PSBs may be told to provide online facility
The bank would be able to recover the loan amount from the insurance amount in the case a borrower’s death.
New Delhi, July 31 The Government wants the existing education loan scheme to be modified to add on a life insurance cover on the student going in for an education loan from a public sector bank. All public sector banks (PSBs) may also be asked to introduce facility of online request for education loans.
An insurance policy on the life of the student at the time of granting of education loan is likely to result in benefits for both the bank as well as the student.
The issue of modifying the existing education loan scheme (2004) is likely to come up for discussion during the Finance Minister, Mr P. Chidambaram’s meeting with the chief executives of PSBs here on Wednesday.
On the benefits of insurance cover, official sources said that the bank would be able to recover the loan amount from the insurance amount in case of an unfortunate demise of the borrower.
For the student, a habit of taking insurance would be inculcated. A student, who is once covered by life insurance, even after repaying the bank loan, would be inclined to continue with the life insurance policy.
Union Bank already has a provision for an insurance policy in their education loan scheme. To lessen the cost of premium, a convertible insurance policy (convertible into an endownment assurance policy for 5 years) could be accepted, says the scheme.
In cases where the parent/guardian cannot bear the premium cost, the amount of premium during the period of education could be remitted by the bank to LIC to the debit of loan account.
Guidelines
Indications are that the Finance Minister may ask the Indian Banks’ Association (IBA) to incorporate specific clauses for life insurance (on the lines of the Union Bank’s scheme) in the model education loan agreement circulated by it to banks for implementation.
The IBA may also be asked to provide broad guidelines to banks regarding the material to be published in the loan forms about insurance options available to students.
Meanwhile, PSBs may also be asked to provide facility of web-based online request for education loans. A presentation is likely to be made by Corporation Bank, which already offers such a facility.
Source: K.R. Srivats for The Hindu Business Line
Friday, August 3, 2007
Technical glitches hit motor third party data transfer
Insurers have so far uploaded only 50% documents on to the pool
The India Motor Insurance Pool (IMIP) created by the 12 general insurance companies is faced with its acid test with the companies yet to complete transfer of data on third party risks.
The National Insurance Company Chairman and Managing Director, Mr V. Ramasamy, said: “There are problems due to inconsistencies in software between the IMIP and insurers, but these are being addressed.”
So far only one PSU and two private sector insurers have completed the data transfer to the IMIP, sources said. Only about 4 lakh documents have been uploaded on to the IMIP. This is less than 50 per cent of the actual number on third party risks.
The IMIP is created by public and private sector non-life insurers exclusively to take over all the third party motor risks. The share of each insurer in the pool is on the basis of gross direct insurance premium collected.
Software mismatch
The mechanism is to be administered by the national reinsurer General Insurance Corporation. The delays are caused by both technical and administrative problems. Technical problems relate to mismatch between the software used by the pool and insurers. The pool functions on a TCS supplied platform. Three of the PSU insurers work on GenSys Enterprise Management. One PSU insurer and almost all the private sector insurers work on their own proprietary systems.
The sources said, some operational mechanisms envisaged when the pool was created, was yet to be put in place.
The mechanisms involve settlement of claims directly by the pool. However, with the delay in data transfer, the claims settlement function is yet to become fully operational. As a result, settlements are being delayed. Faced with this situation, insurers are directly settling the claims.
Mr Ramasaamy said: “We settle the claims directly and reimbursement from the IMIP.”
But reimbursements already face delays. This is because all the members are expected to participate in the settlement process on a pro rata basis. The reconciliation delays have also prompted the pool manager to threaten penal levies of 11 per cent. But the pool glitches have now attracted the attention of the Insurance Regulatory and Development Authority.
IRDA’s stern action
The General Insurers Council Secretary-General, Mr K.N. Bhandari, said: “The IRDA has asked for explanations. They are doing this regularly to ensure the success of the pool.”
This time the regulator has taken stiff line. It has convened a meeting of all the chief executives from the non life insurance companies next week to break the logjam.
Source: C. Shivkumar for The Hindu Business Line
The India Motor Insurance Pool (IMIP) created by the 12 general insurance companies is faced with its acid test with the companies yet to complete transfer of data on third party risks.
The National Insurance Company Chairman and Managing Director, Mr V. Ramasamy, said: “There are problems due to inconsistencies in software between the IMIP and insurers, but these are being addressed.”
So far only one PSU and two private sector insurers have completed the data transfer to the IMIP, sources said. Only about 4 lakh documents have been uploaded on to the IMIP. This is less than 50 per cent of the actual number on third party risks.
The IMIP is created by public and private sector non-life insurers exclusively to take over all the third party motor risks. The share of each insurer in the pool is on the basis of gross direct insurance premium collected.
Software mismatch
The mechanism is to be administered by the national reinsurer General Insurance Corporation. The delays are caused by both technical and administrative problems. Technical problems relate to mismatch between the software used by the pool and insurers. The pool functions on a TCS supplied platform. Three of the PSU insurers work on GenSys Enterprise Management. One PSU insurer and almost all the private sector insurers work on their own proprietary systems.
The sources said, some operational mechanisms envisaged when the pool was created, was yet to be put in place.
The mechanisms involve settlement of claims directly by the pool. However, with the delay in data transfer, the claims settlement function is yet to become fully operational. As a result, settlements are being delayed. Faced with this situation, insurers are directly settling the claims.
Mr Ramasaamy said: “We settle the claims directly and reimbursement from the IMIP.”
But reimbursements already face delays. This is because all the members are expected to participate in the settlement process on a pro rata basis. The reconciliation delays have also prompted the pool manager to threaten penal levies of 11 per cent. But the pool glitches have now attracted the attention of the Insurance Regulatory and Development Authority.
IRDA’s stern action
The General Insurers Council Secretary-General, Mr K.N. Bhandari, said: “The IRDA has asked for explanations. They are doing this regularly to ensure the success of the pool.”
This time the regulator has taken stiff line. It has convened a meeting of all the chief executives from the non life insurance companies next week to break the logjam.
Source: C. Shivkumar for The Hindu Business Line
False claims bleeding health insurers
The healthcare insurance industry is suffering losses of upto Rs 600 crore annually, on false claims every year, according to a survey by MediAssist.
MediAssist, a leading third party administrator, estimates the the number of false claims at 10-15 per cent of total claims.
''We found nearly 25 per cent of claim cases that could be categorized under false claims, but as the sample size increases we believe that this percentage would settle at 10-15 per cent of total claims which amounts to Rs 400 cr-Rs 600 cr,'' said B Madhavan, CEO of MediAssist. The survey had a sample size of 600 cases.
The main reasons for these false claim payouts, MediAssist found, were policyholders making claims for pre-existing diseases, or manipulating documents, or availing and providing treatment that is not reasonably warranted.
Hospitals were also over-diagnosing or overpricing the treatment to increase costs, after getting to know that the person was insured.
Moreover, third party administrators (TPAs) are not fully automated across the country and hospitals are not able to verify patient details immediately. Persons, who are not insured, were also found to be getting treatment under an insured person's policy details.
The total premium collection for medical insurance firms in the country is about Rs 4,000 crore, while total claims amount to about Rs 4,300 crore in a year. Less than one per cent of the country's population is covered under medical insurance.
MediAssist said hospitals need to work in tandem with TPAs to eliminate false claims, while TPAs should invest in infrastructure to improve verification and entitlement. It proposed that TPAs also blacklist hospitals that overcharge or over-diagnose.
MediAssist CEO said that health insurance was a bleeding sector and that the survey aimed to find the causes for the high claim ratio and bring about a consensus among stakeholders to work together to minimize malpractices.
Source: PTI
MediAssist, a leading third party administrator, estimates the the number of false claims at 10-15 per cent of total claims.
''We found nearly 25 per cent of claim cases that could be categorized under false claims, but as the sample size increases we believe that this percentage would settle at 10-15 per cent of total claims which amounts to Rs 400 cr-Rs 600 cr,'' said B Madhavan, CEO of MediAssist. The survey had a sample size of 600 cases.
The main reasons for these false claim payouts, MediAssist found, were policyholders making claims for pre-existing diseases, or manipulating documents, or availing and providing treatment that is not reasonably warranted.
Hospitals were also over-diagnosing or overpricing the treatment to increase costs, after getting to know that the person was insured.
Moreover, third party administrators (TPAs) are not fully automated across the country and hospitals are not able to verify patient details immediately. Persons, who are not insured, were also found to be getting treatment under an insured person's policy details.
The total premium collection for medical insurance firms in the country is about Rs 4,000 crore, while total claims amount to about Rs 4,300 crore in a year. Less than one per cent of the country's population is covered under medical insurance.
MediAssist said hospitals need to work in tandem with TPAs to eliminate false claims, while TPAs should invest in infrastructure to improve verification and entitlement. It proposed that TPAs also blacklist hospitals that overcharge or over-diagnose.
MediAssist CEO said that health insurance was a bleeding sector and that the survey aimed to find the causes for the high claim ratio and bring about a consensus among stakeholders to work together to minimize malpractices.
Source: PTI
SBI to list life, MF holding firm soon
State Bank of India has firmed up plans to launch a separate holding company for its life insurance and mutual fund management arms within the next 2-3 months.
O P Bhatt, chairman and manging director of SBI, at the sidelines of Ficci Banking Conclave 2007, said merchant bankers have evaluated the valuation of the new company between $4 billion and $5 billion (Rs 16,000-20,000 crore).
The new company would be listed on the exchanges this year, he added.
The purpose behind floating a separate company was to obtain better synergies in the operations of life insurance and mutual fund wings of SBI, evaluate the valuation of the two subsidiaries and keep options open for fund raising by listing the new company.
This apart , the bank has shortlisted two to three partners for its general insurance foray. "The partners of the general life insurance venture would be finalised this year, though it may not be floated this year," he said.
Bhatt further said high government stakes in public sector banks constrained their lending capacity. With government's stake at SBI currently being 59 per cent, a further 4 per cent dilution of the stake was a possibility, said Bhatt.
"Even if a 4 per cent stake dilution is done, an additional Rs 5,000 crore capital could be generated, which would raise the lending limit just by Rs 50,000," he added.
Capital and resource crunch due to government regulations based upon ideological factors were the two basic shortcomings of the Indian banking system, said Bhatt.
"Money is available with the economy, but not with the banking system. We need and enabling mechanism to make the money available to the bank," he said.
Source: Business Standard
O P Bhatt, chairman and manging director of SBI, at the sidelines of Ficci Banking Conclave 2007, said merchant bankers have evaluated the valuation of the new company between $4 billion and $5 billion (Rs 16,000-20,000 crore).
The new company would be listed on the exchanges this year, he added.
The purpose behind floating a separate company was to obtain better synergies in the operations of life insurance and mutual fund wings of SBI, evaluate the valuation of the two subsidiaries and keep options open for fund raising by listing the new company.
This apart , the bank has shortlisted two to three partners for its general insurance foray. "The partners of the general life insurance venture would be finalised this year, though it may not be floated this year," he said.
Bhatt further said high government stakes in public sector banks constrained their lending capacity. With government's stake at SBI currently being 59 per cent, a further 4 per cent dilution of the stake was a possibility, said Bhatt.
"Even if a 4 per cent stake dilution is done, an additional Rs 5,000 crore capital could be generated, which would raise the lending limit just by Rs 50,000," he added.
Capital and resource crunch due to government regulations based upon ideological factors were the two basic shortcomings of the Indian banking system, said Bhatt.
"Money is available with the economy, but not with the banking system. We need and enabling mechanism to make the money available to the bank," he said.
Source: Business Standard
`We have set up a team for rural insurance`
Reliance General Insurance, a part of the Reliance Anil Dhirubhai Ambani Group, grew its business through aggressive strategies in 2006-07. It recently launched a health insurance product priced so low that rivals envy it. The company’s president and CEO, K A Somasekharan, tells Falaknaaz Syed in an interview that insurance is a volume game and claims minimisation efforts make it profitable.
You grew phenomenally in 2006-07. What do you attribute the growth to?
In 2006-07, our new business premium income was up 462 per cent to Rs 912 crore. Our focus on creating infrastructure, building a team and market penetration helped.
In 2005-06, we had only 15 offices. By the end of March 2007, we had 97 offices. The number of employees increased from 300 to 1,000 last year. Right now, we are a 2000-people team. We are planning to have 200 operational offices this year.
What are your plans for FY08?
We received the Irda approval last month for setting up 115 operational offices, which we will establish by September this year. After this, I will approach the Irda for setting up more offices. We now plan to move to tier-II and tier-III cities.
We will be penetrating rural areas in a big way. We recently set up a team only for rural insurance in the retail segment. For rural areas, we will be concentrating on popularising cattle insurance, health insurance and personal accident insurance.
In a few months, we will be launching weather insurance. We will this month launch rural insurance products initially in six states – Gujarat, Punjab, Haryana, Kerala, Maharashtra and partially in Uttar Pradesh.
With detariffing, all insurers are now focusing on retail. What is the business mix at present and what are your targets?
Retail, at present, constitutes 55 per cent of our total premium. We plan to grow our retail portfolio to 65 per cent this year. As you are aware, corporate business is shrinking with competition getting tougher. The future for general insurers will be in retail. So we will be concentrating in rural areas.
Reliance General is quoting a low premium of Rs 999 for Rs 1 lakh health insurance cover at a time when public sector insurers are raising rates, including exclusions and capping charges allowed. Would you be able to service and honour a large number of claims?
Insurance is a volume game. We have sold 1.5 lakh policies in the last three months. How many policies have all the companies sold during the same period? Our policy is very easy to get. For people below 45 years, there is no medical formality.
People don’t have to wait for the policy or the TPA cards. Everything is given over the counter. I have collected Rs 35 crore premium by selling health policies. I am sure that by the end of the year, we will collect Rs 300 crore of health insurance premium as there is a heavy demand for this product.
I will create volumes and insurance business is like that. Besides, a majority of the policies sold are for a higher sum insured. By managing false claims, losses are contained and increase in penetration (volumes) ensures profits.
How will Reliance General ensure low claims?
We have a dedicated claims minimisation team to ensure that policies are not sold to people likely to make claims within months. Through TPAs, we have a tie-up with 5,000 hospitals. TPAs bargain and negotiate with hospitals.
Fees and charges for various diseases are fixed. We will soon be introducing a ‘gatekeeper’ concept for large policies. We will engage doctors who would advise the insured on various aspects.
The doctors (gatekeepers) would ensure that the insured are admitted to hospitals where charges are lower and also advise them on tests required and specialists to be consulted. This will eliminate the chances of healthcare providers submitting inflated bills.
You have also been quoting aggressively to bag large corporate accounts. Won’t this impact your profitability?
My growth in corporate business is only 6 per cent, while the overall growth rate is 232 per cent in the last two months. If I am quoting aggressively in getting corporate accounts, then why is my corporate business not growing?
I have lost so many corporate accounts because I could not match rates quoted by other insurers. Since we are growing, people feel we are quoting aggressively.
Also, now we have to give a statement to the Irda every three months. According to our board mandate, the solvency should not be less than 1.8 times against the Irda norm of 1.5 per cent.
How much of your risks do you reinsure?
General Insurance Corporation is our treaty leader with 60 per cent reinsurance support. As you are aware, 15 per cent is the mandatory cession that goes to GIC. You retain 5 per cent and for the remaining 20 per cent, we go for facultative reinsurance. In the retail business, we retain 20 per cent and reinsure 80 per cent.
Source: Business Standard
You grew phenomenally in 2006-07. What do you attribute the growth to?
In 2006-07, our new business premium income was up 462 per cent to Rs 912 crore. Our focus on creating infrastructure, building a team and market penetration helped.
In 2005-06, we had only 15 offices. By the end of March 2007, we had 97 offices. The number of employees increased from 300 to 1,000 last year. Right now, we are a 2000-people team. We are planning to have 200 operational offices this year.
What are your plans for FY08?
We received the Irda approval last month for setting up 115 operational offices, which we will establish by September this year. After this, I will approach the Irda for setting up more offices. We now plan to move to tier-II and tier-III cities.
We will be penetrating rural areas in a big way. We recently set up a team only for rural insurance in the retail segment. For rural areas, we will be concentrating on popularising cattle insurance, health insurance and personal accident insurance.
In a few months, we will be launching weather insurance. We will this month launch rural insurance products initially in six states – Gujarat, Punjab, Haryana, Kerala, Maharashtra and partially in Uttar Pradesh.
With detariffing, all insurers are now focusing on retail. What is the business mix at present and what are your targets?
Retail, at present, constitutes 55 per cent of our total premium. We plan to grow our retail portfolio to 65 per cent this year. As you are aware, corporate business is shrinking with competition getting tougher. The future for general insurers will be in retail. So we will be concentrating in rural areas.
Reliance General is quoting a low premium of Rs 999 for Rs 1 lakh health insurance cover at a time when public sector insurers are raising rates, including exclusions and capping charges allowed. Would you be able to service and honour a large number of claims?
Insurance is a volume game. We have sold 1.5 lakh policies in the last three months. How many policies have all the companies sold during the same period? Our policy is very easy to get. For people below 45 years, there is no medical formality.
People don’t have to wait for the policy or the TPA cards. Everything is given over the counter. I have collected Rs 35 crore premium by selling health policies. I am sure that by the end of the year, we will collect Rs 300 crore of health insurance premium as there is a heavy demand for this product.
I will create volumes and insurance business is like that. Besides, a majority of the policies sold are for a higher sum insured. By managing false claims, losses are contained and increase in penetration (volumes) ensures profits.
How will Reliance General ensure low claims?
We have a dedicated claims minimisation team to ensure that policies are not sold to people likely to make claims within months. Through TPAs, we have a tie-up with 5,000 hospitals. TPAs bargain and negotiate with hospitals.
Fees and charges for various diseases are fixed. We will soon be introducing a ‘gatekeeper’ concept for large policies. We will engage doctors who would advise the insured on various aspects.
The doctors (gatekeepers) would ensure that the insured are admitted to hospitals where charges are lower and also advise them on tests required and specialists to be consulted. This will eliminate the chances of healthcare providers submitting inflated bills.
You have also been quoting aggressively to bag large corporate accounts. Won’t this impact your profitability?
My growth in corporate business is only 6 per cent, while the overall growth rate is 232 per cent in the last two months. If I am quoting aggressively in getting corporate accounts, then why is my corporate business not growing?
I have lost so many corporate accounts because I could not match rates quoted by other insurers. Since we are growing, people feel we are quoting aggressively.
Also, now we have to give a statement to the Irda every three months. According to our board mandate, the solvency should not be less than 1.8 times against the Irda norm of 1.5 per cent.
How much of your risks do you reinsure?
General Insurance Corporation is our treaty leader with 60 per cent reinsurance support. As you are aware, 15 per cent is the mandatory cession that goes to GIC. You retain 5 per cent and for the remaining 20 per cent, we go for facultative reinsurance. In the retail business, we retain 20 per cent and reinsure 80 per cent.
Source: Business Standard
Subscribe to:
Posts (Atom)
