ING Vysya Life Insurance declares bonus

ING Vysya Life Insurance Company has declared a bonus of Rs 75 per thousand on three of its policies.
The Vice-President and Head of Product Development Mr Y.V.D.V. Prasad, told presspersons here today, "We have earned good returns on our investments to reward our policyholders."
The three risk covers are `Power Life' (a limited payment endowment plan, where the sum assured plus accrued bonus is paid on maturity or earlier on death of life assured), `Best Years' (retirement plan with capital guarantee provisions) and `New Fulfilling Plan' (whole life limited payment policy that pays the entire sum assured during the premium payment term and continues to provide life cover and maturity benefit).
Mr Prasad said the mean yield targeted for the retirement plan was 8 per cent. As the mean yield target has been exceeded, ING has rewarded its policyholders, he added. Only about 10 per cent of the investments were in equities, he said. This target would continue as all the investments were long-term and almost entirely in government securities.
Almost the entire premium collection in all the three policies was from individuals. ING's Retirement Plan has so far collected premiums of about Rs 90 crore, he said.

Source: The Hindu Business Line

Bangalore, July 2 For the eleventh year in succession, the public sector National Insurance Company Ltd NICL has retained the Infosys Technologies account.
NICL officials said that the company paid an estimated premium of Rs 16 crore, the same as last year. The sum assured included Rs 5,000 crore for asset coverage and another Rs 3,000 crore for liability cover, essentially implying loss of profit (LOP) risks. The risk coverage also included medical risks for Infosys’ 56,000 employees.
The officials that the assets covered were mostly in the vicinity Bangalore, Mysore, Pune, Chennai and Bhubaneshwar.

Coinsurance partners
NICL, however, is yet to decide on the coinsurance partners this year. The officials said that both ICICI-Lombard Insurance Company and Tata AIG Insurance were pitching hard for a coinsurance partnership with NICL.
Last year National Insurance’ coinsurance partner was ICICI-Lombard. The officials said that a decision on ceding 25 per cent or even 30 per cent to either of these companies would be decided only next week after negotiations with the two companies.
Although Infosys had high medical claims, the company has hardly lodged any claims on the LOP or property covers.
This, the officials said was one of the major factors that weighed in favour of Infosys. Infosys’s claims from for the medical risk cover for last year was close to 95 per cent, though below the national average of about 120 per cent.
Besides, what also weighed in favour of the info tech company were the low probable maximum loss (PML) ratios. This was largely on account of the spread of Infosys’s assets across the country.
This ratio estimates the losses of the underwriter in the case of a claim event. Consequently at any point of time the PML ratios are unlikely to exceed Rs 300 crore for the insurers, the officials said. PML ratios tend to be low in the case of information technology companies.
As a result companies like Infosys tend to be highly profitable for insurers allowing them to obtain competitive tariffs.

Mega risk cover
However, the officials said that the sum assured beyond Rs 1,500 crore were treated as mega risk covers. Mega risk covers were in any case, deregulated some time ago, and were entirely reinsurance driven.

Source: The Hindu Business Line

Insurers plan roadmap against cartelisation

Non-life insurers are in the process of preparing a roadmap to ensure that none of them engage in cartelisation when the Insurance Regulatory and Development Authority (Irda) totally lifts the price controls on fire and engineering insurance from September 1. The code of market conduct is being prepared under the aegis of the General Insurance Council (a self-regulatory body of the 12 non-life insurance companies) in this regard.

"The code of market conduct will ensure there is no cartelisation among insurers, that they don't indulge in restrictive practices, and will ensure that insurance is available to the consumer at reasonable cost. It is to ensure that the insured is not put to any disadvantage by insurance companies charging arbitrary rates," said K N Bhandari, secretary general of the General Insurance Council.

The code of market conduct has to be adopted and filed with the Irda by July 31.

The Irda, on June 25, sent a circular to the CEOs of all non-life insurance companies stating that effective September 1, 2007, the control on the rates of fire, engineering and workmen's compensation would be totally removed.

However, the freedom is subject to two stipulations. Firstly, insurers should prepare a code of market conduct and secondly, they have to file their base rates and the procedure to be followed for rating of individual risks based on the risk features and the range of loadings/discounts with the Irda. However, this time, there will be no approvals required from the Irda. The circular says that insurers will have to adopt a code of conduct through the General Insurance Counicl on matters relating to market conduct and competition as a matter of urgency and abide by such a code in letter and spirit.

The non-life insurance industry was detariffed from January this year. Though the Irda lifted price controls on insurance products (fire, engineering and motor) from January 1 this year, it restricted the discounts insurers could give, fearing a price war between them.

Insurers can give maximum discounts up to 51.25 per cent of the erstwhile tariff rates on individual rated products (those risks, where the sum insured is more than Rs 10 crore), and up to 43.75 per cent in case of class rated products (those risks, whose sum insured is less than Rs 10 crore).

Source: Business Standard

LIC not to appoint retired staff on company boards

The Life Insurance Corporation (LIC) has decided not to nominate any retired employee as a director on the board of the almost 90 companies in which it has equity or loan exposure.

The decision, which comes after LIC was involved in a tussle with one of its retired nominee directors over exercise of the employee stock option plan (Esop) in Larsen & Toubro (L&T), will be implemented once retired employees currently serving as nominee directors complete their term.

Confirming the development, sources in LIC said the corporation would send senior officials of the rank of executive director and above to the company boards.

“The average age of senior officers of the rank of executive director and above is 54; so we may not see many retirements in the near future,” they added.

In most cases, LIC appoints one of its high-level retired employees as a director on the board of a company in which it is a lender or an equity stake holder.

Industry experts said the corporation might find it difficult to meet its own criterion— designation of executive director and above—to fill up vacancies on company boards.

However, a top source in LIC said the corporation’s representation on company boards would be significantly reduced in the near future.

“Today, companies go to the capital markets to meet their fund requirements. There has been a reduction in the number of companies approaching us for a term loan and so we may not need that many nominee directors in the future,” he added.

LIC and GIC were caught in a major controversy two months ago with their representatives in L&T – Kranti Sinha and B P Deshmukh, respectively – exercising their Esops and transferring them to their personal demat accounts without informing the institutions.

LIC took legal recourse against Sinha and received a restraint order from the Bombay High Court.

Later, both directors were replaced from the L&T board and also returned their Esops to the institutions.

Source: Business Standard

Postal department to enter insurance space

TIRUCHIRAPALLI: In a bid to augment its revenue, the postal department would soon venture into life insurance space, IT and Telecom Minister A Raja said. Addressing a function at Perambalur, 45 kms from here, Raja has said the life insurance policies would be introduced at post offices across the country. Also, loans sanctioned by NABARD would be distributed to women's self help groups through post offices. This would help effective implementation of the scheme in rural areas, he said. Raja said all the 1.60 lakh post offices across the country would be computerised in a phased manner. In the first phase, Rs 40 crore has been sanctioned and under this phase and one region would be computerised in every circle of the department. At a function to mark the upgradation of a sub-post office into Head Post Office at Perambalur, Raja said a full- fledged complex would be constructed for the post office at an outlay of Rs two crore. A new building would also come up at Thuraiyur Head Post Office in Tiruchirappalli district at a cost of Rs 1 crore.

Source: Times News Network

Insurers can't take shortcuts in countryside

KOLKATA: Insurers will no longer be able to get away with selling low-value, low-premium covers to rural folk to meet their social and rural obligations. Insurance Regulatory & Development Authority (Irda) has decided to clamp down on insurers and define rural and social insurance products in terms of minimum and maximum sum assured. The regulator also intends to include micro-insurance under its definition. In a communique to insurers, Irda has said: “With a view to aligning rural and social sector obligations with micro-insurance regulations amendments, it is now decided to define the rural and social sector products for compliance with statutory obligations.” According to the letter, rural products will have to offer a minimum sum assured of Rs 5,000 for general and life insurance policies. However, health insurance for family and personal accident per person will have to be a minimum of Rs 10,000. There will, however, be no upper limit on the sum assured. Social products, on the other hand, cannot offer a sum assured beyond Rs 30,000 for general insurance covers and health cover for individual and family floaters. For term insurance and personal accident, the maximum will be Rs 50,000 per person if it’s a social policy. Insurers will also have to adhere to the minimum requirements stipulated for rural policies. Irda intends to make a formal notification soon and it is likely to be made effective from the current fiscal. The letter also says micro-insurance will now be considered a part of rural/social policies. Interestingly, Irda has now asked insurers to keep it updated about the number of policies sold. Currently, life insurance companies are required to sell 7%, 9%, 12%, 14% and 16% of their policies in rural areas in the first, second, third, fourth and fifth financial years, respectively. Non-life insurers need to earn 5% of their gross written premium from rural areas after the third year of operation. Both life and non-life insurers have to insure 20,000 lives from the social sector in the fifth year of operation. The social sector includes the informal and unorganised sector, and economically vulnerable and backward classes from the rural and urban areas. “The idea of rural and social insurance is to shield the rural poor and socially backward classes from unforeseen mishaps. It is being defeated as insurers are either selling policies to rich rural folk or are keeping them under-insured with covers that provide meagre value on sum assured,” said a senior insurance official. “A policy with a sum assured of Rs 5 lakh, if sold to someone staying in rural India, is termed rural cover and is accounted under rural/social insurance under the current norms. Similarly, insurers also sold covers with sum assured values of as low as Rs 1,000 or Rs 2,000 to meet their obligations,” the official said. On micro-insurance, Irda said in its letter: “The authority observes that there is considerable scope for using the platform of micro-insurance to qualitatively enhance the level of compliance with the rural and social sector obligation.... All micro-insurance policies may be reckoned for the purpose of fulfilment of social obligations by an insurer.” These new rules, according to Irda, will be useful in benchmarking the performance of insurers in meeting obligations of rural and social sector against the minimum requirements stipulated under regulations. “This would also check attempts to meet the quantitative requirements through low-value/low-premium policies,” the letter mentioned.

Source: Times News Network