PSU NON-LIFE INSURERS TOLD TO FOCUS ON UNDERWRITING BIZ

Bangalore: As a prelude to equity dilution, the government has asked public sector non-life insurance companies to shift focus from top lines to bottom lines.

Highly placed sources said that at a meeting with the Union Finance Ministry officials last week, the four non-life PSU insurance heads were told to reduce their reliance on profits from investments, including sale of equities. Instead, they were told to turn around their core business — underwriting — and start generating underwriting margins. Underwriting margin is the difference between claims incurred and expenses and the premium earned. A positive underwriting margin implied that premium earned would be higher than claims.

Underwriting has remained a loss-making business for the PSU insurers. Insurers have instead cross subsidised underwriting losses with investment incomes since nationalisation of the non-life business in 1973. Between FY2005 and FY2008, non-life insurers managed to earn investment profits in excess of Rs 500 crore each on the back of soaring equity markets. In FY09, they were unable to sustain the high investment profits with the meltdown in the equity markets coupled with low yields from government securities.

The sources said the Finance Ministry is now insisting that underwriting incomes be made positive. This would mean containing the expenses as a per cent of the net premium earned. The alternatives would be to increase premiums especially in some of the loss-making portfolios or contain losses through tightening the claims mechanisms. The shift to underwriting profits is necessary for improving valuations as equity dilution in the sector is proposed by the end of this year. The sources said the tightening had already started with the third party motor pool taking off. Under thismechanism, all the insurers — both public and private — are expected to aggregate their motor third party risks. The claims are settled on the basis of their respective market shares.

Rural portfolios
In addition, sources said that insurers propose to expand their premium collections from rural portfolios this year. Rural insurance serves the primary objectives which include expanding insurance penetration in the country and at the same time serving social sector objectives.

Gross premiums in the last financial year from the non-life sector were barely 0.7 per cent of the gross domestic product, making the country one of the least penetrated regions in the world. This is despite expanded private sector role in the insurance sector.

However, insurers’ fascination for the rural sector also stems from the historically low claims of less than 50 per cent. The rural sector, which includes risk cover for households, farm implements and co-insurance with the Agricultural Insurance Corporation for crops, has traditionally had a low claims ratios.

Consequently, the sources said that the profits from rural penetration are also likely to be high.

Besides, they said a correction in premium rates was imminent in fire and engineering risks. This comes, after a steep drop in premiums of up to 70 per cent after deregulation in 2007. The opportunity for the correction was partly on account of the tightening of global reinsurance markets and the tight capital situation for private sector insurers which implied that their ability to undercut risk premiums were limited.

Source: C. Shivkumar, The Hindu Business Line

ORIENTAL INSURANCE PLANS TO EXPLORE UNTAPPED AREAS

Coimbatore: In order to tide over the declining growth rate of insurance companies, Oriental Insurance is planning to explore the untapped areas to balance the falling growth rate, said M. Ramadoss, Chairman and Managing Director of The Oriental Insurance Company Limited, New Delhi. He was speaking at the function organised for the inauguration of the new premises of the Coimbatore Regional Office.

S. Surenther, Financial Advisor and General Manager were present. The economic slow down had resulted in the growth rate plummeting during the current fiscal from two to three per cent in October, it fell to one per cent in November and till December the overall growth rate had been only three per cent. Mr.Ramadoss said that the overall growth at the end of the fiscal was expected to stagnate at 10 to 12 per cent.

The fall in premium revenue and the resultant drop in growth rate were also because of the review of pricing and de-tariff measures in the premium rates done in April 2007. In the automobile insurance sector, Oriental was planning to come up with premium products such as depreciation free claim, alternate vehicle replacement policy during the period between accident and restoration of the vehicle.

The Commercial vehicle production had plummeted from 55,000 to 17,000 showing a drastic fall in the premium revenue graph. The health insurance sector alone was growing at a rapid pace. Growth in the health insurance sector stood at 55 per cent last year and it had already crossed more than 25 per cent. Out of the Rs 4,000 crore premium income per annum, Rs 550 crore came from health insurance segment alone and this was expected to touch a Rs 850 crore mark during the current fiscal or next, he said. The focus of the insurance industry would be more on this sector, he said.

However, expressing concern at the fraudulent practices, Mr.Ramadoss said that insurance sector was continuously asking the health ministry to standardise treatment procedures at the private hospitals. In the health insurance and motor vehicle insurance sector, the loss ratio incurred in terms of claims settlement was at Rs 120 crore. Owing to sustained efforts to tame the loss, it fell by 10 per cent this year and was expected to fall by another 10 per cent.

Oriental Insurance was also considering the setting up of a centralised claims processing centre which would be assisted by a panel of surveyors. Personal accident policy, house hold insurance policy, burglary protection cover besides inculcating the habit of insurance among younger generation and focusing on untapped rural areas could help balancing the fall in growth, Mr. Ramdoss said. Oriental Insurance has 900 offices and new regional offices are being opened at Hubli, Vizag and Raipur. An overseas branch is being opened at Doha in Middle East, he said.

Source: The Hindu

OIC EYES RS 4,200 CR PREMIUM

Mumbai: State-run non-life insurer, Oriental Insurance Company (OIC), is looking at a premium growth of 4-5% by the fiscal-end, up from 2.7% recoded a year ago. The company achieved the gross premium collection of Rs 2975 crore as on December, 2008 and was expecting the figure to be at Rs 4200 crore by the end of the fiscal.

Speaking to reporters after inaugurating first broker divisional office of his company in Mumbai on Wednesday, M Ramadoss, chairman and managing director, OIC, said, "Based on various recommendations made by the BCG for the restructuring of the company, we are working a hosts of innovations. First of all, the company has appointed a separate cell for segments like health and motor claims, which were the fastest growing sectors currently.''

The cell is being headed by an official in the rank of a general manager. The idea is to ensure growth and bring down the claims in these portfolios. Also, OIC was looking at opening a separate wing for corporate accounts, which would be headed by an official whose job would be to take care of the agents. Next to come in line will be the dealer tie-up. OIC has also centralized all the existing motor claims through service centres.

The company was planning to make motor claim settlement to merely less than 20 days, said Ramadoss. The OIC was planning to open 10-15 brokers' offices during current fiscal. Coming on business procurement by agents, the company had plans to bring additional business of Rs 5-6 lakh through each agent per month.

While business procurement by agents has grown by 50% during past 5-6 months the number of claims have come down at each service centre of the company. In Mumbai alone, the claim ratio has come down to 25% in motor until December, 2008.

Source: The Financial Express

TRY WEATHER-BASED INSURANCE

New Delhi: The non-clearance of insurance claims can render any risk mitigation product worthless. It is worse when the victims are hapless farmers who, having lost their crops, are deprived of compensation despite having insurance cover under the government-supported National Agricultural Insurance Scheme (NAIS). Unpaid insurance claims are reckoned to have mounted to over Rs 920 crore, owing largely to the failure of state governments to put in their share of the money for running the scheme. This is not the only problem with NAIS, which was evolved after decades of experimentation with over half-a-dozen models of farm insurance products since the 1980s. As the findings of some studies, including the National Sample Survey, have revealed, a large proportion of farmers are either unaware of the available risk management scheme, or are not opting for it because it offers little by way of gain. Inappropriate procedures for assessing crop yield in order to determine the compensation that has to be paid, invariably leave the farmers dismayed. Several other irksome issues have also remained unaddressed, including those concerning the unit area for the operation of the scheme, benchmarks for assessing crop losses, the extent of risk coverage and the amount of premium to be charged.
The fundamental problem with all the agricultural insurance models that have been tried out and discarded till now, is the lack of economic viability despite the government’s financial support. In the case of NAIS, too, the premium-claims ratio is a hopeless 1:3.3. The scheme, therefore, requires heavy subsidisation by governments at the Centre and in the states, which becomes fiscally difficult to sustain. Surprisingly, though the government is in possession of the reports of the joint group that went into the changes required in the agricultural insurance scheme, as well as of the working group that vetted the joint group’s report, a modified NAIS based on the recommendations of these two bodies is yet to be unveiled. It does not help, of course, that many of the suggestions mooted by these panels are either impractical or ill-conceived.

For instance, they have suggested that the unit area for operating the scheme be reduced to the jurisdiction of a village panchayat, little realising that this administrative area may not be agriculturally homogeneous. Similarly, their recommendation to move to an actuarial regime for premium calculation may sound good on paper but is bound to pose operational problems for a national-level programme, as the actuarial premium would vary from state to state, and even from one region to another within a state. Moreover, the plea that any insurance scheme involving government subsidy should not cover high-risk crops is absurd as that defeats the very purpose of providing farm insurance.

Considering the very patchy record of trying to make agricultural insurance work, it may be a good idea to opt for weather-based crop insurance which, as stated in the 2007-08 Budget, appears to be a more promising method of risk mitigation. Some weather-related insurance products are being tried out on a pilot scale by public as well as private sector insurance companies in select states, with encouraging results. Though weather-based insurance, too, may not provide solutions for all the predicaments involved in managing hazard in an inherently risky agricultural business, it has been found to be more practical in almost all the countries where it has been put to the test. There is no reason to believe that India will be an exception.

Source: Business Standard (Editorial)

PREMIUM FOR CROP INSURANCE CAN BE PAID TILL OCTOBER

Perambalur: Farmers, who wish to avail the weather-based crop insurance scheme, can pay the premium for the scheme until October 31, Collector Anil Meshram has said.
Speaking at a consultative meeting on the implementation of the insurance scheme in the district here on Thursday, Mr. Meshram said the scheme was being implemented by the Agriculture Insurance Company of India with assistance from Central and State governments.

For farmers who have availed crop loans, the premium of Rs.225 an acre would be deducted and those who have not taken loans can pay the premium amount and avail an insurance cover of up to Rs.10,000. Further details can be had from the scheme coordinators over the telephone numbers: 9360247160, 9940326750, 9443780661, a release said.

Source: The Hindu

IFFCO-TOKIO ROPES IN PARESH RAWAL

Actor Paresh Rawal will now be seen on the small screen promoting IFFCO-TOKIO General insurance, for it’s recently launched advertising campaign. IFFCO-TOKIO General Insurance is a trusted player in general insurance and has rolled out its new Muskurate Raho ad campaign. The campaign is titled Albert Pinto kyon muskura raha hain and Paresh Rawal who will be seen ad Albert Pinto.

Source: The Financial Express

OPTIMA ONLINE SERVICE TO INSURE TWO-WHEELERS

Coimbatore: Retail insurance site www.click2insure.in is in the process of introducing two-wheeler insurance cover online in the national capital region. The site, promoted by Optima Insurance Brokers, aims to resolve the inconvenience faced by two-wheeler owners on the policy renewal front.

The company has, in the pilot phase, rolled out the service at a grocery store — LM 365, Mayur Vihar, New Delhi. It plans to extend the service across the grocery store chain (comprising 75 stores in Delhi) in a phased manner. Explaining the need for introducing such a service, Mr Rahul Aggarwal, CEO, Optima Insurance Brokers and click2insure.in, said “agents’ commission tends to dip with the slip in the value of the policy. There is not enough money to motivate them to chase a renewal. Insurers too have a thin margin on two-wheeler insurance and so, do not send reminders. The site, therefore, would provide an opportunity for two-wheeler owners to get their vehicles insured conveniently.”

Preventing break in policy
He further pointed out that a break in insurance policy compounded the problem. “With the introduction of this service, a representative from click2insure will be present in LM 365 store to help the vehicle owners avail the cover by registering their policy on the spot,” Mr Aggarwal said, adding there was good response to the service.

Source: The Hindu Business Line

NOW, BUY GENERAL INSURANCE COVER AT KIRANA SHOPS

Chennai: A small photo studio in T Nagar, Chennai, sold more than 50 general insurance policies in the last months alone. All that a person had to furnish was his name, address and the nominee’s name. The policy document will be issued in 15 minutes, shop owner M Raju Mani said.

With the general insurance penetration at a dismal 0.60 per cent (measured as a percentage of GDP), many companies feel that selling the policies through photo studios, grocery stores and even telephone booths would help improve the figure.

“We need to think outside the box and need alternative channels. If telecom companies are able to use grocery stores, petty shops and other small outlets, why not insurance companies?” said an Irda official.

The Committee on Distribution Channels, headed by LIC ex-chairman N M Govardhan, in its report recommended that one of the biggest challenges for the general insurance companies was getting agents to sell their products. The report noted that people are not interested in becoming general insurance agents as the commission is quite low.

In 2005-06, around 40,551 agents were licensed by the general insurance companies compared to 7,21,696 agents employed by the life insurance companies. The committee was constituted by the Insurance Regulatory and Development Authority (Irda).

Private insurers have already gone ahead and started exploring such channels. Bajaj Allianz General Insurance Company has introduced point-of-sale concept on a pilot basis to sell its products.

The point-of-sale concept started in Delhi, where the company’s agent will go to the customers’ homes along with a handy gadget like a blackberry to issue policies on the spot, said Swaraj Krishnan, chief executive officer, Bajaj Allianz General Insurance Company.

The company is also talking to some medical pharmacy chains to sell its health and home insurance products. For motor insurance, the company is in talks with oil companies to sell its products through their retail outlets across the country, he added.

The gadget costs about Rs 50,000. The company wants to supply the gadgets to all its branches, but there is shortage of these machines since there are only two Korean suppliers.

Similarly, ICICI Lombard General Insurance sells its health and motor policies through photo studios and malls. The photo studio in Chennai is selling both the policies.

Source: The Hindu Business Line

IFFCO-TOKIO PLANS TRAVEL INSURANCE PRODUCT

Kolkata: Iffco-Tokio General Insurance (ITGI), was planning to come up with the first of kind product in travel insurance for the domestic market and could move to seek the Insurance Regulatory & Dvelopment Authority(IRDA) in about three month's time.

ITGI, a joint venture between The Indian Farmers Fertiliser Cooperative (IFFCO) and its associates and Tokio Marine and Nichido Fire Group, already had a travel insurance product for the international traveller called the ITGI Travel Protector Policy.

The travel business accounted for around 2 per cent of ITGI's net premium collection, said Prantik Mitra, business head, ITGI. Its net premium revenue for 2007-08 was Rs1254 crore. The new product would also have a built-in health cover component during travel like the old one.

ITGI sold its current travel insurance product mainly through corporate tie-ups and recently tied up with Kaizen Leisure & Holidays Ltd (KLHL), an associate company of the Peerless Group, to sell its products.

It already had a tie-up with the Peerless Group to sell its health, motor, shop and home insurance policies and did business worth Rs2.5 crore last fiscal through the tie-up. "We would make it mandatory for all travellers to take a travel insurance", said Jayanta Roy, director, corporate planning and strategy, KLHL.

He could not share the details of the total number of tourists KLHL had handled last year.
The company enjoyed a 34 per cent market share in the East where the travel & tourism market was pegged at Rs460 crore.

KLHL announced three more tie-ups with Make My Trip travel portal, Budget Rent a Car Systems and Emergency Rescue Card (ERC). Through the strategic tie-up with ERC, KLHL would offer the service of transferring the customer to a better medical facility in case of an emergency during travel.

KLHL registered a turnover of Rs9 crore last fiscal and was eying a revenue of Rs15 crore this year with all the four tie-ups in place.

Source: Business Standard, The Financial Express

INSURANCE BROKERS SEE BIG MONEY

Mumbai: Insurance broking has a potential to reach Rs 10,000 crore in non-life insurance premia from the current Rs 3,000 crore, a broker said. The insurance broking industry, which was given permission to operate by Insurance Regulatory Development Authority in October 2002, is growing by 15-30% for the past 4 years, brokers said.

Unlike insurance agents, who represent the insurance agency, a broker represents the client, often corporates, who are looking for the best deals in non-life policy. At present, there are over 370 brokers in the country. V Ramakrishna, managing director of India Insure Risk Management Services, one such broking firm, said, “Brokers can target about Rs 10,000 crore of non-life insurance premia, out of which they currently get only Rs 3,000 crore.”

Though brokers have made a considerable dent in the Indian insurance market, it is still largely agent-driven. “Most of our clients are from the manufacturing and service sectors,” said Ramakrishna, whose firm has about Rs 300 crore in annual premia and is into composite broking, involving both direct broking and reinsurance broking.

Though the opportunities in life insurance are “mind-boggling”, he said brokers mostly avoid that space because it’s predominantly retail. While some big companies manage insurance in-house, small and medium enterprises are still hesitant to hire brokers. But attitudes are changing.

Source: DNA

MORE PRODUCERS BREATHE EASY WITH FILM INSURANCE PTISee this story in: The

Mumbai: The film insurance business in the country is gathering momentum and may soon become a good revenue-stream for insurance players, industry officials said.

The demand for risk-cover against unanticipated incidents has led film producers to opt for mechanisms that provide protection to their investments, they said. “Films fall into the broad category of event management and hence like any other event, it can also be insured,” Mr K.N. Bhandari, Honorary Director, Centre of Insurance Studies and Research, National Law University, Jodhpur, told PTI here.

Attributing the growth of the business to an increasing number of corporate entities like Adlabs, Sony Pictures and UTV, amongst others, entering the realm of film-making, Mr Bhandari said, “These corporates prefer to be insured against any unforeseen or unfortunate incidents and this is becoming a big driver of growth”.

But the fall-out of this growth is that as the film insurance business picks up steam, in the next few years, so would institutional financing of film-making. “As film insurance gains in popularity, it will also encourage and promote institutional financing of film-making,” Mr Bhandari said.

Source: PTI, The Hindu Business Line

K N BHANDARI TO RESIGN FROM GIC POST

Mumbai: K N Bhandari, the secretary general of the General Insurance Council (GIC), a self-regulatory body for non-life insurers, has decided to step down, following sharp differences between private and public sector players on a host of issues.

The differences, which were across the spectrum, were showing no signs of receding. “There are differences over administered pricing, market wordings and health insurance, which were hampering the functioning of the council,” a source close to the development said.

Bhandari announced his decision to step down as the secretary general after a council meeting in Hyderabad last week. The meeting, which was convened mainly to discuss a new health insurance cover, which will be portable across companies, ended inconclusive.

The former New India Assurance chairman, however, tried to play down the issue and said: “I want some time for introspection and I have yet to decide on what I propose to do.”

Source: Business Standard

PSU GENERAL INSURERS MAY BE ALLOWED TO TAP MARKETS

Kolkata: A fresh set of reforms for unlocking the value of the nationalised insurance companies may be on the way, with the government considering changes in the General Insurance Business (Nationalisation) Act (GIBNA).

If this happens, the four nationalised companies — New India Assurance, National Insurance Company, Oriental Insurance Company and United India Insurance — may be allowed to tap the market for additional funds.

Although the four nationalised companies command 60% of the business share (this has come down over the years with private players eating into the market share), a deregulated tariff environment and fierce competition will eventually point to the need for larger funds in the future.

Industry sources said that subject to amendments in GIBNA, insurers might get to raise other forms of capital, expand their branch network and enter into various strategic partnerships.

At present, the government holds the entire paid-up capital of the companies, amounting to Rs 550 crore. Even a small dilution of 5-6% could bring about sufficient capital.An official at one PSU general insurer told DNA Money that it is a tough market and management expenses are on the higher side. “But we have family silver in the form of huge reserves. If changes in the Act are brought about, a lot can be done with shareholders’ funds. Right now we cannot use shareholders’ funds for various reasons.”

One source told DNA Money that “much would also depend on the profitability and performance of the company.” Three consecutive years of underwriting profits may also be one of the conditions for a public offering, the source said.

The four PSU general insurers and 10 private players have been in a fierce fight for market share, after the detariff regime came into effect, which saw a sharp drop in premiums as the companies fought for market share.

Last year, the insurance regulator (Irda) asked general insurance companies to maintain a solvency ratio of 150% and report their position every quarter. The general insurance industry which had four nationalised and ten private players have been extremely competitive, especially with the detariff regime or market driven rates being introduced since January 2007. Further deregulation is expected in the coming months.

And while increasing the cap on foreign investment in the sector remains a crucial issue for the government, a small dilution of stake in the nationalised majors could change the dynamics of market.

Source: DNA

IPO BY PSU INSURERS OPPOSED

Kochi: The General Insurance Officers All India Association has opposed the Union Government’s move to introduce an initial public offer (IPO) in the four public sector general insurance companies. Mr P. P. Mohanan, General Secretary of the Association, Kerala, said that the proposed amendment in the General Insurance Business (Nationalisation) Act of 1972 to raise capital from the markets through an IPO is against the assurance given by the Union Government while moving th e Insurance Regulatory and Development Authority (IRDA) Bill in 1999.

In order to raise the equity base of the four PSU general insurance companies ( New India Assurance Company, National Insurance Company, Oriental Insurance Company and United India Insurance Company), he suggested that the government should think of other alternatives. As there was no capital support from the Union Government since nationalisation, he said that even government funds could also be used for the same.

Source: The Hindu Business Line

BHARTI AXA GENERAL TO HIRE 1,700

Chennai: Bharti AXA General Insurance, the latest entrant into the general insurance industry, plans to recruit close to 1,700 people during the course of the next year. It currently has 200 people on its rolls, Mr Milind Chalisgaonkar, the CEO of the company, said. Operating out of seven cities — Bangalore, Mumbai, Delhi, Ahmedabad, Hyderabad, Ludhiana and Chennai — the company plans to grow to 29 branches by the end of this year.

Asked if the company was not a rather late entrant, Mr Chalisgaonkar pointed to the 200 per cent growth in general insurance premium since liberalisation. He also quoted a Swiss Re study that predicted the general insurance market premium would treble in the next eight years and touch about one lakh crore. He mentioned that even smaller markets such as Singapore had about a hundred insurance companies operating and that India itself had nearly 100 companies before nationalisation in the seventies. He said that they would not be the last entrant for long.

Source: The Hindu Business Line

INSURANCE COVER FOR FISHING EQUIPMENT

Thiruvananthapuram: The State government will launch the proposed insurance scheme for fishing equipment of traditional fishermen, in Alappuzha on August 25. Minister for Fisheries and Registration S. Sarma said that two lakh fishermen would benefit from the scheme. The government had earmarked Rs. 1 crore for it in the budget. The insurance would cover 75 per cent of the cost of boats, engines and nets lost during natural calamities.

The premium would be 1.8 per cent of the value of the equipment. The beneficiary would have to pay 50 per cent of the premium and the government would meet the balance. The scheme would be implemented by the State Insurance Department, in collaboration with the Oriental Insurance Company.

The Minister announced that the proposed scheme to provide interest-free loans to fisherwomen would be launched shortly. The plan was to disburse Rs. 5,000 each to 40,000 women engaged in the sale of fish. It would be carried out through the primary cooperative societies affiliated to Matsyafed. The government would provide Rs. 50 lakh towards interest costs for the funds and the Society for Assistance to Fisherwomen would meet the balance. The total outlay for the project was Rs. 21.48 crore.

The fisherwomen would have to be members of self-help groups to take the loans. The money would be repayable over 50 weeks. Mr. Sarma said that applications had been invited for both the schemes from fishermen. The Fisheries Director was drawing up a list of fisherwomen in the State towards identifying the beneficiaries and organising them into self-help groups, the Minister added.

Source: The Hindu

NON-LIFE INSURERS FACE TOUGH TIMES

Mumbai: While warning of tough times ahead for non-life insurers, rating agency Icra On Tuesday said of the three key business segments, two portfolios – motor own damage and fire and engineering – have seen a deterioration in the claims situation.

The biggest threat is going to come in the form of pricing pressure and the smaller players are expected to face the heat the most. The current pricing environment — where insurers are doling out discounts to grab market share – is also expected to contribute to hardening of re-insurance rates, Icra said in a report. But with low insurance penetration in the country, the agency is bullish on the sector’s long-term prospects.

The good news came from the health insurance segment, which accounted for 17.7 per cent of the risk underwritten by non-life insurers in 2007-08. While the business continues to be loss-making, post-detariffing, thanks to better risk-based pricing, the claims performance has improved.

While the own-damage part of the motor business, where the premium is not regulated, has seen an increase in claims, there is some good news on the third-party side, which had in the past seen claims that were two times higher than the premium earned from segments like commercial vehicles. With companies resorting to pooling, the balance sheet of the public sector companies is under less strain, the agency said.

The motor business accounted for 45.5 per cent of the non-life business in 2007-’08 and a part of the increase in the claims ratio of the own-damage segment was 20 per cent decrease in premium. Premium levels have dipped further this year. “Over the medium to long term, performance of the motor segment is expected to be supported by a more efficient claim settlement system and by the plugging of leakages,” Icra said.

In the fire and engineering businesses, which had traditionally enjoyed better claims, total premium collected by the insurers declined 10.6 per cent as premium fell. “The business has been supported by the higher risk cover purchased by corporate clients in a favourable pricing scenario. The claims performance for the fire segment deteriorated during 2007-08 and is expected to suffer further weakness during the current financial,” the report said.

Source: Business Standard

FILMS SEEK ‘COVER’ AGAINST PROTEST

Mumbai: In 2006, Aamir Khan’s ‘Fanaa’ was boycotted in Gujarat after the actor spoke up for the Narmada Bachao Andolan. In early 2008, Ashutosh Gowarikar’s ‘Jodhaa Akbar’ bled after groups of Rajputs objected to its ‘‘distortion of historical fact’’. Most recently, there have been reports that a group of Sikh activists in the north was readying to agitate against Vipul Shah’s ‘Singh Is Kingg’ because they were unhappy with the way the community had been depicted.
Politics and public sentiment, Bollywood has learned the hard way, can wind it at the box-office. With community protest increasingly becoming part of the noise accompanying a film release, the industry has decided to hedge its bets. And what better way than buying insurance cover. Most new Bollywood films are insured against everything from bans to terrorism, says producer Punkej Kharbanda, who made the controversial Matrubhoomi (A Nation without Women).
As a result of this new edginess, Alliance Insurance Brokers Pvt Ltd, which deals with media-related risk, is doing brisk business. According to its director Aatur Thakkar, the policy rates depend on the type of movie being insured and on the agreement between producer and distributor. ‘‘But an average of 0.5% to 1% would be the correct indicative premium amount. So if ‘Fanaa’ is budgeted at Rs 30 crore, the insurance cover would be approximately Rs 15 to Rs 20 lakh,’’ he says. ‘‘Similarly, if ‘Jodhaa Akbar’ cost Rs 55 crore to make, the cover would amount to Rs 25 to Rs 30 lakh.’’
‘‘One reason why there are no exact insurance figures available is because producers buy cover on an approximate and not actual budget,’’ says a trade insider. Apart from traditional cover for cast/key members, props and equipment, raw stock, negatives and extra expenses, a film producer is also protected if a movie is hit by adverse weather or if there is an illness in the family.
‘‘Another attractive policy,’’ says leading Bollywood lawyer Shekhar Menon, ‘‘is the Multimedia Liability Insurance (Errors and Omissions) which protects directors from a quiver of legal claims, including those arising from defamation, libel or slander; copyright infringement (such as in the Raakesh Roshan-Ram Sampat Krazzy 4 spat or the Manoj Kumar-Shah Rukh Khan Om Shanti Om encounter); trademark infringement; invasion of privacy, plagiarism; emotion distress; negligence and even imprisonment.’’
An industry source says the producer of Ram Gopal Varma Ki Aag had a cover of Rs 10 lakh under a general insurance policy, but when he was taken to court by Sascha Sippy, he was advised to take multimedia liability insurance. ‘‘Unfortunately, most producers approach an insurance firm at the last minute with policy requests,’’ says an insurance agent.

Source: The Times of India

AXA-BHARTI WILL ENSURE YOUR ART TREASURE’S SECURED

Mumbai: The speciality business of art insurance will come to India, with French insurer Axa participating in a general insurance joint venture with Bharti. Axa of France owns UK-based Axa Art Insurance — the largest specialist art insurance company in the world.
On Thursday, Bharti Axa General Insurance announced its commencement of operations. Although the main focus of the non-life company will be the tradition lines of business, it has received some informal enquires on art insurance from brokers. Bharti Axa Life has been promoted by Sunil Mittal’s Bharti Telecom in association with the French company. The two partners have already floated a life insurance company and an asset management company.
Speaking to ET, Bharti Axa General CEO Milind Chalisgaonkar said that the company would not launch a product based on one-off enquiries, as this would make it difficult to spread the risk. “We will use this enquiries to gauge the market demand for the product and then devise a product,” he said. Insuring art is a challenge for domestic insurers because of the lack of expertise available. This includes the shortage of valuation experts. In India, art owners have had bad experience with conventional insurers who have rejected claims for minor damages to art work on ground that there is no financial loss.
In the past, multinationals, which have set up shop in India, have brought in speciality products where they have a stronghold world over. For instance, German insurer Allianz, which owns a credit insurance company Gerling has brought the credit insurance product through Bajaj Allianz General Insurance. Tata AIG has introduced into the Indian market AIG’s speciality liability covers, including the directors & officers policy.
According to Bharti Axa General CEO Kim-Soon Chua, the company would leverage the distribution network of its affiliate Bharti Axa Life Insurance. He added that the company was in the process of shortlisting third-party administrator for servicing its health insurance products. For motor insurance, the company would be tying up with garages for servicing of claims. He added that once insurance companies were given the freedom to develop new products, Bharti Axa would use the expertise of Axa’s actuarial modelling centre in Singapore to develop new products.

Source: The Economic Times

BHARTI AXA GENERAL PLANS CAPITAL INFUSION OF RS 645 CRORE

Mumbai: Bharti AXA General Insurance, the latest entrant in the general insurance business in the country, is planning capital infusion of Rs 645 crore over the next five years. Announcing the commencement of its operations here today, Milind Chalisgaonkar, chief executive officer said the general insurance market in India has strong growth potential. He said the two joint venture partners, namely, Bharti Enterprises which has 74 per cent stake in the company and AXA, a major insurance player internationally holding 26 per cent stake have already invested Rs 130 crore in the venture. The insurance regulations require minimum capital of only Rs 100 crore. Responding to queries on the quantum of business the company is targetting, he said he would not like to make forward looking statement. He also pointed out there is no formula that a company could generate a certain level of business based on the capital invested. He, however, indicated a company could possibly generate business which is four to five times the capital. There are 25 crore middle class people. The parent company Bharti has 72 million consumers and Bharti group's reach would be leveraged to grow business, he said. He said the company will offer products to cover property, motor, health, personal accident across rural, urban and commercial segments. It is the third JV Bharti has entered into with AXA. Earlier, the company had entered into JV with AXA for life insurance and for an asset management company.

Source: PTI, The Economic Times, Asian Age, The Hindu Business Line, The Hindu, The Telegraph, The Statesman, Business Standard, Deccan Chronicle, Daily News & Analysis