would not like to comment on the industry performance, our unit-linked funds have performed extremely well and are in-line with the performance of mutual funds, says Sanjay Tripathy, head marketing at HDFC Standard Life Insurance.
So what is the way out? It would be ideal to separate your insurance and investment decisions.
Investors desiring both insurance and investment should buy each product individually and avoid any combination thereof. Whenever insurance is combined with investment, it produces sub-opitmal results. So one should always buy term insurance and invest the rest of the funds in a pure investment product of choice," says Shanbhag.
Source: DNA Money
Life Insurance Corp raises stake in IPCL
Mumbai, July 9: Indian Petrochemicals Corp. Ltd. said on Monday Life Insurance Corp. of India has acquired a further 2.03 percent stake in the company to raise its holdings to 13.39 percent.
Shares in IPCL were trading down 0.3 percent at 340 rupees in the Mumbai market.
Source: Financial Express
Shares in IPCL were trading down 0.3 percent at 340 rupees in the Mumbai market.
Source: Financial Express
Skymet bets big on weather insurance for air travellers
At Rs 250/year, travellers can get Rs 4,000 refund for delays of over 10 mins.
More biz from commodities, power, weather derivatives.
Insurance may be on offer in Yatra, TravelGuru travel portals.
Skymet is betting big on weather forecast, and is expecting traders and travellers to celebrate both sunny and gloomy weather days.
Here’s some cheer for stranded travellers: the country’s first private sector weather forecasting cell is in talks with major credit card companies, including ABN-Amro, American Express and SBI to offer weather insurance policy for air travellers.
For a premium of Rs 250 per annum, a traveller could get a refund of Rs 4,000 for delays of more than 10 minutes due to weather parameters. A Rs 1,000 premium will cover travellers completely. According to Mr Jatin Singh, Managing Director, Skymet, issues of travel delays due to fog and rain are exaggerated by the media.
The insurance could soon be available on travel portals such as Yatra and TravelGuru as a retail insurance product. Skymet is also working with Weather Risk Management Services to create a weather insurance policy for New Delhi Power Ltd (NDPL).
Derivatives
With revenues Rs 1.26 crore annually, and growing at 80 per cent year on year since it started operationsin 2003, Skymet is also optimistic about weather derivatives.
“The Forward Markets Commission is considering allowing trading of weather derivatives, and when that happens we believe it will open up huge opportunities for us,” said Mr Singh. Weather derivatives, or the concept of weather as a tradeable commodity, covers for change in demand, say for example for energy companies which would be affected by reduced consumption from a warmer-than-usual winter.
Noida facility
With a team that includes 10 weather forecasters, The company’s Noida facility has been equipped with Weather Research Forecast (WRF) Model, capable of generating forecasts for resolutions as low as 3 km, providing forecasts for three days and general weather outlook for the next seven days.
Inaugurating the new outfit, Dr Jagadish Shukla, Distinguished Professor, Climate Dynamics, George Mason University, US and President, Institute of Global Environment and Society, said there were more than 450 companies in the US affiliated with the national weather service.
Skymet, however, does not have the support of the Indian Meteorological Department and Dr Shukla suggests, in the company release, that the Government create infrastructure and allow the private sector to customise and distribute forecast.
Already providing weather forecasts to Reliance Energy for its power distribution, Skymet expects more business to come from commodities, power, and weather derivatives.
Client base
The parent company, BK Consimpex Pvt Ltd, a technology provider of instrumentation, radars and their maintenance, has clients like the Indian Meteorological Department, the Indian Air Force, and Indian Space Research Organization amongst others.
The company now hopes to be a global player in weather software development and integration of world class instrumentation. The company is also looking to expand its business of flight briefing system offered to major international airports and all Air Force stations in India.
Source: The Hindu Business Line
More biz from commodities, power, weather derivatives.
Insurance may be on offer in Yatra, TravelGuru travel portals.
Skymet is betting big on weather forecast, and is expecting traders and travellers to celebrate both sunny and gloomy weather days.
Here’s some cheer for stranded travellers: the country’s first private sector weather forecasting cell is in talks with major credit card companies, including ABN-Amro, American Express and SBI to offer weather insurance policy for air travellers.
For a premium of Rs 250 per annum, a traveller could get a refund of Rs 4,000 for delays of more than 10 minutes due to weather parameters. A Rs 1,000 premium will cover travellers completely. According to Mr Jatin Singh, Managing Director, Skymet, issues of travel delays due to fog and rain are exaggerated by the media.
The insurance could soon be available on travel portals such as Yatra and TravelGuru as a retail insurance product. Skymet is also working with Weather Risk Management Services to create a weather insurance policy for New Delhi Power Ltd (NDPL).
Derivatives
With revenues Rs 1.26 crore annually, and growing at 80 per cent year on year since it started operationsin 2003, Skymet is also optimistic about weather derivatives.
“The Forward Markets Commission is considering allowing trading of weather derivatives, and when that happens we believe it will open up huge opportunities for us,” said Mr Singh. Weather derivatives, or the concept of weather as a tradeable commodity, covers for change in demand, say for example for energy companies which would be affected by reduced consumption from a warmer-than-usual winter.
Noida facility
With a team that includes 10 weather forecasters, The company’s Noida facility has been equipped with Weather Research Forecast (WRF) Model, capable of generating forecasts for resolutions as low as 3 km, providing forecasts for three days and general weather outlook for the next seven days.
Inaugurating the new outfit, Dr Jagadish Shukla, Distinguished Professor, Climate Dynamics, George Mason University, US and President, Institute of Global Environment and Society, said there were more than 450 companies in the US affiliated with the national weather service.
Skymet, however, does not have the support of the Indian Meteorological Department and Dr Shukla suggests, in the company release, that the Government create infrastructure and allow the private sector to customise and distribute forecast.
Already providing weather forecasts to Reliance Energy for its power distribution, Skymet expects more business to come from commodities, power, and weather derivatives.
Client base
The parent company, BK Consimpex Pvt Ltd, a technology provider of instrumentation, radars and their maintenance, has clients like the Indian Meteorological Department, the Indian Air Force, and Indian Space Research Organization amongst others.
The company now hopes to be a global player in weather software development and integration of world class instrumentation. The company is also looking to expand its business of flight briefing system offered to major international airports and all Air Force stations in India.
Source: The Hindu Business Line
Tuesday, July 24, 2007
LIC provides Janashree Bima Yojana for people below poverty line.
Life Insurance Corporation of India, the country's largest life insurance company, has received a cheque of Rs 22,23,18,500 crore from Rajasthan government for covering 22,23,815 people. These are the below poverty line (BPL) families in Rajasthan.This coverage is being given by the Janashree Bima Yojana (JBY).
LIC's JBY provides insurance cover for death due to natural and accidental cause. It also provides cover for accident resulting into total or permanent disability. Besides, the scheme also provides scholarship of Rs 1,200 per annum without any extra cost for maximum two children
LIC's JBY provides insurance cover for death due to natural and accidental cause. It also provides cover for accident resulting into total or permanent disability. Besides, the scheme also provides scholarship of Rs 1,200 per annum without any extra cost for maximum two children
AVIVA and PML joins hand
Aviva Life Insurance and region based financial services providers Paul Merchants Ltd (PML) have entered into a tie- up through which Aviva plans to increase the insurance penetration in the NRI markets. Aviva plans to sell its products like Life Long, Save Guard, Life Saver plus and pension plus to PML customers. Aviva is looking forward to using Paul Merchants’ network of over 100 branches and more than 10,000 sub-agents in India. PML will sell Aviva's products initially in Punjab, Haryana, UP and Delhi through about 50 outlets.
Yash Jagdhari, regional director (North), Bancassurance and Business Partnerships, Aviva has said that the company has entered into a referral arrangement with Paul Merchants and their products would be sold to their customers by our advisors pan India. Aviva will also be initiating this business plan in Punjab, Haryana, Delhi and Uttar Pradesh at present. And gradually the company will expand in the markets of South and East India.
The company reportedly has a strong presence in Punjab through their bancassurance tie-ups and direct sales force. Mr. Jagdhari has hinted long term and aggressive plan for Aviva India and tie-up with Paul Merchants, which would enable them to expand their reach to the NRI customers.
source:insuremagic.com
Yash Jagdhari, regional director (North), Bancassurance and Business Partnerships, Aviva has said that the company has entered into a referral arrangement with Paul Merchants and their products would be sold to their customers by our advisors pan India. Aviva will also be initiating this business plan in Punjab, Haryana, Delhi and Uttar Pradesh at present. And gradually the company will expand in the markets of South and East India.
The company reportedly has a strong presence in Punjab through their bancassurance tie-ups and direct sales force. Mr. Jagdhari has hinted long term and aggressive plan for Aviva India and tie-up with Paul Merchants, which would enable them to expand their reach to the NRI customers.
source:insuremagic.com
Monday, July 23, 2007
Insurance cos set to get more financial leeway
The Insurance Regulatory Development Authority (IRDA) is set to allow insurance companies to invest in a few more financial instruments including derivatives.The proposed move will enhance returns for policy holders.
Currently, insurance companies are allowed to invest in around 58 financial instruments. A broadbasing of the categories of investments to include derivativesis now on the cards. “For policy holders, the move will mean higher yields with better risk management”, said S V Mony, secretary general, Life Insurance Council.
IRDA had proposed delinking the norms governing investment of assets by insurance companies from the main Insurance Act and bringing it under IRDA regulations.
The regulator plans to make a few changes which do not need an amendment to the main Act. One such change includes adding a few more instruments to the investment category known as “other than approved securities, said C S Rao, chairman IRDA
Source: The Economic Times
Currently, insurance companies are allowed to invest in around 58 financial instruments. A broadbasing of the categories of investments to include derivativesis now on the cards. “For policy holders, the move will mean higher yields with better risk management”, said S V Mony, secretary general, Life Insurance Council.
IRDA had proposed delinking the norms governing investment of assets by insurance companies from the main Insurance Act and bringing it under IRDA regulations.
The regulator plans to make a few changes which do not need an amendment to the main Act. One such change includes adding a few more instruments to the investment category known as “other than approved securities, said C S Rao, chairman IRDA
Source: The Economic Times
Sunday, July 22, 2007
QBE AND RAJAN RAHEJA IN JV FOR GENERAL INS
21/July/2007
The QBE Insurance Group, Australian major -- has entered India's growing general insurance market by signing a joint venture agreement with diversified conglomerate Rajan Raheja Group.
According to sources, QBE will invest around seven million dollars initially for a 26 per cent stake in the JV, to operate in the Indian general insurance business.
A managing director will also be nominated by QBE and provide technical expertise. It has the option to increase its equity to 50 per cent ,if the Indian legislation permits so.
Frank O’Halloran, the QBE CEO has said that the group is excited about the opportunity to work in India 's rapidly growing general insurance market. He also expressed his delight on his partnership with the Rajan Raheja Group, which has extensive interests in India and a track record of successful joint ventures with foreign partners.
Subject to IRDA approval, the joint venture company expects to begin trading in early 2008
The QBE Insurance Group, Australian major -- has entered India's growing general insurance market by signing a joint venture agreement with diversified conglomerate Rajan Raheja Group.
According to sources, QBE will invest around seven million dollars initially for a 26 per cent stake in the JV, to operate in the Indian general insurance business.
A managing director will also be nominated by QBE and provide technical expertise. It has the option to increase its equity to 50 per cent ,if the Indian legislation permits so.
Frank O’Halloran, the QBE CEO has said that the group is excited about the opportunity to work in India 's rapidly growing general insurance market. He also expressed his delight on his partnership with the Rajan Raheja Group, which has extensive interests in India and a track record of successful joint ventures with foreign partners.
Subject to IRDA approval, the joint venture company expects to begin trading in early 2008
Saturday, July 21, 2007
3 entities proposed for pension fund managers
New Delhi, June 20 The committee formed by the Pension Fund Regulatory and Development Authority (PFRDA) has recommended the names of three public sector financial institutions as managers of pension funds under the New Pension Scheme (NPS).
Based on the overall evaluation, including technical and commercial parameters, the committee has found State Bank of India, UTI Asset Management Company Private Ltd and Life Insurance Corporation of India as the three best value bidders.
The three entities will now have to set up separate companies and the whole process of managing pension funds could start in the next four to six months.
IDBI Capital Market Services Ltd was the other company that was short-listed and had given the request for proposal (RFP) after seven companies had originally evinced interest when the PFRDA had called for applications for the role of pension fund managers.
“The report of the committee is under consideration by the PFRDA. The process of contract negotiations will begin shortly and we are hoping that the negotiations would be finalised by August 31,” Ms Meena Chaturvedi, Executive Director, PFRDA, told Business Line.
She, however, refused to give specific details on the recommendations of the committee.
“Since the report was submitted only on Thursday, it is too early to comment on the contents as we are still going through the document. But the committee was entrusted with the responsibility of evaluation of the proposals received from the eligible entities and to short-list the three best value bidders in terms of requirements (technical & commercial) of RFP and we are sure they have selected the best,” she added. Pension scheme
As per estimates, about five-lakh Central and state government employees have joined the scheme since it came into being on January 1, 2004, leading to accumulation of around Rs 1,700-crore pension fund corpus.
Under the NPS, employees have to contribute 10 per cent of their basic salary and dearness allowance, with a matching contribution from their employer.
This contributory system is in contrast to the earlier system, in which employees used to get defined returns.
The sponsors will have to offer alternative products to employees including risk-free options under which all funds would be invested in government securities, and share-market linked products with variable returns as well.
Meanwhile, the contract between PFRDA and National Securities Depository Limited (NSDL) is under finalisation and the work relating to CRA (central record keeping agency) activities will commence as soon as NSDL obtains the approval of SEBI to undertake this work.
source :Business Line
Based on the overall evaluation, including technical and commercial parameters, the committee has found State Bank of India, UTI Asset Management Company Private Ltd and Life Insurance Corporation of India as the three best value bidders.
The three entities will now have to set up separate companies and the whole process of managing pension funds could start in the next four to six months.
IDBI Capital Market Services Ltd was the other company that was short-listed and had given the request for proposal (RFP) after seven companies had originally evinced interest when the PFRDA had called for applications for the role of pension fund managers.
“The report of the committee is under consideration by the PFRDA. The process of contract negotiations will begin shortly and we are hoping that the negotiations would be finalised by August 31,” Ms Meena Chaturvedi, Executive Director, PFRDA, told Business Line.
She, however, refused to give specific details on the recommendations of the committee.
“Since the report was submitted only on Thursday, it is too early to comment on the contents as we are still going through the document. But the committee was entrusted with the responsibility of evaluation of the proposals received from the eligible entities and to short-list the three best value bidders in terms of requirements (technical & commercial) of RFP and we are sure they have selected the best,” she added. Pension scheme
As per estimates, about five-lakh Central and state government employees have joined the scheme since it came into being on January 1, 2004, leading to accumulation of around Rs 1,700-crore pension fund corpus.
Under the NPS, employees have to contribute 10 per cent of their basic salary and dearness allowance, with a matching contribution from their employer.
This contributory system is in contrast to the earlier system, in which employees used to get defined returns.
The sponsors will have to offer alternative products to employees including risk-free options under which all funds would be invested in government securities, and share-market linked products with variable returns as well.
Meanwhile, the contract between PFRDA and National Securities Depository Limited (NSDL) is under finalisation and the work relating to CRA (central record keeping agency) activities will commence as soon as NSDL obtains the approval of SEBI to undertake this work.
source :Business Line
GIC, PSU insurers axed from UTI Bank offer
The General Insurance Corporation (GIC), the country's only reinsurer, and the four government-owned general insurance companies, New India Assurance, Oriental Insurance, United India Insurance and National Insurance, will not be able to participate in the upcoming preferential offer being made by UTI Bank to its promoter shareholders.
A UTI Bank official said these companies had sold some shares of the bank after the extraordinary general meeting on June 25, which passed a resolution to make a preferential offer to its promoter shareholders.
Guidelines framed by the Securities & Exchange Board of India say that any shareholder that has sold shares six months prior to the date of a preferential offer cannot participate in the offer.
“Accordingly, they have been declared ineligible to subscribe to the preferential offer. However, they could approach Sebi to get an exemption,” said a senior UTI Bank official.
Confirming the development, the investment head of a public sector insurance company said, “We are not eligible for the preferential offer.”
Asked why his company had sold the UTI Bank shares, the official said, “The market was moving up. It was part of our regular transactions. We have to book capital gains.”
The GIC and the four insurance companies together hold 5 per cent in UTI Bank.
The bank was planning to mobilise over Rs 2,000 crore through the preferential allotment to its promoters — the Specified Undertaking of Unit Trust of India, the Life Insurance Corporation, the GIC and the four general insurers.
If GIC and the four insurance companies do not participate in the preferential offer, their stake in UTI Bank could come down from the current 5 per cent.
Source:Business Standard
Friday, July 20, 2007
Irda lists norms for closure of liaison insurance offices
Chennai, Jul 19 The Insurance Regulatory and Development Authority (Irda) has announced a set of norms for closure of liaison offices established in India by insurance companies registered outside India. Irda’s framework for approval of opening a liaison office of foreign insurance companies registered outside India is already in place.
As per the norms, the requests for closure of liaison office shall be submitted to IRDA in form Irda FIC - 2 attached as annexure ‘1’. The application for closure of liaison offices shall be submitted along with the documents including certified copy of Irda’s permission for establishing the branch/liaison office in India, a chartered accountant’s certificate indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant indicating the manner of disposal of assets, confirming that all liabilities in India including arrears of gratuity and other benefits to employees etc of the office have been either fully met or adequately provided for; confirming that no proceeds accruing from sources outside India has remained unrepatriated to India.
As per the guidelines, the insurance companies should also enclose the no-objection/tax clearance certificate from Income Tax authority for the remittance or an undertaking from the applicant and a certificate from the chartered accountant regarding undertaking to be obtained from a person making remittance of foreign exchange as advised by RBI from time to time and confirmation from the parent entity that no legal proceedings in any court in India are pending against the liaison office and there is no legal impediment to the closure/remittance.
Source: Financial Express
As per the norms, the requests for closure of liaison office shall be submitted to IRDA in form Irda FIC - 2 attached as annexure ‘1’. The application for closure of liaison offices shall be submitted along with the documents including certified copy of Irda’s permission for establishing the branch/liaison office in India, a chartered accountant’s certificate indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant indicating the manner of disposal of assets, confirming that all liabilities in India including arrears of gratuity and other benefits to employees etc of the office have been either fully met or adequately provided for; confirming that no proceeds accruing from sources outside India has remained unrepatriated to India.
As per the guidelines, the insurance companies should also enclose the no-objection/tax clearance certificate from Income Tax authority for the remittance or an undertaking from the applicant and a certificate from the chartered accountant regarding undertaking to be obtained from a person making remittance of foreign exchange as advised by RBI from time to time and confirmation from the parent entity that no legal proceedings in any court in India are pending against the liaison office and there is no legal impediment to the closure/remittance.
Source: Financial Express
Insurers cut benefits on mediclaim
New Delhi: If your company's group mediclaim is all you rely on for your medical expenses, it's time to wake up. You could be in for less than what you bargained for as insurers have raised premiums on such policies and are cutting benefits to keep costs down.
Step by step towards a big shock. Arun, an MNC bank employee, depends solely on his company's mediclaim. Insured for Rs 5 lakh, he believes the cover is enough protection.
Arun says, "I haven't even thought about taking the mediclaim because the sum assured is quite sufficient to cover me and my family."
But it might not. Most corporates have been knocking off several benefits from group policies to keep down costs.
Karan Chopra from ICICI Lombard says, "A lot of riders and benefits are being removed from group covers to keep premiums low. Riders like pre-existing illness covers and covers for dependents are being reconsidered."
This year the premium on group mediclaim policies rose 15 per cent to 20 per cent. The claim ratio of these policies is almost 100 per cent. That means for every Rs 100 insurance companies collect as premium, they pay out an equal amount, making it a no-profit proposition.
Until 2006, insurers used premiums from fire and engineering policies to subsidise group mediclaim policies. But after de-tariffing this year, fire and engineering premiums have fallen sharply.
So, mediclaim policies are being issued according to their claim ratios. Experts say it's time people started looking for their own covers.
Source: www.IBNlive.com
Step by step towards a big shock. Arun, an MNC bank employee, depends solely on his company's mediclaim. Insured for Rs 5 lakh, he believes the cover is enough protection.
Arun says, "I haven't even thought about taking the mediclaim because the sum assured is quite sufficient to cover me and my family."
But it might not. Most corporates have been knocking off several benefits from group policies to keep down costs.
Karan Chopra from ICICI Lombard says, "A lot of riders and benefits are being removed from group covers to keep premiums low. Riders like pre-existing illness covers and covers for dependents are being reconsidered."
This year the premium on group mediclaim policies rose 15 per cent to 20 per cent. The claim ratio of these policies is almost 100 per cent. That means for every Rs 100 insurance companies collect as premium, they pay out an equal amount, making it a no-profit proposition.
Until 2006, insurers used premiums from fire and engineering policies to subsidise group mediclaim policies. But after de-tariffing this year, fire and engineering premiums have fallen sharply.
So, mediclaim policies are being issued according to their claim ratios. Experts say it's time people started looking for their own covers.
Source: www.IBNlive.com
Household insurance cover from Reliance
With monsoons in full swing and "Act of God" perils ready to strike, a householders’ insurance plan is a good idea.
Reliance General Insurance Company is in the process of unveiling its first over-the-counter household policy, christened "Reliance Home Protect", with added benefits with coverage of Rs 1-5 lakh. The insurer expects a premium of Rs 150 crore from the product in the first year itself.
The company, in the next stage, is preparing to target the rural market with its existing basket of products, including health and tailor-made farmer package policies. It also aims to have 65 per cent of its premium from the retail segment alone.
Home insurance contributes less than 1 per cent to the Rs 25,000 crore general insurance business in India. Incidentally, only a little over 2 per cent of the 3 crore households in the country have household insurance.
A household policy covers contents and valuables, which may be affected due to various natural calamities such as fire or floods or manmade causes such as thefts.
K A Somasekharan, CEO, Reliance General said, "Most existing household insurance policies are cumbersome as far as their procedures are concerned. We felt that a simple and easily worded mass policy with very competitive rates was needed. People often take cover for buildings leaving the content and valuables uncovered. The lack of hassle-free products has limited the growth of this segment".
"Apart from covering contents, valuables and gadgets on a first loss basis, add-on features like cover for goods in transit, loss of title good expenses, personal accident benefits, cover loss of passport expenses, children education grant would be included," Somasekharan said.
Asked whether underwriting will be an issue, the CEO pointed out: “We have internal limits like a maximum of Rs 1 lakh for fire and allied perils, Rs 1 lakh for burglary cover and lower limits for say title deeds or passport".
Source: DNA Money
Reliance General Insurance Company is in the process of unveiling its first over-the-counter household policy, christened "Reliance Home Protect", with added benefits with coverage of Rs 1-5 lakh. The insurer expects a premium of Rs 150 crore from the product in the first year itself.
The company, in the next stage, is preparing to target the rural market with its existing basket of products, including health and tailor-made farmer package policies. It also aims to have 65 per cent of its premium from the retail segment alone.
Home insurance contributes less than 1 per cent to the Rs 25,000 crore general insurance business in India. Incidentally, only a little over 2 per cent of the 3 crore households in the country have household insurance.
A household policy covers contents and valuables, which may be affected due to various natural calamities such as fire or floods or manmade causes such as thefts.
K A Somasekharan, CEO, Reliance General said, "Most existing household insurance policies are cumbersome as far as their procedures are concerned. We felt that a simple and easily worded mass policy with very competitive rates was needed. People often take cover for buildings leaving the content and valuables uncovered. The lack of hassle-free products has limited the growth of this segment".
"Apart from covering contents, valuables and gadgets on a first loss basis, add-on features like cover for goods in transit, loss of title good expenses, personal accident benefits, cover loss of passport expenses, children education grant would be included," Somasekharan said.
Asked whether underwriting will be an issue, the CEO pointed out: “We have internal limits like a maximum of Rs 1 lakh for fire and allied perils, Rs 1 lakh for burglary cover and lower limits for say title deeds or passport".
Source: DNA Money
Private players look at hinterland to drive growth
The scorching pace of growth in the life insurance business, along with a two-way competition between private players and the Life Insurance Corporation (LIC) and among the 16 private players themselves, is likely to see a 25-50 per cent increase in number of branches in the current year.
Private companies are expected to blitz the market with 50,000-1,00,000 new agents, a bulk of them chipping away at the monopoly of LIC in smaller cities and towns.
Eyeing a big growth in selling volumes and increase in ticket size of policies, private biggies such as SBI Life, HDFC Standard Life, Bajaj Allianz, Kotak Insurance, ICICI PruLife, Aviva, Max NewYork Life and others have been sizing up aggressive plans for major expansion to Tier II and III markets. Many feel that almost 50-60 per cent of sales can come in from these towns.
With the aggressive new entrants, LIC, the strongest among life companies, is likely to face threats to its near-monopolistic hold in smaller towns and cities.
The new entrants are sharpening their weapons for an assault on LIC's life insurance empire. Bert Paterson, managing director, Aviva Insurance said: "We've extended to 187 branches covering the full geographical spread of the country, including rural areas. We are reaching out to customers in close to 500 locations and are successfully following a dual distribution approach".
Trevor Bull, managing director, Tata AIG Life, also has a similar strategy. "As part of our overall strategy of expansion, we wish to have a major presence across the country.
The second stage of expansion will be largely in the second and third tier towns," he said.
According to Sanjay Tripathy, head marketing, HDFC Standard Life, research among people in smaller towns indicated that customers are much more open to a private insurer these days, mainly due to brand awareness and their high disposable incomes. The company's objective is to be one of the top-most considered brands in all non-metro markets in India.
A recent report by Macquarie Research Equities points out that LIC is being challenged on its own turf.
"In the last two years, the private life insurers have been rolling out to the smaller towns, with Bajaj Allianz having set the trend two years ago. We think this will put LIC under more pressure.
"Anecdotal evidence suggests that private players tend to make a large impact on LIC's market on initial entry into a particular geography. This process is intensifying as most of the major players are on a large distribution push through FY3/07 and FY3/08E," the report stated.
Source: DNA Money
Private companies are expected to blitz the market with 50,000-1,00,000 new agents, a bulk of them chipping away at the monopoly of LIC in smaller cities and towns.
Eyeing a big growth in selling volumes and increase in ticket size of policies, private biggies such as SBI Life, HDFC Standard Life, Bajaj Allianz, Kotak Insurance, ICICI PruLife, Aviva, Max NewYork Life and others have been sizing up aggressive plans for major expansion to Tier II and III markets. Many feel that almost 50-60 per cent of sales can come in from these towns.
With the aggressive new entrants, LIC, the strongest among life companies, is likely to face threats to its near-monopolistic hold in smaller towns and cities.
The new entrants are sharpening their weapons for an assault on LIC's life insurance empire. Bert Paterson, managing director, Aviva Insurance said: "We've extended to 187 branches covering the full geographical spread of the country, including rural areas. We are reaching out to customers in close to 500 locations and are successfully following a dual distribution approach".
Trevor Bull, managing director, Tata AIG Life, also has a similar strategy. "As part of our overall strategy of expansion, we wish to have a major presence across the country.
The second stage of expansion will be largely in the second and third tier towns," he said.
According to Sanjay Tripathy, head marketing, HDFC Standard Life, research among people in smaller towns indicated that customers are much more open to a private insurer these days, mainly due to brand awareness and their high disposable incomes. The company's objective is to be one of the top-most considered brands in all non-metro markets in India.
A recent report by Macquarie Research Equities points out that LIC is being challenged on its own turf.
"In the last two years, the private life insurers have been rolling out to the smaller towns, with Bajaj Allianz having set the trend two years ago. We think this will put LIC under more pressure.
"Anecdotal evidence suggests that private players tend to make a large impact on LIC's market on initial entry into a particular geography. This process is intensifying as most of the major players are on a large distribution push through FY3/07 and FY3/08E," the report stated.
Source: DNA Money
Tata AIG launches ULIP
Tata AIG Life Insurance Company has launched ‘InvestAssure Gold,’ a whole life unit-linked insurance plan (ULIP), in Chennai. Mr Joydeep Roy, Chief Distribution Officer, said that the product offered the advantage of combining protection and tax advantages with the prospect of investing in different kinds of securities through multiple fund options. There is the option to pay premiums for only five years, besides the enhanced entry age up to 70, to ensure that the elderly population is not excluded, he said. The policy provides life cover till the age of 100. He said that nearly 55 to 60 per cent of the premium was through sale of ULIPs while the balance came from term, pension, health and endowment products. —
Source: The Hindu Business Line
Source: The Hindu Business Line
IRDA balking at migration to new solvency norms
Non-acceptance by some insurers; Regulator opts for step-by-step approach
Bangalore, July 19 Implementation of Solvency II guidelines prescribed by the International Association of Insurance Supervisors (IAIS) is likely to be delayed in the country.
The Insurance Regulatory and Development Authority (IRDA) made it clear that it was no hurry to implement Solvency II guidelines.
Its Chairman, Mr C.S. Rao, said: “We are in no hurry to immediately implement the guidelines.”
The IAIS final guidelines released in February this year address material risks that insurers face — underwriting risk, market risk, credit risk and operational risk.
Solvency margin is the excess of the value of assets and capital that non-life insurers have to maintain over the insured liabilities.
Solvency regime
Under the current solvency regime, insurers are expected to maintain a 150 per cent margin over the insured liabilities. Solvency II however, does not imply any change in the margin. The new guidelines make the solvency margins dynamic.
But according to industry sources, the regulator’s balking at migration to Solvency II guidelines has more to do with the ground situation in the country. This implies that some of the insurers are simply not ready for migration. The situation is somewhat identical to the situation faced by the banking sector’s migration to the Basel II capital standards. Solvency II is the insurer’s equivalent of the Basel II.
Step-by-step approach
Instead, the insurance regulator has opted for step-by-step approach. As the first step, life insurers are now expected to file their audited reports on solvency compliance on a quarterly basis effective from this financial year. For the non-life sector, the IRDA has indicated that the reporting would be done on a half-yearly basis, though this is likely to begin only after the completion of tariff deregulation.
However, the public sector Oriental Insurance Company Chairman and Managing Director, Mr M. Ramadoss, said: “We are ready for moving into half-yearly reporting. This is not an issue. It is up the regulator to decide the timeframe.”
Complete transition
The migration though would still be short of a complete transition to Solvency II. This is because the asset valuation is currently done on a year-end basis. A half-yearly solvency regime would imply that the asset valuations would also have to be on similar terms.
“Yes valuation of investments would have to be done on a half-yearly basis. Equities could be done on a half-yearly basis. For Government securities we need a regulatory direction,” Mr Ramadoss said.
Government securities are still valued on a book value basis by the insurers.
Moreover, some of the western countries that have implemented advanced management information solutions (MIS) are also yet to fully accept the IAIS guidelines, the sources added.
The absence of such MIS in the Indian insurance industry is a major stumbling block for migration to new solvency guidelines.
Only the private sector is in readiness for the migration, though they account for only about 30 per cent of the domestic market.
Source: The Hindu Business Line
Bangalore, July 19 Implementation of Solvency II guidelines prescribed by the International Association of Insurance Supervisors (IAIS) is likely to be delayed in the country.
The Insurance Regulatory and Development Authority (IRDA) made it clear that it was no hurry to implement Solvency II guidelines.
Its Chairman, Mr C.S. Rao, said: “We are in no hurry to immediately implement the guidelines.”
The IAIS final guidelines released in February this year address material risks that insurers face — underwriting risk, market risk, credit risk and operational risk.
Solvency margin is the excess of the value of assets and capital that non-life insurers have to maintain over the insured liabilities.
Solvency regime
Under the current solvency regime, insurers are expected to maintain a 150 per cent margin over the insured liabilities. Solvency II however, does not imply any change in the margin. The new guidelines make the solvency margins dynamic.
But according to industry sources, the regulator’s balking at migration to Solvency II guidelines has more to do with the ground situation in the country. This implies that some of the insurers are simply not ready for migration. The situation is somewhat identical to the situation faced by the banking sector’s migration to the Basel II capital standards. Solvency II is the insurer’s equivalent of the Basel II.
Step-by-step approach
Instead, the insurance regulator has opted for step-by-step approach. As the first step, life insurers are now expected to file their audited reports on solvency compliance on a quarterly basis effective from this financial year. For the non-life sector, the IRDA has indicated that the reporting would be done on a half-yearly basis, though this is likely to begin only after the completion of tariff deregulation.
However, the public sector Oriental Insurance Company Chairman and Managing Director, Mr M. Ramadoss, said: “We are ready for moving into half-yearly reporting. This is not an issue. It is up the regulator to decide the timeframe.”
Complete transition
The migration though would still be short of a complete transition to Solvency II. This is because the asset valuation is currently done on a year-end basis. A half-yearly solvency regime would imply that the asset valuations would also have to be on similar terms.
“Yes valuation of investments would have to be done on a half-yearly basis. Equities could be done on a half-yearly basis. For Government securities we need a regulatory direction,” Mr Ramadoss said.
Government securities are still valued on a book value basis by the insurers.
Moreover, some of the western countries that have implemented advanced management information solutions (MIS) are also yet to fully accept the IAIS guidelines, the sources added.
The absence of such MIS in the Indian insurance industry is a major stumbling block for migration to new solvency guidelines.
Only the private sector is in readiness for the migration, though they account for only about 30 per cent of the domestic market.
Source: The Hindu Business Line
Rajan Raheja, Australia’s QBE setting up insurance co
Mumbai, Jul 19 The Rajan Raheja Group (RRG) and the Australian QBE Insurance Group (QBE) have signed a joint venture agreement to establish a general insurance company in India.
QBE will hold a 26 per cent equity stake in the joint venture company, while Prism Cement Ltd, an RRG company, will hold the remaining 74 per cent stake.
QBE will leverage its expertise in technical insurance functions as well as process and systems.
RRG will assist in distribution and other areas through its knowledge of the Indian market, said a press release.
QBE is Australia’s largest international general insurance and reinsurance group. It has offices in 45 countries and is listed on the Australian Stock Exchange with a market capitalisation of approximately $23 billion.
Lineage
The company traces its origins back to North Queensland Insurance Company Ltd, founded in Australia in 1886.
Interestingly, its antecedent companies had insurance operations in India for close to 50 years until the sector was nationalised in 1972.
The Rajan Raheja Group has interests in a range of industries including cement, automotive and industrial batteries, real estate development, ceramic tiles, ready-mixed concrete, life insurance, asset management, retailing, cable television, publishing, petrochemicals and software.
“This entry into the general insurance market in India is part of QBE’s ongoing strategy of product and geographic diversification and strengthens RRG’s interest in the financial services sector, which currently includes shareholdings in ING Vysya Life Insurance and ING Mutual Fund,” said the release.
The licensing of the company is subject to approval by the Insurance Regulatory and Development Authority and other applicable approvals.
According to the release, Mr Frank O’Halloran, QBE’s Group Chief Executive Officer, said: “We are delighted to partner with the Rajan Raheja Group which has extensive interests in India and a track record of successful joint ventures with foreign partners.”
Source: The Hindu Business Line
QBE will hold a 26 per cent equity stake in the joint venture company, while Prism Cement Ltd, an RRG company, will hold the remaining 74 per cent stake.
QBE will leverage its expertise in technical insurance functions as well as process and systems.
RRG will assist in distribution and other areas through its knowledge of the Indian market, said a press release.
QBE is Australia’s largest international general insurance and reinsurance group. It has offices in 45 countries and is listed on the Australian Stock Exchange with a market capitalisation of approximately $23 billion.
Lineage
The company traces its origins back to North Queensland Insurance Company Ltd, founded in Australia in 1886.
Interestingly, its antecedent companies had insurance operations in India for close to 50 years until the sector was nationalised in 1972.
The Rajan Raheja Group has interests in a range of industries including cement, automotive and industrial batteries, real estate development, ceramic tiles, ready-mixed concrete, life insurance, asset management, retailing, cable television, publishing, petrochemicals and software.
“This entry into the general insurance market in India is part of QBE’s ongoing strategy of product and geographic diversification and strengthens RRG’s interest in the financial services sector, which currently includes shareholdings in ING Vysya Life Insurance and ING Mutual Fund,” said the release.
The licensing of the company is subject to approval by the Insurance Regulatory and Development Authority and other applicable approvals.
According to the release, Mr Frank O’Halloran, QBE’s Group Chief Executive Officer, said: “We are delighted to partner with the Rajan Raheja Group which has extensive interests in India and a track record of successful joint ventures with foreign partners.”
Source: The Hindu Business Line
Apollo Hospitals to launch health insurance scheme
Jointly with Germany-based DKV Health Insurance
Apollo Hospitals will be launching, on August 8, a health insurance scheme jointly with Germany-based DKV Health Insurance with an initial corpus of Rs 100 crore, said Dr Prathap C. Reddy, Chairman, Apollo Hospitals, here on Thursday.
To be inaugurated by Union Finance Minister, Mr P. Chidambaram, the scheme would bring in new and innovative packages with a focus, especially on school children, he said in an exclusive interview to Business Line .
Speaking further, Dr Reddy said that Apollo Hospitals has been trying to build chest pain centres across the country where primary care would be ensured.
The centres, to be manned by doctors from Apollo, would be coming up within a radius of 50 miles from a major hospital identified in an area where further treatment would be possible.
Hundred centres have been planned to be established before September this year, he mentioned. He underscored the need to bring about awareness on preventive check up.
Asked on global expansion plans of Apollo, Dr Reddy said that they were in the look out for acquisitions in South East Asia and China and were not in a hurry, as right pricing needs to be ensured for better and cost effective delivery of health care.
Referring to Madurai Apollo Speciality Hospitals, he said that plans are underway to make the 300 beds plus hospital, a Centre of Excellence in Cardiology and Cancer together with research. Lands have been identified but are to be finalised yet, for the proposed cancer institute to be established in association with CBCC, US, in the city, he added.
Source: The Hindu Business Line
Apollo Hospitals will be launching, on August 8, a health insurance scheme jointly with Germany-based DKV Health Insurance with an initial corpus of Rs 100 crore, said Dr Prathap C. Reddy, Chairman, Apollo Hospitals, here on Thursday.
To be inaugurated by Union Finance Minister, Mr P. Chidambaram, the scheme would bring in new and innovative packages with a focus, especially on school children, he said in an exclusive interview to Business Line .
Speaking further, Dr Reddy said that Apollo Hospitals has been trying to build chest pain centres across the country where primary care would be ensured.
The centres, to be manned by doctors from Apollo, would be coming up within a radius of 50 miles from a major hospital identified in an area where further treatment would be possible.
Hundred centres have been planned to be established before September this year, he mentioned. He underscored the need to bring about awareness on preventive check up.
Asked on global expansion plans of Apollo, Dr Reddy said that they were in the look out for acquisitions in South East Asia and China and were not in a hurry, as right pricing needs to be ensured for better and cost effective delivery of health care.
Referring to Madurai Apollo Speciality Hospitals, he said that plans are underway to make the 300 beds plus hospital, a Centre of Excellence in Cardiology and Cancer together with research. Lands have been identified but are to be finalised yet, for the proposed cancer institute to be established in association with CBCC, US, in the city, he added.
Source: The Hindu Business Line
Insurers get core equity leeway
Insurance companies will have more infrastructure firms in their equity investment portfolio soon.
At a meeting with the finance ministry, the Insurance Regulatory and Development Authority (Irda) has agreed to allow insurance companies to invest in equities of non-dividend-paying infrastructure companies.
Currently, an insurance company is allowed to invest in an infrastructure company only if the latter pays dividend not less than 4 per cent for at least seven out of nine immediately preceding years.
“Relaxation will enable investment in such companies on the basis of project risk assessment and developers’ risk-rating,” the Irda said.
The Irda is also planning to allow insurance companies to invest in highly-rated mortgage-backed securities and securitised assets with underlying infrastructure assets. The regulator may also allow insurance companies to invest in equity derivatives to hedge risks.
An executive of a public sector insurance company said life insurance companies looked for long-term investments for better asset-liability management. The relaxation in norms would give them more avenues to invest in long-term equity instruments.
“Mortgage-backed securities are like debt papers and give a minimum assured return. This instrument is suitable for general insurance companies, whose funds are short-term in nature,” a senior executive of Oriental Insurance Company said.
Source: Business Standard
At a meeting with the finance ministry, the Insurance Regulatory and Development Authority (Irda) has agreed to allow insurance companies to invest in equities of non-dividend-paying infrastructure companies.
Currently, an insurance company is allowed to invest in an infrastructure company only if the latter pays dividend not less than 4 per cent for at least seven out of nine immediately preceding years.
“Relaxation will enable investment in such companies on the basis of project risk assessment and developers’ risk-rating,” the Irda said.
The Irda is also planning to allow insurance companies to invest in highly-rated mortgage-backed securities and securitised assets with underlying infrastructure assets. The regulator may also allow insurance companies to invest in equity derivatives to hedge risks.
An executive of a public sector insurance company said life insurance companies looked for long-term investments for better asset-liability management. The relaxation in norms would give them more avenues to invest in long-term equity instruments.
“Mortgage-backed securities are like debt papers and give a minimum assured return. This instrument is suitable for general insurance companies, whose funds are short-term in nature,” a senior executive of Oriental Insurance Company said.
Source: Business Standard
Tata AIG to ramp up operations in TN, Kerala
Tata AIG General Insurance Company Limited (Tata AIG), a joint venture between the Tata group and American International Group, Inc. (AIG), is to open more outlets in Kerala and Tamil Nadu.
V Vendhan, head - branch operations, Tata AIG, on the sidelines of opening a distributor office at Trichy recently said the company planned to open extension branches at Salem and Erode before month end in Tamil Nadu.
Similarly, in Kerala it would open branches at Thiruvananthapuram, Palakad, Thrissur and Kozhikode of which at least two will come up by August end.
The southern region comprising Kerala, Tamil Nadu and Puducherry collected about Rs 70 crore premium in the year 2006-07 and for the current fiscal, this is expected to touch Rs 80 crore, added Vendhan.
Source: Business Standard
V Vendhan, head - branch operations, Tata AIG, on the sidelines of opening a distributor office at Trichy recently said the company planned to open extension branches at Salem and Erode before month end in Tamil Nadu.
Similarly, in Kerala it would open branches at Thiruvananthapuram, Palakad, Thrissur and Kozhikode of which at least two will come up by August end.
The southern region comprising Kerala, Tamil Nadu and Puducherry collected about Rs 70 crore premium in the year 2006-07 and for the current fiscal, this is expected to touch Rs 80 crore, added Vendhan.
Source: Business Standard
Wednesday, July 18, 2007
More home loan borrowers opting for life cover
Mumbai: More home loan borrowers are opting for creditor life insurance. Major mortgage lenders say that 25 per cent to 50 per cent of the borrowers are now insured.
Under a loan cover term assurance plan, the insurer pays the outstanding loan amount in case of death or disability of the borrower.
SBI clients
Five years ago, SBI Life Insurance introduced the home loan (creditor) life insurance cover and has been selling it on State Bank of India’s home loans. Today, half of SBI’s home loan borrowers are protected by insurance.
"Around 50 per cent of SBI’s home loan portfolio is covered by insurance. As old loan accounts are expiring, the coverage of insurance is increasing as awareness has increased among new borrowers," said a senior SBI official.
SBI’s current outstanding home loan portfolio stands at Rs 38,000 crore.
Besides, its parent State Bank of India, SBI Life has tie-ups with Dewan Housing Finance and other banks such as Union Bank of India and Federal Bank.
"SBI Life Insurance has covered a total of 6.5 lakh home loan borrowers. The awareness of such insurance has increased significantly over the last two years," said U.S. Roy, MD and CEO, SBI Life.
ICICI Prudential Life Insurance introduced the product two-and-half years ago and has a tie-up with home loan market leader ICICI Bank. The company is seeing a strong year-on-year growth of 250 per cent in terms of premium from this product.
“There has been significant increase in real estate prices in the past five to six years which has prompted people to buy insurance,” said Pranav Mishra, Senior Vice-President, ICICI Prudential Life Insurance.
Changing trend
“Earlier, those who were 40 plus were buying property and since they had the capital, they were taking loans for only 50-60 per cent of the total amount. Now, more people in their late 20s and 30s are buying property and taking loans for 80-90 per cent of the amount, with repayment periods extending to 20 years,” he adds.
Under ICICI Prudential’s plan, the single premium is around Rs 27,000 on a Rs 20-lakh loan.
Deepak Satwalekar, MD and CEO, HDFC Standard Life, said: “We are working with HDFC to look at customers who are with us at least for a couple of years.”
HDFC’s outstanding home loan portfolio is at Rs 56,512 crore as on March 31, 2007 and around 20 per cent of it is covered by insurance.
Until 2003-04, 100 per cent of LIC Housing Finance’s portfolio was insured, as taking a life insurance policy (equivalent to the amount of the loan) had been made mandatory for borrowers.
"Since it is no longer mandatory, the proportion has slightly come down. But most borrowers still opt for insurance," said an LIC Housing Finance official.
Source: Sify Insurance News
Under a loan cover term assurance plan, the insurer pays the outstanding loan amount in case of death or disability of the borrower.
SBI clients
Five years ago, SBI Life Insurance introduced the home loan (creditor) life insurance cover and has been selling it on State Bank of India’s home loans. Today, half of SBI’s home loan borrowers are protected by insurance.
"Around 50 per cent of SBI’s home loan portfolio is covered by insurance. As old loan accounts are expiring, the coverage of insurance is increasing as awareness has increased among new borrowers," said a senior SBI official.
SBI’s current outstanding home loan portfolio stands at Rs 38,000 crore.
Besides, its parent State Bank of India, SBI Life has tie-ups with Dewan Housing Finance and other banks such as Union Bank of India and Federal Bank.
"SBI Life Insurance has covered a total of 6.5 lakh home loan borrowers. The awareness of such insurance has increased significantly over the last two years," said U.S. Roy, MD and CEO, SBI Life.
ICICI Prudential Life Insurance introduced the product two-and-half years ago and has a tie-up with home loan market leader ICICI Bank. The company is seeing a strong year-on-year growth of 250 per cent in terms of premium from this product.
“There has been significant increase in real estate prices in the past five to six years which has prompted people to buy insurance,” said Pranav Mishra, Senior Vice-President, ICICI Prudential Life Insurance.
Changing trend
“Earlier, those who were 40 plus were buying property and since they had the capital, they were taking loans for only 50-60 per cent of the total amount. Now, more people in their late 20s and 30s are buying property and taking loans for 80-90 per cent of the amount, with repayment periods extending to 20 years,” he adds.
Under ICICI Prudential’s plan, the single premium is around Rs 27,000 on a Rs 20-lakh loan.
Deepak Satwalekar, MD and CEO, HDFC Standard Life, said: “We are working with HDFC to look at customers who are with us at least for a couple of years.”
HDFC’s outstanding home loan portfolio is at Rs 56,512 crore as on March 31, 2007 and around 20 per cent of it is covered by insurance.
Until 2003-04, 100 per cent of LIC Housing Finance’s portfolio was insured, as taking a life insurance policy (equivalent to the amount of the loan) had been made mandatory for borrowers.
"Since it is no longer mandatory, the proportion has slightly come down. But most borrowers still opt for insurance," said an LIC Housing Finance official.
Source: Sify Insurance News
Tata AIG to strengthen branch network by Aug 2007
Chennai: The Tata AIG Life Insurance company would strengthen its branch network to 205 by the end of August next, as against the existing 169 branches, according to Company's Chief Distribution Officer, Joydeep Roy and Sr Vice President, Investments, Prasun Gajri.
Talking to newspersons here today, soon after the launch of company's nationwide campaign for Invest Assure gold, a whole life unit-linked Insurance solution years, they said Invest Assure gold blends in protection and tax advantages of Life Insurance with attraction of investments in assets through multiple fund options upto 100 years.
They said the product is a complete and comprehensive insurance plan which precludes the investors' need to look for more than one product to satisfy his financial needs.
They said the new product would have five-fund options, namely whole life mid cap equity fuind, whole life aggressive growth fund, whole life stable growth fund, whole life income fund and whole life short-term fixed income fund and the policy holders could choose any one.
They said customers could apply for their policies till attaining the age of 70 and can enjoy protection for their entire life, till he becomes 100-year-old. The policy could be availed of 30 days from birth for 70 years.
They said apart from death and maturity benefits, the product provides the policy holder the option to pay premium only for five years to avail life-cover up for investors upto 100 years. The investors could either withdraw money when the need arises or invest surplus money to further augment his corpus, they added.
The premium paid under this policy is eligible for tax deduction, they said.
At present the company is having 23400 advisors (agents) and 13,000 business associates, they added.
Source: Financial Express
Talking to newspersons here today, soon after the launch of company's nationwide campaign for Invest Assure gold, a whole life unit-linked Insurance solution years, they said Invest Assure gold blends in protection and tax advantages of Life Insurance with attraction of investments in assets through multiple fund options upto 100 years.
They said the product is a complete and comprehensive insurance plan which precludes the investors' need to look for more than one product to satisfy his financial needs.
They said the new product would have five-fund options, namely whole life mid cap equity fuind, whole life aggressive growth fund, whole life stable growth fund, whole life income fund and whole life short-term fixed income fund and the policy holders could choose any one.
They said customers could apply for their policies till attaining the age of 70 and can enjoy protection for their entire life, till he becomes 100-year-old. The policy could be availed of 30 days from birth for 70 years.
They said apart from death and maturity benefits, the product provides the policy holder the option to pay premium only for five years to avail life-cover up for investors upto 100 years. The investors could either withdraw money when the need arises or invest surplus money to further augment his corpus, they added.
The premium paid under this policy is eligible for tax deduction, they said.
At present the company is having 23400 advisors (agents) and 13,000 business associates, they added.
Source: Financial Express
Reliance General bets on retail
MUMBAI, JULY 16: Reliance General Insurance, a fully owned company of Anil Dhirubhai Ambani Group(ADAG) is betting big on retail business.
The company, which has earned Rs 252 crore, the highest incremental premium among the general insurance companies in first two months of the fiscal, has mobilised almost 50% from its retail exposure during the period.
Some companies have witnessed a slow down or negative growth during this period.
“Our recently launched health policy has done well and 40% of the the total premium has come from motor,’’ said K A Somasekharan, president and chief executive officer of Reliance General Insurance.
The health policy has already covered 1,50,000 families
The company which has over 100 offices is adding another 115 offices by September.
“After September I would apply for more branch licenses,’’ he said adding that the company is equally expanding its manpower base.
Going forward the company is focusing on tier I and tier II cities.
Turning its focus on untapped home insurance market the company has launched its hassle free home insurance policy on Monday.
With premiums ranging from Rs 497 to Rs 3,799 the over-the-counter-householders policy includes personal accident policy, provision for paying six equated monthly installments against housing loan in case of disability or death of the policy holder.
It is the first policy to cover loss of passport expenses, loss of goods in transit and loss of title deed expenses in case of their looses in home. The policy is available at a fixed price of price of Rs 499 for Standard plan, Rs 799 for Silver plan, Rs 1799 for Gold plan and Rs 3799 for Platinum plan for a cover upto Rs 5 lakh.
Home Insurance contributes less than 1% of total general insurance in the country.
Just over 2 % of the 3 crore households have household insurance in the country.Of late increasing incident of natural hazards, accidents and gaining crime rate pose grave threat to properties and lives.
Source: Financial Express
The company, which has earned Rs 252 crore, the highest incremental premium among the general insurance companies in first two months of the fiscal, has mobilised almost 50% from its retail exposure during the period.
Some companies have witnessed a slow down or negative growth during this period.
“Our recently launched health policy has done well and 40% of the the total premium has come from motor,’’ said K A Somasekharan, president and chief executive officer of Reliance General Insurance.
The health policy has already covered 1,50,000 families
The company which has over 100 offices is adding another 115 offices by September.
“After September I would apply for more branch licenses,’’ he said adding that the company is equally expanding its manpower base.
Going forward the company is focusing on tier I and tier II cities.
Turning its focus on untapped home insurance market the company has launched its hassle free home insurance policy on Monday.
With premiums ranging from Rs 497 to Rs 3,799 the over-the-counter-householders policy includes personal accident policy, provision for paying six equated monthly installments against housing loan in case of disability or death of the policy holder.
It is the first policy to cover loss of passport expenses, loss of goods in transit and loss of title deed expenses in case of their looses in home. The policy is available at a fixed price of price of Rs 499 for Standard plan, Rs 799 for Silver plan, Rs 1799 for Gold plan and Rs 3799 for Platinum plan for a cover upto Rs 5 lakh.
Home Insurance contributes less than 1% of total general insurance in the country.
Just over 2 % of the 3 crore households have household insurance in the country.Of late increasing incident of natural hazards, accidents and gaining crime rate pose grave threat to properties and lives.
Source: Financial Express
New portal on insurance
Ram Informatics Ltd will be launching InsuranceOnline.com, a portal to cater to the needs of general public, insurance agents, brokers and other professionals. The portal would offer quick policy search, LIC forms, policy serving matters, value-added services such as policy marketing aspects besides updated information on insurance industry, according to a release. —
Source: The Hindu Business Line
Source: The Hindu Business Line
Public sector non-life insurers comply with management ratio
Bangalore, July 16 For the first time this decade, public sector non-life insurance companies have complied with the statutorily prescribed management ratios.
The ratio is 19.5 per cent for non-life insurers under section 40C of the Insurance Act of 1938. The management ratio is a prescribed cost cap on wages, dividends and commissions. Till 2005-06 this ratio ranged between 23 and 25 per cent. But in 2006-07, PSU insurers have sharply pared it down to about 19.1 per cent. This was despite the high dividend payouts to its shareholders, entirely government.
Reliable sources said that the PSU insurers had largely managed to contain their costs during the year. However, in the case of private sector, the ratios are still well over 25 per cent with focus on business acquisition. For the private sector, this is the last year of the Insurance Regulatory and Development Authority’s six-year reprieve for complying with the management ratio. PSU insurers contained all the three components of management expenses during the financial year. The growth in business volumes also helped. Business volume growth was higher than the cost of acquisition, one of the crucial components of the management ratio.
Last year gross premiums grew 9 per cent over 2005-06. Wages grew less than five per cent during the year, the sources said. This was largely due to the absence of wage revisions in the industry since 2003. Besides, low inflation also ensured that the indexed components of salaries stayed at about 5 per cent. Moreover, the two rounds of voluntary retirement scheme effected in four PSUs had ensured a reduction in manpower.
The sources said that the profits realised from cost containment were ploughed back to bolster net worth. This had a favourable impact on solvency. As a result, New India Assurance Company reported a solvency ratio (the excess of the value of assets and capital over the insured liabilities) of close to 5 times, well above the IRDA’s prescribed figure of 1.5 times. For other PSU insurers like Oriental, it is about 2.2 times.
Source: The Hindu Business Line
The ratio is 19.5 per cent for non-life insurers under section 40C of the Insurance Act of 1938. The management ratio is a prescribed cost cap on wages, dividends and commissions. Till 2005-06 this ratio ranged between 23 and 25 per cent. But in 2006-07, PSU insurers have sharply pared it down to about 19.1 per cent. This was despite the high dividend payouts to its shareholders, entirely government.
Reliable sources said that the PSU insurers had largely managed to contain their costs during the year. However, in the case of private sector, the ratios are still well over 25 per cent with focus on business acquisition. For the private sector, this is the last year of the Insurance Regulatory and Development Authority’s six-year reprieve for complying with the management ratio. PSU insurers contained all the three components of management expenses during the financial year. The growth in business volumes also helped. Business volume growth was higher than the cost of acquisition, one of the crucial components of the management ratio.
Last year gross premiums grew 9 per cent over 2005-06. Wages grew less than five per cent during the year, the sources said. This was largely due to the absence of wage revisions in the industry since 2003. Besides, low inflation also ensured that the indexed components of salaries stayed at about 5 per cent. Moreover, the two rounds of voluntary retirement scheme effected in four PSUs had ensured a reduction in manpower.
The sources said that the profits realised from cost containment were ploughed back to bolster net worth. This had a favourable impact on solvency. As a result, New India Assurance Company reported a solvency ratio (the excess of the value of assets and capital over the insured liabilities) of close to 5 times, well above the IRDA’s prescribed figure of 1.5 times. For other PSU insurers like Oriental, it is about 2.2 times.
Source: The Hindu Business Line
ICICI Pru plans healthcare in UP
ICICI Prudential Life Insurance, in a bid to tap the potential in healthcare sector, has tied up with private hospitals and nursing homes of Uttar Pradesh.
Speaking to Business Standard, Pranav Mishra, senior vice-president, ICICI Prudential life insurance, said, “The Company at present has tied up with about 60 hospitals and nursing homes in the state to offer its hospital care plan. This will cover major cities like Lucknow, Allahabad, Kanpur, Varanasi and Agra.”
Hospital care is structured to ensure that customers receive a pre determined insurance amount for each procedure or hospitalisation, ranging from room charges, doctor and surgery fees and other incidental expenses.
“Our research revealed that many customers believe that existing health insurance policies would not cover all the expenses related to hospitalisation or surgical procedures, leaving them with a considerable financial burden,” Mishra said.
“This is compounded by the concern that these policies are not long term and that once a claim is made, it might not be renewed or will attract a higher premium. Our policy will fill this gap in health insurance and also offer customers control over their health spends,” he said.
The company already has six products in health insurance space and now has introduced hospital care to cover over 1,000 surgical procedures and hospitalisation.
“We have networked with 3,000 hospitals across the country for cashless facilities,” added Mishra. The company at present has 55 branches in 45 locations, in the state.
In the next one year, 5-6 more branches will be opened in the state. These will be centered in B category cities.
Source: Business Standard
Speaking to Business Standard, Pranav Mishra, senior vice-president, ICICI Prudential life insurance, said, “The Company at present has tied up with about 60 hospitals and nursing homes in the state to offer its hospital care plan. This will cover major cities like Lucknow, Allahabad, Kanpur, Varanasi and Agra.”
Hospital care is structured to ensure that customers receive a pre determined insurance amount for each procedure or hospitalisation, ranging from room charges, doctor and surgery fees and other incidental expenses.
“Our research revealed that many customers believe that existing health insurance policies would not cover all the expenses related to hospitalisation or surgical procedures, leaving them with a considerable financial burden,” Mishra said.
“This is compounded by the concern that these policies are not long term and that once a claim is made, it might not be renewed or will attract a higher premium. Our policy will fill this gap in health insurance and also offer customers control over their health spends,” he said.
The company already has six products in health insurance space and now has introduced hospital care to cover over 1,000 surgical procedures and hospitalisation.
“We have networked with 3,000 hospitals across the country for cashless facilities,” added Mishra. The company at present has 55 branches in 45 locations, in the state.
In the next one year, 5-6 more branches will be opened in the state. These will be centered in B category cities.
Source: Business Standard
PNB insurance foray hits roadblock
Punjab National Bank’s (PNB) proposed foray into life insurance with the UK-based Principal Financial Group, UK Paints (India) and Vijaya Bank has hit a roadblock, with some of the partners wanting to withdraw from the venture.
Berger Paints, which was to own 32 per cent in the new venture - ‘Principal PNB Life Insurance Compan - is considering withdrawing from the venture, while Vijaya Bank, with a 12 per cent stake, is weighing its options. Principal Financial holds the remaining 26 per cent stake , the maximum that a foreign partner can hold.
PNB, which has 30 per cent stake in the joint venture, said the venture needs to be reviewed.
“There has to be some rethink on the proposed venture. There is a problem as some of the shareholders are not willing to participate,” said K C Chakrabarty, chairman and managing director, PNB.
In May, the Insurance Regulatory and Development Authority (Irda) declined to clear the R1 application of Principal PNB Life insurance and had sought clarifications. The clearance is basically an in-principle approval by the Irda to the proposed terms of an insurance company.
“We had asked for certain clarifications on which they have still not got back to us,” said an Irda official.
According to sources, the Irda had raised concerns on the participation of UK Paints in the venture. The Kolkata-based paints company was considering withdrawing from the venture.
The company’s officials could not be reached for comments.
Rajan Ghotgalkar, country head of Principal Financial in India, said: “We are reviewing the entire strategy. There is no talk about exiting. The issues could be long-term or short–term. We are having strategic discussions and are hopeful of resolving the issues . Currently, we want to put all the issues behind us and get the R1 licence.”
PNB’s Chakrabarty, however, said: “The company has still not been formulated. The entire company may be up for a rethink. The shareholding and constitution of the company may change.”
The four partners had entered into a memorandum of understanding way in April 2004 to roll out an insurance company.
“There could be issues like equity stakes. However, these should be sorted out,” said one of the partners.
The sources said Vijaya Bank which has only a 12 per cent stake may want to increase its stake in the venture.
Earlier, Andhra Bank, had pulled out of a life insurance venture led by Bank of India (BoI) and Dai-Ichi Mutual Life Insurance Company of Japan, as it was offered only a 23 per cent stake.
BoI was to hold 51 per cent with Dai-Ichi having 26 per cent stake. Union Bank of India subsequently replaced Andhra Bank as a partner with an identical stake in the venture but with the option of scaling up its stake along with the foreign partner.
The bank (Union Bank) will have the option of increasing its stake once the FDI (foreign direct investment) norms are liberalised allowing the foreign partner to scale up its stake from 26 per cent to 49 per cent,” said a senior BoI official.
Source: Business Standard
Berger Paints, which was to own 32 per cent in the new venture - ‘Principal PNB Life Insurance Compan - is considering withdrawing from the venture, while Vijaya Bank, with a 12 per cent stake, is weighing its options. Principal Financial holds the remaining 26 per cent stake , the maximum that a foreign partner can hold.
PNB, which has 30 per cent stake in the joint venture, said the venture needs to be reviewed.
“There has to be some rethink on the proposed venture. There is a problem as some of the shareholders are not willing to participate,” said K C Chakrabarty, chairman and managing director, PNB.
In May, the Insurance Regulatory and Development Authority (Irda) declined to clear the R1 application of Principal PNB Life insurance and had sought clarifications. The clearance is basically an in-principle approval by the Irda to the proposed terms of an insurance company.
“We had asked for certain clarifications on which they have still not got back to us,” said an Irda official.
According to sources, the Irda had raised concerns on the participation of UK Paints in the venture. The Kolkata-based paints company was considering withdrawing from the venture.
The company’s officials could not be reached for comments.
Rajan Ghotgalkar, country head of Principal Financial in India, said: “We are reviewing the entire strategy. There is no talk about exiting. The issues could be long-term or short–term. We are having strategic discussions and are hopeful of resolving the issues . Currently, we want to put all the issues behind us and get the R1 licence.”
PNB’s Chakrabarty, however, said: “The company has still not been formulated. The entire company may be up for a rethink. The shareholding and constitution of the company may change.”
The four partners had entered into a memorandum of understanding way in April 2004 to roll out an insurance company.
“There could be issues like equity stakes. However, these should be sorted out,” said one of the partners.
The sources said Vijaya Bank which has only a 12 per cent stake may want to increase its stake in the venture.
Earlier, Andhra Bank, had pulled out of a life insurance venture led by Bank of India (BoI) and Dai-Ichi Mutual Life Insurance Company of Japan, as it was offered only a 23 per cent stake.
BoI was to hold 51 per cent with Dai-Ichi having 26 per cent stake. Union Bank of India subsequently replaced Andhra Bank as a partner with an identical stake in the venture but with the option of scaling up its stake along with the foreign partner.
The bank (Union Bank) will have the option of increasing its stake once the FDI (foreign direct investment) norms are liberalised allowing the foreign partner to scale up its stake from 26 per cent to 49 per cent,” said a senior BoI official.
Source: Business Standard
Tuesday, July 17, 2007
Insurers want more premium in cash
HYDERABAD/MUMBAI: The reporting norms for insurers to track individuals who are using unaccounted money to buy insurance policies are up for review. The move comes less than a year after the government made it mandatory for insurers to comply with the guidelines on anti-money laundering.
Money laundering is a practice of moving illegally-acquired cash through the financial system to make it legal. Authorities in India have shifted their focus to insurance since the life industry has been driven by investment products rather than protection policies in recent times. Insurers are now required to identify income sources and also report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND), a nodal government agency that tracks money laundering attempts and then probes them further.
Top FIU-IND officials met up with both general and life insurers earlier this month to take stock of their compliance levels. The results revealed a mixed bag with some insurers yet to come on board. Insurers, on their part, say there are a few glitches in implementing these guidelines. State-owned insurers, for instance, want the Rs 50,000 limit for accepting cash payments raised as rural customers do not have access to banking facilities.
According to the chairman of the insurance regulator, IRDA, C S Rao, any change in the rules will need the finance ministry’s approval. From FIU-IND’s perspective, a higher limit for premium payments in cash would mean adding more cash transactions in the economy. “Our goal is to encourage all stakeholders in the financial sector to move towards a cheque economy as this would help curb money laundering,” said a senior official.
Insurers also have to report integrally-connected cash transactions exceeding Rs 10 lakh a month to FIU-IND. Officials say there have been instances where individuals buy multiple policies and pay premium in cash. In many cases, the integrally-connected cash transactions are a tad short of Rs 10 lakh a month and thus escape from being reported.
The guidelines now in vogue require insurers to report suspicious transactions, including those which could be ‘structuring deals’. These are deals which are artificially carved into several transactions to avoid reporting requirements.
Some insurers, particularly state-owned companies, say their existing IT systems are not equipped to identify if a proposer has simultaneously made applications in various offices across the country. All insurance companies are now putting in place a software to identify multiple policies by the same customer.
“It is important to know this not just from the asset liability management guidelines point of view, but also for a company’s own risk management” says Deepak Satwalekar, MD, HDFC Standard Life. An insurer should know whether the proposal he has on hand is a single proposal for Rs 10 lakh sum insured or whether it is a part of multiple proposals that add up to Rs 1 crore on the life of the same individual, he adds.
It is tough to keep an audit trail of such transactions unless insurers report these as suspicious transactions. Indeed, some of them have done that. The regulator had, in fact, told insurers to look at lower thresholds for cash transactions when it issued guidelines for anti-money laundering last year.
A section within the government reckons that there is a case for lowering the threshold for premium payments in cash. Mutual funds, for instance, do not accept cash from investors. “If mutual funds can do it, why not insurance companies,” argues an official.
According to S V Mony, secretary-general , Life Insurance Council, the insurance industry is not opposed to anti-money laundering guidelines per se. But too many administrative procedures may be a deterrent to the sector’s growth. The photograph of the policyholders, for instance, is a must under the know-your-customer norms, though an exception has been made for micro-insurance. Insurers are finding it tough to comply with this requirement as well.
Source: Economic Times
Money laundering is a practice of moving illegally-acquired cash through the financial system to make it legal. Authorities in India have shifted their focus to insurance since the life industry has been driven by investment products rather than protection policies in recent times. Insurers are now required to identify income sources and also report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND), a nodal government agency that tracks money laundering attempts and then probes them further.
Top FIU-IND officials met up with both general and life insurers earlier this month to take stock of their compliance levels. The results revealed a mixed bag with some insurers yet to come on board. Insurers, on their part, say there are a few glitches in implementing these guidelines. State-owned insurers, for instance, want the Rs 50,000 limit for accepting cash payments raised as rural customers do not have access to banking facilities.
According to the chairman of the insurance regulator, IRDA, C S Rao, any change in the rules will need the finance ministry’s approval. From FIU-IND’s perspective, a higher limit for premium payments in cash would mean adding more cash transactions in the economy. “Our goal is to encourage all stakeholders in the financial sector to move towards a cheque economy as this would help curb money laundering,” said a senior official.
Insurers also have to report integrally-connected cash transactions exceeding Rs 10 lakh a month to FIU-IND. Officials say there have been instances where individuals buy multiple policies and pay premium in cash. In many cases, the integrally-connected cash transactions are a tad short of Rs 10 lakh a month and thus escape from being reported.
The guidelines now in vogue require insurers to report suspicious transactions, including those which could be ‘structuring deals’. These are deals which are artificially carved into several transactions to avoid reporting requirements.
Some insurers, particularly state-owned companies, say their existing IT systems are not equipped to identify if a proposer has simultaneously made applications in various offices across the country. All insurance companies are now putting in place a software to identify multiple policies by the same customer.
“It is important to know this not just from the asset liability management guidelines point of view, but also for a company’s own risk management” says Deepak Satwalekar, MD, HDFC Standard Life. An insurer should know whether the proposal he has on hand is a single proposal for Rs 10 lakh sum insured or whether it is a part of multiple proposals that add up to Rs 1 crore on the life of the same individual, he adds.
It is tough to keep an audit trail of such transactions unless insurers report these as suspicious transactions. Indeed, some of them have done that. The regulator had, in fact, told insurers to look at lower thresholds for cash transactions when it issued guidelines for anti-money laundering last year.
A section within the government reckons that there is a case for lowering the threshold for premium payments in cash. Mutual funds, for instance, do not accept cash from investors. “If mutual funds can do it, why not insurance companies,” argues an official.
According to S V Mony, secretary-general , Life Insurance Council, the insurance industry is not opposed to anti-money laundering guidelines per se. But too many administrative procedures may be a deterrent to the sector’s growth. The photograph of the policyholders, for instance, is a must under the know-your-customer norms, though an exception has been made for micro-insurance. Insurers are finding it tough to comply with this requirement as well.
Source: Economic Times
Monday, July 16, 2007
Aviva Life plans tie-up with co-op banks
Recently in Prague
Aviva Life Insurance is planning to join hands with the cooperative banks in India to expand its reach besides augmenting its direct sales force significantly.
“Bankassurance has been one of our strongholds in India and we prefer to make cooperative banks a channel to reach the countryside in India,” Mr Bert Paterson, Managing Director, Aviva Life Insurance India, told Business Line during the International Insurance Summit held recently in Prague.
Fool-proof-strategy
The company has done lot of homework and a “fool-proof strategy” is already in place for partnering with the rural banks, he added.
The UK-headquarted company has already tied up with the Basix Group for its micro insurance product.
“In addition, banks would be a prime channel for us and the details about the partnerships would be made public soon,” Mr Paterson said.
Currently, Aviva (which holds 26 per cent stake in the joint venture company with Dabur) has tie-ups with Centurion Bank of Punjab, ABN Amro, American Express Bank, Lakshmi Vilas Bank and IndusInd Bank, among others.
Bankassurance
Bankassurance in India is becoming competitive with leading private banks and some public sector banks going on their own to tap the insurance potential.
“Aviva had pioneered the concept of bankassurance in India and we would strive to be in the lead.
“We are devising a totally different strategy in this regard,” he said.
The company will also strengthen its distribution channel.
“Currently, bankassurance accounts for 60 per cent of our distribution while remaining 40 per cent done by our direct sales force.
“We want to recruit over 3,000 personnel to strengthen our direct sales force,” Mr Paterson said.
More products
On the product front, the company, which recently launched ‘Grameen Suraksha’ a micro insurance product for BASIX customers, would add more products to suit rural customers soon.
“We will be launching more products in this segment,” he added.
The company is also willing to infuse more capital into its Indian operations.
“We had invested Rs 199 crore in January 2007 and plan to infuse more capital over the next two years,” he said while declining to disclose approximate figures.
On the relationship with Dabur Group in India, Mr Paterson said they shared “excellent” understanding.
“We have also worked out the modalities of relationship between the two companies in the likely 100 per cent FDI regime in the future,” he added.
Source: The Hindu Business Line
Bank of Baroda plans life insurance foray
As part of its wealth management initiative, Bank of Baroda (BoB) will venture into mutual fund business very soon. Bank of Baroda Asset Management Company, a subsidiary of the BoB in collaoration with the Italian company 'Pioneer' will form a joint venture for mutual fund business.
"The memorandum of understanding (MOU) has been signed and the details are being worked out", V Santhanaraman the Executive Director of the bank told Business Standard.
Of late mutual funds have become a major destination for investment. Sensing this, the bank has decided to make a foray into the business. As this required specialized expertise, the bank has gone for foreign tie up, he added.
"With the disposable income rising , the high salaried and professionals are evincing interest to invest in mutual funds", he said, adding that apart from easy liquidity, the MF instruments offer tax incentives which has become another cause of attraction.
According to him , various mutual fund products catering to different segments of people will be developed by Pioneer and the marketing of the products will be made by Bank of Baroda Asset Management Company.
The bank is betting big on this venture and expects to be among the top five within next five years. Besides, as part of diversification plan the bank will venture into the life insurance business very soon.
For this, it tying up with London based Legal and General. "A joint company will be formed with 26 percent equity participation by Legal and General", he said.
The remaining equity will be held by the Bank of Boroda, Andhra Bank and some other institutions which are to be finalized yet, Santhanaraman added.
The bank at present has 2732 branches across the country and plans to add 150 more branches and 120 offsite ATMs soon. About 31 branches are to be opened by end of July.
In Orissa the bank will open 7 more branches during the current fiscal to take the total to 49 from 42 at present. While two more branches will be opened very shortly, the bank has applied for license for the remaining 5 branches. Importantly, 25 of the bank's 42 branches in the state will be under the Core Banking Solution (CBS).
At the national level, while 80 percent of the current business is covered through CBS branches, it is likely to go up to 90 percent by March 2008.
Further, to meet the rising credit requirements of the Small and Medium Enterprises, the bank has come out with the concept of SME loan factory. The credit requirement beyond Rs.25 lakh will be provided by this outlet.
The bank has 15 such factories in the country and plans to add 16 more during the current fiscal including one in Bhubaneswar.
Bhubanesswar SME factory is likely to come up before December 2007, he announced. Besides, within next 4-5 months Baroda Vikas Sansthan (BVS), the training institute for self employment, will be functional in Orissa.
Currently, the bank is at the fourth position among PSU banks in terms of profit and third largest in terms of business. However, it aims to be number one by 2010-11.It expects the product and processes to drive its growth. However, maximum stress will be given on the customer satisfaction, the executive director said.
It may be noted, the bank achieved a business of Rs 2, 09,000 crore by March 2007 with Orissa business contributing Rs 1413 crore. Orissa has emerged as a major growth centre in the east and the bank is according top most priority to it, he said.
Source: Business Standard
Sunday, July 15, 2007
NIASoM, one of the most prominent B-School: TOI
The ultimate test in MANAGEMENT
The Common Admission Test (CAT) is an all-India test conducted by the Indian Institutes of Management (IIMs) as an entrance test for the management programmes of its six business schools. It is also the entrance test for few other top B-Schools.
Around 180,000 students compete for less than 1200 general seats in the IIMs which makes it an extremely tough competition. In fact, the CAT is one of the world's most demanding entrance examinations for any graduate institute. Even with a top 1% score, a candidate must also cross the equally stringent hurdles of a group discussion and an individual interview.
The test taker is expected to excel in arithmetical problem solving, geometry, statistics, data interpretation, logical reasoning in solving complex puzzles, and English language skills.
It is neither expected, nor possible, that all the questions be answered, so the CAT also tests the candidates' ability to prioritise under pressure: a quality necessary in the competitive environment of IIMs' courses.
The test tests your skills in five broad areas viz.
Verbal ability and reasoning
Reading comprehension
Quantitative skills
Data interpretation
Analytical and logical reasoning.
CAT has evolved from a speed-based simple test into a test which demands more proficiency in concepts and fundamentals rather than just speed. Typically this test can be expected to comprise between 75 to 150 objective type questions and is usually divided into three to four sections. Each question has a question statement followed by four alternate answer choices and the candidate has to choose the best answer for each of the questions and mark it on a special Optical Reader answer sheet.
Over the years, the number of questions being asked in CAT has been decreasing steadily. While the early 90s witnessed 180 to 200 questions, the late 90s, specifically CAT 1999 and CAT 2000 had 165 questions each. CAT 2001, CAT 2002 and CAT 2003 had only 150 questions each and these 150 questions were divided into three sections of 50 questions each. There were 123 questions in CAT 2004 and only 90 in CAT 2005. CAT 2004 and CAT 2005 both had differential marks to questions. There were 0.5 marks, 1 mark and 2 marks questions.
The duration of the test is of 120 minutes. This literally translates to answering a CAT question in 48 seconds. Most successful aspirants do not attempt anything more than 120 plus questions. And quite a lot of them attempt between 70 and 90 marks worth of questions.
CAT 2006, which was conducted on November 19, was a 2.5-hour exam instead of the traditional 2-hour exam. It is speculated that this change was made by the CAT exam committee to decrease the level of predictability of the exam and to relieve the stress caused to students in a two-hour time limit.
CAT 2006 had 75 questions, 25 questions per section and 4 marks per question, making it a 300-mark paper. There was a penalty of 1 mark for a wrong answer. The paper also proved to be a break from the previous pattern in that it had 5 answer options instead of the usual 4. The English section was generally perceived as very difficult, whereas the quantitative aptitude section was relatively much easier than previous CATs as also in comparison to the other two sections.
The key to success, therefore, lies in two important parameters:
The accuracy or strike rate
While each correct answer carries 0.5 or 1 or 2 positive mark, each incorrect question carries 1/3rd of the marks allocated to it as negative marks. Hence, it is important to get a strike rate of over 85% - that is reduce the number of negatives.
Smart selection
As it is clear that you will not be generally able to attempt all 150 marks question, and you skip between 60 to 80 questions, key to success lies in selecting questions properly. Hence, there are no kudos, nobel prizes or awards waiting for attempting the tough questions. Be smart to choose, the easiest of the questions and the ones that you have practised a lot and smash them. Do not venture into unsafe territories or to questions which you only have a vague idea.
CAT and entrance tests of other top B Schools are a unique breed of entrance exams. They focus on testing some of the basic qualities essential for managers - the grit to work hard, smartness
to choose the best alternative, quick thinking and above all perseverance.
Exams like IIT JEE test the depth of your knowledge, while the Civil Services exams test your width of knowledge. CAT evaluates your presence of mind and the ability to perform under pressure. You cannot prepare for CAT during the last 10 days, as one generally does for semester exams. A minimum of 3 to 9 months of regular preparation is essential.
Other colleges accepting CAT scores Many colleges in India, other than the IIMs, also accept the CAT scores for admission.
SOME OF THE MORE PROMINENT ONES ARE:
• National Insurance Academy School of Management (NIASoM), Pune
• S.P.Jain Institute of Management and Research (SPJIMR), Mumbai
• Management Development Institute (MDI), Gurgaon
• Mudra Institute of Communications Ahmedabad (MICA), Ahmedabad
• National Institute of Industrial Engineering (NITIE), Mumbai
• International Management Institute (IMI), New Delhi
• T.A.Pai Management Institute (TAPMI), Manipal.
• Fore School of Management (FSM), New Delhi
• Institute of Management Technology, Ghaziabad
• Institute of Management, Nirma University, Ahmedabad.
Source: Times of India, 15/07/07
Health is wealth
Some dates hold special importance in our lives. In fact, we mark them in our planner, our office calendar and even on the cellphone. But sometimes, in our busy schedules, we somehow overlook them. And missing your mediclaim renewal deadline can bring more trouble than forgetting your anniversary date or your spouse’s birthday. Here’s why you shouldn’t forget the renewal date of your mediclaim policy. Mediclaim provides cover for expenses in case of hospitalisation. Not only it takes care of costs incurred during hospitalisation but also protects you from pre as well as post-hospitalisation expenses. And if you’ve kept the policy for long, it may serve you even better. For instance, a fresh policy doesn’t cover any pre-existing illness. “Not only that, the insured will lose the no-claim bonus as well. Further, his policy will be treated as fresh policy and the first year exclusions will apply again,” says Mukesh Gupta, director, Wealthcare Securities, a financial advisory firm. This is a very important aspect because if you’ve a mediclaim policy and made no claims on it for four consecutive years, you start getting covered for those pre-existing illnesses. And for every claim-free year, the sum assured will be increased by 5-10% — that too without an increase in premiums. “But most people are unaware of such benefits and that’s why they don’t attach much importance to renewal, little realising that all their hard work may go waste,” observes a senior official from New India Assurance. Thus, if the insured has a health condition existing prior to taking the policy and requiring medical treatment, the same gets automatically excluded in the policy. “To ensure that in subsequent renewals medical conditions incepting since the policy was taken don’t get excluded it becomes a must to renew the policy without any break,” he adds. Renewal of your mediclaim also becomes important since the policy terms have become more stringent. Before April this year, policies covered pre-existing diseases after four claim-free years even if the policy was held with another insurance company. Under the current terms, policyholders need to be covered by the same insurer for at least four years. There are more reasons why you should keep continuing your existing policy. For starters, the premium rates have gone up considerably. Most insurance companies have hiked their premiums by 30% to 50%. “It simply means that not only will you lose out on benefits but also will have to pay a much higher price for being insured,” says Shreeraj Deshpande, head, Health Insurance, Bajaj Allianz General Insurance. The list of diseases that are excluded from the purview of the policy has also been extended. Under the current policy, benign ENT disorders and surgeries such as tonsilectomy, adenoidectomy, mastoidectomy and tympanoplasty come under first-year exclusions. In case you’ve missed the renewal, it will require you to re-do the medical tests. “This leaves no option other than renewing your policy. Otherwise, you’ll start comparing the premium charged by various companies and decide accordingly,” adds Gupta. Apart from this, most medical insurance policies have a moratorium of about six months. This means that any claims made during the first six months of taking a fresh policy will not be reimbursed. So, if you lose out on renewing the old policy, you’ll have to start afresh. An official from National Insurance believes that around 30% of health insurance policies lapse because people forget to renew their policies. “You can’t blame the policy holders only. The insurance companies are partly responsible for that. We’re supposed to send reminders a month in advance but sometimes because of negligence or system flaws it doesn’t happen,” he adds. Most insurance companies, however, give a grace period of seven days, which can be extended to 15 days in case of extreme circumstances, under which a policy can be renewed for keeping it eligible for a no-claim bonus. “We don’t want our customers to suffer, so we make sure that if the fault is on our side, then it should be rectified immediately. If the fault lies with the policy holder, then it can be reviewed on a case-to-case basis,” says the official. So, if you still haven’t marked this important date in your calendar, do it now. For, some dates hold exceptional significance — they not only remind how beautiful life is but they also ensure it remains so as well.
source:Economic Times
source:Economic Times
DIAL inks 5400 crore cover insurance deal
NEW DELHI: Delhi International Airport Private Limited (DIAL) has signed an insurance deal worth Rs 5,400 crore with a consortium comprising three major insurance companies in India. The deal will provide insurance cover for upgradation of the existing terminals, construction of new runway and an integrated passenger terminal (T3). Sources familiar with the deal said, DIAL, a joint venture company comprising of Bangalore-based GMR Group, Airports Authority of India (AAI), Fraport, Malaysian Airport and India Development Fund, is paying Rs 8 crore as premium charges for the insurance cover of its project during the construction period. “The consortium includes the Oriental Insurance Company, the National Insurance Company and ICICI Lombard. Oriental Insurance is a major stakeholder, insuring two-third of the whole project,” the source told SundayET. In the aviation sector, Oriental Insurance already provides insurance cover for Jet Airways, Air Sahara and Kingfisher. When contacted, The Oriental Insurance chairman and managing director, M Ramadoss confirmed the deal. It covers the airport project till its completion in 2010. The cover provided under this is similar to any other construction insurance policy, which provides protection for physical damage, increase cost of working and other losses such as those emanating from terrorist attacks, said Ramadoss. The project is being developed by DIAL under Public Private Partnership and has been given the mandate to finance, design, build, operate and maintain the Delhi Airport for 30 years with an option to extend it by another 30 years. The first phase of the airport is designed to handle 37 million passengers per annum (mppa). This phase is to be completed by March 2010 and will be fully operational before the Commonwealth Games. The project also involves construction of connecting taxiways, satellite fire lighting facilities, cargo terminals, aircraft maintenance facilities, utility services and other primary infrastructure support facilities. We ve got a stronghold in mega insurance. The company has gained a business of Rs 30 crore from Vedanta Group in 2006-07, and renewed contracts with NTPC for Rs 35 crore , added Ramadoss. In the past, The Oriental insurance has insured petrochemical major Reliance Industries Limited for an amount of Rs 16,000 crore, which is considered to be one of the biggest insurance deals in the country. The Construction Insurance business in India has witnessed a boom particularly in the backdrop of various infrastructure development initiatives taken in different sectors. Delhi Airport irrespective of being developed by a private player or government itself is a national asset. The same trend is also visible in the West, where all mega-projects are insured against any threat, be it emanating from natural calamities or terrorist attack, says Kapil Kaul, CEO Indian subcontinent, Centre for Asia Pacific Aviation
source:Economic Times
source:Economic Times
Now, even insurers care for your heart
CHENNAI, JUL 14: If insurance is the business of underwriting risks, then general insurance firms are more than willing to take that. For, many general insurers may soon launch healthcare policies for people afflicted by diseases such as diabetis and cardiac problems.
“It was unthinkable a few years ago. But now it is becoming a reality. Insurers are seeing a good business potential in covering such patients,” says a senior official with Tata AIG on condition of anonymity.
According to sources, Insurance Regulatory and Development Authority has been informally approached by many private sector general insurers with draft policies that cover known illnesses. “At least three companies are in the process of seeking Irda’s permission for healthcare policies to cover known diseases such as diabetis. These companies hope to get regulatory approval depending on the nature of policies they have prepared,” sources said.
Some industry insiders, however, claimed that some public sector companies had such policies under their belt, but these have not been marketed properly. For instance, United India Insurance is believed to have a policy targeted at people who have the potential to develop cardiac illness.
Source: Financial Express
“It was unthinkable a few years ago. But now it is becoming a reality. Insurers are seeing a good business potential in covering such patients,” says a senior official with Tata AIG on condition of anonymity.
According to sources, Insurance Regulatory and Development Authority has been informally approached by many private sector general insurers with draft policies that cover known illnesses. “At least three companies are in the process of seeking Irda’s permission for healthcare policies to cover known diseases such as diabetis. These companies hope to get regulatory approval depending on the nature of policies they have prepared,” sources said.
Some industry insiders, however, claimed that some public sector companies had such policies under their belt, but these have not been marketed properly. For instance, United India Insurance is believed to have a policy targeted at people who have the potential to develop cardiac illness.
Source: Financial Express
Road caution: 38 m non-insured vehicles added every year
Insurance council plans to set up Indian Motor Bureau
New Delhi, July 14 Here is an interesting statistic. On an average, around 78 million vehicles are sold every year across the country but the number of motor insurance polices which are renewed the following year drops to around 40 million.
In other words, almost 38 million vehicles join the growing number of non-insured machines on Indian roads every year.
Baulked by this statistic, the General Insurance Council plans to address this problem by creating a nodal agency to monitor the non-insured vehicles in the country. It is planning to set up the Indian Motor Bureau, on the same lines as the one which exists in the United Kingdom.
Motor bureau
“UK has one of the worst records for uninsured driving, with an estimated one in every 20 cars on the road being driven without insurance, and in India we are not far behind. So to help curb this practice we are looking at creating the Indian Motor Bureau. The process is in the developmental stage and by the middle of next month we expect to have something concrete on the issue.
“We need consent of all the RTOs and also need to get permission from the Insurance Regulatory and Development Authority,” insurance industry sources told Business Line.
Stolen vehicle records
Apart from this, the Bureau would also keep a record of all the vehicles which are stolen. “A number of times stolen vehicles are reregistered and sold without the knowledge of the insurance companies or the police. So to make it difficult for this practice to continue, the Bureau, once it receives a complaint regarding a lost vehicle, can alert the concerned RTO so that the vehicle is not registered in someone else’s name.
“For example, in the UK the police is the biggest customer of the Motor Insurance Database, making close to three million enquiries every month,” he said.
The Bureau will also look at making the underwriting related to motor insurance more scientific.
Source: The Hindu Business Line
New Delhi, July 14 Here is an interesting statistic. On an average, around 78 million vehicles are sold every year across the country but the number of motor insurance polices which are renewed the following year drops to around 40 million.
In other words, almost 38 million vehicles join the growing number of non-insured machines on Indian roads every year.
Baulked by this statistic, the General Insurance Council plans to address this problem by creating a nodal agency to monitor the non-insured vehicles in the country. It is planning to set up the Indian Motor Bureau, on the same lines as the one which exists in the United Kingdom.
Motor bureau
“UK has one of the worst records for uninsured driving, with an estimated one in every 20 cars on the road being driven without insurance, and in India we are not far behind. So to help curb this practice we are looking at creating the Indian Motor Bureau. The process is in the developmental stage and by the middle of next month we expect to have something concrete on the issue.
“We need consent of all the RTOs and also need to get permission from the Insurance Regulatory and Development Authority,” insurance industry sources told Business Line.
Stolen vehicle records
Apart from this, the Bureau would also keep a record of all the vehicles which are stolen. “A number of times stolen vehicles are reregistered and sold without the knowledge of the insurance companies or the police. So to make it difficult for this practice to continue, the Bureau, once it receives a complaint regarding a lost vehicle, can alert the concerned RTO so that the vehicle is not registered in someone else’s name.
“For example, in the UK the police is the biggest customer of the Motor Insurance Database, making close to three million enquiries every month,” he said.
The Bureau will also look at making the underwriting related to motor insurance more scientific.
Source: The Hindu Business Line
Saturday, July 14, 2007
Barclays in bancassurance tie-up with MetLife
11th July, Mumbai
MetLife India Insurance Company Private Limited (MetLife) and Barclays today announced their bancassurance tie-up in India. With this tie-up, MetLife, which is now amongst the top five fastest growing private players in the country, has taken another step in the direction of establishing itself as one of the leading private life insurers in India.
Speaking about this partnership, Mr. Rajesh Relan, Managing Director, MetLife, said, "We are happy to announce our partnership with Barclays in India, which is the coming together of two formidable institutions. In Barclays, MetLife has a partner that shares its vision of providing world class products to its customers". He added, "The combined experience of the Barclays and MetLife, Inc. groups in financial services is more than 400 years and we are confident of making a difference in the hugely promising Indian market."
Mr. Samir Bhatia, Managing Director, Barclays India and Indian Ocean, said, "The tie-up with MetLife will address our clients’ need for a comprehensive range of best-in-class, need-based life insurance solutions. We are also happy that with this need-based approach, we will assure our customers of solutions that are tailor-made to their individual insurance needs."
Through its other partnerships with Jammu & Kashmir Bank, UTI Bank, Karnataka Bank and Dhanalakshmi Bank, MetLife’s products are available at over 500 branches of these partner banks.
MetLife follows a multi-distribution approach. Besides the strong bancassurance channel, the company currently has an agency force comprising around 25,000
SOURCE: India Infoline News Service
11th July, Mumbai
MetLife India Insurance Company Private Limited (MetLife) and Barclays today announced their bancassurance tie-up in India. With this tie-up, MetLife, which is now amongst the top five fastest growing private players in the country, has taken another step in the direction of establishing itself as one of the leading private life insurers in India.
Speaking about this partnership, Mr. Rajesh Relan, Managing Director, MetLife, said, "We are happy to announce our partnership with Barclays in India, which is the coming together of two formidable institutions. In Barclays, MetLife has a partner that shares its vision of providing world class products to its customers". He added, "The combined experience of the Barclays and MetLife, Inc. groups in financial services is more than 400 years and we are confident of making a difference in the hugely promising Indian market."
Mr. Samir Bhatia, Managing Director, Barclays India and Indian Ocean, said, "The tie-up with MetLife will address our clients’ need for a comprehensive range of best-in-class, need-based life insurance solutions. We are also happy that with this need-based approach, we will assure our customers of solutions that are tailor-made to their individual insurance needs."
Through its other partnerships with Jammu & Kashmir Bank, UTI Bank, Karnataka Bank and Dhanalakshmi Bank, MetLife’s products are available at over 500 branches of these partner banks.
MetLife follows a multi-distribution approach. Besides the strong bancassurance channel, the company currently has an agency force comprising around 25,000
SOURCE: India Infoline News Service
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