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

More premium cuts likely in fire, workmen’s compensation

“Due to competitive pressures there would surely be a further price cut in the new premiums. However, in the long run, prices for these segments are likely to move up and stabilise as the industry matures.”

New Delhi, July 13 The non-life insurance sector could see a further reduction in premium rates of fire, engineering and workmen’s compensation after September. This, however, could only be a short-term phenomena as in the long run prices are likely to move up and stabilise as the industry matures.

The move has been prompted after the Insurance Regulatory and Development Authority (IRDA) issued a circular on June 25 to all general insurance companies stating that the control rates on fire, engineering and workmen’s compensation insurance classes shall be totally removed.

“Till now rates were subject to maximum limits of 10 per cent in motor and between 20 to 50 per cent in fire and engineering. But from September, the reduction or discount caps will be lifted and left to individual insurer’s judgment. So greater premium reductions are likely in fire and engineering as also workmen’s compensation which could be between 50 to 55 per cent,” Mr Vinod Sahgal, Managing Director, Bajaj Capital Insurance Broking Ltd, told Business Line.

According to Mr Antony Jacob, Managing Director, Royal Sundaram Alliance Insurance Company, “Due to competitive pressures there would surely be a further price cut in the new premiums.

However, in the long run, prices for these segments are likely to move up and stabilise as the industry matures.”

Better terms

Analysts also point out that customers will get better terms if proper risk management system is in place. For example, in the case of fire insurance, an insurer who undertakes necessary fire safety and prevention measures with fire detection and good suppression equipment, would enjoy far lower premium than another insurer with little or no fire safety infrastructure.

Topline may be hit

Though the industry has welcomed it, they feel that the topline of companies might take a hit because of rate reductions. They, however, are confident that buoyant auto sales can compensate for the reduction in premium in the other segments in the same way as it has happened in the last six months when detariffing was introduced.

“What is happening now is that companies are being forced to give discounts and do not follow a flat discount system because of the number of players in the segment. Many companies are giving heavy discounts for the fear of loosing customers and this is leading to unhealthy competition in the industry. But after September we can have better pricing like what has happened in the case of marine insurance a decade ago,” an official of a public sector general insurance company said.

But for new products in these segments customers might have to wait longer as companies are waiting for the regulator’s nod on product innovation.

“At present, the regulator has allowed only rate variation within a specified band and kept the policy wordings and conditions untouched. Product differentiation is expected by January next Once the restriction on policy wordings and so on is removed, there would be considerable scope for insurers to introduce innovative products and value-added features,” Mr Jacob said.

Another feeling is that for product innovation the underwriting skills have to be sharpened.

Source: The Hindu Business Line

ICICI Pru Life, the first Indian private life insurer to open office in Dubai

ICICI Prudential Life Insurance, opened its representative office in Dubai, becoming the first private life insurer from India to open an office in the Emirate. This is ICICI Pru's second overseas office, after its first overseas office in the Kingdom of Bahrain, and marks a move to further strengthen the company's ability to cater to the vast non-resident Indian (NRI) population in the Gulf.

ICICI Pru's office in Dubai will be able to service the 1.4 million discerning NRIs in UAE. The office will promote and service the life insurance needs of the NRIs through ICICI Prudential's wide range of products, which include wealth creation, education insurance, retirement solutions and health solutions.

ICICI Pru's Dubai office was inaugurated today by Venu Rajamony, Counsel-General of India, Dubai, in the presence of Bhargav Dasgupta, Amey Saxena, Senior Vice President & Head - Priority Circle & GCC, ICICI Pru Life Insurance and other senior officials from ICICI Pru Life and ICICI Bank.

Speaking at a press conference to mark the launch of the Dubai office, Bhargav Dasgupta, Executive Director, ICICI Prudential Life Insurance, said, "ICICI Prudential is delighted to announce the opening of its Dubai office. GCC is an important region for ICICI Prudential's future growth plans and UAE, as one of the fastest growing economies with a large NRI population, is key to this growth. Today we are delighted to bring our brand and service promise closer to Indians who live and work in UAE. As we establish our presence here, we hope to partner with them as they secure the future of their families and themselves here as well as in India."

He added, "The booming UAE economy has resulted in greater wealth for NRIs, most of who are seeking to use their enhanced earnings to secure the future of their families back home in India, be it for their retirement planning, child's education or wealth creation needs. ICICI Prudential's range of insurance products is ideally suited to meet all these needs in a comprehensive manner."

Source: Asia Insurance Post

Indian insurers overcome the IT challenge

Though they’ve been late adopters, they’ve done well

While other industries have been successfully adopting new technologies, technology workers in the insurance industry have been watching impatiently.

Insurance industry observers have been critical of companies for being too conservative and all-too-willing to stick with what is admittedly a comfortable status quo.

But now, the insurance industry is finally adopting those technologies years later. This industry, dealing with the future, should be part of the leading edge of technology.

It is important to realise that insurers actually have some good reasons to have a backlog on technology advances.

First, there’s the old culture about not fixing what has not broken. As early adopters of mainframe technology, insurance companies saw a huge increase in productivity that they frankly expected to last them for years to come and that promise has been realised, with so-called “legacy systems” still in place today.

This leads to a false positive comfort that they are technology experts rather than technology followers.

In the US, insurers made a mad rush for customer relationship management, now more popular as CRM. CRM was considered as a technology that would help insurers focus their sales and marketing efforts, while at the same time maintaining positive relationships with their most profitable customers.
CRM made a world of sense for business, and certainly for insurance, but it proved to be a miserable failure in the insurance industry.

Of course, critics like Ara Trembly, who runs an IT and insurance advisory publication, were quick to say that CRM was an impractical and useless bit of nonsense that had cost insurance companies large money and yielded virtually no benefit.

No doubt, CRM was a failure in insurance, but it was the humans who failed, not the technology. The more unfortunate fallout was that the technology took the blame, and insurers were all the more reluctant to sink money into new tech initiatives. But, fortunately, the negativism about CRM has not yet entered into blissfully indigenous insurance decision makers of India. Still, they are investing in CRM software and humanware.

The potential benefits include cost reductions, flexibility for processes and rules modification; help with compliance and support of legacy systems. Ara Trembly may smile to hear that Indian insurers are directed to undertake a BPM exercise of sorts, which may be implemented, circa 2008-09.

Research has shown that most insurers will pass on implementing BPM. While there are some industry-specific issues, and while there is certainly a considerable cost, one wonders if the main reasons insurers are saying no is that they just don’t want to get burned by technology again. May be they even have confidence in the technology, but lack faith in their human resources to interact profitably with that technology. This state must change for the survival and growth of individual companies.

All of this mean that vendors of BPM and other technologies that could benefit the insurance industry need to step it up a notch in educating, selling and assuaging the fears of a sensitive buying insurance industry.

In India, the situation is multi-layered. First, the insurance company looks for a know-all strategic advisor without any implementation responsibilities, but having the god-given right to identify the failures. Then, the company mandates a business-consulting firm to rationalise what is obvious.

The insurance industry, particularly the PSUs, has done so well in India in spite of the fact that they don’t have the IT standards for a service-level to fall back upon.

By: K.C. Mishra, Director, National Insurance Academy, Pune

Can Tendulkar make you buy insurance?

Don’t be surprised if your child pulls you by the hand and asks you to buy him that insurance product. Chances are he has been drawn to it by none other than Sachin Tendulkar.

Indeed, Aviva Life Insurance has not only roped in Tendulkar, but has also named its new children’s insurance policy as ‘Little Master’.

What’s more? Tendulkar was heard as saying at the launch of the product, “It is a great opportunity for forward thinking parents to secure their children’s future and gain kal par control.”

The reasoning of the company is pure and simple. At the launch, Bert Paterson, managing director of Aviva India said, “Sachin is the most popular icon in India for all age groups and his popularity transcends the boundaries of religion, caste and region. It also builds on Aviva’s association with cricket from the time we launched our operations in India.”

Several other life insurance companies have taken that line before - Birla Sun Life, Max New York Life and the now-defunct ANP Sanmar Life if one may recall.

The advantages of celebrity endorsement are all to well known, especially for first attraction. “Then, a Kapil Dev or a Tendulkar is a winner… is a brand in himself, so you try and identify with him,” says an industry official.

But why sports personalities and not film stars? Because of the cost, industry officials agree all agree. “A Hrithik Roshan would be a lot more costly than a Rahul Dravid,” says a distributor with an insurance company.

Why not mascots then? “You have to invest quite a lot in mascots. You remember Asian Paints’ mascot today after it has been publicised for so long. However, mascots have one advantage. They don’t change like celebrity endorsers do,” says the distributor.

And do celebrity endorsements work? No, says H Ansari, a former IRDA member. “Insurance is sold, not bought. Unless someone comes to you personally and tries to sell the product to you, you wouldn’t buy it. Celebrity endorsing may not to lead to buying,” he adds.

So, why aren’t mutual funds allowed to use celebrity endorsements on the ground that they could mislead, whereas insurance companies are?

At any rate, around 90% of the insurance policies sold by private sector insurance companies last financial year were unit linked insurance plans (Ulips), which are more investment than insurance products.

Indeed, “If banking can do it, insurance can do it, why not mutual funds? … It can’t be misleading for one and not misleading for others,” says Jaideep Bhattacharya, chief marketing officer of UTI Mutual Fund.

Penetration of mutual funds in the country is less than 4% today and celebrity endorsement could help improve penetration, he adds.

Waqar Naqvi, vice president of international sales & speciality business at Birla Sun Life Mutual Fund echoes the view. “Imagine Aishwarya Bachchan endorsing a mutual fund product … While performance is the predominant factor people look at while investing, there are other things that work in (a fund’s) favour as well.”

But, others feel mutual funds don’t need celebrities as performance is the only thing that counts.

“If investors do not see performance, they would not invest in the mutual fund,” says a fund manager. A P Kurein, chairman of the Association of Mutual Funds in India is also clear: “We are not very keen on celebrity endorsement and misleading advertisements.”

Article by: Khyati Lodaya for DNA

Australia's IAG in JV talks with HDFC

Insurance Australia Group Ltd is in talks to buy 26 per cent in an Indian insurance firm founded by Housing Development Finance Corp, media reported on Monday. HDFC in May bought out its partner Chubb Corp in a general insurance venture after an uneasy relationship stalled growth. IAG, Australia's top car and home insurer, is in "advanced" talks to buy the stake, media said, citing unnamed sources. Other "strong contenders" were US insurer Travelers and Munich Re's insurance unit ERGO, the paper said, adding HDFC expected to receive a premium for the stake. Last week, a source said Travelers was among several insurance firms that HDFC was talking to, and that a final decision had not been made. HDFC also runs a life insurance firm in a joint venture with UK's Standard Life.

source:Economic Times

Mediclaim cover may come in parts

Do you have a mediclaim? Get prepared to shell out a portion of the hospital bill in cash in case expenditure under certain heads crosses maximum allowable limits. This may happen even if the total bill is well below the sum assured. Kolkata-based National Insurance Company (NIC) has introduced sub-limits under different heads like room rents, surgeons, medical practitioner, and items like anaesthesia, blood, oxygen, OT charges and pacemakers. Sub-limits, basically mean an individual cannot spend more than the stipulated amount under any specific head. If spent, the individual will have to shell out excess from his/her pocket. What more? Your premium bill may be higher by anything from 5-100% as NIC has also raised premiums for almost all age brackets. The older you are, the higher you will have to shell out. The insurer has raised premiums for persons older than 25. It has, in fact, also hiked the minimum cover or sum assured from Rs 15,000 per person to Rs 50,000. A quick look at the premium hike shows that for individuals between 26 and 35 years the rise is 5%. For the 36-45 range, the rise is 30%. Individuals between 46 and 55 years will have to pay 55% more, while those between 56 and 65 years will now be required to shell out 80% extra. Citizens older than 66 years will see their premiums double. Earlier, NIC had just one flat premium rate for a new-born up to the age of 35. This has now been broken up into two categories. One includes children below one year to 25 years where premiums have in fact declined by about 20%. The other is 26-35. In the revised mediclaim policy, NIC has introduced sub-limits under three broad heads. These are room rents and the limit is 1% of sum assured to a maximum of Rs 5,000 per day. For intensive care units, the sub-limit is 2% of sum assured per day and the maximum is Rs 10,000. Overall limit under this head is 25% of sum assured per illness. The other head includes, surgeons, anaesthetist, medical practitioner, consultants, and specialists’ fee. The maximum limit is 25% of sum assured per illness. Cost of pacemaker, anaesthesia, blood, oxygen, OT charges, surgical appliances, medicines, drugs, diagnostic material & X-ray, dialysis, chemotherapy, radiotherapy, artificial limbs and cost of stent and implant will have to be necessarily 50% of the sum assured. The only relief that an individual may get is when they opt out of the cashless system where NIC may directly pay the hospitals. “We are not charging the 6% service charge on premiums if a consumer opts out of the TPA system,” said a senior NIC official. Nevertheless, a 10% discount on covering the entire family remains so does the cumulative bonus. This bonus increases the sum assured by 5% every year in case there are no claims. The maximum can be 10 years. NIC, however, will provide for free health check-up every four year provided the preceding years were claim free. The maximum limit, however, is 1% of the sum assured.

source :Economic Times

Banks may be allowed to form insurance arms

NEW DELHI: Banks are likely to be allowed to form subsidiaries to hold their stake in insurance joint ventures, according to the chairman of the Insurance regulator, IRDA. However, non-banking promoters of insurance joint ventures looking to form holding companies to fund these businesses, may find it difficult to do so. The IRDA view is significant, given the Foreign Investment Promotion Board is meeting on Friday to consider ICICI Bank’s proposal to transfer its stake in its insurance joint venture to a subsidiary holding company. ICICI Bank also wants to induct 24% foreign direct investment in the subsidiary. State Bank of India also proposes to set up a subsidiary for all its non-banking arms, including its insurance venture. “While banks are constrained due to a limit on their exposure to insurance ventures, their need to establish a holding company is justified. For all other promoters which are not banks, whether the holding company route is really required will have to be considered on a case-to-case basis,” CS Rao, chairman, IRDA said. Banking regulations will take precedence over insurance in this case, he said. However manufacturing or service sector companies, should continue to fund their insurance business without floating a holding company. Under Section 19 (2) of the Banking Regulation Act, the investment by a bank in a subsidiary company, should not exceed 10% of the bank’s paid-up capital and reserves. This would constrain a bank’s ability to expand the capital of its insurance venture. Vesting ownership of the insurance venture in a holding company that could draw funds from other investors as well is one way of getting around this constraint. IRDA regulation stipulates that an Indian promoter of an insurance company should not be a subsidiary company under the Companies Act. Banking companies are differently placed. Already, companies including Max India and Bharti have established special purpose vehicles to act as holding companies to fund their insurance ventures. Bajaj Allianz is also expected to come under a holding company - Bajaj Financial Services - controlled by an overall parent Bajaj Holdings under the proposed demerger plan. Officials at Bajaj Allianz refused to comment on the status of the proposed holding company. In a response to an email, a spokesperson said, "the decision of Bajaj Auto to form a holding company for all its financial services is a part of the demerger process and not otherwise."
On the decision of the Foreign Investment Promotion Board (FIPB) which has so far not cleared ICICI Bank's proposal to sell equity of its holding group ICICI Financial Services, the IRDA is of the view that it is more important to serve the larger interest of the industry than starving ICICI's insurance ventures of funds. ICICI has proposed to set up ICICI Financial Services as a wholly-owned subsidiary to hold its investments in insurance and mutual fund business. The bank had applied for permission from FIPB to induct 24% foreign investment in the holding company. “Rules flagged by the FIPB distinguishes between a subsidiary versus a company. Though the registration principles under the IRDA specify that a company and not a subsidiary can hold stake in an insurance venture, this difference is not spelt in the law,” Mr Rao said. Besides, approval of ICICI bank’s holding company does not mean the bank has ceased being a promoter in its insurance ventures, he clarified. The FIPB is likely to again consider the ICICI holding company proposal on July 13. The insurance division in the finance ministry and the IRDA have said the proposal does not violate foreign holding limits for the insurance sector. ICICI problem arose as it was felt by some officials that foreign investment in a holding company was intended to circumvent the ceiling on foreign equity in insurance companies. As per IRDA norms, this conflict arises only when foreign promoter of an insurance company also has a stake in the holding company apart from the joint venture

source:Economic Times

Birla Sun expects online payers to double

Birla Sun Life Insurance, which was the first life insurance company in India to enable purchase of insurance policies through its website, is expecting the number of its policyholders using the internet to pay their insurance premium to double this financial year.

The company’s website was launched in 2006 to test if insurance could be sold online in the country, and since then the company has seen more online activity for paying premiums than attracting new policy takers through the internet.

The company’s 15 per cent premiums now comes through the internet with around 15,000 policy holders using the internet service.

However, the percentage of new insurance policy holders signing up through the internet still remains close to only two per cent for the company.

“Most people in India still prefer the personal touch from the company’s side, when it comes to buying life insurance policies,” said Vikram Mehmi, president and CEO, Birla Sun Life Insurance.

The company offers products such as Birla Sun Life Flexi SecureLife Retirement Plan (without life cover) and Birla Sun Life Single Premium Bond for online purchase and intends to place only simple products online. Other players in the online life insurance segment include Bajaj Allianz, ICICI Prudential and Tata AIG Life.

Mehmi added the company was receiving 40 per cent of its revenues from its new products. Birla Sun Life Insurance now has close to 18 products in its stable and has just launched the Gold-Plus plan, which has a minimum premium of Rs 10,000 for a duration of three years and takes investment in seven fund options in varying proportions depending on an individual’s risk appetite.

In Gujarat, the company clocked a premium of Rs 53 crores for the year ended March 2007. It has developed a network of 3,000 advisors in the state.

The company recorded 1.2 million life insurance policies across the country in March 2007, and expects a further one million policies to be added in the coming few months.
source :Business Standard