An average Indian considers investment in life insurance policy as a safe investment as it not just covers insurer’s life but also gives return on investment.
However the Bombay High Court’s recent judgement allowing trading in insurance policies, has paved way for legal trading in it and the insurance sector especially the broking firms are of the view that the trading of life insurance polices should be formalised and legalised at the earliest.
Demanding legalisation of trading in life insurance polices, Rahul Aggarwal, chief executive officer, Optima Risk Management Services, said, “IRDA should legalised the trading of the life insurance polices to make the entire system more transparent.”
Recently, in a judgment the Bombay High Court clarified the trading in insurance policies is permissible as its working as it paves the way to formalise trading of life insurance policy products.
Presently, the trading of the life insurance policies is undertaken in a unorganised manner with small time broking firms picking up the lapsed life insurance policies. The insurance policy trading in an unorganized market in an unorganized manner is exposed to the threat of frauds may be committed by the agents taking advantage of the situation says industry experts.
The argument made by some quarters that making insurance policies tradeable will encourage unhealthy practices which in turn might harm public interest.
According to Aggrawal, this is a rare possibility as unorganised trading is more harmful to the public rather than a transparent and legalised trading in life insurance policies.
Experts are of the view that opening up life insurance product for trade, the customer will get optimum value for their policies.
“Most lapse policies are of no use to the policyholder and there where the people can make good out of nothing”, argues Vinay Taluja, senior vice president, Life Insurance, Bajaj Capital Insurance Broking Ltd.
According to Taluja, if the market is formalized the insured person can get better value of its policies thereby there is need of the hour that the trading of life insurance polices should be legalised and formalised.
Taluja is of the view that making the life insurance policies tradable will allow the customer to switch-over from one policy to another without worrying about old policies which has lost its purpose.
“Most of the policy holders normally follows the advise of the insurance agents which sometime does not even serves the purpose for the policy holders”, adds Taluja.
An alternative route given to the customer to dispose off their old and outdated life insurance policies will have a positive affect as it would help selling more number of new policies.
Few other broking firms also share the a similar view. According to a broker with a leading broking firm legalising and formalizing the trade in life insurance products will be a win win situation for both the customers (policy holders) as well as for the broking firms.
Recently, in a petition filed by an investor it was contended that Life Insurance Corporation of India refuses to honour policies in transaction in case of a particular company. LIC reportedly had contended that the company had no insurance business interests and the policies were purchased merely to re-sell them onward.
However, the Bombay high court rejected the contention of LIC and stated that the contractual terms of the policy did not prohibit LIC from honouring the policy.
The court further said that as long as the due process are followed and the parties involved are willingly participating in the transactions, then LIC’s role is just reduced as a registering authority.
source:business standard
Friday, July 13, 2007
LIC to offer health insurance; plans to enter credit card, pension businesses
Mumbai: Life Insurance Corporation (LIC) of India has hinted at plans to enter credit cards and pension funds business.
LIC chairman T S Vijayan said the corporation would enter health insurance, pension management and credit cards business. "We have no intention of owning a bank as it is a highly specialised area," he asserted.
Vijayan said that LIC had created a separate department for health insurance in its corporate set-up and the department was making efforts to come out with innovative products.
"We would be coming out with our initiative during the later part of the year. We are building a strong marketing network and technology platform for the new health insurance product," he said.
Reports, meanwhile, said the country's largest life insurer is trying to acquire a major stake in UTI Bank to foray into banking.
LIC already has a strategic partnership with Corporation Bank and owns 27 per cent stake in it. LIC also has substantial shareholding in a number of other banks, but does not have controlling stake.
LIC, however, is eager to enter the credit card business, as the potential is huge considering the credit card spends as a proportion of total expenditure. There is a possibility of Corporation Bank being roped into it.
GE already has a tie-up with India 's largest commercial bank, State Bank of India , for the credit card business.
Source: Domain-b
NSDL's pension plan faces sebi block
NSDL's pension agency plan faces Sebi block
The National Securities Depository (NSDL) bid to act as central record keeping agency (CRA) for pension funds seems to have hit the a roadblock with the Securities and Exchange Board of India (Sebi).
It is learnt that the capital markets regulator has expressed reservations about NSDL acting as a CRA, citing that it falls outside the basic objective of the depository, established under the Depositories Act, 1996.
Significantly, it was the Pension Fund Regulatory and Development Authority (PFRDA), which proposed the name of NSDL for the pension fund record keeping job.
This is not the first time that Sebi is objecting to NSDL’s business plans. Earlier, the regulator had denied NSDL from bidding for the e-stamping project, which was later awarded to the Stock Holding Corporation of India (SHCIL).
The corporation is now battling a series of charges ranging from misappropriation of funds to stake sale in subsidiaries to unknown entities without the knowledge of its board.
Under the proposed new pension plan, government employees who started service from January 2004 are required to contribute a part of their salaries to the pension fund. The government will contribute a matching amount and continue paying the pension of employees on the rolls before 2004.
NSDL executives declined to comment on the development owing to its sensitive nature. “We don’t want to comment on this topic,” a senior executive said.
Following the regulator’s reservations, the NSDL may now think of roping in subsidiary, NSDL Database Management Services Ltd, for undertaking the task.
The subsidiary was put forward by NSDL for its National Skills Registry (NSR) project, which is now undertaking a project for Nasscom to promote the IT and ITeS industry.
NSR involves third-party verification of personal, educational and career information of the IT professionals in the country.
The agreement between PFRDA and NSDL is yet to be signed as final negotiations are still going on. The CRA will be responsible for keeping the accounts of members of the national pension scheme (NPS).
A week ago, the PFRDA also received technical and commercial bids from the SBI, LIC, IDBI Capital and UTI AMC for managing the Rs 1,500 crore pension funds.
Three AMCs will be selected for the purpose. The successful bidders will float a separate subsidiary for the fund management and their parent will be the sole sponsor.
Under the NPS, fund managers will be allowed to invest up to 5 per cent of the total corpus into equities. Even though the Pension Bill is still pending the in the Parliament, central and state governments have permitted limited equity investment through the pension fund.
source :business standard
The National Securities Depository (NSDL) bid to act as central record keeping agency (CRA) for pension funds seems to have hit the a roadblock with the Securities and Exchange Board of India (Sebi).
It is learnt that the capital markets regulator has expressed reservations about NSDL acting as a CRA, citing that it falls outside the basic objective of the depository, established under the Depositories Act, 1996.
Significantly, it was the Pension Fund Regulatory and Development Authority (PFRDA), which proposed the name of NSDL for the pension fund record keeping job.
This is not the first time that Sebi is objecting to NSDL’s business plans. Earlier, the regulator had denied NSDL from bidding for the e-stamping project, which was later awarded to the Stock Holding Corporation of India (SHCIL).
The corporation is now battling a series of charges ranging from misappropriation of funds to stake sale in subsidiaries to unknown entities without the knowledge of its board.
Under the proposed new pension plan, government employees who started service from January 2004 are required to contribute a part of their salaries to the pension fund. The government will contribute a matching amount and continue paying the pension of employees on the rolls before 2004.
NSDL executives declined to comment on the development owing to its sensitive nature. “We don’t want to comment on this topic,” a senior executive said.
Following the regulator’s reservations, the NSDL may now think of roping in subsidiary, NSDL Database Management Services Ltd, for undertaking the task.
The subsidiary was put forward by NSDL for its National Skills Registry (NSR) project, which is now undertaking a project for Nasscom to promote the IT and ITeS industry.
NSR involves third-party verification of personal, educational and career information of the IT professionals in the country.
The agreement between PFRDA and NSDL is yet to be signed as final negotiations are still going on. The CRA will be responsible for keeping the accounts of members of the national pension scheme (NPS).
A week ago, the PFRDA also received technical and commercial bids from the SBI, LIC, IDBI Capital and UTI AMC for managing the Rs 1,500 crore pension funds.
Three AMCs will be selected for the purpose. The successful bidders will float a separate subsidiary for the fund management and their parent will be the sole sponsor.
Under the NPS, fund managers will be allowed to invest up to 5 per cent of the total corpus into equities. Even though the Pension Bill is still pending the in the Parliament, central and state governments have permitted limited equity investment through the pension fund.
source :business standard
Reducing risks for policyholders
N V Subba Rao, head, risk services, Chola MS Risk Services Ltd, shares his perspectives, expects risk mitigation services to grow with the growth of the insurance sector.
Chennai: The promoter of a popular hotel chain in India was shocked to learn that a thermal imaging study by Cholamandalam MS Risk Services Limited, part of the Murugappa Group, revealed that a new hotel had 22 'hotspots'.
Here 'hotspots' refer to those electric points that emit more than normal heat, making them trigger points for potential electrical fire accidents. The hotel chain asked Chola MS Risk Services to conduct thermal imaging studies at all its properties to be able to take corrective measures across the chain.
"No more do corporates look at risk management companies to merely to save insurance premium. Today corporates would like to be seen as responsible corporate citizens by minimising the accident risks," says N V Subba Rao, head, Risk Services, Chola MS Risk Services.
He further adds, "Rather than reducing the premium outgo there have been instances where after our risk inspection report, companies have increased their insurance coverage by paying higher premium."
Interestingly Chola MS Risk Services is instrumental in getting a sizeable business for the $2-billion Murugappa group's non life insurance company, Cholamandalam MS General Insurance Company Limited. For instance Madras Cements Limited, which initially hired the risk management company to conduct a safety audit later shifted its insurance account to Cholamandalam MS General Insurance.
An experienced hand in loss prevention and safety, Rao, 44, is a B.Tech (mechanical) and an associate of the Institute of Risk Management, UK. Earlier, while with the Loss Prevention Association (LPA) of India he had investigated more than 120 fire accidents across the country.
In 1998 he joined Chola Axa Risk Services. However, global changes in the shareholding pattern led to Axa exiting the Murugappa joint venture. When it tied up with Mitsui Sumitomo for the non-life insurance venture, it was natural for the Murugappa Group to st up an equal venture with the Japanese company for its risk management services venture.
After a lull, Chola MS Risk Services hit the growth trajectory from 2002 onwards. Today it has 25 engineers on its rolls and couple of more will be added soon. "We have conducted safety audits for 18 out of 26 fertiliser plants in India," says Rao.
Last year the company did 160 assignments including couple of overseas projects. The company also services corporates in Hong Kong, Thailand, Taiwan, Indonesia, Singapore and Sri Lanka. Chola MS Risk Services is the first Indian risk management company to be on the Kuwait Oil Company's panel of risk managers.
Here Rao talks about the risk management services business and its growth drivers. Excerpts.
On the importance of risk management services.
in India, every 48 hours a major fire resulting in loss of over Rs50 lakh breaks out. The total marine losses incurred by private general insurance companies in India for FY06 amounted to Rs1,164 crore.
Given this, risk management is an investment to protect the future value of a company by mitigating the impact of a major loss and the company's ability to generate positive return to shareholders and employees.
For instance in Hurricane Katrina that hit parts of the US, companies that have implemented engineering recommendations had eight times lower damage than the ones that chose not to implement them.
On notable achievements of Chola MS Risk Services
The manual developed by us for building petrol bunks for a multinational oil company later became the blue book for setting up such outlets here. In the case of a car carrier, the implementation of our suggestions improved its mean time between accidents from 14 to 107 days.
We do safety audits for construction, logistics, ceramics, bulk drug, cement, chemicals, paints, electronics, telecom, food processing, high rise buildings, hotels, BPO, petrochemical plants, refineries and power plants. Chola MS Risk Services will soon start green building certification.
We don't see Chola MS Risk Services marketing its services aggressively.
We will soon setting up a focused marketing department. We get our clients through word of mouth and through our website. As of now we are able to respond to the market demands. We target is medium and large sized companies. We expect good orders from overseas market. This year our focus will be on chemical industries, retail chains and power plants. Target revenue this year is $1 million. Last year the revenue was Rs2.7 crore.
How will the detariffing of non-life premium rates impact your business?
Surely the market for us would expand. In a free pricing market, insurers would demand action taken report from their customers on safety precautions. The risk management flow chart is like this — identification of risks, implementing risk reduction measures, emergency measures for containing risk and finally comes transfer of risk.
We do suggest retention and transfer in loss of profit machinery breakdown policy. We base our recommendation after studying the cash flow, maintenance history, availability of spares. It is not only premium savings we do. We also assist in companies to get adequate insurance coverage to avoid under or over insurance. It should be mentioned that we are more into risk engineering and high end consulting.
Source: Domain-b
Chennai: The promoter of a popular hotel chain in India was shocked to learn that a thermal imaging study by Cholamandalam MS Risk Services Limited, part of the Murugappa Group, revealed that a new hotel had 22 'hotspots'.
Here 'hotspots' refer to those electric points that emit more than normal heat, making them trigger points for potential electrical fire accidents. The hotel chain asked Chola MS Risk Services to conduct thermal imaging studies at all its properties to be able to take corrective measures across the chain.
"No more do corporates look at risk management companies to merely to save insurance premium. Today corporates would like to be seen as responsible corporate citizens by minimising the accident risks," says N V Subba Rao, head, Risk Services, Chola MS Risk Services.
He further adds, "Rather than reducing the premium outgo there have been instances where after our risk inspection report, companies have increased their insurance coverage by paying higher premium."
Interestingly Chola MS Risk Services is instrumental in getting a sizeable business for the $2-billion Murugappa group's non life insurance company, Cholamandalam MS General Insurance Company Limited. For instance Madras Cements Limited, which initially hired the risk management company to conduct a safety audit later shifted its insurance account to Cholamandalam MS General Insurance.
An experienced hand in loss prevention and safety, Rao, 44, is a B.Tech (mechanical) and an associate of the Institute of Risk Management, UK. Earlier, while with the Loss Prevention Association (LPA) of India he had investigated more than 120 fire accidents across the country.
In 1998 he joined Chola Axa Risk Services. However, global changes in the shareholding pattern led to Axa exiting the Murugappa joint venture. When it tied up with Mitsui Sumitomo for the non-life insurance venture, it was natural for the Murugappa Group to st up an equal venture with the Japanese company for its risk management services venture.
After a lull, Chola MS Risk Services hit the growth trajectory from 2002 onwards. Today it has 25 engineers on its rolls and couple of more will be added soon. "We have conducted safety audits for 18 out of 26 fertiliser plants in India," says Rao.
Last year the company did 160 assignments including couple of overseas projects. The company also services corporates in Hong Kong, Thailand, Taiwan, Indonesia, Singapore and Sri Lanka. Chola MS Risk Services is the first Indian risk management company to be on the Kuwait Oil Company's panel of risk managers.
Here Rao talks about the risk management services business and its growth drivers. Excerpts.
On the importance of risk management services.
in India, every 48 hours a major fire resulting in loss of over Rs50 lakh breaks out. The total marine losses incurred by private general insurance companies in India for FY06 amounted to Rs1,164 crore.
Given this, risk management is an investment to protect the future value of a company by mitigating the impact of a major loss and the company's ability to generate positive return to shareholders and employees.
For instance in Hurricane Katrina that hit parts of the US, companies that have implemented engineering recommendations had eight times lower damage than the ones that chose not to implement them.
On notable achievements of Chola MS Risk Services
The manual developed by us for building petrol bunks for a multinational oil company later became the blue book for setting up such outlets here. In the case of a car carrier, the implementation of our suggestions improved its mean time between accidents from 14 to 107 days.
We do safety audits for construction, logistics, ceramics, bulk drug, cement, chemicals, paints, electronics, telecom, food processing, high rise buildings, hotels, BPO, petrochemical plants, refineries and power plants. Chola MS Risk Services will soon start green building certification.
We don't see Chola MS Risk Services marketing its services aggressively.
We will soon setting up a focused marketing department. We get our clients through word of mouth and through our website. As of now we are able to respond to the market demands. We target is medium and large sized companies. We expect good orders from overseas market. This year our focus will be on chemical industries, retail chains and power plants. Target revenue this year is $1 million. Last year the revenue was Rs2.7 crore.
How will the detariffing of non-life premium rates impact your business?
Surely the market for us would expand. In a free pricing market, insurers would demand action taken report from their customers on safety precautions. The risk management flow chart is like this — identification of risks, implementing risk reduction measures, emergency measures for containing risk and finally comes transfer of risk.
We do suggest retention and transfer in loss of profit machinery breakdown policy. We base our recommendation after studying the cash flow, maintenance history, availability of spares. It is not only premium savings we do. We also assist in companies to get adequate insurance coverage to avoid under or over insurance. It should be mentioned that we are more into risk engineering and high end consulting.
Source: Domain-b
Bajaj Allianz Life nets Rs 30 cr in first quarter
MUMBAI, JUL 12: Bajaj Allianz Life Insurance, which ended 2006-07 with a Rs 63 crore net profit, notched a figure of Rs 30 crore in the first quarter.
The company issued over 536,703 policies in the current quarter against 201,442 in the corresponding period of 2006-07, a growth of over 166%. The annualised premium of the company is estimated at Rs 658 crore. The total new business premium received in the current quarter is estimated to be Rs 729 crore. Normally, the first quarter contributes about 10% of annual new business premium.
The company has attributed its strong performances by becoming a mass retail company, reaching out to all segments across the country.
Sam Ghosh, country manager Allianz & CEO Bajaj Allianz Life, said “Key to profitability is our strong base of wide and stable distribution network coupled with bouquet of flexible and simple products.
Profits are not only a result of efficient capital management and strong cost controls by the company but are also contributed by agents, corporate agents, franchisees and bancassurance partners.
Bajaj Allianz was the most profitable private sector life insurance company in the country in 2006-07. With a pan India presence and over 900 offices, it already has a customer base of close to 3.5 million customers.
Source: Financial Express
Dena Bank to enter non-life insurance business
KOLKATA: Dena Bank is in the process of forming a joint venture to foray into the non-life insurance sector along with other partners, chairman and managing director P L Gairola said on Friday.
The idea was at a conceptualisation stage and was yet to get approval of the board, Gairola told reporters on the sidelines of the Banking Conclave organised by FICCI (eastern region) here.
Dena Bank would hold 26 per cent stake in the proposed JV, he said, adding besides Dena Bank, there would be other domestic and foreign players.
At present, the bank is selling products of LIC for life and Oriental Insurance for non-life.
During the current fiscal, the bank was eyeing a credit growth of 22 per cent and deposit growth of 23 per cent as compared to 27 per cent and 18 per cent respectively in the last financial year.
Gairola said that the bank was keen to maintain a capital adequacy ratio of 11 per cent during the year which at present was at 11.52 per cent.
He said the bank did have headroom to raise Rs 8000 crore both in Tier I and Tier II.
The bank was also in talks with State Bank of India to launch credit cards.
Dena Bank is eyeing a business of Rs 57,000 crore in the current year.
Source: Press Trust of India
Unhealthy surprises in new mediclaim norms
The next time you are admitted to an upscale hospital, read your medi-claim policy carefully. Starting April 1, medical insurers have imposed a limit on claims for room rents, intensive care, doctor’s fees and other charges, raised premiums by 30 to 50 per cent, and increased the list of exclusions for all new medi-claims drawn up in the new financial year.
This means all policies issued after April 1, 2007 have the following restrictions for any one illness:
room rent restricted to 1 per cent of the sum insured and intensive care unit charges to 2 per cent, with the overall limit restricted to 25 per cent of the sum insured;
limits for surgeon, anaesthetist, medical practitioner and specialist consultant fees set at 25 per cent of the sum insured;
reimbursement for expenses incurred towards anaesthesia, blood, oxygen and operation theatre has been restricted to 50 per cent of the sum insured.
Over and above this, the minimum sum insured has gone up more than three times. In previous policies, the minimum sum insured was Rs 15,000 and other options were available in multiples of Rs 5,000. In new policies, the minimum sum insured is Rs 50,000 and other options are available in multiples of Rs 25,000.
Premium rates have also gone up considerably. A new age slab of 0-25 years has been created at a relatively low rate, but in other age slabs premiums have gone up by 30 to 50 per cent.
These changes have been made to reduce claims on high-value bills in “five-star hospitals”, the higher cost of medicare as a result of technology advancements and to account for inflation. Premium rates have not been raised for six years. Last fiscal, mediclaim premiums were around Rs 3,500 crore, a 25 per cent annual growth.
Industry sources say insurance companies are currently paying out Rs 120 for every Rs 100 premium they get from policy-holders.
“The incurred claim ratio is 120 per cent in the health portfolio. We need to be clear about our overall liability. If the claim is more than what is provided for, the additional cost will be borne by the policy-holder,” said an executive at Oriental Insurance Company.
Added Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers, “There have been substantial increases in healthcare costs over the last few years. This, coupled with an increase in awareness, is leading to ever-growing claims. One way for insurers to control cost is through cappings, though consumers may not fully understand the financial impact of these cappings at the time they buy the policy.”
Mediclaim policies have also become more stringent in terms of the diseases they cover. Pre-April policies covered pre-existing diseases after four claim-free years even if the policy was held by another insurance company for the first three years.
Under the current policy, policy-holders need to be covered by the same insurer for at least four years.
Certain diseases or disorders arising out of diabetes and hypertension or both are now excluded (if they exist when the policy is taken for the first time), a condition that was not clearly mentioned in the earlier policy.
Further, the list of diseases that are excluded from the purview of the policy has been extended. Earlier, first-year exclusions included benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy, tympanoplasty cataract, hernia, piles, fistula, and benign prostratic hypertrophy.
Under the current policy, benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy and tympanoplasty come under first-year exclusions.
All other diseases and disorders carry a waiting period of two years and procedures like joint replacement carry a waiting period of four years.
Predictably, the medical fraternity is unhappy. “This is not the right way to correct a malpractice. A blanket cap on medical expenses is unrealistic. There should be a robust dialogue between healthcare providers and insurance companies to correct malpractices, if any,” said Daljit Singh, president, strategy and organisational development, Fortis Healthcare Ltd.
Source: Business Standard
This means all policies issued after April 1, 2007 have the following restrictions for any one illness:
room rent restricted to 1 per cent of the sum insured and intensive care unit charges to 2 per cent, with the overall limit restricted to 25 per cent of the sum insured;
limits for surgeon, anaesthetist, medical practitioner and specialist consultant fees set at 25 per cent of the sum insured;
reimbursement for expenses incurred towards anaesthesia, blood, oxygen and operation theatre has been restricted to 50 per cent of the sum insured.
Over and above this, the minimum sum insured has gone up more than three times. In previous policies, the minimum sum insured was Rs 15,000 and other options were available in multiples of Rs 5,000. In new policies, the minimum sum insured is Rs 50,000 and other options are available in multiples of Rs 25,000.
Premium rates have also gone up considerably. A new age slab of 0-25 years has been created at a relatively low rate, but in other age slabs premiums have gone up by 30 to 50 per cent.
These changes have been made to reduce claims on high-value bills in “five-star hospitals”, the higher cost of medicare as a result of technology advancements and to account for inflation. Premium rates have not been raised for six years. Last fiscal, mediclaim premiums were around Rs 3,500 crore, a 25 per cent annual growth.
Industry sources say insurance companies are currently paying out Rs 120 for every Rs 100 premium they get from policy-holders.
“The incurred claim ratio is 120 per cent in the health portfolio. We need to be clear about our overall liability. If the claim is more than what is provided for, the additional cost will be borne by the policy-holder,” said an executive at Oriental Insurance Company.
Added Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers, “There have been substantial increases in healthcare costs over the last few years. This, coupled with an increase in awareness, is leading to ever-growing claims. One way for insurers to control cost is through cappings, though consumers may not fully understand the financial impact of these cappings at the time they buy the policy.”
Mediclaim policies have also become more stringent in terms of the diseases they cover. Pre-April policies covered pre-existing diseases after four claim-free years even if the policy was held by another insurance company for the first three years.
Under the current policy, policy-holders need to be covered by the same insurer for at least four years.
Certain diseases or disorders arising out of diabetes and hypertension or both are now excluded (if they exist when the policy is taken for the first time), a condition that was not clearly mentioned in the earlier policy.
Further, the list of diseases that are excluded from the purview of the policy has been extended. Earlier, first-year exclusions included benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy, tympanoplasty cataract, hernia, piles, fistula, and benign prostratic hypertrophy.
Under the current policy, benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy and tympanoplasty come under first-year exclusions.
All other diseases and disorders carry a waiting period of two years and procedures like joint replacement carry a waiting period of four years.
Predictably, the medical fraternity is unhappy. “This is not the right way to correct a malpractice. A blanket cap on medical expenses is unrealistic. There should be a robust dialogue between healthcare providers and insurance companies to correct malpractices, if any,” said Daljit Singh, president, strategy and organisational development, Fortis Healthcare Ltd.
Source: Business Standard
Insurance cover for HIV+ likely
NEW DELHI: India's 2.5-million-strong HIV population will finally have an insurance policy to fall back on, once they develop full blown AIDS.
A Chennai-based private insurance firm, Star Health and Allied Insurance Company, is set to launch India's first-ever health cover for HIV-positive people, early next week.
Under the scheme, an HIV-positive patient with a CD-4 count not less than 500 cells per cubic millimetre of blood, will have to pay an annual premium of Rs 3,000.
Once he or she becomes a full blown AIDS patient, the company will pay a one time compensation of Rs 50,000 back to them. The company has also tied up with 1,800 hospitals and labs where it will conduct the CD-4 test of HIV patients seeking insurance cover.
The CD-4 count test is used to gauge immunity levels of an HIV-infected patient and to assess whether damage caused by the virus requires life-saving anti-retroviral therapy (ART).
The CD-4 count is used in combination with the viral load test which measures level of HIV in blood. The test is ordered when a person is first diagnosed with HIV as part of a baseline measurement. Tests are repeated every six months. The CD-4 count in healthy adults ranges from 500 to 1,500 cells per cubic millimetre of blood.
In HIV infected people, it goes down by 60 cells per cubic millimetre of blood per year as HIV progresses. ART is administered when an HIV-positive person registers a CD-4 count under 200. Speaking to TOI, chief of Star Health V Jagannathan said, "At present, we have fixed the premium at Rs 3,000. However, we plan to revise that and lower the price in the next renewal."
He added, "This health insurance cover is awaiting Insurance Regulatory and Development Authority approvals. We hope to get them by this weekend. All that a patient has to do is come to us for the insurance cover. The blood tests will be conducted by us." According to Naco, of the 2.5 million people with HIV in India, nearly 3 lakh at present suffer from full blown AIDS.
Reacting to this move, K K Abraham, chief of Indian Network of People Living with HIV, told TOI, "For someone with CD-4 count above 500 following proper treatment regimen and good nutrition, transmission from HIV to AIDS will take nearly 15-16 years. The company, therefore, has done good research. However, that such an insurance cover is being launched at all is a great sign for India's HIV population. At present, no such cover exists. Hopefully, many other companies will come up with similar schemes for HIV-positive people."
Currently, AIDS insurance is not offered in India and insurers have complained that lack of representative data has kept them from venturing into the segment. Globally, the government of Uganda was the first to offer AIDS insurance to 25,000 miners. Star Health had recently come out with a Diabetes safe insurance policy. It covered already known diabetics against risks arising out of specified complications. The policy cover ranged from Rs 50,000 to Rs 4 lakh.
Source: Times News Network
A Chennai-based private insurance firm, Star Health and Allied Insurance Company, is set to launch India's first-ever health cover for HIV-positive people, early next week.
Under the scheme, an HIV-positive patient with a CD-4 count not less than 500 cells per cubic millimetre of blood, will have to pay an annual premium of Rs 3,000.
Once he or she becomes a full blown AIDS patient, the company will pay a one time compensation of Rs 50,000 back to them. The company has also tied up with 1,800 hospitals and labs where it will conduct the CD-4 test of HIV patients seeking insurance cover.
The CD-4 count test is used to gauge immunity levels of an HIV-infected patient and to assess whether damage caused by the virus requires life-saving anti-retroviral therapy (ART).
The CD-4 count is used in combination with the viral load test which measures level of HIV in blood. The test is ordered when a person is first diagnosed with HIV as part of a baseline measurement. Tests are repeated every six months. The CD-4 count in healthy adults ranges from 500 to 1,500 cells per cubic millimetre of blood.
In HIV infected people, it goes down by 60 cells per cubic millimetre of blood per year as HIV progresses. ART is administered when an HIV-positive person registers a CD-4 count under 200. Speaking to TOI, chief of Star Health V Jagannathan said, "At present, we have fixed the premium at Rs 3,000. However, we plan to revise that and lower the price in the next renewal."
He added, "This health insurance cover is awaiting Insurance Regulatory and Development Authority approvals. We hope to get them by this weekend. All that a patient has to do is come to us for the insurance cover. The blood tests will be conducted by us." According to Naco, of the 2.5 million people with HIV in India, nearly 3 lakh at present suffer from full blown AIDS.
Reacting to this move, K K Abraham, chief of Indian Network of People Living with HIV, told TOI, "For someone with CD-4 count above 500 following proper treatment regimen and good nutrition, transmission from HIV to AIDS will take nearly 15-16 years. The company, therefore, has done good research. However, that such an insurance cover is being launched at all is a great sign for India's HIV population. At present, no such cover exists. Hopefully, many other companies will come up with similar schemes for HIV-positive people."
Currently, AIDS insurance is not offered in India and insurers have complained that lack of representative data has kept them from venturing into the segment. Globally, the government of Uganda was the first to offer AIDS insurance to 25,000 miners. Star Health had recently come out with a Diabetes safe insurance policy. It covered already known diabetics against risks arising out of specified complications. The policy cover ranged from Rs 50,000 to Rs 4 lakh.
Source: Times News Network
Insurers may face flood loss claims of Rs 3,000 crore
Floods in Maharashtra, Gujarat and West Bengal have turned into a nightmare for insurance companies, as initial reports from these states indicate losses of up to Rs 3,000 crore. In 2005, the losses due to the Mumbai rains were estimated at over Rs 1,000 crore.
An executive at a public sector general insurance company said that post-2005, awareness about insurance had significantly increased, which, in turn, had pushed up new insurance accounts.
"This time, claims are likely to be much higher than those in 2005, with insurance policies for general household goods or even from small and medium shopkeepers showing a rise. Prior to the Mumbai floods in 2005, awareness was low and consumers never felt the need to insure their properties and assets," the executive said.
General insurers literally expect a flood of claims once the situation improves in these states.
"A clearer picture would emerge once the claims come in," the official added. After the claims are made, they would be assessed and then the final settlement amount would be made available.
Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers Pvt Ltd, said this time, the hinterlands-where insurance penetration was low-were the most affected. "Hence, insurance companies need not worry too much," he said.
Source: The Financial Express
An executive at a public sector general insurance company said that post-2005, awareness about insurance had significantly increased, which, in turn, had pushed up new insurance accounts.
"This time, claims are likely to be much higher than those in 2005, with insurance policies for general household goods or even from small and medium shopkeepers showing a rise. Prior to the Mumbai floods in 2005, awareness was low and consumers never felt the need to insure their properties and assets," the executive said.
General insurers literally expect a flood of claims once the situation improves in these states.
"A clearer picture would emerge once the claims come in," the official added. After the claims are made, they would be assessed and then the final settlement amount would be made available.
Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers Pvt Ltd, said this time, the hinterlands-where insurance penetration was low-were the most affected. "Hence, insurance companies need not worry too much," he said.
Source: The Financial Express
Life, health… or both?
Life insurance companies are now gearing up to venture into health cover. But are they “fit enough” to meet the expectations of the health insurance sector?
In the past, general insurance companies failed to make health into a successful portfolio due to various factors such as limited focus on life-related products, less commission compared to other products, comparatively more demanding, higher claims r atio, and problems with hospitals/doctors. In comparison, life-insurance companies have been more successful with the critical illness rider portfolio, though this business belongs in a different league compared to health insurance. While the critical illness rider is usually a one-time payment, health insurance means a long-term relationship besides involving many players.
Cross-selling
Life-insurance companies hope to sell more health policies by tapping their existing customer base. The question is if this will work.
On the positive side, it will help to standardise the underwriting procedures and also set up quality process standards for both the life and general insurance sectors.
But if life-insurance companies are allowed to sell health insurance in the current framework, many new problems might crop up.
The problem areas
Currently, most life-insurance policies are sold through agents and a majority of them do not record the policyholder’s health facts. Though the insurance industry regards agents as the primary underwriters and empowers them to weigh the potential hazards — moral, financial, physical — many a time the agents, who are anxious to achieve their target, fail to record all the facts.
Ultimately, it is the customer who faces the problems for misrepresenting his health status. This may have serious implications only in cases of early claims.
But when it comes to health insurance, most claims face rejection. Moreover, policyholders who have both life and health policies with the same insurer or its subsidiary run the risk of misrepresentation in the life-insurance policy, as their health insurance claim would reveal the true state of affairs.
As most life insurance companies have an integrated data warehousing system this is very likely to happen.
The net result is that existing life insurance policyholders may want to think twice before going in for health insurance with the same insurer.
Besides, life-insurers will bank only on the Third Party Administrator (TPA) network. Hence, the supply chain management will lack an innovative process compared to the general insurance companies. Already, there is a lot of criticism about the TPAs and the way claims are processed.
Life-insurance companies also run the risk of losing their loyal customers due to the rejection of claims in the health insurance portfolio. Far from ‘cross-selling’, this may lead to ‘cross-lapsing’.
There is enough evidence to prove that the cross-selling concept, based on mere customer base statistics, may not work very effectively.
For example, when the State Bank of India entered the life-insurance business with its 13,000-plus branches, pitted against the 2,000-plus branches of the behemoth Life Insurance Corporation (LIC), it was thought that SBI Life would give tough competition to LIC due to its brand image and rural reach.
But even after eight years, this has not happened.Though the Insurance Regulatory and Development Authority allowed agents of any insurance company to work for standalone health insurance outfits, there has been no visible impact, yet. The expectations from the loyal customers of life-insurers such as LIC will be too high in terms of the strength of network hospitals, claim procedures, etc. As most companies have both life and general business as separate entities, health insurance — the common portfolio for both — may lead to horizontal conflict among companies. In the post-tariff regime, general insurance companies were somewhat liberal with the health insurance portfolio in terms of underwriting and claims, as they could offset the losses in health insurance with profits from other lines of business. With competition creeping in due to de-tariff regime, general insurance entities are facing a lot of pressure in the health insurance portfolio.
Tackling issues
What is the solution?
financialexpress
Let life-insurance companies start with simple products before strengthening them.
For designing the products, companies should analyse their portfolio and the segments they are already covering. Going in for stereotyped products may not help.
Let these products be positioned in between the critical illness rider products and full-fledged health insurance products.
Award discounts for loyal life-insurance customers and provide slight relaxation in the health insurance portfolio conditions. Now it may be the turn of the life-insurers to offset the loss. But this should be done because it is a soci al objective; there is an imminent need to expand the base.
Health insurance was neglected in the past leaving millions of people without cover. For example, a person may be paying Rs 25,000 premium for life insurance for the past 10 years, but not even Rs 1,000 towards health insurance. The main reason for this is the lack of proper information.
Trigger re-engineering at all levels — IT, workflow, and business.
Above all, why not pool the health insurance departments of life and general insurance companies (for those with both forms of insurance) and create a health insurance company? Now the regulatory climate is more conducive in terms of c apital requirements and other support requirements.
Article By: S. Jayaprakash (Insurance consultant at i-flex)
In the past, general insurance companies failed to make health into a successful portfolio due to various factors such as limited focus on life-related products, less commission compared to other products, comparatively more demanding, higher claims r atio, and problems with hospitals/doctors. In comparison, life-insurance companies have been more successful with the critical illness rider portfolio, though this business belongs in a different league compared to health insurance. While the critical illness rider is usually a one-time payment, health insurance means a long-term relationship besides involving many players.
Cross-selling
Life-insurance companies hope to sell more health policies by tapping their existing customer base. The question is if this will work.
On the positive side, it will help to standardise the underwriting procedures and also set up quality process standards for both the life and general insurance sectors.
But if life-insurance companies are allowed to sell health insurance in the current framework, many new problems might crop up.
The problem areas
Currently, most life-insurance policies are sold through agents and a majority of them do not record the policyholder’s health facts. Though the insurance industry regards agents as the primary underwriters and empowers them to weigh the potential hazards — moral, financial, physical — many a time the agents, who are anxious to achieve their target, fail to record all the facts.
Ultimately, it is the customer who faces the problems for misrepresenting his health status. This may have serious implications only in cases of early claims.
But when it comes to health insurance, most claims face rejection. Moreover, policyholders who have both life and health policies with the same insurer or its subsidiary run the risk of misrepresentation in the life-insurance policy, as their health insurance claim would reveal the true state of affairs.
As most life insurance companies have an integrated data warehousing system this is very likely to happen.
The net result is that existing life insurance policyholders may want to think twice before going in for health insurance with the same insurer.
Besides, life-insurers will bank only on the Third Party Administrator (TPA) network. Hence, the supply chain management will lack an innovative process compared to the general insurance companies. Already, there is a lot of criticism about the TPAs and the way claims are processed.
Life-insurance companies also run the risk of losing their loyal customers due to the rejection of claims in the health insurance portfolio. Far from ‘cross-selling’, this may lead to ‘cross-lapsing’.
There is enough evidence to prove that the cross-selling concept, based on mere customer base statistics, may not work very effectively.
For example, when the State Bank of India entered the life-insurance business with its 13,000-plus branches, pitted against the 2,000-plus branches of the behemoth Life Insurance Corporation (LIC), it was thought that SBI Life would give tough competition to LIC due to its brand image and rural reach.
But even after eight years, this has not happened.Though the Insurance Regulatory and Development Authority allowed agents of any insurance company to work for standalone health insurance outfits, there has been no visible impact, yet. The expectations from the loyal customers of life-insurers such as LIC will be too high in terms of the strength of network hospitals, claim procedures, etc. As most companies have both life and general business as separate entities, health insurance — the common portfolio for both — may lead to horizontal conflict among companies. In the post-tariff regime, general insurance companies were somewhat liberal with the health insurance portfolio in terms of underwriting and claims, as they could offset the losses in health insurance with profits from other lines of business. With competition creeping in due to de-tariff regime, general insurance entities are facing a lot of pressure in the health insurance portfolio.
Tackling issues
What is the solution?
financialexpress
Let life-insurance companies start with simple products before strengthening them.
For designing the products, companies should analyse their portfolio and the segments they are already covering. Going in for stereotyped products may not help.
Let these products be positioned in between the critical illness rider products and full-fledged health insurance products.
Award discounts for loyal life-insurance customers and provide slight relaxation in the health insurance portfolio conditions. Now it may be the turn of the life-insurers to offset the loss. But this should be done because it is a soci al objective; there is an imminent need to expand the base.
Health insurance was neglected in the past leaving millions of people without cover. For example, a person may be paying Rs 25,000 premium for life insurance for the past 10 years, but not even Rs 1,000 towards health insurance. The main reason for this is the lack of proper information.
Trigger re-engineering at all levels — IT, workflow, and business.
Above all, why not pool the health insurance departments of life and general insurance companies (for those with both forms of insurance) and create a health insurance company? Now the regulatory climate is more conducive in terms of c apital requirements and other support requirements.
Article By: S. Jayaprakash (Insurance consultant at i-flex)
Biz school, ICICI Pru tie-up
Chennai Business School (CBS) had tied up with ICICI Prudential Life Insurance Company to introduce a yearlong post graduate programme in Management and Insurance this academic year. The programme will be jointly developed by the two parties and students enrolling for the programme will be hired by ICICI Prudential after course completion.
The institute will also offer new specialisations in IT, telecom and marketing streams starting this academic year, according to Ms Minnie Menon, Associate Dean and Director of the institute. Currently, CBS offers a yearlong post graduate management programme in three specialisations - human resources, marketing and communications and retail (offered through a tie up with Pantaloon Retail, now a Future Group company).
Talking to Business Line on the sidelines of the graduation ceremony of CBS' first batch of students, Ms Menon said CBS would set up institutes in Mumbai, Bangalore and Bhubhaneshwar and courses would commence from August. All the new institutes would offer the programme in Management and Insurance. Additionally, the institutes at Mumbai and Bangalore would offer the retail stream of specialisation to students. Other streams available at the Chennai institute would be introduced at these centres.
The institute will also offer new specialisations in IT, telecom and marketing streams starting this academic year, according to Ms Minnie Menon, Associate Dean and Director of the institute. Currently, CBS offers a yearlong post graduate management programme in three specialisations - human resources, marketing and communications and retail (offered through a tie up with Pantaloon Retail, now a Future Group company).
Talking to Business Line on the sidelines of the graduation ceremony of CBS' first batch of students, Ms Menon said CBS would set up institutes in Mumbai, Bangalore and Bhubhaneshwar and courses would commence from August. All the new institutes would offer the programme in Management and Insurance. Additionally, the institutes at Mumbai and Bangalore would offer the retail stream of specialisation to students. Other streams available at the Chennai institute would be introduced at these centres.
Source: The Hindu Business Line
Max New York Life to open 150 branches
Firm eyes 100% growth in new assured premium biz.With an aim to extend its reach, Max New York Life Insurance Company Ltd (MNYL), a leading life insurance company and a joint venture between ‘Max India Ltd’- one of India’s leading multi-business corporations and ‘New York Life’- a Fortune 100 company, is planning to open 150 new branches in major cities across the country during the present fiscal 2007-08.
The company is also eyeing 100 per cent growth in the new assured premium business in the current fiscal year.
Speaking to Business Standard, Rajender Sud, Senior Vice-President (West & South), MNYL, said, “We are planning to target those Indian cities where we have still no presence or not reached. As part of this, the company is planning to open 150 new branches in major cities across the country during the current fiscal year 2007-08. In Maharashtra, we will open branches in Jalgaon, Solapur, Sangli and Nanded.”
In 2006-07, MNYL sold 5.52 lakh policies in the country with the premium business of Rs 970 crore.
Out of which, 70,000 policies were sold in Maharashtra with Rs 146 crore premium business. In 2005-06, the company had sold 4.23 lakh policies in the country with Rs 536 crore premium income.
Informing about the company’s new products, Sud said, “The company has introduced 28 products so far. In the current fiscal, we are planning to launch new products for children’s education and for long-term wealth creation for old age. With an aim to make the working system more effective and facilitate both agents and customers, we are investing on the technology.”
Accordingly, our agents will not need to come to office. They will do work through Internet and get necessary official information through company's portal and we will make a separate portal for agents for the purpose. Our customers will also get the information they want about the products through Internet,” Sud said, but he avoided divulge financial details.
Source: Business Standard
Retail boom fuels parking insurance business
An increasing number of contractors managing parking lots at malls, multiplexes and five-star hotels are buying parking insurance covers. Insurance for parking lots is a novel concept in India and is likely to gain ground with parking getting more organised.
Brokers, who customise covers for contractors, said the retail boom had led to a demand for such covers over the last one year.
For instance, Hyatt Hotel in Delhi has outsourced parking management to Jupiter Security Services, which in turn has bought a cover from National Insurance Company.
In cities, large hotels and multiplexes outsource car parking management to contractors. Several foreign contractors such as Intertoll of South Africa, Tenaka of Malyasia, Tramell Crow and Knight Frank have entered India.
These contractors specialising in managing buildings, multiplexes, roads, and parkings lots have made standalone parking insurance popular. Third-party liability insurance so far would take care of any liabilities arising from damage to cars parked in the premises of malls and multiplexes.
Rahul Aggarwal, director & CEO, Optima Risk Management Services, said “Five-star hotels have premium cars parked in their parking lots. If a car is stolen, the contractor and the hotel owner are held liable for the theft. Similarly, if a car is damaged while parking, the contractor or the hotel owner are held liable for the damages. Visitors in large hotels are VIPs and are legally aware. Therefore, hotel owners, mall owners, multiplex owners ask contractors to buy parking insurance when they outsource the job.”
Parking insurance is a variation of a liability insurance policy. It covers the life of car owner whose car is parked inside the parking lot, any injury to the owner, damage to the patron’s vehicle, damage to a standing vehicle due to some other vehicle being parked, theft of a vehicle or its contents, death or injury to a patron while in the parking lot due to fire, explosion or collapse, etc.
The insurance also covers loss of income to the parking lot manager in case the lot is closed due to fire, explosion, collapse, flooding or digging/excavation work by municipal authorities, electricity supply companies, telephone companies, etc.
The primary insured is the contractor while the hotel/multiplex owner is the co-insured. For a five star hotel, the sum insured for a parking insurance cover ranges from Rs 4 to 5 crore. The premium ranges from 0.6 to 0.7 per cent of the sum insured. For a Rs 4 crore policy, the premium would be about Rs 2.5 lakh.
On the other hand, in a multiplex, the composition of the cars is diverse ranging from a Maruti 800 to a Mercedes so the risk is diversified and the sum insured is normally Rs 1-2 crore. At present, the four government-owned general insurance companies offer this cover.
Source: Business Standard
HDFC to finalise insurance partner
MUMBAI: HDFC Chairman Deepak Parekh on Thursday said the housing finance major will finalise the partner for its general insurance business within a few weeks. "We don't want to make a second Chubb Corporation as partner for our general insurance business," Parekh said. HDFC had been approached by a couple of companies for picking up a stake in the general insurance venture. Since HDFC "did not want to make a mistake again", it would select its partner after due deliberation, he said. Asked his views on prevailing asset prices, Parekh said prices were softening. "However, HDFC has decided not to tweak its interest rates," he said. "We will wait for the credit policy in July and then look at the cost of funds before taking a decision, he added.Source: PTI
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