RISING LIFE EXPECTANCY TO HELP LOWER INSURANCE PREMIUM

Mumbai: Life insurance premium rates are likely to drop over the next few months owing to longer life expectancy, with a new mortality and morbidity table expected to be in place by the fourth quarter of 2009 to replace the current one, which is of 1994-96 vintage.

The new rates will include the claim experience of individual companies and will be based on 2006-08 data.

The Mortality and Morbidity Investigating Centre (MMIC), an affiliate of the Institute of Actuaries of India (IAI), plans to publish the mortality table by October. The institute has been working on the table for the last six months.

Data and statistics are currently being collected from various insurance companies though a handful of large players, including government-owned Life Insurance Corporation of India, are yet to submit data, said IAI President G N Agarwal.

With the risk perception falling, premium rates, which are based on mortality rates, are expected to fall as well. “Over the years, life expectancy has increased, mortality has come down drastically and this gives a room for the rates to drop,” said Agarwal, who is the chief actuary of Future Generali India Life Insurance Company, a joint venture between the Future Group and Italy’s Generali.

Agarwal said over the last 12 or 15 years, according to data available so far, mortality rates have come down by 25 to 30 per cent in the higher age brackets, which may translate into a reduction of 15 to 20 per cent in certain segments.

While the impact will be felt most on term covers, unit-linked insurance plans are also expected to see an impact, but only on the insurance component. In the case of endowment policies, the impact is likely to be on bonus payments on certain policies, since 8 to 9 per cent of the premium is linked to mortality rates.

“Term and savings-cum-life endowment (policies) are likely to see a reduction in premiums, while on the other side, rates on annuity products may go up. Insurers have already factored in the anticipated improvement in their mortality table,” said SBI Life Appointed Actuary Sanjeev Pujari.

The new tables are likely to provide data for various product categories and on the experience of individual insurers, since it would be based on the sex, age and geography, among other factors. At present, the tables only provide the mortality rate per thousand.

For instance, according to the Indian Assured Lives Mortality (1994-96), which has been in effect since January 2005, for people who are 40 years old, the probability of their death is 2.053 per 1,000. For 60 year olds, the probability is 13.073 per 1,000, which results in a higher premium.

The new table is expected to provide additional data by classifying customers into various segments on the basis of economic groups as well, making pricing according to their profile possible.

Pujari added that since the industry was opened in 2000-2001, private insurers have enough experience to contribute to the table.

“Some actuaries have been reducing premium rates for life covers over the last few years as life expectancy has increased. I don’t expect the new table to reduce the premium rates drastically,” said ICICI Prudential Life Insurance Appointed Actuary Abhijit Chatterji.

However, actuaries said the new table would be predominantly based on LIC data, since private insurers would not have rates for ages beyond a particular limit. Private sector insurance companies have a relatively younger client base and therefore have data for fewer age groups.

Once the tables are finalised, apart from the industry-wide data, Insurance Regulatory and Development Authority has also agreed to allow companies to decide the premium based on their experience, which would be based on their own tables.

Source: Shilpy Sinha, Business Standard

NSURANCE FIRMS BET BIG ON CHILD COVER

Bangalore: Child insurance is one of the biggest growth areas for the insurance business in India, driven by the rising cost of education and parents' desire to secure a good future for their children. At ING Life, children's plans contribute over 20% of the total business currently, up from about 8% a year ago. At HDFC Standard Life, children's plans are a third of the total business. Max New York Life Insurance (MNYL) says the number of consumers opting for children's plans grew by about 50% in 2007-08, compared to the year before. The annual growth rate till then was about 10%-15%. Insurance companies say that in the last one year, most parents buying children's policies did so mainly to fund their children's higher education. Education is one of the most certain needs that cannot be deferred unlike other needs. "Providing good education, establishing a professional career or even doing a modest wedding is expensive. Every parent needs significant savings to support their children to take these important steps in life," says Sanjay Tripathy, executive head (marketing) in HDFC Standard Life. Manik Nangia, head of product management in MNYL, says child insurance has become more easy to market compared to regular endowment plans. He attributes this to higher levels of awareness and the rising costs of education. According to the MNYL-NCAER India Financial Protection survey, 85% of the addressable households save for children's education. Parents normally choose a term that coincides with the child turning 18-25 years of age. This varies depending on the targetted milestones -- child's graduation, higher education, marriage. The plans offered by insurance companies help to build a fund for your child's education, and offer an insurance cover alongside. There are several concerns that determine which plan you should go for, including how much you would need for your child, the level of security. Wealth advisors say savings for children must be fairly protected. The chosen plan could offer payouts at critical milestones of the child's career, followed by a lumpsum payout when it matures. "The insured can be either the parent or the child. In case of death of the parent, a lumpsum amount is made available to the child and future premiums are waived off," said Amit Gupta, marketing director in ING Vysya Life Insurance. ING has a unit linked savings plan that gives education payouts of 20%, 30% and 50% of the fund value during key milestones of a child's higher education. MNYL's children's plans also offer cover against dread diseases. "This is because even a critical illness can impair one's earning ability and financial well being," said Nangia. Financial planners suggest that if you are a conservative investor, you should go for a traditional insurance product with a mutual fund SIP (systematic investment plan) for a longer period.

Source: The Times of India

LIC NOT AVERSE TO STAKE SALE IN SATYAM

New Delhi: Keeping an eye on engineering giant L&T's moves on the Satyam front, government-run life insurance major LIC, which has equity investment and board representation in both the companies, on Thursday said the IT firm was still valua ble and could be revived with right leadership. “We have an investment there (Satyam). If better returns come from a sale, then we (will) go for a sale,'' LIC Chairman told PTI but added that he would not give any instruction to two nominees that the insurer has on L&T board on the issue. The country 's top life insurer, which has over four per cent stake in Satyam, however, ruled out joining the race for acquiring the troubled IT firm, either alone or with L&T.

“We don't have the expertise to run an IT company. We are clear on Satyam issue that we are an investor... We are not interested in controlling the company. We are interested in the prosperity of the company as our money is still there,'' Vijayan said. Asked given its position as the single largest investor in L&T with about 18 per cent stake, LIC would want the engineering major to take over the IT firm. “We are the single largest shareholder, but L&T is a board-driven company. It is not proper for me to discuss.''
On its suggestion to LIC nominees on L&T board, he said that the insurer had two members on L&T board, but their brief was to focus on proposals made at the meeting and the issues arising out of those. When asked what LIC would prefer between a takeover or revival of Satyam, Vijayan said, “If somebody is taking over and giving us a better return, then we will do it

Source: PTIS, The Hindu Business Line, The Indian Express, Deccan Chronicle, The Pioneer, The Statesman

LIC'S NEW POLICY WON'T BE SUBSIDIZED BY POLICYHOLDERS: CHAIRMAN

Chennai: Existing Life Insurance Corp (LIC) policyholders will not have to subsidise holders of the insurer's new guaranteed return product Jeevan Aastha, LIC chairman T.S. Vijayan has said. Launched for 45 days, the scheme closed Wednesday and is expected to fetch LIC around Rs.90 billion (Rs.9,000 crore). "There is no question of robbing Peter (existing policyholders) to pay Paul (Jeevan Aastha holders)," Vijayan told IANS over phone from Delhi. "The funds collected under Jeevan Aastha will be kept separately and investments will be made from that. A triple A rated corporate bond gets a return of 11 percent. We will soon be locking the investments," he added. Vijayan said he was confident the fund will generate sufficient surplus to pay not only the guaranteed return but also the loyalty bonus. The single premium policy guarantees a return of Rs.90 and Rs.100 for every Rs.1,000 of sum assured for a five-year and a 10-year tenure, respectively. However, this has made competition to raise doubts as to how LIC is going to pay such high returns, as the compounded rate of interest works out around eight percent. An official of a private life insurer preferring anonymity said: "In the case of a guaranteed return policy, 50 percent of the premium collected will have to be invested in government securities and the balance in triple A rated corporate securities." "The return on government securities is around six percent and 8.5 percent in the case of corporate bonds. After factoring in expenses like agents commission and administrative costs, LIC's margin will be around seven percent. The question is how LIC will bridge the shortfall as similar products sold by private players offer lower returns." But according to Vijayan, LIC has taken sufficient precaution to avoid any asset-liability mismatch. "The policy will be for two periods, five years and 10 years, and the scheme closed on Wednesday. In a couple of days we will know the amount collected selling Jeevan Aastha." According to sources close to LIC, the product does not leave much margin for LIC.

Source: The Economic Times

TATA AIG LIFE LAUNCHES INVESTASSURE INSTA

Tata AIG Life Insurance Company Limited has announced the launch of Tata AIG Life InvestAssure Insta, an easy-to-understand and customer-friendly unit-linked insurance plan. Tata AIG Life InvestAssure Insta is designed to help the policyholder obtain valuable protection enhanced by the benefit of getting the most out of his investment and the growth potential through high allocation rates and further supplement it with a guaranteed maturity bonus. The customer can choose from a spread of five fund options depending upon his risk taking appetite.

Source: Business Standard

INVESTORS KEEP FAITH IN LIC'S JEEVAN AASTHA

Mumbai: Despite the turmoil in the financial markets, Life Insurance Corporation’s Jeevan Aastha policy is on course to break the record for premia collection by a scheme in a single month. The policy has been lapped up by celebrities and middle-class investors alike during the 45-day window it was open for sale. The policy, which closed on Wednesday, is expected to collect over Rs 8,000 crore. But some insiders said the collection could be higher. “The exact amount will take some time to collate. Some large proposers have deposited only a token amount as they did not want to lock their funds in case they did not clear the medical underwriting,” said an official. Although the corporation had said it was targeting Rs 25,000 crore, this was seen as a marketing gimmick and not a real target. Sources said the applicants include a host of big-ticket names. A sportsperson is understood to have put in Rs 35 crore, while a leading film actor has invested Rs 8 crore and a little-known business family has invested Rs 50 crore. In addition, thousands of applications have been received for Rs 1-crore policies, said sources. For high net worth individuals, the tax free earnings were a major attraction while for the middle class, there was the additional benefit of tax savings under section 80 CCC. In the past, many of LIC’s guaranteed high-return schemes have seen runaway sales towards their closing date. These include Bima Nivesh and Jeevan Shree. But there are several differences between Jeevan Aastha and other high-return schemes. Aastha is largely an urban phenomenon, with money coming in from large cities. Unlike other products, where a sudden turn in interest rates tipped money into the schemes, Jeevan Aastha was a combination of clever structuring, planning and timing. Understanding investors’ preference for guaranteed returns, LIC structured a product by first buying huge quantities of bonds when triple A companies were borrowing at 11-12%. The corporation then obtained permission from the industry regulator IRDA for a guaranteed return product where subscriptions would be open for only 45 days. The insurer delayed the launch of the scheme to time it closer to the third quarter, as rates were seen to be coming down. The sheer distribution strength of LIC also played a big role in pushing the product. The policy has helped to boost LIC’s flagging market share and has enabled several offices in metro centres to achieve their premium targets for the whole year in January itself. Despite the success, the scheme has its limitations. Jeevan Aastha is more of a bond and less of an insurance policy. Although the sum insured is five times the premium in the first year, the cover amount declines to two times from the second year. Smaller investors, who were not all that savvy in reading the fine print, were sold the policy with a promise of 10% return. But the actual returns are likely to be much lesser.

Source: The Economic Times

ANDHRA BANK LAUNCHES ‘BIMA UTSAV-2008’

Karimnagar: Andhra Bank launched the ‘AB Bima Utsav-II -2008’ coinciding with the festival season from October 15 to December 31, 2008 at all its branches. Speaking to newsmen here on Wednesday, Andhra Bank deputy general manager A. S. Prabhakar said that during this Utsav they would educate customers about various insurance-based policies such as Andhra Bank Jeevan Abhaya and Abhaya Gold, Andhra Bank Arogyadhan-health insurance scheme, loan liability insurance, housing loan, educational loan, vehicle loan etc.

Low-cost deposits
He said the Andhra Bank zone had mobilised 10,000 low-cost deposit accounts, 2,500 LIC policies with premium of Rs 1.25 crore and other products under Andhra Bank touch four campaign, which was completed last month. Giving details about the performance of the bank in the zone which comprises of Karimnagar, Adilabad and Nizamabad districts, he said that they had total business around Rs. 3,635 crore till September 30.

Advances
He said that they had provided Rs. 506 crore as advances to the agricultural sector and Rs. 122 crore to women self-help groups.

New branches
He also said that the bank had decided to open new braches at Armoor (Nizamabad), Bellampally crossroads (Mancherial), Vavilalapally and Bank Colony in Karimnagar town. Assistant general manager I. C.V. Subba Reddy and others were also present.

Source: The Hindu

TSM TIES UP WITH AEGON RELIGARE LIFE

Chennai: T. S. Mahalingam & Sons (TSM), a reputed name in the used car business, has inked a distribution agreement with nascent AEGON Religare Life Insurance to hawk the latter’s products. The tie-up with TSM is expected to help AEGON Religare beef up its presence in southern India. Also, Religare will have access to over 2.50 lakh potential customers of TSM.

Addressing a press conference here on Thursday, Rajiv Jamkhedkar, CEO, AEGON Religare Life Insurance, said Religare had written 4,000 polices since its launch in August. “We want to build a sustainable business,” he said. The company had already brought in capital to the tune of Rs. 370 crore.

K. Mahalingam, Partner, TSM, said his organisation hoped to provide customised insurance products and bring about a difference in the way life insurance is sold.

Source: The Hindu

MAX NEW YORK LIFE LAUNCHES MAX VIJAY SCHEME

Taking a cue from the mobile telecom sector, Max New York Life Insurance on Wednesday, launched Max Vijay, an innovative insurance scheme that has been made affordable, accessible and flexible for the common man.

Marking a paradigm shift in life insurance, the company has made the process of buying life insurance simple with its innovative distribution, marketing as well as service delivery. “Unlike other financial instruments, buying and selling Max Vijay is as simple as buying atta, dal and chawal. In fact, it is as simple as recharging a mobile sim card and can be done by paying a minimum of Rs 10 at the nearest kirana store,” said Anil Mehta, senior director and head, Vijay, Max New York Life Insurance.

Speaking to FE on the sidelines of the launch, Kenneth Sannoo, the company’s director & chief distribution officer said “Uttar Pradesh, the largest state of India, has people, who aspire to achieve more in life and Max Vijay thus offers them the opportunity to partake in the financial inclusion process. It offers life insurance cover to provide financial protection with an opportunity to create wealth by aggregating small savings.”

“Distribution is an integral and perhaps the most important element of this innovative savings plus protection solution. Thus taking Max Vijay to every nook and corner of the country is very important to us. Our strong network will introduce Max Vijay across the state in a few months, through which the customers will be able to avail multiple facilities such as initial purchase, subsequent premiums and partial withdrawals,” said Mehta.

To be available in three premium paying options: Rajat, Swarna, and Heera, the sum assured from the policy is guaranteed with choice to invest any amount, anytime, anywhere.

Source: The Financial Express

MAX NY LIFE UNVEILS NEW BRAND POSITIONING

New Delhi: Max New York Life Insurance Co Ltd plans to expand aggressively in the South this fiscal, a top company official has said. “We already have well dispersed presence in North and Western India. Bulk of the expansion will happen in South this year. By the end of the year, we will be in 75 towns with 125 offices”, Mr Debhasis Sarkar, Senior Director & Chief Marketing Officer, MNYLI, told Business Line, after unveiling the company’s new consumer-oriented brand positioning here.

MNYLI currently has 366 offices in 223 cities and aims to expand presence to 1,000 cities with about 1,600 offices by 2012. The company has coined a new tagline “Karo Zyaada ka Iraada” to represent an ambitious and assertive India that is ready to compete for more, demand more, dream more and live more to create a better and brighter tomorrow.

Studies conducted by Mckinsey Global Institute and demographic research by Max New York Life Insurance point to the modern Indian consumer as predominantly young and more confident than ever before, willing to take risks and unabashedly ambitious. This radical change in the thought process of the consumer has inspired MNYLI to revamp the brand and change the tagline from “Your Partner for Life” to “Karo Zyaada Ka Iraada”, Mr Sarkar said.

Source: The Hindu Business Line, The Hindu, Business Standard

SBI LIFE RANKED THIRD GLOBALLY AT MDRT

Mumbai: SBI Life on Tuesday said it has been ranked third globally in terms of number of Million Dollar Round Table (MDRT) members. The MDRT membership is an exclusive honour that is achieved by less than one per cent of the world's life insurance and financial services advisors, a press release issued here said. "Our global ranking is a testimony to the capabilities and potential of the Indian life insurance industry. Strong brand equity coupled with a highly productive sales force will enable us to scale greater heights in the future," SBI Life's Managing Director and CEO, U S Roy, said. Of the 40,000 SBI Life insurance advisors, 1,662 have qualified for the prestigious MDRT membership. Among these, 124 qualified for Court of Table (COTs) and 20 for Top of Table (TOTs).

Source: PTI, The Economic Times, Daily News & Analysis

WHENEVER A MARKET CRASH ATTENTION SHIFTS TO LIC

One notion about Life Insurance Corporation of India persisting in the public mind is that of a government hotline. It is widely believed that every time the stock market sees a historic crash, the phone rings at the investment department with instructions to support the market. Indeed, in various Black Mondays witnessed by the equity markets, when the Sensex crashed several hundred points, LIC was the only buyer. What irks Sushoban Sarker, CEO of LIC MF Asset Management, is that LIC is not being given enough credit for diligently following the age-old strategy of buying cheap and selling dear. “If you get an opportunity to buy an asset for Rs 750 which was until now selling for over Rs 1,000 what would you do?” asks Mr Sarker in an attempt to explain LIC’s strategy. He points out that legendary investors like Benjamin Graham and Warren Buffett have made their mark by buying value stocks during economic downtrends. While in a market crash attention immediately shifts to LIC, what has gone almost unnoticed is that the corporation made a killing selling bluechips when the Sensex crossed 20,000. Besides this simple home truth, LIC’s other investment philosophy has been to ensure that there are always some self-defined ground rules, even when there is freedom from regulation. Completely unrestricted fund management is the hallmark of hedge funds which have been in the news for losing investors’ money.

Mr Sarker brings these values into his new job at LIC Mutual Fund where he took charge in April. Mr Sarker, a direct recruit at LIC of the 1977 batch, has close to a decade’s experience in investment. Immediately before taking charge, he was executive director in charge of investment department at LIC. He has overseen LIC’s investment in diverse financial instruments including equities, government securities and corporate bonds. After graduating with honours in physics, Mr Sarker went on to acquire a post-graduate degree in financial management from Jamnalal Bajaj Institute of Management Studies, University of Mumbai. He has been on various committees, including those constituted by the government, RBI and the Insurance Regulatory and Development Authority. Though the Rs 18,000 crore-odd assets under management of LIC MF are significant, compared to LIC’s assets of close to Rs 8,00,000 crore they may appear small. But there is a lot of excitement in the fund business. On the cards is a proposed joint venture with Japan’s Nomura. The fund ranks No.11. Mr Sarker aims to improve the rankings and bring LIC MF to the 5th or 6th position. The mutual fund has so far done well in liquid and debt schemes. He wants to diversify a bit more into equity. Although in recent months life insurers and mutual funds have been fighting a bitter turf war, Mr Sarker, who has made the transition from insurance to asset management, feels there is no inherent conflict. On the contrary, he feels there is scope for LIC MF to work closer with its parent and use the distribution network to offer fund products to high net worth customers.

Source: Economic Times

UBI, TATA AIG LIFE LAUNCH RETIREMENT SOLUTIONS

Bangalore: United Bank of India (UBI) and Tata AIG Life Insurance (Tata AIG Life) on Monday announced the launch of 'United Retirement Solutions' - a customised package of three retirement products from Tata AIG Life for customers of UBI. The solutions includes - InvestAssure Future, Nirvana Plus Pension Policy and Easy Retire which offer comprehensive retirement benefits and financial protection. InvestAssure Future is a unit linked insurance plan designed to help the customer meet his needs of capital accumulation to plan for a secure retired life.
Nirvana Plus Pension Policy is a powerful retirement solution which helps the customer build a corpus for his golden years and get sound financial protection for his dependents in the event of any unfortunate event like accidental or natural death, said the company. Easy retire is an immediate annuity plan which is the ideal solution to convert the policy holder's corpus into regular income.

Source: Deccan Chronicle

LIFE INSURERS' VALUATIONS DIP ON LOWER SALES GROWTH

Mumbai: slower growth in sales of new insurance policies has affected the valuation of life insurance companies by up to 40 per cent. An international investment bank has lowered the valuation of ICICI Prudential Life Insurance by over 41 per cent to $9.2 billion compared with that of $15.7 billion assigned in February this year. In both the cases, the valuation was for 2009-10. ICICI Prudential Life was valued between $12 billion and $17 billion a year ago by most international investment banks.

“We have assigned lower multiples to growth as we see a moderation in growth,” said an analyst at the investment bank, which did not want to be identified, saying the report was meant for private circulation.

An analyst at another global investment bank, which is finalising a similar report, added that stocks of the promoters of life insurance companies too have been re-rated due to the current market volatility. In addition, he pointed out that the growth rate for new business and margins on the business also dipped, resulting in lower valuations. In addition, the depreciation of the rupee against the dollar is affecting valuations.

“Inflation is at 12.63 per cent, crude oil price is rising, money market is tightening, interest rates are rising, the international market scenario is not encouraging, the GDP growth (forecast) has been scaled down to 8 per cent, therefore the perception of the analysts about the future growth prospects over the next 12 months has been impacted,” said SBI Life Managing Director and CEO U S Roy.

During the year ended March 2008, the first year premium income of life insurers rose by 74 per cent to Rs 33,800 crore, while the growth in 2006-07 was 90 per cent. With stock markets continuing to be volatile, investors are no longer thronging to buy unit-linked insurance plans (Ulips) the way they did in the past.

When stock markets were booming, Ulip sales accounted for 75-90 per cent of new sales. In addition, HDFC Standard Life Managing Director and CEO Deepak Satwalekar said the economic slowdown and higher inflation were affecting savings of individuals.

Valuations will have an impact on public offers lined up by companies like SBI Life and HDFC Standard Life, which intend to list next year. “No doubt, lower valuations will impact our price at listing. However, the real value will be to see how the market and the growth pan out in the next one year,” said Satwalekar.

ICICI Prudential Executive Director N S Kannan, however, said the depreciation of the rupee during the last month or so has not been factored in by the investment bank that has dished out lower valuations for life insurers. “ICICI Prudential has grown 50 per cent during the first quarter, its new business achieved a profit of Rs 240 crore. However, what multiples the analysts assign to a company’s earnings depend on their outlook on which I cannot comment.”

Source: Business Standard

LIFE COS SAY COVER SALE BY MFs AFFECT DISTRIBUTION INFRASTRUCTURE

Mumbai: Life companies have expressed concern that sale of insurance cover by mutual funds could undermine the distribution infrastructure of life companies. They have also complained to the regulator that such a move would end up violating guidelines of the insurance regulator. This is the latest in the ongoing turf war between the mutual fund and the life insurance industry. Mutual funds have been attacking insurers over the lack of transparency and high charges in unit-linked insurance plans — insurance products that mimic mutual funds. Insurers have responded saying they are only exploiting the failure of the mutual fund industry to build a distribution force to sell to retail. Mutual funds have decided to get back at insurers by introducing systematic investment plans (SIPs) with a built-in life insurance cover. The insurance covers on the SIP were small and given away without any charge to the investor. Now, the mutual funds have submitted a proposal where they will sell insurance cover against which premium will be collected. Speaking to ET, Life Insurance Council chief executive SB Mathur said: “Insurance companies are spending hundreds of crores on training agents to sell insurance. If mutual fund distributors are allowed to sell insurance without adequate training, the sanctity of the training would be lost.” According to Mr Mathur, so far the insurance cover has been restricted to the target investment value (the total amount expected to be saved under a systematic investment plan). However, if mutual funds were given too much flexibility in the level of insurance cover, it could weaken the quality of underwriting and safeguards followed by life insurance companies. Insurers also point out that according to IRDA guidelines, any buyer of insurance should be made aware of the name of the company from which he is buying insurance. In the past, the regulator had barred people from naming products in such a manner that it is identified predominantly with the distributor. The other issue raised by life insurers is that of the social obligation of insurance companies. The directive to sell over a fifth of their policies in the rural sector has forced companies to invest in rural areas where costs are averaged out because of sales in urban areas. Mutual funds have no such obligation and sell largely in urban areas. Insurers say allowing them to distribute insurance can lead to cherry-picking by mutual funds.

source: The Economic Times

IDBI FORTIS BRANCH IN VIJAYAWADA

Hyderabad: IDBI Fortis Life Insurance Co Ltd has opened its second branch in Andhra Pradesh in Vijayawada in addition to its branch in the State Capital. It is also planning to open four more new branches in the State during the year, Ms R.M. Vishakha, President – Bancassurance, IDBI Fortis Life Insurance Co Ltd, said after inaugurating the branch, according to a release.

Source: The Hindu Business Line

MAKEOVER TIME AT BAJAJ ALLIANZ

Kolkata: Having suffered a severe downslide in growth in premium during the first quarter of the current fiscal, Bajaj Allianz Life Insurance is going in for a rejig of its operations.

It is devising a new range of unit-linked policies to compensate for the chunk of premium that came from a category of products that were discontinued since last year. It is also looking at controlling expenses.

Bajaj Allianz grew 13% in the first quarter of the current year, one of the lowest in the industry. Although the company has the second highest market share of 12.20% in the private life space, the growth has been low compared to most of the other players in the industry.

Kamesh Goyal, CEO, Bajaj Allianz told DNA Money, “Yes, there has been a low growth, mainly on account of some categories of businesses that we have almost stopped. We are not doing single premium and hardly doing group business plans. Moreover, we have discontinued the clutch of actuarially funded products. All this contributed 40-50% of the portfolio.”

Bajaj Allianz, which has one of the largest geographical spread in the industry, may not go in for much expansion in the current year. “The greatest challenge will be to manage costs while building a market share. Currently, we are well positioned, with costs comprising 14-15% of the gross written premium. But this has to be lower in a few years. This will be done by increasing market share and increasing productivity per employee,” Goyal said.

As part of its thrust on new policies, the insurer just introduced a new unit linked plan - Fortune Plus. The company also recently launched a family floater as part of its health insurance initiatives.

Commenting on the company’s growth, Rajeev Varma, analyst with Merrill Lynch said in a recent report, “Bajaj Life’s slowdown a worry. While a concern, it is too early to take a call. We expect the growth to bounce back as it scales up distribution in the coming months.”

Enam India Research analysts Punit Srivastava and Sumit Agarwal, point out, “The company has seen a moderating growth after a high growth phase. Market share of the company has seen substantial improvement.”

Source: DNA

‘WE LEARNT A LOT FROM OUR VENDORS’: CATHRYN RILEY, AVIVA GLOBAL SERVICES CHAIRPERSON

Earlier this month, in one of the more complex transactions concluded in recent times, UK insurance major Aviva that was running some of its insurance and back-office processes through build-operate-transfer contracts with three vendors in India, sold the entire operations to WNS Global Services for a consideration of $228 million. In addition, WNS also received a commitment from Aviva that is expected to generate $1 billion in revenues over a 100-month period.

In an interview Aviva Global Services chairperson and Norwich Union Life COO, Cathryn Riley, talks about why Aviva decided to sell the operations rather than run them itself, and its future plans with WNS.

You initially transferred two of your facilities, one in Sri Lanka from WNS and one in Bangalore from 24x7. Why did you decide to sell instead of transferring the rest?

Let me go back in time to when we first set up in India about five years back under the build-operate-transfer model. The model enabled us to have a low-risk rapid entry and also benefit from the expertise of established partners over here. That has been a very successful venture but a lot has changed both in our market and in the BPO (business process outsourcing) market since. Over the last five years, we have seen the benefits of a hybrid-operating model because some facilities were with our partners and some, we had transferred. We felt it would be right to do a strategic review of the best model we should have for the next 5-10 years.

Was the review also part of the original plan or did something trigger it?

It came about later. Any sensible company takes the opportunity to step back and think about what the strategy should be after a period of five years. It’s a good, sensible business practice. When we started out on our journey, we had an open mind. We didn’t start the strategic review with the intention of doing this.

There have been a couple of studies talking about the high costs of captives and captives not being as efficient as third-party operations. Did some of these factors influence your review?

As part of the review, we looked at what was going on in the marketplace with our competitors — we looked at costs but not only at that. This wasn’t only about whether we could run this as efficiently as WNS, there were other factors as well. But I think it’s fair to say we’ve seen the benefit WNS’ expertise. They’ve been helping us over the last few years to run an efficient operation and help us manage our processes — that was one of the considerations. There were others: financial, customers, people...

What are the kind of services you’ve been doing from India and what will it be going ahead?

They range from finance and accounting, actuarial services, customer service, claims, and back office administration. We don’t intend changing that. We are looking to develop Bangalore as a centre of excellence for liability claims and Pune for motor claims. We’ll see more of a trend towards centres of excellence in line with what is happening in UK. The sale to WNS in no way changes our commitment to offshoring. Signing a 100-month deal (with WNS), in fact, underlines our commitment.

Do you expect outsourcing in insurance to pick up? Compared to the rest of banking and financial services, insurance is still small.

I don’t think insurance is different from any other industry. You’re right; banking has been a hit, which is fairly typical. Many of our UK competitors are now here. But one of the things that’s differentiated us is the way we’ve jointly managed our relationships. From day one, we’ve had very strong partnerships, whereas some other companies have been more hands off. It’s not just about coming here but how we’ve operated that’s given us competitive advantage. That has enabled our partners to understand what is it we want, what our strategic imperatives are, and to be able to keep pace with processes, practices, and changes at all levels. That marks us out from the competition.

Has there been a rise in the backlash against outsourcing in the US or the UK?

There has been some backlash over call centre operations, not so much in other areas. We as a company have been in the forefront of offshoring. We’ve been very public about our offshoring and very proud of it. The fact is, service speaks for itself. We continue to seek and listen to our customers’ feedback and work accordingly but I think the perception of the noise in UK is greater than what it really is.

What is the amount of offshoring you’ve done in the last five years?

We have around 6,000 employees here. The market was very different then from what it is now. It was a relatively immature market. We weren’t able to come in and say, this vendor is the best. We selected vendors we felt we could work in a partnership with to build something. No one vendor had one particular process. It was a low risk model for us and we were able to learn a lot from each of those of vendors. Now we’ve got something that we’re very proud of and something we intend to build on in the future.

Did you look at the option of outsourcing BPO work to your IT services vendors, Wipro and Tata Consultancy Services?

We looked into it. But we were more comfortable with the existing arrangement. We had a very successful model and we wanted to build on it. I know that is the trend to combine business outsourcing with IT, but it is more the trend in thought than in practice. I’m not sure how successful that’s been yet. But it’s something we’re aware of and which we’ll keep in mind.

Source: Shivapriya/P P Thimmaya, The Economic Times

ICICI PRU EXTENDS TIE UP

Mumbai: ICICI Prudential Life has extended its corporate agency tie up with the Muthoot Group in 6 additional States for the distribution of its insurance products. ICICI Prudential Life has partnered with the Muthoot Group for the past six years in Kerala, said a press release. The partnership with the Kerala- based NBFC will now be extended to States such as Delhi and NCR, Rajasthan, West Bengal, Punjab, Gujarat and Maharashtra where it has a strong presence.

Source: The Hindu Business Line

BAJAJ ALLIANZ LAUNCHES 'BAJAJ ALLIANZ FORTUNE PLUS'

Mumbai: Private sector life insurance company, Bajaj Allianz Life Insurance, has announced the launch of its wealth-creating ULIP, 'Bajaj Allianz Fortune Plus'. The product would be the first ULIP to offer Zero Surrender Charges and high allocation from day one, a press release issued here said. It would be available at affordable premiums to masses starting at Rs 15,000 per annum only. "This is the best investment plan for the Indian masses, it provides unmatched flexibility, high allocation, zero surrender charges and unlimited top-ups," Allianz's Country Manager and CEO, Bajaj Allianz Life Insurance, Kamesh Goyal," said. \ The product also offers Asset Allocation Fund wherein Bajaj Allianz Life Insurers professional fund managers hedge market instruments to maximise returns. It is available for three terms of 10, 15 and 20 years. Bajaj Allianz Life Insurance has a presence in over 950 towns and has sold over 7.5 million policies.

Source: PTI, The Economic Times, The Financial Express