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
Wednesday, May 21, 2008
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
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
"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
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
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
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
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