After the overwhelming success of its job cards scheme, which covered about 20 million households in villages, the UPA government is ready with yet another programme, health insurance for poor, and a set of smart cards.
The ruling coalition, which survived the confidence vote in Parliament today, is aiming to cover 60 million households (or about 300 million people) across the country in the next five years under the Rashtriya Swasthya Bima Yojana (RSBY), which it announced last year. Already, 300-odd patients insured under the scheme have availed of this facility in various listed hospitals in Delhi and Haryana.
Under the scheme, smart cards are distributed to below poverty line (BPL) families that enable beneficiaries and their family members to access healthcare worth Rs 30,000 a year from listed public and private hospitals at an yearly premium of Rs 30.
The actual premium per card is Rs 662, paid by the Union labour ministry and the state governments. The ministry pays 75 percent of the cost.
While Assam and Tripura have already rolled out the scheme, Gujarat, Rajasthan, Kerala and West Bengal are ready to issue the smart cards in a month. In August, people in Bihar and Jharkhand and 15 districts of Uttar Pradesh would also start getting the cards.
Last week, Delhi Chief Minister Sheila Dikshit inaugurated the distribution of the cards in one of the city's most backward areas, Mongolpuri.
Mahender Singh, who works at a construction site in Delhi, was among the 200 people who received the cards from the chief minister. He said though he did not recognise any of the hospitals on the list, he was glad there were some nursing homes where he could take his ailing mother for treatment.
According to Anil Swarup, director general (labour welfare), Ministry of Labour, the market-linked model is a win-win for the patient, the participating hospitals, the insurance companies as well as the companies making the smart cards.
The companies that win the bids get a premium of Rs 662 per smart card. The business model behind the programme obliges the insurance companies to distribute as many smart cards as possible as it is these cards that determine their income, says Swarup.
So far, insurance companies like Oriental Insurance, National Insurance, United India Insurance, ICICI Lombard, New India Assurance and Cholamandalam MS General Insurance have accepted the deal in 12 states. Others are waiting for more states to invite the bids.
Source: Business Standard
Wednesday, July 23, 2008
HOME AND HEALTH
HDFC Ergo General Insurance, a non-life venture between HDFC and Munich Re group, may not underwrite health insurance despite this being the fastest-growing segment. This is because Munich Re already has a joint venture with Apollo Hospitals, which specialises in health insurance. There has been speculation that HDFC may have another joint venture for health, perhaps with US company Cigna. HDFC has strongly denied such speculation and has said that it may instead sell health insurance for Apollo DKV Health, if regulations permit.
Source: The Economic Times
Source: The Economic Times
PF CORPUS: FUNDS QUOTE LOWEST FEES
Mumbai: The Employees’ Provident Fund Organisation (EPFO), which runs one of the biggest social security schemes in the world and has often been criticised for the way it runs the scheme, has attracted one of the lowest fund management fees from top fund houses.
Over five fund houses have quoted a fee of one basis point (0.01%) or less for managing the incremental or fresh funds of the EPFO which is reckoned to be close to Rs 25,000 crore annually. The EPFO had invited bids from asset management firms for outsourcing the fund management functions of the organisation which has over 2 crore subscribers and has a corpus aggregating Rs 2,40,000 crore.
The plan is to have multiple fund managers for the scheme to help generate higher returns and to bring about greater professionalism by infusing competition.
From a provident or pension fund subscribers’ perspective, a lower fund management fee translates into higher returns over a long stretch. Typically, provident and pension fund monies remain invested over decades and there is evidence to show that each percentage fall in fund management charges is reflected in higher returns. In India, mutual funds charge, on an average, well over 2% as fund management fees.
The pension sector regulator PFRDA has also adopted a similar approach of awarding the mandate of fund management to three stateowned fund houses on the basis of the lowest fees quoted.
According to persons familiar with the EPFO’s bidding process, the asset management arms of HSBC, ICICI Bank, SBI, HDFC and Birla Sun Life are among those that have quoted a low fund management fee. What could be encouraging for these fund houses is access to a fairly large corpus at a time when there has been a decline in the assets under management of the mutual fund industry.
If the EPFO board approves the choice of three fund managers as proposed it may well have an impact on other exempt and what is known as excluded trusts, provident and pension funds. The funds, given their long-term nature, could also help provide stability in a rocky market.
These funds also may be enthused then to outsource their fund management activities to professional fund managers. In turn this could put pressure on the government to liberalise the investment guidelines to permit greater play for equity.
Source: The Economic Times
Over five fund houses have quoted a fee of one basis point (0.01%) or less for managing the incremental or fresh funds of the EPFO which is reckoned to be close to Rs 25,000 crore annually. The EPFO had invited bids from asset management firms for outsourcing the fund management functions of the organisation which has over 2 crore subscribers and has a corpus aggregating Rs 2,40,000 crore.
The plan is to have multiple fund managers for the scheme to help generate higher returns and to bring about greater professionalism by infusing competition.
From a provident or pension fund subscribers’ perspective, a lower fund management fee translates into higher returns over a long stretch. Typically, provident and pension fund monies remain invested over decades and there is evidence to show that each percentage fall in fund management charges is reflected in higher returns. In India, mutual funds charge, on an average, well over 2% as fund management fees.
The pension sector regulator PFRDA has also adopted a similar approach of awarding the mandate of fund management to three stateowned fund houses on the basis of the lowest fees quoted.
According to persons familiar with the EPFO’s bidding process, the asset management arms of HSBC, ICICI Bank, SBI, HDFC and Birla Sun Life are among those that have quoted a low fund management fee. What could be encouraging for these fund houses is access to a fairly large corpus at a time when there has been a decline in the assets under management of the mutual fund industry.
If the EPFO board approves the choice of three fund managers as proposed it may well have an impact on other exempt and what is known as excluded trusts, provident and pension funds. The funds, given their long-term nature, could also help provide stability in a rocky market.
These funds also may be enthused then to outsource their fund management activities to professional fund managers. In turn this could put pressure on the government to liberalise the investment guidelines to permit greater play for equity.
Source: The Economic Times
‘BRING ALL RYOTS UNDER CROP INSURANCE SCHEME’
District Collector K. Devanand has asked agriculture officials and bankers to work in tandem and ensure that all farmers -- landlords, tenants, loanees and non-loanees -- are brought under the crop insurance scheme which is being implemented taking village as a unit from this year.
Speaking to newspersons here on Tuesday, the Collector stressed the need to educate farmers that they can safeguard themselves against natural calamities by paying a nominal premium for crop insurance. He said that the crop insurance scheme was modified to cover all farmers to assess losses in a more scientific manner and pay compensation without hassles.
He pointed out that only those farmers who availed bank loans were covered earlier leaving a large number of tenants as well as non-loanee farmers. Also mandal was taken as a unit for assessing losses causing dissatisfaction among farmers who resented payment of premium.
The government now modified the scheme to cover all farmers. Non-loanee farmers and even tenants can get covered by paying prescribed premium along with sowing certificate issued by village secretary.
Source: The Hindu
Speaking to newspersons here on Tuesday, the Collector stressed the need to educate farmers that they can safeguard themselves against natural calamities by paying a nominal premium for crop insurance. He said that the crop insurance scheme was modified to cover all farmers to assess losses in a more scientific manner and pay compensation without hassles.
He pointed out that only those farmers who availed bank loans were covered earlier leaving a large number of tenants as well as non-loanee farmers. Also mandal was taken as a unit for assessing losses causing dissatisfaction among farmers who resented payment of premium.
The government now modified the scheme to cover all farmers. Non-loanee farmers and even tenants can get covered by paying prescribed premium along with sowing certificate issued by village secretary.
Source: The Hindu
AVIVA, MCDONALD’S TIE UP
Chennai: Aviva Life Insurance has announced a tie up with McDonald’s, a leading fast food chain in India, to promote its new marketing initiative ‘Tension Chhodo Cricket Khelo’ (TCCK). TCCK is a mass activation campaign that will culminate in the month of September with the 15 lucky dad-kid duos playing cricket with Sachin and his son in Mumbai. A press release from the company said that participants could simply fill in a contest form available free of cost with a Happy Meal at most McDonald’s outlets. In addition to the big prize, 250 customers are also eligible for beach cricket kits every week. Source: The Hindu Business Line
STAR UNION TO BANK ON BANCASSURANCE TO SELL PRODUCTS
Mumbai: Star Union Daiichi Life Insurance — the three way joint venture between Bank of India, Union Bank and Dai-ichi Life of Japan plans to hit the ground running. The insurer will distribute its products through employees of its two promoter banks who have been trained in insurance distribution. Star Union Daiichi is expecting to get its license to sell insurance products from the regulator soon. Although the company is yet to commence business, it has a distribution network in place thanks to its promoters involvement in the distribution process. Bank of India distributed products for ICICI Prudential through the referral model while Union Bank had a bancassurance partnership with HDFC Standard Life and the private insurer trained a large number of the bank’s employees.
Talking to ET, Kamalji Sahay, who has been designated as CEO of Star Union said that the company would use the existing distribution infrastructure for selling insurance. After Bank of India and Union Bank put in their application to set up their own company, they ceased to be insurance distributors for ICICI Prudential and HDFC Standard Life whose products they sold earlier.
Mr Sahay was an executive director (personnel) of the Life Insurance Corporation. “Bank of India and Union Bank together have a network of over 5,000 branches. We expect at least one person in each branch to be selling life insurance” said Mr Sahay. Additionally the regional rural banks sponsored by the two banks have more than 1,400 branches to tap the life-insurance business in the rural areas.
Mr Sahay said that the company would initially sell its products predominantly through the bancassurance route and its products would be structured accordingly. “While initially we will focus largely on the banking channel, eventually we will have a tied agency force of our own”. The company is in the process of putting in place its senior management team.
M Balachandran, former chairman of Bank of India, has been appointed as chairman of the company.
The joint venture agreement, among others, envisages, a capital stake of 51% by BoI, 26% by Daiichi Life and 23% by Union Bank. The joint venture company would have an initial paid-up capital of Rs. 250.00 crore. Dai-ichi Life is a leading player in the Life Insurance Segment in Japan and is one of the top 10 life insurers in the world and the second largest life insurance company in Japan.
Source: The Economic Times
KEEP A TAB ON YOUR INSURANCE AGENT
Mumbai: Has your insurance agent, whom you have entirely trusted to handle your insurance matters, suddenly vanished, leaving you in the lurch? Don’t worry. These days, the transactions can be carried out online and hence, the necessity of insurance agents can be avoided.
Insurance premiums can be paid through electronic clearing system, net banking or standing instructions. According to experts, the need of an insurance agent/advisor arises when a policyholder needs to notify any change in the policyholder’s address, policy term, mode of payment or nominee.
Other than this, advisors come in handy if you want to change the investment mandate of the unit linked insurance plan (Ulip), in which you may have invested. Having said that, there are certain things you can do while the agent is still around. First, get the name and contact details of his boss or unit manager, who can take charge of your policy if the agent vanished.
Insurance agents are usually not an employee of the insurance company and only earn commissions on the policies they sell. But, the manager is on the regular payroll of the company. You may also ask the agent to provide you details of the head of the client-servicing department, which is responsible for addressing your queries and policy requirements at any point. So if your policy is about to lapse or your premium has not been received, people in the department would know it all and help you fix the problem when the need arises.
Most insurance companies today have call centre or helpline numbers, which are very helpful. While buying the policy, take the helpline number from the agent and note it down in your telephone diary. The numbers may also be available on the policy documents available with you or on the website of the company.
Further, check the website to see for yourself the functions that can be performed without an agent. For example, to change your risk exposure to markets in case of Ulips, the companys’ website can suffice, thus obviating the need for the agent’s help completely.
Insurance companies these days also offer various communication modes, viz letter, e-mail and mobile messages, apart from agents’ contact details. Ensure that you have enrolled for at least one additional mode than the agent. This can protect you from losing out on any important policy deadlines or dates. An insurance official points out that most relapses occur because the agent fails to inform the policyholder before the time runs out.
To avoid such mishaps, companies too take steps to help the orphan policyholders. A communication is sent to the customer informing him of the advisor’s exit and the call centre reminds customers about renewal dates and premium payment options.
But, to allow the company to get in touch, you need to ensure that your contact details with it are updated in case of any change.
Source: DNA
Insurance premiums can be paid through electronic clearing system, net banking or standing instructions. According to experts, the need of an insurance agent/advisor arises when a policyholder needs to notify any change in the policyholder’s address, policy term, mode of payment or nominee.
Other than this, advisors come in handy if you want to change the investment mandate of the unit linked insurance plan (Ulip), in which you may have invested. Having said that, there are certain things you can do while the agent is still around. First, get the name and contact details of his boss or unit manager, who can take charge of your policy if the agent vanished.
Insurance agents are usually not an employee of the insurance company and only earn commissions on the policies they sell. But, the manager is on the regular payroll of the company. You may also ask the agent to provide you details of the head of the client-servicing department, which is responsible for addressing your queries and policy requirements at any point. So if your policy is about to lapse or your premium has not been received, people in the department would know it all and help you fix the problem when the need arises.
Most insurance companies today have call centre or helpline numbers, which are very helpful. While buying the policy, take the helpline number from the agent and note it down in your telephone diary. The numbers may also be available on the policy documents available with you or on the website of the company.
Further, check the website to see for yourself the functions that can be performed without an agent. For example, to change your risk exposure to markets in case of Ulips, the companys’ website can suffice, thus obviating the need for the agent’s help completely.
Insurance companies these days also offer various communication modes, viz letter, e-mail and mobile messages, apart from agents’ contact details. Ensure that you have enrolled for at least one additional mode than the agent. This can protect you from losing out on any important policy deadlines or dates. An insurance official points out that most relapses occur because the agent fails to inform the policyholder before the time runs out.
To avoid such mishaps, companies too take steps to help the orphan policyholders. A communication is sent to the customer informing him of the advisor’s exit and the call centre reminds customers about renewal dates and premium payment options.
But, to allow the company to get in touch, you need to ensure that your contact details with it are updated in case of any change.
Source: DNA
UNITECH PROMOTERS EYE INSURANCE
New Delhi: The Chandras, the promoters of Unitech, India's second largest real estate company, are looking to venture into the sunrise general insurance sector. This will be the second major diversification move by the promoters after the telecom foray sometime back. A top Unitech executive confirmed the family's interest in the insurance sector. "It is being looked at as a family investment, but not actively as yet", he said. The partner and the proposed investments have not been finalised, but sources indicated that the foray may be undertaken in partnership with a foreign company.
A total of 26 per cent foreign investment is allowed in the insurance sector and the limit is proposed to be increased to 49 per cent soon. The Chandras are among India's richest business families. They have nearly 75 per cent holding in the listed Unitech, which is worth Rs 19,293 crore (over $4.5 billion) as of today.
The group patriarch Ramesh Chandra is the chairman, while sons Sanjay and Ajay Chandra run the business as managing directors. Sanjay, who oversees finances and new businesses such as the wireless communications foray, is the public face of the group, while Ajay handles land acquisition in south Indian markets.
The general industry consists of 14 players. The 14 non-life players grew their businesses by 12.6 per cent to Rs 28,130 crore in fresh premium in 2007-08 as against Rs 24,975 crore in 2006-07.
Shriram General Insurance Company made its debut into general insurance market this year and some more players are expected to enter the fray. The general insurance market which was detariffed from January 2007 has witnessed an unprecedented decline in the prices of fire and engineering covers. However, the health insurance and motor insurance have performed well.
The Insurance Regulatory and Development Authority is expected to give freedom to insurers soon to change the terms and conditions of contracts.
Source: Business Standard
Govt to push banking, insurance reforms after vote
Fresh from winning a vote of confidence, the government is likely to seek parliament's approval for reforms to boost foreign investment in private banks and insurance firms, senior officials said.
It may raise the foreign investment limit for the insurance sector to 49 percent from the present 26 percent, open up the pension sector further, and increase the voting rights of investors in private banks proportional to their shareholding.
Junior Finance Minister Pawan Kumar Bansal said the government would "move forward in all areas" of financial sector reforms.
"The insurance legislation is with a group of ministers and now we have to see what they say," he said after emerging from parliament.
At present foreign investors can buy up to 74 percent of a private Indian bank but their voting rights on how the bank is run are capped at 10 percent, a major deterrent for investors trying to gain management control.
The government could also move a bill to improve the working of the country's largest lender, State Bank of India, in the next session of parliament scheduled to begin in August, a finance ministry official, who did not wish to be identified, told Reuters.
The government introduced bills to enact these reforms in 2005 but met stiff opposition from communist parties, who provided the coalition government with a majority until withdrawing support last month and triggering the vote.
Finance Minister Palaniappan Chidambaram said the confidence vote win showed the Congress party-led coalition had majority support for reforms and it would work with other parties to carry them forward.
Source: Thomson Reuters
It may raise the foreign investment limit for the insurance sector to 49 percent from the present 26 percent, open up the pension sector further, and increase the voting rights of investors in private banks proportional to their shareholding.
Junior Finance Minister Pawan Kumar Bansal said the government would "move forward in all areas" of financial sector reforms.
"The insurance legislation is with a group of ministers and now we have to see what they say," he said after emerging from parliament.
At present foreign investors can buy up to 74 percent of a private Indian bank but their voting rights on how the bank is run are capped at 10 percent, a major deterrent for investors trying to gain management control.
The government could also move a bill to improve the working of the country's largest lender, State Bank of India, in the next session of parliament scheduled to begin in August, a finance ministry official, who did not wish to be identified, told Reuters.
The government introduced bills to enact these reforms in 2005 but met stiff opposition from communist parties, who provided the coalition government with a majority until withdrawing support last month and triggering the vote.
Finance Minister Palaniappan Chidambaram said the confidence vote win showed the Congress party-led coalition had majority support for reforms and it would work with other parties to carry them forward.
Source: Thomson Reuters
INSURANCE REFORMS NO LONGER LEFT ALONE
New Delhi: Even as the UPA government’s fate hangs in balance, the finance ministry has decided to form a panel to suggest possible changes in the proposed insurance Bill. The move follows a parliamentary standing committee’s objections to the Bill in its present form. The panel would suggest changes in the Bill as soon as possible to facilitate its smooth passage during the current government, if it survives. The new panel would consist of four members: two each from the life and non-life sectors. The shortlisted names include G N Bajpai and A K Shukla, both former chairmen of Life Insurance Corporation (LIC). From the non-life side, three names have been shortlisted, of which two would be finally selected. The panel would suggest changes in the present insurance Bill, which aims at bringing more foreign players in the sector and raise the foreign direct investment (FDI) limit to 49%.
“The parliamentary standing committee on insurance had objections to a few clauses of the proposed Bill. The panel would give suggestions so that the objections are sorted out,” an official in the finance ministry said. Earlier in the month, finance minister P Chidambaram had said he was still pursuing the insurance Bill and hoped it to get passed during the current tenure of the government.
The insurance Bill was stuck due to the Left’s opposition on liberalising norms for entry of more private and foreign players and raising the FDI limit in the sector to 49% from the existing 26%. The Left has now withdrawn support to the UPA government and the new ally Samajwadi Party has said it has no objection if the government goes ahead with its reform proposals.
The government has also constituted a group of ministers (GoM) led by external affairs minister Pranab Mukherjee to look into the issue of opening of insurance sector. The Bill is likely to be taken by the government if it manages to win the trust vote on Tuesday.
Source: Niranjan Bharati
The Economic Times
MAX GROUP LOOKS TO LIST THREE COS
Mumbai: The Max group is looking at listing three of its companies, Max India, Max New York Life and Max Healthcare. The timing of the listing procedure has not been finalised as of now. However, the decision would depend on the specifications and stipulations put in place by the regulator.
Addressing the media on Monday here, Max India chairman Analjit Singh said: “We are considering the move in order to make all these companies independent. It would also be more prudent to list these companies, especially from the viewpoint of investors’ interest.”
Max India, on Monday, announced that it has restructured its joint venture with New York Life, wherein Max India has increased its stake in Max New York Life to 74%, from 50% earlier. However, the Max group has given New York Life an option to purchase 24% stake in MNYL at a 10% discount, but this offer could be exercised only within the next eight years, i.e. by 2016.
The Max group plans to invest up to Rs 3,600 crore towards its expansion activities, including a rise in sales force and setting up new offices. Of this, funds worth Rs 1,232 crore have already been invested. The insurance company is expected to break even by 2011. MYNL has been currently valued at around Rs 10,000 crore. The company plans to provide products in the stream of out-patient care, investigations and prevention and wellness over the coming years.
Max India also plans to float a new company for health insurance, through a JV with UK-based Bupa Finance. The JV, known as Max Bupa Health Insurance, would have an initial share capital of Rs 100 crore, of which Max India would come in with a 50% equity participation. While the Bupa group would own 26%, the balance would be held by Analjit Singh and few of his family members via some intermediate companies. The group however does not intend foraying into any of the non-life areas.
Source: The Economic Times
Addressing the media on Monday here, Max India chairman Analjit Singh said: “We are considering the move in order to make all these companies independent. It would also be more prudent to list these companies, especially from the viewpoint of investors’ interest.”
Max India, on Monday, announced that it has restructured its joint venture with New York Life, wherein Max India has increased its stake in Max New York Life to 74%, from 50% earlier. However, the Max group has given New York Life an option to purchase 24% stake in MNYL at a 10% discount, but this offer could be exercised only within the next eight years, i.e. by 2016.
The Max group plans to invest up to Rs 3,600 crore towards its expansion activities, including a rise in sales force and setting up new offices. Of this, funds worth Rs 1,232 crore have already been invested. The insurance company is expected to break even by 2011. MYNL has been currently valued at around Rs 10,000 crore. The company plans to provide products in the stream of out-patient care, investigations and prevention and wellness over the coming years.
Max India also plans to float a new company for health insurance, through a JV with UK-based Bupa Finance. The JV, known as Max Bupa Health Insurance, would have an initial share capital of Rs 100 crore, of which Max India would come in with a 50% equity participation. While the Bupa group would own 26%, the balance would be held by Analjit Singh and few of his family members via some intermediate companies. The group however does not intend foraying into any of the non-life areas.
Source: The Economic Times
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