PNB, Vijaya stop selling Principal policies

MUMBAI: Punjab National Bank and Vijaya Bank — the two key partners of insurance broking firm Principal PNB Insurance Broking Company — have completely stopped selling insurance policies. This, market observers say, could be the first step of banks severing their ties with the Principal Group. Principal PNB Insurance Broking Company is a joint venture between the Principal Group, PNB, Vijaya Bank and Berger Paints and it sells insurance policies of many insurance companies. In the past, both Delhi-based PNB and South-based Vijaya Bank had said that they were not very keen on continuing their relation with the Principal Group. However, both banks decided to stop offering policies being marketed by the broking arm to their customers this April. Officials from both banks said that they have stopped selling policies since they were not earning a significant level of fee income through this route. Bank officials also pilferage customer data as yet another reason for discontinuing the activity. The move by both banks to discontinue selling insurance products may come as a setback to the insurance broking company since both banks have a huge network of branches. While PNB has about 3,000 branches with most of them in northern India, Vijaya has about 1,000 branches in the South. Under the tie-up, Principal holds 26%, PNB has 30%, Berger Paints has 25% while Vijaya Bank holds 19% stake. According to insurance regulations, a bank can distribute products of only one company through the corporate agency route. However, it is possible for a bank to float a broking arm which can, in turn, sell insurance products of various companies. Besides PNB, HSBC has floated an insurance broking arm in India.

Source: ET

Dabur forays into general insurance

MUMBAI: The Burman family, the promoters of the Dabur group, is entering the non-life insurance business. The group, which already has a presence in the life insurance sector through Aviva Life Insurance, has roped in Liberty Mutual group of US for its non-life foray. As per the current rules governing the insurance businesses in India, Dabur's group firm, Dabur GI Invest Corp, will hold a 74% stake in the non-life insurance company, while Liberty Mutual, through one of its fully owned subsidiaries, will hold the balance 26% stake, a release from the Indian promoters said. The US-headquartered Liberty Mutual has presence in 24 countries across the globe and in 2007 had reported a consolidated revenue of $25.9 billion. As per the latest listings, Liberty Mutual was ranked as the sixth largest casualty and property insurer in the US. As per the roll out plan for this new insurer, Liberty Mutual will start the process of setting up the company soon. And once the regulatory and other approvals are in place, the new entity will operate under the name Dabur Liberty General Insurance Company. Although Dabur Liberty will provide different types of insurance products, the emphasis will be on personal insurance products such as car, home and personal accident protection. In the life insurance, Dabur partners Aviva, UK's largest and the world's fifth largest insurance group. There are 18 companies offering non-life insurance products.
Source: TOI

Ceiling on insurance premia

Sec. 80C(3) places a ceiling of 20 per cent of the sum assured as available for benefit of Sec. 80C. Sec. 80C is easily applicable for endowment policies where there is a specific sum assured. There are other policies where there is no specific sum assured as in the case of Bhima Plus. Since the ceiling with reference to the assured sum is not possible, I presume that the entire premium should be deductible.
Sec. 80C(3) applies for an insurance policy other than a contract for deferred annuity. Insurance policy for purposes of Sec. 80C has to be on the life of a person. Merely because the sum assured may include an element of profit or part of it is returned in instalments or subject to any other variation instead of payment of an assured sum on death or maturity of the policy, it does not mean that the ceiling is inapplicable for policies other than endowment policies. It can be presumed that in all cases of single premium payment, there can be no deduction of more than 20 per cent of such amount in the case of any life policy.
Any other view would not be consistent either with the letter or the spirit of the section.

Source: The Hindu