Friday, May 30, 2008

ORIENTAL GAME FOR $1M HEALTH COVER

Kolkata: Oriental Insurance Co Ltd, the Delhi-based non-life insurance major, is moving out of its public sector mindset and looking at the idea of a health policy with a cover of up to $1 million, which will entitle the insured to go for treatment anywhere in the world. M Ramadoss, chairman and managing director, said public sector insurance Companies like Oriental are usually directed into the low-end and 'Janata' segment, but there is no reason for them not to target high net worth individuals (HNIs), considering that the PSU insurers have the highest financial strength, the government's backing and longest-standing market presence.

"One person came to me recently and said he wants a health insurance product with a coverage of $1 million, and he can go anywhere in the world to receive treatment, but he was skeptical of our ability," Ramadoss said.

Against this cover of $1 million or Rs 4.37 crore, Oriental's highest health cover at present is Rs 5 lakh.

Ramadoss said the policy is at "a very preliminary stage, but nothing has been finalised so far."

"What I am saying is that in health, we should have a low premium, but we can also come up with very premium products, and there is no constraint," Ramadoss said. "People think only private Companies can do it."
Ramadoss pointed out that competition is increasing in the insurance segment, with more players entering the national scene and some even speaking of regional players. So it is imperative for PSU Companies to focus on service.

Source: The Financial Express

LIBERALISATION BOOSTS INSURANCE GROWTH

Kolkata: The insurance market has grown rapidly following liberalisation in 2001, feel major public sector companies. Speaking at the third insurance conclave organised by Federation of Indian Chambers of Commerce and Industry, Mr M Ramadoss, chairman and managing director of The Oriental Insurance Company said: "Whereas the gross direct premium of general insurance industry has gone up by Rs 2,000 crore from 1997 to 2000, it has grown by Rs 20,000 crore in the period between 2002-08," he said.

He, however, pointed out that general insurance has done poorly compared to life insurance.

Mr G Srinivasan chairman and managing director of United India Insurance Company Ltd, felt that liberalisation had created an environment where the industry could reach its full potential.

Source: The Statesman

LIC TO TAKE REFUGE IN MORE CONVENTIONAL POLICIES

Mumbai: The country’s largest insurer — Life Insurance Corporation (LIC) — has decided to rebalance its product portfolio to have more of conventional policies. The corporation, which sees most of its revenues from unit-linked insurance plans, feels that more conventional policies have to be sold if it wants to have a steady premium income.

Speaking to ET, DK Mehrotra, managing director, LIC, said one reason for the slowdown in new business growth from 110% in 2006-07 to 6% in 2007-08 was the move to promote conventional policies. “We are looking at repositioning some of the old conventional plans which were very strong products. In the long run, conventional products have to be focused upon,” he said.

“An insurance company cannot depend only on unit-linked insurance plans. In the previous year (2006-07), because of the stock market wave everybody cashed in on it,” said Mr Mehrotra.

He added that although the corporation may not have succeeded in the shift, a message was sent that ‘we have to come to conventional’. In terms of number of policies in 2007-08, LIC sold almost as many conventional policies as ULIPs.

While LIC sold 1.74 crore conventional policies, the number of ULIPs sold was 1.9 crore. But since the average premium under ULIP was around Rs 20,000 as against Rs 3,400 in conventional, the impact of the shift was not much on premium, said Mr Mehrotra.

Unit-linked plans have been the flavour of the insurance market for the past few years. While funds mobilised under conventional products are invested in government securities, ULIPs leaves the choice of investment category to the policyholder.

In 2006-07, the surge in stock indices saw policyholders using insurance to channelise savings into the stock market. 2007-08, too, saw a surge of investments in ULIPs. However, the pace of collections slowed as a market crash in the last quarter turned investors cautious.According to Mr Mehrotra, it was necessary to move to conventional as these policies focused on protection. Also, it ensures stability for the corporation and policyholders.

“This year we tried to have 70:30 mix between unit-linked and conventional plans. Last year, the ratio was 82:18 in favour of ULIPs,” he said. Though the corporation wants to shift focus, it will not do so overnight nor will it stop coming out with new ULIPs.

The new products that it will launch will be a mix of ULIPs and conventional plans. “We cannot make the shift overnight. There is a customer demand for ULIPs and we cannot afford to leave a vacuum in the market,” said Mr Mehrotra.

Source: Economic Times

GENERAL INSURANCE INDUSTRY EYES 23% GROWTH IN 2008-09

Kolkata: The general insurance industry is slated to touch Rs 50,000 crore premium income in the next five years against Rs 28,130 crore achieved in 2007-08. In 2008-09 — the first full year of the detariffed regime — state-owned general insurance companies are targeting a total premium income of about Rs 20,000 crore, a 23% growth, against Rs 16,259 crore achieved in 2007-08.

New India Assurance, the largest general insurer, expects a 10% growth to about Rs 5,800 crore in 2008-09, while United India Insurance has pegged it at Rs 4,200 crore against Rs 3,739 crore achieved in 2007-08. Both National Insurance and Oriental Insurance are hoping to garner a total premium income of Rs 4,500 crore each in 2008-09 against Rs 4,032 crore in the previous fiscal.

“However, in a bid to facilitate growth, a slew of measures need to be taken. These include tax breaks like removal of service tax on health insurance and personal accident policies, encouragement for growth of individual agents including removal of sealing on commission as well as freedom of policy designing,” said M Ramadoss, chairman and managing director, Oriental Insurance Company.

He was talking to media persons at the sidelines of an Insurance Conclave organised by Ficci’s eastern region council. Mr Ramadoss added that the industry should concentrate in facilitating insurance skill development and offer more liberalised norms for creation of intermediaries.

Additionally, some regulations for the health service providers should be introduced to enable orderly growth in the segment. In a bid to achieve these, the relevant portion of the Insurance Act of 1938 also needs to be amended, he added.

V Ramasaamy, chairman, National Insurance, who was present, said: “Total premium is only a small 0.61% of GDP and penetration of general insurance business is low. However, detariffing will lead to introduction of new innovative products and the huge untapped market will be targeted soon.”

Mr Ramasaamy, however, believes that in the near future growth in fire and engineering may not be encouraging, while the insurance industry will concentrate more on retail and micro insurance in rural areas, too.

Products development will eventually be more customer need-based. On the distribution front, present channels will be broad based and new channels like tele-marketing, co-operative banks, RRBs, micro insurance agents, NGOs, travel agents will widen.

Talking about health insurance, Mr Ramasaamy said demand from the segment is rising and is likely to reach Rs 40,000 crore by 2020. It is expected to grow at 35% for the next five years.

Talking about the recent past, G Srinivasan, chairman, United India Insurance, said: “Though in absolute terms the growth seems large, but the sector has not outperformed growth in the Indian economy.”

Source: Economic Times

GENERAL INSURANCE PREMIUM GROWTH DIPS TO 12.5% ON DETARIFFING

Kolkata: The growth of general insurance business has slowed down to 12.5 per cent in 2007-08 compared to 25 per cent in the previous financial year due to the end of pricing control on regulated businesses such as fire, motor and engineering from January 2007.

Growth was also impacted by the subsequent price war among the insurance companies. In 2007-08, the gross premium underwritten by non-life insurance companies stood at Rs 28,126.29 crore compared with Rs 24,998.41 in 2006-07. In order to retain corporate clients and grab new businesses, insurers had to cut their property premium rates by more than 70 per cent.

"A reduction of premium rates by 70-80 per cent in the fire and engineering portfolio has accounted for a significant fall in the premium underwritten in these segments," National Insurance Chairman and Managing Director V Ramasaamy said.

"The tremors expected after detariffing have not really got pronounced in 2007-08," added Oriental Insurance Chairman and Managing Director M Ramadoss, during a presentation in the Ficci Insurance Conclave.

The fire insurance premium has dipped 15.39 per cent to Rs 3,517 crore in 2007-08 compared to Rs 4,157 crore in the previous year. Of the Rs 639.87 crore loss in premium, the public sector companies accounted for Rs 469.51 crore.

Fire premium for the public sector insurers came down by 17.95 per cent to Rs 2,144.95 crore compared to Rs 2614.46 crore reported a year ago.

Private insurers fared marginally better, registering a drop of 11.04 per cent to Rs 1,372.32 crore against Rs 1,542.68 crore reported in the previous year.

The four public sector general insurers - New India Assurance, Oriental Insurance, National Insurance and United India Insurance - grew 3.76 per cent to Rs 16,895.70 crore as against a gross premium of Rs 16,282.10 crore reported a year ago. The 10 private insurers grew by 28.85 per cent to Rs 11,231.19 crore from Rs 8,716.31 crore a year earlier.

However, motor insurance and health insurance businesses were the growth drivers with a premium of Rs 2200 crore and Rs 1,800 crore, respectively.

Of Rs 2,200 crore premium in motor insurance, the private sector accounted for Rs 1800 crore, mainly due to the creation of motor third party insurance pool for commercial vehicles. In the case of health insurance, public insurers contributed Rs 1200 crore of the total Rs 1800 crore.

"This belies the theory that health insurance is the forte of private insurers. Health insurance is likely to be the focus area of public sector insurance players," Ramadoss said.

Commenting about future trends, Ramadoss said the compounded annual growth rate of the insurance industry is likely to be around 16 per cent in the next five years in tune with the expected gross domestic product growth of 8 per cent. He said that the premium rates would stabilise from the next financial year.

Source: Business Standard

Insurers clip TPAs’ wings

Kolkata: Bugged by ‘upfront cash payment’ issues when admitting someone to hospital? Don’t worry, help is at hand.

General insurance companies covering over 85% of mediclaim policies issued in India have decided to make payments of claims directly to health service providers (or hospitals etc) through some private banks instead of routing the money through third-party administrators (TPAs) as is being done now.

Insurance companies, TPAs and health service providers have been into a blame-game over payment of claims for quite some time now.

Many hospitals and nursing homes have often refused to admit mediclaim patients through the “cashless” option.

Some hospitals refuse the cashless option even after upfront payments because of the delay in receiving the balance money from TPAs, “in some cases for 9-10 months” said a hospital executive.

G Srinivasan, chairman and managing director, United India, said the company has already initiated making payments through its designated banks instead of TPAs.

V Ramasaamy, chairman and managing director, National Insurance Company, and M Ramadoss, Oriental Insurance chief, are following suit.

TPAs will now process the claims and send it to the bank, which, in turn, will make the payment directly to the health service provider.

Insurance companies have been conducting quarterly reviews of TPAs, which involves auditing and checking of their records and flow of funds.

The potential of the health insurance, which is around Rs 5,500 crore at present is said to be Rs 40,000 crore by 2020 and expected to grow by 35% for the next five years.

Source: DNA Money

Lifestyle protection plans from ING Vysya

Chennai: ING Vysya Life has launched two lifestyle protection products -- ING Term Life and ING Term Life Plus.

Speaking at the launch function, T K Uthappa, Director- Sales, Tied Agency, ING Vysya Life Insurance said, “ING Term Life and ING Term Life Plus have highly attractive premium rates, thus making it a value proposition for customers. While both are lifestyle protection products, ING Term Life Plus offers return of premiums, paid half-way through the policy term and at the end of the policy term, on maturity.”

Both the products offer flexibility to choose the premium paying tenure between 10 years and 30 years. They also have a wide spectrum of age of entry, wherein a customer can buy either of the products between the completed age of 18 and 65, and provide cover upto the completed age of 75.

Some of the other features of the products are:


Both the products are simple to obtain and offer high non-medical limits. Rider options, including accidental death benefits and accidental death, disability and dismemberment benefits are also available on the two plans.

Source: Sify Finance

ISO CERTIFICATION TO BE MUST FOR ESI HOSPITALS

New Delhi: ESI hospitals providing healthcare facilities to workers covered under the Employees State Insurance Corporation (ESIC) will be soon required to have ISO certification. Minister of state for labour and employment Shri Oscar Fernandes has said that the certification will be made mandatory so that hospitals provide world class medical facilities to workers of both organised as well as unorganised sector.

In the first conference of revenue officers of ESIC, the minister said ESIC revenue officers should dedicate themselves to the cause of healthcare of workers and should aim at increasing the number of beneficiaries to at least 4 crores, same as EPF members.

The minister added that the doctors and staff at these hospitals would be given special training to meet the shortage of medical personnel in the country.

Labour and employment secretary Sudha Pillai said that the government will ensure that the insurance scheme is expanded to new areas. The latest figures show that during 2007-08, the scheme was implemented in 37 new areas covering nearly 98,000 workers. The total number of beneficiaries were 3.94 crore. During the year, contribution income increased to a record high of Rs 3,249 crore against the target of Rs 2,450 crore, thereby registering an increase of Rs 800 crore which is 32.61% higher than the target, Ms Pillai said.

The motive of this conference was to interact with field workers and make them aware about their role in the implementation of policies and programmes of the ESIC and the ministry. Insurance inspectors and other officials were also asked to improve efficiency so that delivery system could be improved.

Source: The Economic Times

United India, Honda Motor tie up

United India Insurance Company Ltd has entered into an agreement with Honda Motorcycle & Scooter India Pvt Ltd, under which the insurer will provide its services to HMSI's customers at the latter's dealer outlets. Initially, customers will be able to avail themselves of insurance cover for scooters and motorcycles purchased from the outlets. Subsequently, this will be expanded to include other personal lines insurances such as house, personal accident, and health insurance.

As a part of the agreement, United India will provide insurance for new vehicles at competitive rates. Another value addition will be provision of "cashless repairs" at dealer's premises in case of accidents, says a press release from the company. Meanwhile, United India has announced a new health policy. The `Family Medicare Policy' covers family members under a single sum insured, against hospitalisation expenses due to disease or accident. "In other words, the sum insured "floats" over the entire family," says a press release from the insurer.

Source: The Hindu Business Line

Thursday, May 29, 2008

ICICI Prudential Life ties up with American Express







MUMBAI: ICICI Prudential Life Insurance today announced a tie-up with American Express Banking Corp, a service initiative that would enable the private insurer's policy-holders across the world to pay their premiums online.

All ICICI Prudential Life policy-holders, who have an American Express Card, can log into the leading insurance company's website and make payment through American Express online payment gateway, a release said here.

Alternatively, policy-holders also have the option to walk into any ICICI Prudential Life branch and make a one-time premium payment. Further, the policy-holder can also opt to give instruction for auto debit of his credit card for subsequent premiums.

ICICI Prudential Life's Executive Vice-President, Anita Pai, said "our partnership with American Express is yet another step in the direction of making customer interactions convenient and effortless."

Source: PTI

LIC thinks big, to rope in 3 lakh more agents




May 29, 2008

The country’s largest insurance company — Life Insurance Corporation — is looking at recruiting three lakh agents. The corporation has over one million agents. Most of LIC’s policies continue to be sold by agents though the corporation has been making attempts to grow alternate channels such as bancassurance. To increase the size of the agency force, the corporation expects its existing development officers to recruit new agents. In addition, the corporation plans to add another 4,700 development officers to its field force. The corporation has also introduced a chief life insurance advisor scheme where senior agents will recruit more agents. These existing senior agents are expected to add several new salespeople during the year.

In addition to increasing the number of agents, the corporation is looking at ways of increasing the productivity of its existing agents. In the initial years of liberalization, 80% of new insurance agents were being recruited by LIC. In recent years, around 80% are being enrolled by the private companies. According to Shewak Gidwani, secretary general of the Insurance Institute of India which conducts examinations for prospective agents, close to 27 lakh people registered for the exams in 2007-08, of this around 19 lakh actually appeared and around 9 lakh passed. Over six lakh agents were recruited by the private life insurance companies.

Although insurance companies have recruited more than 20 lakh agents since the industry opened up, the size of their existing agency force is not known. Some private companies see as much as 50% of their entire agency force being replaced during the year.

Although the ramp-up in recruitment has led to increased lapsation of agents, competition is forcing life insurers to make up for the agents dropping out by recruiting fresh agents. When the life insurance industry was opened up, private companies had taken a stand that they would focus on career agents — salespeople who would make a living selling life insurance. This approach was quickly abandoned in their quest to achieve scale rapidly. Today, a large number of insurance agents recruited by private companies are either part-time agents or see their profession as in-between jobs. The growth in employment opportunities in the BPO sector is making it difficult for life insurers to find young people willing to take up selling life insurance.

Private insurance companies had earlier aimed to increase the stature of insurance agents in public perception by repositioning them as financial advisers. However, the repositioning did not work as companies shifted focus from quality to scale.

Source: Insuremagic

Wednesday, May 28, 2008

Health Insurance Article : Floater Health Insurance Policy

The incidence of chronic diseases has been on the rise all over the world in the past few years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment too has been ever rising. This is where medical insurance can come handy. By spending a small sum on a regular basis in a health-care policy, you can undergo medical treatment assured that your precious savings are not affected by the cost of treatment. The peace of mind alone could help you to heal quicker!

As in any booming economy, India's economic growth is being driven largely by the middle class. Notwithstanding our increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.

A relatively new type of health insurance plan called the Floater health insurance plan helps you get maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.

The policy covers medical expenses incurred as an inpatient during hospitalization for more than 24 hours, including room charges, doctor/surgeon fee and medicines etc. This policy also covers expenses 30 days prior to hospitalization and 60 days post hospitalization.

So...what is the difference between regular health insurance plans and Floater health insurance plans?

We can study this with the following example. A family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs. 7580. The same family will have to pay only Rs. 6024 if they opt for a Floater policy.


In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The Floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.

In the above-mentioned example, when the claim amount increased in the daughter's case, only the amount up to her respective sum insured would have been paid in case of Mediclaim. With the Floater plan, however, the full claim would have been paid out since the total sum insured of the family was Rs.300000 - the sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.

There is an upper limit in floater health insurance plan coverage of Rs. 3 lakhs.



Floater plans have some additional benefits, such as:
Free health checkup coupon for the senior most member of the insured family
An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available.
No health check up required up to the age of 45 years (as on last birthday).
Income tax benefits under Section 80D (which from the current financial year has increased from Rs. 10,000 to Rs. 15,000) in the form of deduction from total taxable income. It is Rs 20,000 for senior citizens.

Policy Exclusions
30-day exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days from the start date of the policy are not covered. This clause does not apply for subsequent renewal (without a break) of this policy.

The Floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill, therefore the Floater policy can be an effective cost saver. As age increases, you should start looking to migrate to individual sum insured policies.

Author: Kairav Shah
www.apnainsurance.com

NIC in overhauling mode

The National Insurance Company (NIC) is overhauling its business processes to be more competitive in a deregulated general insurance market.
The public sector behemoth is targeting 12% growth in FY 08-09 on the back of a projected target of Rs. 4500 crore premium collection.

Global consultancy major Price Waterhouse Coopers (PWC) is acting as consultant. The restructuring process includes relocation of a few offices in Mumbai and Kolkata. Earlier, PWC had also contributed to NIC's business re-engineering initiative.

NIC's plans include massive growth projections in the health insurance market, up to 25-30%. Other initiatives include selling cheap discounted house insurance specifically targeted at flat owners.

Furthermore, NIC is planning to focus specifically on corporate clients this year. Selected regional offices at Mumbai, Delhi, Chennai, Kolkata, and Hyderabad will exclusively deal with corporate clients who pay annual premiums in the Rs. 25-30 lakh range.

Another PWC recommendation includes a centralized claim settlement system. A pilot project for this process has been started in Kolkata, halving the time for settlement to 20 days.

General insurers faced a tough year in FY 08 with free-pricing seeing heavy price discounting by the various players in an attempt to build market share.

Source: www.apnainsurance.com

How India calculates inflation

Last Thursday, when journalists questioned Finance Minister P Chidambaram about the rising inflation rate in the country, he quipped: 'Thank God, it's not Friday.'
Yes, indeed, there was no need for Chidambaram to comment on the inflation rate on Thursday, because in India inflation is calculated and announced on Fridays.
How is inflation calculated in India? Why is it announced on Fridays? And how do other countries calculate inflation? Read on . . .

India uses the Wholesale Price Index (WPI) to calculate and then decide the rate of inflation in the economy. Most developed countries use the Consumer Price Index (CPI) to calculate inflation.
WPI was first published in 1902, and was one of the major economic indicators available to policy makers until it was replaced by the Consumer Price Index in most developed countries by in the 1970s.
WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. In India, price data for 435 commodities is tracked through WPI which is an indicator of movement in prices of commodities in all trades and transactions. It is also the price index which is available on a weekly basis with the shortest possible time lag -- two weeks. The Indian government has taken WPI as an indicator of the rate of inflation in the economy.
CPI is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is a price index that tracks the prices of a specified basket of consumer goods and services, providing a measure of inflation.
CPI is a fixed quantity price index and considered by some a cost of living index. Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one.
Some economists argue that it is high time that India abandoned WPI and adopted CPI to calculate inflation.
India is the only major country that uses a wholesale index to measure inflation. Most countries use the CPI as a measure of inflation, as this actually measures the increase in price that a consumer will ultimately have to pay for.
CPI is the official barometer of inflation in many countries such as the United States, the United Kingdom, Japan, France, Canada, Singapore and China. The governments there review the commodity basket of CPI every 4-5 years to factor in changes in consumption pattern.
WPI does not properly measure the exact price rise an end-consumer will experience because, as the same suggests, it is at the wholesale level.
The main problem with WPI calculation is that more than 100 out of the 435 commodities included in the Index have ceased to be important from the consumption point of view. Take, for example, a commodity like coarse grains that go into making of livestock feed. This commodity is insignificant, but continues to be considered while measuring inflation.
India constituted the last WPI series of commodities in 1993-94; but has not updated it till now that economists argue the Index has lost relevance and can not be the barometer to calculate inflation.
The WPI is published on a weekly basis and the CPI, on a monthly basis. And in India, inflation is calculated on a weekly basis and announced on every Friday.

Source: Commodity Online May 27, 2008

MDRT Brand India as ‘Perfect’ Insurance Market

A global network of chief insurance professionals has today branded India as the ideal market for insurance products, suggesting it had a significant scope for long term development and infrastructural strengthening over the coming years.

The Million Dollar Round Table, a worldwide network of insurance executives, has branded the size and demographic makeup of the Indian insurance market as ‘perfect’ in terms of the potential market for insurance products. With a massive population comprising of young, educated consumers, the market looks set to boom over the coming decades as it continues to present serious investment opportunities for insurance providers.

The Indian market would benefit from a rise in insurance, given the infrastructural and capital formation benefits brought about in markets with growing insurance activity, allowing business and development to flourish alongside economic development.

India and China are fast growing economies. It would be foolish not to be interested in this part of the world, especially India, and increasing our membership because this is an economic story that is very exciting and we want to be a part of it. The Indian market could contribute a further 40,000 members to the Million Dollar Round Table Network.

Whilst the Indian insurance market has grown in line with the country’s economic development, it still remains relatively undeveloped in terms of other mature insurance markets, leaving room for significant development, particularly amongst some of the world’s existing key players.

It remains to be seen whether more insurers will jump on the badwagon and enter the market, and indeed whether the market can hold up to its current potential.

Source: Insuremagic

United India Insurance launches new health product

United India Insurance Co Ltd unveiled a new health product called "Family Medicare Policy".

The policy covers family members under a single Sum Insured against hospitalisation expenses due to disease or accident and any family member can avail upto the entire sum during the policy period.

The proposer can be aged between 18 and 80 years and the family cover is available for Self, Spouse and dependent children. A wider range of Sum Insured options is also available starting from Rs one lakh to Rs 10 lakh. In addition, the policy also has add-on covers like ambulance charges, hospital daily cash and Section 80-D benefits.

Source: Insuremagic

IDBI Fortis Life plans more branches

IDBI Fortis Life Insurance will set up 100 branches by the end of the fiscal. The company, which started operations in March last, currently has 30 branches and an agency force of 500.

So far, they have around 7,000 customers and have received around Rs 20 crore of premium. IDBI Fortis has introduced a unit-linked insurance product with health riders called "Wealthasurance" and a mortgage reducing term plan called "Homesurance".

Bancassurance is a key model for the company as IDBI and Federal Bank (which are partners in the insurance venture) provide access to 1,000 branches and 10 million customers.

They expect around two-thirds of our business to come from bancassurance. Around 1,000 staff members have been trained. IDBI Fortis Life Insurance on launched their business on Mastek's "Elixir Policy Administration System module".

The solution is designed to support all product lines including traditional life, health, unit-linked, annuities and pension products. It is an end-to-end policy administration platform that integrates the front and back office.

Source: Insuremagic

Global churn may bring Chinese insurance firms to India

Chinese insurance firms could end up having a strategic stake in life insurance in India if their global acquisition plans attain fruition. Chinese insurers Ping An and China Life and other institutions like Bank of China have expressed their ambitions to acquire international insurance companies.

Earlier this year, media reports were abuzz with talks about a possible bid for UK insurer Prudential by Ping An - China's second largest insurance company. The company, which announced a net profit of $709 million for the Jan-Apr quarter, is listed both in Hong Kong and China. There are also reports that Bank of America is interested in bidding for Direct Line and Churchill Insurance Group owned by the Royal Bank of Scotland.

Post-liberalization, multinational insurers headquartered in the US, UK, Europe, South Africa, Canada and Japan have participated in the insurance industry in India. But, there is no Chinese company in this sector yet. Unlike banks, there is no rationing of license in insurance.

However, there is a ceiling of 26% on the total shareholding by foreigners in an insurance venture. But, despite the ceiling some companies have managed to acquire management control in their insurance partnership with the consent of the Indian partner.

If a Chinese insurer such as Ping An does acquire Prudential, it will give the firm a 26% stake in the largest private life insurance company - ICICI Prudential Life Insurance. According to sources, ICICI Bank does not have any exit clause if its foreign partner is acquired by another company.

Several, insurers in the West have been weakened by losses on account of their exposure to sub prime debt. Given their appetite for long-term investments, insurance companies are the main investors in mortgage securities. The mortgage crisis in the US has resulted in a fall in the market value of most mortgage securities forcing insurance companies to write down the value of their assets. In March this year, Prudential reported a 47% drop in pre-tax profit due to poor performance of its life fund after writing off credit risks in the US following the sub prime crisis.

Other insurers which have been insulated from the sub prime are seen as acquirers. Italian insurer Generali is seen as one such acquisitive company. One reason why the company has been able to post a 21% growth in profits was the absence of sub prime in its books. At that time everyone thought they were too conservative. Now everyone is happy.

Source: Insuremagic

ICICI Pru prims health to be key growth driver

Having emerged as one of the core areas of ICICI Prudential Life's portfolio in the last couple of years, the company is putting its efforts behind the health vertical to make it one of its major growth drivers.

Among the plans are variants of the flagship products like critical illness, hospital care and a crisis cover plan that includes cancer and diabetes care. The company also plans to explore the health savings and reimbursement category in future.

Binay Agarwala, senior VP and head, health business and corporate strategy, ICICI Prudential Life told DNA Money, "As a strategic initiative, the organisation energy in terms of marketing, actuarial and operation is dedicated to the health insurance space. Although the ticket size is small, the volumes have grown."

At present, over 10% of policies sold by the company are health policies.

What about competition from other private players also getting into health space?

"The idea is to make the bulk of sales beyond the Top 10 cities and this would be the major differentiator," Agarwala said, adding: "For many such customers, this will be the first of any health policy. We've created a comprehensive distribution scale by reaching out to 1,600 locations across India."

The health segment, which is dominated by indemnity plans (mediclaim) from general insurers, has seen the entry of almost all life players and has grown five-fold to Rs 5,000 crore from Rs 1,000 crore five years ago. Last year, health insurance business grew 63%.

"In the current year, there could be improved versions of some of our existing products like Diabetes Care. We will also think of new offerings keeping in mind the market dynamics and also profitability to both the customer and the company," Agarwala said.

Two new areas the company is likely to weigh are the savings-linked insurance plans and the reimbursement category. Both would help increase penetration of health insurance.

Internationally, health insurance with savings is a growing segment. But for this, much would depend whether health insurance plans qualify for tax benefits under Section 80D of the Income Tax Act.

Source: Nandini Goswami / DNA MONEY

LIC launches Money Plus I scheme

Kolkata: Life India Corporation (LIC) has launched its Unit Linked Endowment Plan, Money Plus 1, which offers both investment and insurance benefits.

The minimum sum assured of this scheme is five times the annual premium and the maximum sum assured can go upto 30 times the premium, which will depend on the age at entry level.

The age at the entry level can be between 0-65 years with the policy term ranging from five to 30 years.

R R Dash, zonal manager, LIC said: "We have targeted to get Rs.1,800 (Rs.18 billion) from Money Plus 1 this fiscal."

Last fiscal, total premium volume of LIC including renewals stood at Rs.138.95 billion in the eastern zone. United Linked Insurance Plans (Ulip) was the highest performer, which fetched Rs.37.04 billion. The net profit in 2007-08 was Rs.61.93 billion. The company expects the surplus income to grow by 50 percent this fiscal.

The company is focusing on reducing Ulip's marketshare to 60 percent from present 76 percent. Other conventional policies will constitute the remaining 40 percent of the market share.

Dash said: "People are more interested in monetary returns than health cover."

LIC already has 45 satellite offices and plans to construct nine more soon. It also plans to strengthen northeast operations.

D K Banerjee, chief engineer, LIC said: "The company has acquired a plot near Salt Lake for Rs.2.76 billion. It will construct a 50-storied commercial buildings on that plot, which will house offices of various companies."

LIC has altogether 81 buildings in Kolkata. Another housing project of LIC will commence from this year. In the current fiscal the company has earmarked Rs.20 billion for housing projects.

LIC has approximately 1,000 buildings all over India.

Source: IANS

Monday, May 26, 2008

SJVN GETS 307-CRORE INSURANCE SETTLEMENT

Shimla: The public sector mini-navratna Sutlej Jal Vidyut Nigam has received a whopping Rs.307 crore here in a claim settlement from the National Insurance Company on account of losses due to flooding of the power house of the countrys largest 1500-MW Nathpa Jhakri power project in 2005.

It is the countrys largest- ever claim settlement onshore, claimed the Chairman of National Insurance, V. Ramaswamy, in a media briefing here.

He formally handed over the cheque for Rs.307 crore to SJVN Managing Director H. K. Sharma and said it was done in record time.

The power station was insured through an industrial all-risk policy with National Insurance as a leader of the consortium of some other smaller public and private sector companies.

The power house was flooded on the night of September 4-5 and power generation came to a halt, resulting in power shortage in the Northern Grid. It was temporarily restored after 44 days. The insurance company had also made interim payments in November 2005 and March 2006 amounting to Rs.51 crore on account of damage to the equipment.
The company is paying a premium of about Rs.15 crore per year to the insurance companies.

UNITED INDIA INSURANCE APPEAL DISMISSED

The Supreme Court has dismissed the appeals of United Insurance Company which had refused to renew mediclaim policies in high claim cases of senior citizens.
The court stated that the company's denial was highly arbitrary. Though the insured were not entitled to automatic renewal, the public sector companies should have been fair. The claimants had been hospitalised repeatedly and the company declined to renew their insurance.
The court said: "Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason."
The parties are not required to go into all the formalities. Since the policy contemplates terms for renewal, it cannot be placed at par with a case of first contract.

Friday, May 23, 2008

Malls on target


Future Generali to sell insurance policies in malls for a premium as low as Rs 49 per month. FUTURE Generali, the insurance joint venture between Kishore Biyani-led Future Group and Italian major Generali Insurance, yesterday launched Mallassurance, a unique initiative to sell insurance policies at the malls.

The policies, both life and non-life, will be available through kiosks and Future Money outlets in select malls for a premium as low as Rs 49, Rs 99 and Rs 199.The policies will include personal accident cover, house cover and also life insurance. They hope to create some history with these products and at Rs 49, Rs 99 and Rs 199; most Indian homes can purchase these policies and especially the young.

Their mission is to sell one lakh policies in the next 45 days. The products will be offered through 40 malls initially and will be ramped up to about 500 outlets in the next six months. The group is investing about Rs 185 crore in the life insurance venture and Rs 150 crore in non-life. Through the innovative marketing methods, the group can have a wider reach to the customers.

Source: Insuremagic

Insurance sale over the phone can help reduce premiums

Allowing insurers to conclude contracts over the phone will bring down the cost of insurance on low value covers. This channel would help the industry reach out to a section of buyers who do not want to deal with agents.

Concluding the sale over the phone makes it easier and more cost effective. The more cost effective it is, the lower will be the premium for customers. At present, direct marketing involves a two-stage process, where in the first stage, the prospect is convinced to buy a policy and at the second stage a representative approaches him for a signed proposal. This two step process makes it more expensive and reduces the rate of conversion.

The committee has suggested that the Indian regulator could consider allowing insurance companies to conclude a proposal through the telephone instead of insisting on a signed proposal form. The condition was that the conversation should be recorded and retained for at least two years. When insurance regulations were first drawn up, the technology for recording and storing voice conversations was not widespread. Today, most companies already record conversations between tele-callers and customers on grounds of monitoring quality.

Transactions over the phone would protect the interest of clients better as compared to a signed proposal form. For instance, in the case of proposal forms, there could be a case where the agent disregards material facts that are disclosed to him by the proposer. But in the case of phone contracts everything is on record. The insured has the option to change his mind as the 15-day ‘free-look’ period will be available. Also, cover begins instantly, the moment the payment is effected. In countries like Korea, such direct sales account for close to a fifth of sales. Insurance companies receive calls from prospective customers following an advertisement campaign. The tele-caller explains the terms of cover and concludes the contract over the phone and also receives payment by either credit/debit cards or through funds transfer.

Direct marketing is not expected to result in channel conflict between the agent and the company’s call centre. Direct marketing usually involves one or two simple products. The agent would have the full menu of products which would be much more complex than the ones sold over the telephone.

Source: Insuremagic

NIC banks on health biz

National Insurance Company (NIC) is in the process of an elaborate overhaul of its business processes to take on competition in the deregulated general insurance market.

Working on the prescriptions of consultants Price Waterhouse Coopers (PwC), the nationalised major is working on product and distribution led strategies with a projected target of Rs 4,500 crore premium collection in 2008-09, a roughly 12% growth.

As part of the restructuring, the company has relocated a few offices in Mumbai and Kolkata. It had hired PwC to work on its business re-engineering initiative last year.

Sharing some of the company's key initiatives this year, V Ramasaamy, NIC chairman and managing director, told DNA Money, "There are a host of recommendations from PwC, which we have started adopting in our processes as per our convenience. We are striving for a 25-30% growth in health insurance as part of the retail initiative.

Various such initiatives would include selling cheap flat and house insurance at discounted rates for which we are preparing sales campaigns targeting flat owners."

There will be a distinct focus on corporate clients this year. NIC has selected a few regional offices in Mumbai, Delhi, Chennai, Kolkata and Hyderabad to deal exclusively with corporate clients who pay annual premiums in the range of Rs 25-50 lakh.

"Cross selling of our products with our agency force will be significant this year." Ramasaamy said. "We have projected that 20% of the business should come from agents this year from 9-10% till now. The potential available in bancassurance is huge and the focal point would be encouraging agents to go to banks and drive businesses."

Following a PwC recommendation, NIC has introduced a centralised claim settlement system. As a pilot, it has started the process with one of its offices in Kolkata. This exercise, according to the chairman, has halved the time for settlement of motor claims from 40 days to 20 days.

The second-largest general insurance company by premium income and market share, NIC mopped up Rs 4,030 crore of premium in the financial year 2007-08, registering a growth of 5.7%.

"In 2007-08, the decline in insurance rates was lower than anticipated, down by almost 60-70%. We do not expect rates to come down any further this year," Ramasaamy said.

FY08 was a tough year for general insurers, as the free-pricing regime saw heavy discounting. Growth in premium collections fell at most companies as the sector grew just 12%.

In FY 08, NIC saw its premium from fire decline 22% to Rs 377 crore from Rs 481 crore the previous year. Motor insurance premium increased 6.6% to Rs 2,143 crore.

Owing to increase in rates, health premium grew 46% to Rs 685 crore, contributing close to 15% of the portfolio mix.

How has FY 09 year been so far?

"This year started on a good note with a 15.7% growth in April," Ramasaamy said. "We were able to clinch a group mediclaim in Andhra Pradesh and good support from bancassurance."

Source: DNA Money

Wednesday, May 21, 2008

NEW REINSURERS IN THE GULF TURN UP THE HEAT ON GIC

The oil boom has resulted in billions of dollars flowing into reinsurance, creating new capacity in the Middle East, which will provide stiff competition to General Insurance Corporation (GIC). GIC has had a leading position in the Afro-Asian region.

Speaking to ET, GIC chairman Yogesh Lohiya said that in the past 8-9 months alone, four reinsurance companies have come up in the Gulf region. Each of these companies has a capital of over $500 million, which gives them enormous capacity to provide reinsurance support. According to Lohiya, the emergence of new capacity will have an impact on GIC’s reinsurance business.

“These companies are willing to go wherever there is business. While there are many companies which have a level of comfort with GIC, there are insurers who are always looking for lower price and higher commission,” he added. Lohiya said that although reinsurance prices were down, reinsurers could not keep rejecting business merely because international prices are low. GIC or GIC Re, as the company now refers itself, is the national reinsurer with whom all companies need to compulsorily reinsure. However, the mandatory reinsurance requirement is being gradually diluted and is expected to be waived in the long term.

In the Middle East, petro dollars are fuelling growth in construction activity, which is boosting demand for insurance and reinsurance. Only last week, the largest Islamic reinsurance company in the world opened operations in Dubai. The firm, ACR ReTakaful Holdings, was promoted jointly by Dubai Group, Malaysian Khazanah Nasional and Singapore-based Asian Reinsurance. ACR ReTakaful Holdings was set up with a paid-up capital of one billion dirhams ($300 million).

Traditionally, GIC’s inward reinsurance business has been from developing countries in the Afro-Asian region. These were from insurance companies, which were too small for players in European markets to take notice of. Also, since the European markets had limited knowledge of the risks, the prices tended to be higher.

The softness in the reinsurance market is providing added impetus to the vigorous competition the domestic market is seeing, post-detariffication. According to Lohiya, because of the drastic fall in rates, most lines of business have seen a reduction in premium. “Were it not for the motor third-party liability, premium for many companies would have been lower,” said Lohiya. According to Lohiya, it is difficult to forecast when the soft cycle will end.

Although recent calamitous events — the cyclone in Myanmar, and earthquake in China — have not resulted in major insured losses, the events have reminded reinsurers of the weather risks in the region. Meanwhile, GIC is exploring opportunities outside property insurance. The corporation has for long been eyeing reinsurance for the life insurance business. It has recently held talks with Hannover Re to have a life reinsurance business in India. Hannover Re, one of the large reinsurers, is eyeing a presence in India.

Source:
Mayur Shetty, Mumbai
The Economic Times

CHANDIGARH SELECTED FOR NEW HEALTH SCHEME ‘NIRMAYA’

The National Trust, Ministry of Social Justice and Empowerment, New Delhi, has selected Chandigarh, as one of the 10 centres, for the implementation of a new health insurance scheme – Nirmaya.

The scheme will cater to the health insurance of persons suffering from autism, cerebral palsy, mental retardation and multiple disabilities.

The Government Institute for Mentally Retarded Children in Sector 32, Chandigarh, which has been appointed as the State Nodal Agency Center (SNAC) is in the process of receiving applications for the scheme.

Source:
Chandigarh
The Indian Express

INSURANCE CLAIM CANNOT BE DENIED DUE TO DROWNING IN POOL

A company cannot deny an accident insurance policy claim to a man who had died due to drowning in a swimming pool, the National Consumer Commission has said.

"In our view, in the present case, the death caused to the insured is an accidental death as it was not natural and that the insured did not intend to die by drowning," Commission President Justice M B Shah said.

The apex consumer panel noted that as per the terms of policy, the insurance company was to pay the claims, if the insured sustained any bodily injury resulting solely and directly from accident caused by "external, violence and visible means".

"Violent means included any external, impersonal cause, such as drowning or inhalation of gas or even undue exertion on the part of the assured," the Commission Bench also comprising member Rajyalakshmi Rao explained. "In such cases, the death is not due to internal cause and that any cause which is not internal must be external. But this does not mean that the injury must be external," the Commission said, referring to the English laws as most of the companies had borrowed their forms of policy from there.

Holding repudiation of the claim as "totally unjustified", the Commission asked the National Insurance Company Ltd (NICL) to pay Rs 25 lakh to Chennai resident Padma Ramanathan, wife of deceased with an interest of 12 percent.

N Ramanathan, a parter in a Chartered Accountants firms, who obtained a personal accident insurance policy for one year period between June 1996 to 1997, had died within one month while swimming at Madras Gymkhana Club.

The NICL had denied his claims saying that since Ramanathan had not died due to bodily injury -- solely and directly -- caused by the external and visible means, so the claim did not come within the purview of the policy.

Source:
New Delhi
The Economic Times

DETARIFFING DEALS DOUBLE BLOW FOR GENERAL INSURERS

General insurers are faced with double whammy in terms of reduced premiums and fall in commission from reinsurance portfolio as the fallout of detariffing, which has removed all pricing controls on non-life insurance.

As it is — insurance premium is falling, but now reinsurers are paying lower commission to insurance companies, which would ultimately affect their bottomolines, said an insurer.

The price-war in post complete detarriffing from January this year has led to huge discounts on fire, engineering and other general insurance policies resulting in the premium reduction as high as 70-80 percent from earlier instalments.

With this, reinsurers have also reduced their commission to insurers for the cover they sought from the reinsurance companies. As per normal practice, a major chunk of the premium collected goes for reinsurance on which the insurers earn commission. Since in many instances, large risks are being placed at low premiums, reinsurers are reducing commissions to insurance companies upon the renewal of their treaties, the insurer added.

Source:
New Delhi, Deccan Herald

INSURANCE AGENTS MAY GET TO SELL PRODUCTS OF ALL COMPANIES

Do you remember the last time you wanted to buy a general insurance product — be it a mediclaim, a householder’s policy or an accident cover? In all probability, you had to painstakingly compare every product feature and eventually opt for a particular policy based on your needs. This was because an agent from a particular company would neither inform you on product features of another insurer’s products nor sell its products as he isn’t allowed to do so.

If Insurance Regulatory & Development Authority (IRDA) accepts the recommendations made by the NM Govardhan Committee on distribution channels, that could be history. To provide a holistic product range to consumers with comparison across products, the committee has proposed that retail insurance agents from general insurance companies be allowed to contract with multiple non-life companies and sell policies of more than one company. At present, an exclusivity clause in insurance regulation restricts an agent from working with more than one insurance company.

“Retail insurance agents are a new concept to sell personal lines of products. The committee feels this will increase penetration of general insurance retail products,” the committee recommended.

“Penetration levels of general insurance products are very low, even lower than life insurance products. The recommendation will help increase sale of general insurance policies including mediclaim covers and offer a wide range of option to his/her clients,” said an analyst.

In a parallel development, the panel set up to look into senior citizens’ health insurance aspects has suggested convergence of agents for health insurance plans. This means agents of any insurance company — private or public sector, life and general — can sell mediclaim and health plans of any other company. In effect, the agent will work as a broker for health covers. You as a customer will have a choice from a vast array of products both specialised and off the shelve.

If both the recommendations are accepted by the regulator, agents from general insurance companies will be able to sell an array of health covers both from life and non-life companies as well as offer a wide range of other non-life retail policies including accident covers, motor vehicle insurance, and householders policy.

Currently, there are 18 life insurance companies and another 18 general cover companies. Although not all 18 life companies have launched health covers, a handful of them have and a host of others are looking at launching the product. Following adoption of this norm, each of the 20 lakh life insurance agents and 10 lakh general insurance advisors will be able to sell health plans from 17 general insurance companies and 16 life cover companies. However, not all life insurers have started selling health insurance policies though all the non-life companies have more than one version of the product. The largest life insurer, Life Insurance Corporation of India, which has about 13 lakh agents has announced plans of selling health insurance plans.

To this effect it has formed a team and is working on the products, which are expected to hit the market in the next couple of months. Private life insurers have also started launching health plans.

Source:
Debjoy Sengupta, Kolkata
The Economic Times

MEDICLAIM RENEWAL BY INSURERS MUST BE AUTOMATIC, RULES SC

The Supreme Court has ruled that insurance companies are obliged to renew the mediclaim policy automatically unless otherwise mutually agreed between insurer and insured.

A bench comprising Justice SB Sinha and Justice VS Sirpurkar also asked the regulator (Irda) to lay down guidelines to check the imposition of arbitrary clauses of mediclaim policy and its renewal. The court said, “renewal of a mediclaim policy subject to just exceptions should ordinarily be made”.

But where a renewal is based on mutual consent, there may be no automatic renewal. A mediclaim policy in which a senior citizen is involved would stand on a different footing. It will depend upon the contract entered into between the parties and the statutes operating in the field as also the constitutional scheme, court said.

It rejected the plea of some public sector insurance companies, which had said that wherever renewal is subject to mutual consent of the parties, it might be at its whims and caprice to refuse the renewal of the policy.

“The insurance companies cannot, either in their prospectus or in the terms of policy, lay down any condition which would be derogatory to the terms and conditions approved by the regulatory authority. If the contract of insurance itself provides for renewal of an insurance policy the same may not mean that the assured has a legal right of automatic renewal, but the courts are required to strike a balance” said Justice Sinha writing the verdict. The court asked the authorities concerned to lay down guidelines in this regard.

“We would like to observe that keeping in view the role played by the insurance companies, it is essential that the regulatory authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field...” the court said. The duties and functions of the regulatory authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the central government or the general insurance companies also issue requisite circulars,” the court said.

It further said, “ We would request the IRDA to consider the matter in depth and undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking recourse to arbitrary methodologies in the matter of entering into contracts of insurance or renewal thereof, appropriate steps on that behalf may be taken”.

Source:
Sanjay K Singh, New Delhi
The Economic Times

Tuesday, May 20, 2008

Your health cover’s best left floating

The incidence of chronic diseases has been on the rise all over the world in recent years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment, too, has been rising.

This is where medical insurance can come in handy. By spending a small sum on a healthcare policy on a regular basis, you can undergo expensive medical treatment without having to worry about your precious savings getting eroded.

As in any booming economy, India’s economic growth is being driven largely by the middle classes. Notwithstanding the increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.

A relatively new type of health insurance plan called the floater health insurance plan helps you get the maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.

The policy covers medical expenses incurred as an inpatient during hospitalisation for more than 24 hours, including room charges, doctor surgeon fees and medicines, etc. This policy also covers expenses 30 days prior to hospitalisation and 60 days post hospitalisation.

So, what is the difference between the regular health insurance plans and Floater health insurance plans?

We can study this with an example. As the table shows, a family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs 7,580. The same family will have to pay only Rs 6,024 if they opt for a floater policy.

In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.

In the example above, when the claim amount increased in the daughter’s case, only the amount up to her respective sum insured would have been paid. In case of the floater plan, however, the full claim would be paid since the total sum insured of the family was Rs 3,00,000, wherein all members of a family were covered under the same plan for a single premium. The sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.

There is an upper limit in floater health insurance plan coverage, of Rs 3 lakh.

Floater plan has some additional benefits, such as:

- Free health checkup coupon for the senior most member of the insured family

- An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one-time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available

- No health check up required up to the age of 45 years (as on last birthday).

- Income tax benefits under section 80D, which from the current financial year has increased from Rs 10,000 to Rs 15,000 as deduction from the total income; Rs 20,000 for senior citizens.

Policy exclusions

All health policies have the following exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days of the commencement of the policy cover are not covered. This clause does not apply to subsequent renewal (without a break) of this policy.

The floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill. Therefore, the floater policy can be an effective cost-saver. As the age increases, you should start looking to migrate to individual sum insured policies.

Source: DNA Money

Allianz eyes 10% emerging market growth in 2008

Frankfurt: Europe's biggest insurer Allianz is aiming for top-line insurance growth of at least 10 per cent in emerging markets this year, Allianz board member Werner Zedelius told Reuters in an interview.

"Our goal is to add at least 10 per cent per year in our growth markets and we've managed it up to now. We're doing everything we can to make it again this year," said Zedelius, responsible for business in 26 markets in Europe and Asia.

Allianz set a target in 2006 to earn 15 billion euros ($23.40 billion) in premiums from emerging markets, mainly central and eastern Europe and the Asia-Pacific region, within three to five years.

At the end of 2007, premiums were 12.8 billion euros, a 24 per cent increase over the previous year, with Asia-Pacific contributing 8.8 billion euros and eastern Europe 4 billion.

"We will probably reach our goal sooner rather than later," he said.

Emerging markets developed positively last year and Allianz also added some acquisitions, such as Russian insurers Rosno and Progress-Garant, which also boosted premiums.

"We more than met all our targets for sales and earnings," Zedelius said.

Prices for potential takeover targets still varied across emerging markets, Zedelius said.

"We are mainly focused on internal growth but we also look selectively at acquisitions," he said. "There will certainly be some buying opportunities also in the future," he said.

Allianz's growth market businesses steered clear of investments in subprime-related assets but they have noted some uncertainty among retail investors in some markets in the wake of the crisis.

For example, new business suffered in the first quarter in India, but generally the company has seen no big declines.

Allianz is pushing for long-term growth in China, where it earned more than 300 million euros in premiums in 2007.

It plans to raise the number of agents there to 40,000 in 2009/2010 from 11,000 now and is also expanding geographically, though the regions where it is already present have a combined population of around 250 million people.

"We've just received a licence for the Beijing region, which I definitely wanted to have ahead of the Olympics to show: We are now in the capital."

Allianz has focused so far on life insurance in China, which contributed about 290 million euros in premiums last year, with sales helped by cooperation agreements with banks ICBC and Agricultural Bank of China.

Zedelius said he was concerned for the safety of Allianz staff in Sichuan following last week's devastating earthquake in the region, noting that one employee was still missing.

"We don't expect significant claims for Allianz, however. We're still small in property insurance and while we may have some cases on the life side, that's what we're there for."

In Japan, Allianz has already reached its target for 2008, just six weeks after starting life insurance sales, Zedelius said.

In India, Allianz has more than 10.7 million policies outstanding. "That's an incredible number for a company that didn't even exist in 2001," Zedelius said.

Premiums there totalled almost 1.8 billion euros last year, about 1.4 billion of which were in life insurance.

Zedelius said Allianz was in concrete talks about its expansion into asset management in India but declined to give details.

Source: Reuters

Choosing a no-frills insurance plan

If you are looking for a no-frills insurance plan that covers you against risk to life, then a plain-vanilla term assurance plan may be your ideal investment.

It provides basic life cover to an individual and compensates dependants for the loss of an earning member of the family, in the event of his death.

For individuals, term assurance is the first type of life insurance to be bought before they plan for any other kind of investment.

Of late, individuals taking home loans or other large obligations have started to opt for a term insurance policy along with the loan, in order to secure their family against the loan obligation in the event of their death. With expanding choices, premiums on term assurance policies have become very competitive.

A term policy can be taken to cover an individual alone or his/her spouse (joint life) or to cover business partners. Term insurance plans are non-participating policies. Therefore, if the insured survives the term, he will stand to receive no maturity value at the end of the term.

Term insurance is intended to compensate your family for loss of income. Assuming Avinash, aged 25, earns Rs 5 lakh per annum and his yearly financial commitments total Rs 3 lakh, he has to plan for the sum assured based on the requirement. In this case, if the dependant can earn a return of 7 per cent per annum, he has to buy a plan for Rs 40 lakh.

A point to remember here is that most insurance companies offer term plans for a maximum period of 25-30 years and cover is provided till the age of 65 years.

Apart from one policy for income replacement, an individual can take separate policies for the other financial goals such as education and marriage of the dependant children. Separate policies can be taken for these and discontinued if the goal is reached.

Types of term insurance

Level Premium: Under this option, your risk cover and premium remain the same throughout the policy term. This type of option is considered to be best if one prefers to plan for income replacement, after one’s time. In the event of death, a lumpsum payment is made and the same can be invested to secure monthly income for dependants.

Decreasing cover: The sum assured gets reduced every year and becomes nil at the end of the term. These plans are ideal if linked to your home loan or to any other business loan. As the loan outstanding reduces, the cover will fall accordingly.

Single Premium: Several insurers allow you to pay a lumpsum premium at one go. This may factor in a good discount to your regular premium and is ideal if you have an irregular income stream and cannot commit to regular premia over time.

Riders

Term policies also allow you to add other riders or benefits on payment of additional premium. A few key ones are:

Critical illness benefit: If one is diagnosed with any illness covered by the policy, a lump sum is paid and the critical illness rider then ceases to be in operation. However, the basic sum assured continues to be in operation.

The general rule is that if one survives for 30 days after the critical illness, the entire sum insured, including critical illness, is paid.

In comparison to general insurance, here the entire cover is paid, irrespective of the actual money spent on treatment. Some insurance companies offer a cover that is as high as Rs 50 lakh under this benefit.

Accelerated Sum Assured benefit: On diagnosis of any one of the critical illnesses, the sum insured is paid and the basic policy terminates without any value.

Accident death benefit: In case of demise by accident, an amount equal to the sum assured is paid in case of accident, or if death occurs within 90 days from the accident.

Choosing term plans

Some insurance companies offer return of premium and others offer plain products. It is advisable to take plain products and save on the extra premium, which can be invested in other avenues.

It is important to remember that taking insurance gets more expensive as you get older, therefore locking into a term plan early in your life makes sense. Premiums for term insurance policies are based on a number of factors, including age, gender, state of health and lifestyle.

Some insurance companies offer a discount on the premium for a non-smoker.

Therefore, it may be best to do some comparison shopping based on your requirements and select the provider who offers a competitive rate.

Tax benefit: The premium paid on your policy is eligible for tax benefits under the overall investment limit under section 80 C. In the event of death, the money received from the insurance company is tax exempted under section 10 (10D).

The premium paid for accelerated sum assured is exempted under section 80 D.

Hence, plan your requirement and select a term insurance policy as soon as possible because when it comes to term policies, early initiation translates into straight savings on your premia.

Source: Business Line

Monday, May 19, 2008

Royal Sundaram bets on customised plans

Like most general insurers, Royal Sundaram Alliance Insurance (RSA) too has witnessed a slowdown in growth of premium income in the detariff regime. Also in the news

To get back, the company is planning to offer differential pricing and policies to customers. The focus this year will be on the growth of personal and commercial insurance, and the company will aim for at least 15% growth.

At present, customers get a choice of prices for the products sold by general insurers, but not on the terms and conditions of the specific policy.

Customised insurance products could be introduced in a few months from now across all categories, including fire, motor and marine.

"We are closely working with leading actuarial consultants to assist us in gaining technical knowledge," Ajay Bimbhet, managing director, RSA told DNA Money. "We will be able to offer innovative value-added products and differential propositions once the relaxation on policy covers, terms and conditions comes into effect."

"Our focus will be on the growth of select segments in personal and commercial insurances. We believe this is the best approach to increase insurance penetration. The company will also focus on distribution enhancement to access more locations across the country," Bimbhet added.

As per Insurance Regulatory & Development Authority data, RSA has a 2% market share at present.

The company has underwritten gross premium of Rs 695.16 crore for the year 2007-08, a growth of 15.75% over the previous year.

Motor insurance is the company's largest portfolio, contributing 58% of total premium.

Health contributes around 21%, while commercial insurance, which includes property and engineering insurance, contributes around 19%. About 7% of premium comes from the personal insurance category.

Does the company bother about market share and their slower growth? No, says Bimbhet: "Since inception we have been prudent in risk selection while remaining focussed on our bottom line. This strategy has paid dividends and our profit ratios have shown a market improvement."

"Though tariff abolition has challenged our ability to sustain this trend, we will continue to be focussed on delivering profitable growth in the future," he adds.

Source: DNA

Marlabs’ KPO unit for health insurance sector

Chennai: Marlabs India, a wholly owned subsidiary of Marlabs Inc, announced the launch of their new unit to provide KPO services in health insurance sector. The unit, which currently operates from the company’s Bangalore and Mysore offices, will soon expand to other cities as well.

Marlabs intends to hire over 2,000 medical professionals over the next 18 months to staff the KPO division and is investing close to $7-8 million in the venture. The KPO unit, which is already functional in Bangalore and Mysore currently, has 400 professionals on its rolls.

Announcing the new business unit, Krishnan Ramachandran, CFO, Marlabs Inc. said, ”With our extensive experience in providing value added services to US corporations, the KPO division will be a significant component of our long-term business plans.”

Source: Sify Finance

ICICI Pru life Insurance topped among private insurers

19/May/2008

India's leading private insurer, ICICI Prudential Life Insurance completed seven full years of operations during which period it sold over seven million policies and crossed the Rs 28,000 crore in assets held.

During the financial year 2007-2008, the ICICI Prudential Life Insurance continued its strong new business performance with retail new business weighted premium of Rs 6,684 crore, registering a growth of 68 per cent over the last year. The company sustained its leadership position with an overall market share of 11.8 per cent.

As compared to financial year 2006-007, the company had more than tripled its branch network to increase customer convenience in financial year 2007-08.

Today, the company has over 1,950 branches in over 1,665 cities across the country, including over one thousand branches in rural segments. The last financial year saw a increase in distribution network and strengthen its service infrastructure and continued to introduce innovative products in the health, retirement and wealth creation space. This strategy helped them to maintain their leadership position in the market and also enhance their customers experience in many distinct ways.

Source: Insuremagic

LIC eyes Singapore as base for SE Asia

19/May/2008

Seeks Branch Licence There; Insurer Also Keen on US, Australia

The country’s largest financial institution, Life Insurance Corporation (LIC), eyes operations in Singapore. LIC is planning to set up a representative office first and later a subsidiary in Singapore, which could serve as its base for the region.

LIC has got the go-ahead from the Centre to set up an office in Singapore. A representative office was expected to be opened in a few months’ time after authorities there approved the corporation’s choice of a chief executive.

At present, LIC does not have a presence in the south-east Asian region. The corporation is looking at Singapore as a base. The only south-east Asian presence LIC has is a tie-up between LIC International in Bahrain and a Thai broker. The representative office is expected to open up within the next six months. It will study the market for a year and then draw up a business plan to set up its local operations.

Unlike banking, insurance licenses are easier to get. However, life insurance operations are much more capital-intensive as the business takes several years to break even. Many countries, which allow foreign investment in insurance, insist that multinationals have locally incorporated companies. In Singapore too, LIC will need to have a local subsidiary.

The corporation plans to enter Australian and US markets. It is in the process of appointing management consultants to advice on how to approach such markets.

LIC generates a sizeable business from overseas Indians through LIC International in Bahrain, which was established in 1989. The company caters to the Gulf region and has operations in all six GCC countries — Bahrain, Saudi Arabia, Kuwait and the UAE (through chief agents), Qatar (through broker) and Oman, Dubai (through branch offices).

Besides, LIC has operations in Nepal through a joint venture company between LIC and Vishal Group of companies, which was established in ‘01. In ‘03, the corporation established LIC (Lanka), a JV company between LIC and the Bartleet group.

Source: Insuremagic

Life insurance is where the life is

17/May/2008

There seems to be shift in favor of life insurance, in contrast with earlier rosy projections about general insurance. Every would-be insurer wanted to be in general insurance. Now the choice is life insurance. Allianz, which has tied up with Alpic Finance for general insurance, has now decided to start a life insurance venture. There are others in the pipeline, like GIO Australia, which is withdrawing from the Indian general insurance business so that its new parent AMP can run a life insurance business unfettered. The reason is simple. The Life Insurance Corporation of India registers a premium of Rs.20,000 crore, double that collected by GIC and its subsidiaries. Also, LIC's claims experience is far better than GIC's.

According to projections made by Confederation of Indian Industry, life insurance premiums will grow to Rs 1,48,000 crore in 2009-2010 and the pension business to around Rs 14,000 crore.

It was earlier assumed that private players would exploit the immense potential offered by health insurance. But with life insurance companies ready to package a health insurance product with their life policies, a plain vanilla medical insurance policy is unlikely to make waves.

The other added attraction of life insurance is that a policy holder gets his money back at the end of the maturity period or his family gets the money on his untimely death. With a major chunk of the potential market, read health, targeted by the life insurance companies too, what is left behind for general insurers to fight over is fire, burglary, transit and other such insurance lines.

The hitch again here is the possible fall in premium rates because of competition. For instance, the fire insurance premium -- the most profitable product for the four government insurers -- is all set to be reduced, and motor insurance is really a drag on bottom lines.

The other likely problem that a new private general insurer would face is finding a re-insurer.

Source: Insuremagic

Bajaj Allianz ties-up with Maharashtra Co-op

16/May/2008

Private sector life insurance company Bajaj Allianz Life Insurance has joined hands with Maharashtra State Co-operative Bank to provide life insurance solutions across the state through the bank's 265 branches.

This tie-up will greatly improve our distribution strength in all Maharashtra and help provide life insurance solutions across the rural and semi-rural customer base of Maharashtra State Co-operative Bank. They are proud to tie-up with Bajaj and will now be able to offer insurance benefits and products to their customers.

Source: Insuremagic

Friday, May 16, 2008

Clients cheer as insurance gets the Net edge

MUMBAI: The benefits of de-tariffing in non-life insurance is finally trickling down to individuals. Insurance brokers have started providing aggregations services, offering quotes across a range of insurance companies to retail buyers of property, auto or health insurance. The key difference between a broker and an insurance agent is that unlike an agent, who pushes products for an insurance company, the brokers represent the customer and are expected to get their clients the best deals from across companies. So far, insurance brokers had been constrained by regulations that required that any person selling insurance be a fully-qualified insurance person. Also, brokers were not allowed to have sub-brokers’ selling insurance. As a result of these restrictions, brokers focused only on high-networth corporate customers. Corporates made the best of de-tariffing by playing up one insurance company against the other. But now insurance brokers have found out that by leveraging the power of the internet, they can aggregate quotes from across companies and offer the best rates to individuals. Insurance broking firms Optima Risk Management and Bonsai Insurance Broking services have managed to tie up with insurance companies, allowing buyers to purchase cover directly over the internet. Optima offers quotes through its website click2insure.com while Bonsai’s site is insurancemall.in. For the consumer, what this means is s/he can purchase the cheapest health or auto insurance online in the same way s/he compares and buys air tickets online. Another silent revolution that has made this possible is the outsourcing of claims servicing by insurance companies. Both in health as well as motor insurance, companies are offering cashless servicing of claim servicing through tie-up with either third-party administrators or auto dealers. “Involvement of the branch has gone down drastically. The location of the branch, therefore, does not matter for the customer,” said Optima Risk Management MD Rahul Aggarwal. But the cashless service has not evolved to the extent that policyholders can get service from across service providers. This means that if either the car is repaired at a not-networked workshop or the policyholder is hospitalised outside the TPA network, the documents will have to be forwarded to the policy issuing officer for reimbursement. According to Mr Aggarwal, after the purchase, the buyer can get the receipt and proof of insurance through email almost immediately. The brokers are also able to extend the benefit of no-claim bonus based on proof of no-claim, either in the form of a renewal notice or through a letter issued by the insurer, who has issued the expiring policy. Mr Aggarwal anticipates retail business to get much bigger than corporate business. He expects to generate a premium of Rs 500 crore from a 10-lakh customer base in the next three to five years. With auto and health insurance dominating the non-life market and private life insurance almost doubling every year, international insurers have also started showing interest in retail. Howden India, an affiliate of the UK-based Hyperion group, has shown interest in distributing life insurance products for multiple companies in India.
Source : ET

Thursday, May 15, 2008

Apollo DKV Insurance to invest Rs 5 bn in India

MUMBAI: Health insurer Apollo DKV Insurance Co Ltd plans to invest up to Rs 5 billion in the next five years to increase market share, Vice Chairperson of the Apollo Hospitals Group, Shobana Kamineni, told reporters on the sidelines of a health insurance summit on Friday. "To be a significant player we need at least 15 per cent of business in the health insurance sector in India," she said. She estimated the health insurance business in India at $1 billion now. The addressable market is the 250 million middle class Indians, she said. The company is a joint venture between Apollo Hospitals Group, which holds 74 per cent in the venture, and DKV Deutsche Krankenversicherung AG, which is a part of German re-insurer Munich Re. Apollo Hospitals Enterprise Ltd is the flagship of the Apollo Hospitals Group. The venture has so far invested 1 billion rupees in India. In the five months of its operations in India, Apollo DKV Insurance Co has generated 100 million rupees revenue in premiums collected

Source: ET

Aviva plans MF foray

15/May/2008

Life Insurance firm Aviva India is planning to foray into mutual funds by setting up an asset management company. The company is also doubling its sales force for the insurance business and plans to launch new products for the health insurance segment.

India and China have massive geographic potential and will continue to drive our growth in the Asia-Pacific region. In India, Aviva plans to foray in the asset management segment either through a joint venture with a local partner or independently. According to the existing laws, foreign companies will have to invest a minimum of $5 million if it wants to start an asset management company through a JV. If the overseas company pursues the venture independently, it will have to invest a minimum of $50 million. It takes around 6-12 months to get an asset management Licence in India.

Asset management is a key unit of the company. Globally, Aviva Plc has around $326 billion worth of funds as asset under management. An ideal Indian partner should have a large distribution network. However, he declined to comment if the company is in talks for an Indian partner. Aviva also intends to raise its stake in Aviva India to 49% whenever the government increases the FDI limit in the sector to 49% from the present 26%.

The hike in FDI in the sector has been opposed by the Left parties for the past 4 years. Aviva India is a 26:74 JV with the Dabur Group holding the majority stake.

One of the focus areas of the company is to drive its growth in India by augmenting its distribution channel.

Source: Insuremagic

The bonus bounty: Play your cards right

MUMBAI: It’s that time of the year when your salary is supposed to look fatter — after all, the financial year has ended. And the New Year brings cheer with pay hikes and lumpsum performance bonus, if any. Are you one of those lucky employees to boast of such a windfall? If yes, ET congratulates you as it takes you through a financial plan to park your bonus money.

It’s better that you pay off your ‘bad and ugly loans’ with it. These could be your high interest-paying credit card bills, personal loans or car loan. “Any loan that costs above 14% should be paid off,” says Kartik Jhaveri, a certified financial planner, and director, Transcend India.

Never miss the wood for the trees and ensure that any investment is directed towards the ultimate financial goal, experts say. The idea is that you should see your money grow to meet your financial targets.

If you want to use the money for medium-term needs, say 3-4 years, consider safe instruments like debt. This could be debt funds or even arbitrage funds. Arbitrage funds generate fixed income by taking advantage of price differentials between the cash and the futures market.

“I would advise not to invest this bonus in aggressive instruments as this windfall is not part of regular investment plan. It’s better to park it in safe instruments, which can later be used for downpayment of home loan. This would lower the overall loan amount,” says Swapnil Pawar, director, Park Financial Advisors, a personal financial planning company.

If you are above 35 years old, you could also look at adding this amount to your retirement corpus. Consider index funds or balanced funds, Mr Pawar suggests. If you have smaller amounts like Rs 50,000 or below, you could look at PPF. That would shore up your long-term savings.

When you think long term, experts suggest equity. The reason being equity investments can give tremendous returns in the long term. This may be a good time to buy stocks, given that markets are looking choppy. But the bigger question is whether you want to enter the equity route via stocks or look at equity mutual funds? “You should look at splitting your money over 5-6 blue chip companies. If you don’t have the expertise, then a diversified equity fund will be a safe bet,” Mr Jhaveri adds.

Consider parking the money in liquid funds, fixed deposits if you require money in the near term. Liquid funds can be a good alternative as the effective tax rate would be less.

Every windfall comes with a price tag. In this case, the bonus amount will be taxed as part of your salary. How much it would exactly cost you would depend upon the tax slab. You could look at insurance, PPF or even equity-linked saving scheme, which would come under Section 80C. Even home loan could help.

The overall tax deduction on the interest component for a single borrower is Rs 1,50,000 and Rs 3 lakh in case of joint loans. Even the principal component of the loan enjoys tax rebate. So, base your decision on the post-tax return, not to mention your liquidity needs.


Source: Economic Times/15 May,2008

Munich Re, Hero start Indian life insurance venture

FRANKFURT: Germany's Ergo Insurance Group and India's Hero Group have agreed to form a life insurance joint venture in India, Ergo parent Munich Re said on Friday.

"Under the proposed agreement, equity will be shared between the two partners, and Ergo International AG will take a 26 per cent share in Hero Ergo Life Insurance Co Ltd, which is the maximum permissible limit under the existing guidelines for the insurance sector in India," a statement said.

The plan is to seek regulatory approval over the next 10 to 12 months and to start operations during the second quarter of 2009, it added.

"Our tie-up for life insurance will strengthen our primary insurance footprint in the entire insurance sector, that is life, health and non-life business in India," Munich Re Chief Executive Nikolaus von Bomhard said. It said the Indian life insurance market grew around 63 percent in 2006 and 47 per cent in 2007.

"With household earnings accelerating in the fast-growing economy, the life insurance market is projected to double in size from $40 billion in 2007 to $80 billion and may even grow to $100 billion by 2012, according to market research," it said.

Source: Economic Times/2 May, 2008