Reliance gets EPF deal

Anil Ambani's Reliance Capital has been selected along with two other private companies to help manage the employee provident fund which is worth a whooping Rs two lakh 50 thousand crore.
However, the inclusion of Anil Ambani led Reliance Capital as one of the fund managers for the Employee Provident Fund has angered the Left and the Leftist trade unions are alleging foul play.
The CPM alleges the late selection of Reliance Capital is a payback for the trust vote.
Fresh from the victory in the trust vote and with no allies to wave the red flag, the Government seems to have taken the first step in putting the reform process back on track.
The move to allow private fund managers to manage a part of Rs two-lakh fifty thousand crore provident fund corpus has run into controversy.
The CPM and left allied trade union allege that only three players were given the clearance by the committee but it was expanded for a fourth player to enable Anil Ambani owned Relaince capital to co-manage provident funds.
The Government, they allege, was returning the Samajwadi Party a favour - of bailing them out from the crisis.
"It is a political move," says CPI (M) Politburo Member, M K Pandhe.
However, it is not just the politicians who are alleging foul play.
Sources in the mutual fund industry tell CNN-IBN that HDFC and Birla Sunlife had quoted a nil asset management fee in the tender. Tenders usually favour the company that quotes the lowest rates. That apart they also need pass the technical bids.
Sources say bids from HDFC and Birla Sunlife were rejected based on an earlier court judgement that no service can be rendered without consideration.
That left four players in the fray. HSBC quoted the lowest rates, followed by ICICI Prudential and SBI.
And, what was meant to be a best of three, suddenly saw a fourth player in the form of Anil Ambani's Reliance Capital.
The labour ministry has maintained that the entire process has been transparent. But the manner in which a fourth player was squeezed in to manage the graveyard benefits of four crore employees does raise many question marks of credibility and transparency.
Source: CNN IBN

Price cuts help private cos gain share of motor insurance mkt

Private non-life insurance companies have increased their share of motor insurance, following introduction of free pricing. Private insurers’ share of premium from comprehensive insurance of vehicles is 50% for 2007-08 against 41% a year ago. According to data released by insurance regulator Insurance Regulatory and Development Authority (IRDA), private life insurance companies generated a premium of Rs 4,061 crore from sales of motor insurance cover for ‘own damage’. Own damage or comprehensive cover refers to that part of motor insurance that is voluntary and covers the risk of damage to the vehicle. A year ago, private companies had written only Rs 3,115 crore from this segment. Private insurers have been able to wrest market share from state-owned companies because of aggressive price cuts and tie-ups with automobile dealers. Among private companies, growth in this segment was driven by Reliance General Insurance and Bajaj Allianz both companies increased their motor own damage portfolio by 124% and 50%, respectively. Interestingly, largest private life insurer ICICI Lombard went slow in motor and its own damage portfolio actually shrunk 5%. Interestingly, it is not just the profitable own damage segment that private companies have increased market share. Private companies have made inroads into the compulsory third-party liability portfolio as well. Until a couple of years ago, private companies were shunning the third-party liability covers, as rates on this were frozen and claims ratio were too high. However, following revision of the rates in 2006, private companies have slowly increased market share in this segment as well. In 2006-07, private companies wrote third-party business amounting to Rs 1,528 crore which is two-and-a-half times of the Rs 596-crore business they did in 2006-07. The market share of private companies in this segment has gone up to 33% from 19% a year earlier. Private companies have been able to increase their market share in motor insurance, to a much larger extent than they could increase overall market share. Overall private companies accounted for 40% of total business of Rs 28,126 crore in 2007-08, up from their market share of 35% of the total business of Rs 24,998 crore in 2006-07. Motor and health insurance have been the drivers of growth in 2007-08. Property insurance has seen negative growth on account of detariffing which has resulted in fire insurance premium for the industry declining to Rs 3,516 crore from Rs 4,157 crore a year ago. ICICI Lombard and Tata AIG have been the only two companies to have increased their premium from fire insurance in 2007-08.

Source : The Economic Times

Govt to give Rs 1,000 cr more to LIC for Aam Admi Bima Yojana

The government on Thursday decided to provide an additional Rs 1,000 crore to Life Insurance Corporation to cover another one crore rural landless households under the social security scheme 'Aam Admi Bima Yojana'. The scheme will cover an additional one crore landless households by September 30, 2009 under the AABY to provide death and disability benefits to the head of the family or earning members of the family, Information and Broadcasting Minister P R Dasmunsi told reporters after the Cabinet meeting. The scheme, which is being implemented through the LIC, was launched on October 2 last year. The union government bears 50 per cent of the premium of Rs 200 per year per person and the state governments pays the rest of the premium on behalf of the beneficiaries. Besides, the Cabinet also approved giving Rs 500 crore towards Social Security Fund maintained by LIC to provide 50 per cent share of premium Janshree Bima Yojana for all women self help groups credit linked to banks. Dasmunsi said the decision will facilitate providing life and permanent disability cover to 2.5 lakh women SHGs under the scheme by March 31, 2009. Janshree Bima Yojana was launched in August 2000 to provide life insurance protection to the rural and urban poor under various vocational groups. The premium under the scheme is Rs 200 per member per annum, of which 50 per cent premium is paid by beneficiaries of the scheme and the rest pitched in by the government through the fund maintained by LIC. At present, there are 45 vocational or occupational groups covered under the scheme.
Source: The Economic Times