New insurance product

The product, Gold Plus Plan, also offers the option of reducing your premium amount from the first year onwards

Realizing that Indians prefer short pays, Birla Sun Life Insurance has launched a life insurance product where you need to pay a premium only for three years. Life insurance policies generally have a lock-in period of 7-10 years.
The product, Gold Plus Plan, also offers the option of reducing your premium amount from the first year onwards. It is a unit-linked insurance plan under which your premium money is invested in the stock markets.

Other features

Premium:Even if you reduce the premium amount from the first year, there will be no lowering of the assured sum. You can start your policy with a minimum annual pay of Rs10,000.
Fund offer:You can choose from seven kinds of funds that decide the proportion of exposure in equity and debt instruments. You can also change the allocation into the various funds any time during the term of the policy. The seven funds are— Assure, Protector, Builder, Enhancer, Creator, Magnifier and Maximiser.
Eligibility:Individuals between 18 and 70 years of age are eligible for the policy.
Tax benefits: You will get tax benefits under Section 80 C and Section 10 (10D) of the Income-Tax Act.
Top-up premium:You can increase your fund whenever you have additional savings prior to the maturity of the policy. The minimum top-up premium is Rs5,000.

Policy charges

Premium allocation charge:This is the percentage of the premium appropriated towards charges from the premium received. The balance, known as allocation rate, constitutes that part of the premium which is utilized to purchase units for the policy. For the first year, allocation charges are 8% for the policyholder and for the second and third year, 4%.
Fund management charge:This is the charge levied as a percentage of the fund value. Under this head, the company will cut 1.5% of the fund value every year.
Policy administration charge: The policy has a high administration charge. For the first three years, it is 18.4%. If you want to continue the policy for the fourth year, the rate is 14.4%.
Mortality charge:This is the cost of insurance cover. As you grow old, the mortality charge increases. It is age-specific and will be deducted every month. For instance, for a 25-year-old person, the mortality charge is 1% while for 65-year-old person, it is as high as 21%.
Surrender charge:If you plan to surrender your policy before three years, the surrender charges are 15%, 12.5% and 10% for first, second and third years, respectively. From the fourth year, the surrender charge will be zero. But, in case of surrender in the first three policy years, the benefits will be paid out only after the third policy year.

Source: www.livemint.com

Tata AIG`s rural policy launch soon

Tata AIG Life Insurance Company, a private life insurance player, is planning to add rural health insurance product to its rural insurance portfolio.

Talking to Business Standard, Joydeep Roy, chief distribution officer, Tata AIG Life Insurance, said, “The company is coming up with rural health insurance product in the next six months”.

However, the company is yet to finalise the features of the product and whether the health insurance product would be combined with life insurance.

Before the product is launched, the company has to comply with the micro-insurance guidelines, informs Roy.

“We are yet to file for the permission for rural health product with Insurance Regulatory and Development Authority (IRDA)”, adds Roy.

Apart from launching rural health insurance product, the company is also working on creating a new distribution channel to market its insurance products in the rural areas of the country.

Speaking on the company’s efforts to find out a new distribution model for its rural insurance products for the rural markets, he said, “We are working to find out a innovative ways of distribution of our life insurance product in rural market”.

He further said, “Just like agricultural produce moving without restricted to any one market, we would like to have a situation where services can also flow in a similar way “.

The company is exploring new distribution system where the life insurance products will be distributed in a similar way as any other products and goods are distributed in the market.

Source: Business Standard

ULIPs in vogue thanks to equity investments

Kolkata June 14 ULIPs (unit-linked insurance plans) are riding high on their equity investments, increasingly making their presence felt as savings and investment tools, a trend that is getting reflected in terms of both performance and average ticket size.
Unit-linked products, the domain of which is seen to be expanding steadily, will continue to attract sections of the investing populace, insurance companies feel, while referring to figures that are evident in the latest performance charts.

Performance chart

ULIPs - those focusing on equities - have on the whole managed to perform well during recent times, relative to the broad market, which has delivered decent returns in the past few years, the frequent ups and downs in indices notwithstanding, they point out.
While returns from the index may not have been anything to write home about insofar as very short-term periods are concerned, its three-year performance has been quite impressive, notes Mr Sam Ghosh, CEO, Bajaj Allianz Life Insurance. The results have found reflection in ULIP returns too, he mentioned.
"That ULIPs are here to stay is not a subject of debate any more. What we have to see how they perform in the days to come", he said, adding that the insurance industry is likely to throw up ULIP variants in the days ahead.

Strong show
A random selection from the list of performs include products such as Kotak Aggressive Growth, which has given 47.5 per cent over a two-year period ending on April 30, 2007, ICICI Pension Maximiser (36 per cent since inception in May 2002) and Aviva Life Unit Linked Growth (34 per cent CAGR since inception in January 2004). These are heavily invested in equities selected from across industries. These figures are based on market prices declared by the insurance companies; market price declared is essentially NAV after adjusting transaction charges.
Unit-linked plans, which essentially seek to blend insurance with investment, have managed to convince larger sections of the market, insurers suggest. This, it is felt, is mirrored in the larger ticket sizes that are getting reported these days.
The industry has in recent times witnessed a general increase in the average consumer's allocation, indicates Mr S.K. Mitra, who heads Birla Sun Life Insurance. "We know how savers are taking to insurance products. There has been a clear upturn on this front", he stated.
A variety of ULIPs are available in the market, courtesy insurers who have tried to widen their range of products. These include those that have considerable investment in equities. The latter, they feel, have been able to satisfy investors adequately.
Investment advisors who counsel clients on their portfolios confirm that insurance products now account for a greater share of investors' surpluses, securing a firmer place against such straight-laced options like mutual funds. The latter, according to figures pertaining to end-May, have seen a definite increase in their asset base: The AUM (assets under management) of all fund houses put together has now crossed previous records. Of these, diversified equity funds (which are lately increasing in number, thanks to the arrival of newer products) have generated an average 40 per cent for the one-year period ended June 11.

Source: The Hindu Business Line

Study soon on creating natural catastrophe risk insurance pool

To tide over unpredictable weather, natural calamities

New Delhi June 15 The creation of Indian natural catastrophe risk insurance pool has been deferred for the time being.
A decision on this issue was taken after a meeting between the chief executives of general insurance companies and the Insurance Regulatory and Development Authority recently. Mr K.N. Bhandari, Secretary-General of the General Insurance Corporation (GIC), told Business Line: "The meeting looked at the possibility of setting up a natural catastrophe risk insurance pool. We would be commissioning a study soon on the issue and in all probability we might arrive at a conclusion by the end of the year."
The proposed natural catastrophe risk insurance pool would be structured in the same format as the existing terrorism and motor pools. A pool is a fund created out of the commitments from insurance companies as per their individual exposure. In the case of claims, the pool reserves could be used to make payouts and market forces would determine the size of the pool.
In this case, insurance companies would be putting in the premium collected for providing coverage to natural calamities, which would then be insured abroad.
"The need for creating natural catastrophe pool has been proposed looking at the unpredictability of the weather and the widespread damage caused by natural calamites. Companies while taking optimal rates do not want to take higher exposure so they are willing to create the pool," Mr Bhandari said.

Detariff Regime
The meeting also reviewed the working of the general insurance sector in the last six months under the detariff regime and also convinced the regulator to advance implementing the second phase of detariff regime.
"We have urged the IRDA to consider advancing the second phase of detariff regime from April 1, 2008, to January 1, 2008," Mr Bhandari said.
In the first phase of detariffing, which came into effect from January 1 this year, the IRDA had given freedom to insurance companies to fix premium rates. This leads to a price war among the companies with companies offering heavy discounts on the policies.
Now, in the second phase, companies will be able to customise products for individual clients. Industry observers also feel that this will allow insurance companies to bring in newer and better internationally accepted products in the Indian market.
"The Chairman of IRDA, Mr C.S. Rao, heard our proposal and assured us that he would talk to the concerned authorities (the Government) and get back to us," Mr Bhandari added.

Source: The Hindu Business Line

IRDA mulls halving minimum training period for agents

Insurers have long maintained that the 100 hours of mandatory training translated to micro-management by the regulator.

Mumbai June 17 The Insurance Regulatory and Development Authority is considering halving the minimum training period for insurance agents from 100 hours to 50 hours.
"We are considering a possible reduction of the mandatory 100 training hours to 50 hours. Insurers say that they are finding the 100-hour stipulation to be excessive," Mr C.S. Rao, Chairman, IRDA, told Business Line.
Insurance agents are currently required to complete 100 hours of training spread over two to three weeks from an IRDA approved institution, and pass the qualifying test. In the case of online training, agents have to complete their training within a minimum period of 18 days and a maximum of 30 days. However, those who have an MBA or a CA qualification need just 50 hours of training.
Mr Rao said the Life Insurance Council had submitted a list of recommendations on behalf of the life insurers.
Insurers have long maintained that the 100 hours of mandatory training translated to micro-management by the regulator.

Focus on agent's needs
"Training has to be focused on the agent's needs. An agent, who is mainly selling unit-linked insurance plans, needs to trained on the capital and debt markets, while an agent selling traditional products may not require as much training," said Mr Sam Ghosh, CEO, Bajaj Allianz Life Insurance.
"Similarly, an agent selling in the rural areas may require minimal training as the products are simple and less sophisticated," he added.
Bajaj Allianz Life currently has a large agency force of 2.3 lakh and plans to expand it to 3.5- 4 lakh by the end of the year.
Mr Deepak Satwalekar, MD and CEO, HDFC Standard Life, said that while there is no grouse against licensing agents, the 100 hours of training amounts to micro-management. He illustrates with an example: "The on-line training facility works well in the smaller towns and that is where it hurts the most. You have to complete 100 hours in 30 days. So, if I have done 98 hours on the 29th day, but on the 30th day there is a power cut and I cannot access the Internet, then on the 31st day I have to start at zero."
"Why should one worry if it is done in 15 days or 30 days? What is really needed is monitoring the integrity of the testing process rather than input controls," he adds.

Source: The Hindu Business Line

Non-life players churn top deck

MUMBAI: A host of senior-level changes are in the offing in the general insurance industry. Gaurav Garg is expected to join Tata AIG General Insurance as CEO in place of Michael Carlin who put in papers a couple of months after taking charge. Shrirang Samant, former CEO of HDFC Chubb General Insurance has joined Lloyds of London as their representative in India. Lloyds is expected to open an office in India soon. Mr Garg was formerly head of Tata AIG General Insurance’s personal lines before moving to AIG New York. He will now be returning to take over as managing director. Meanwhile, the search is on for chief executives for Royal Sundaram Insurance and for the public sector United India Insurance. The top position in Royal Sundaram fell vacant after present chief Antony Jacob got larger responsibilities for the region from UK insurer Royal Sun Alliance. The government is engaged in identifying a candidate to replace MK Garg who put in his papers last month. The non-life industry association is also looking for a new CEO for managing the motor insurance pool. Non-life companies are bracing themselves for a fresh round of poaching with several companies planning to set shop this year. The joint ventures include Bharti Axa General Insurance, the joint venture between Future Group (Pantaloon) and Generali of Italy, and Allahabad Bank Sompo joint venture. Shriram Sanlam has already started recruiting a big way Insurance officials are forecasting more changes at senior management level as people leave on account of opportunities created by new entrants. In addition to the already established partnerships a number of new companies are looking at non-life. These include State Bank of India and the Aditya Birla Group. There are also a number of foreign players such as Ergo, IAG of Australia, Berkshire Hathway and a couple of Japanese insurance companies looking at the Indian market. Lloyds of London is planning to open an office in Mumbai soon. Unlike other companies, Lloyds has a different organisational structure. Lloyds recently opened an office in Shanghai to sell reinsurance. Mr Samant, who will represent Lloyds in India, quit HDFC Chubb after HDFC decided to buy out Chubb . over differences over the two partners’ approach to growth.

Source: Times News Network