Tuesday, 06 May
Mumbai: Caution will be the buzzword in the banking, financial services and insurance (BFSI) sector this year, as far as increments go. Or, so the indications are, so far.
ICICI Bank, the country’s largest private sector bank, issued a letter to its employees last week stating that the organisation would effect a “realignment” of cost structures and wages in this year of “stable and robust growth.” And now, other banks appear set to tone down increments, too.
“Appraisals will happen, but will be a little less than the 18-20% that was doled out last year,” says the human resource manager of a private sector bank.
But, of course, no company is likely to play Scrooge by chopping off promotions or appraisals drastically, despite the slowing economy and high interest rates, feel HR consultants. The war for talent is nowhere near cooling down yet.
E. Balaji, chief executive officer of HR consulting and recruitment firm Ma Foi Consultants Ltd, said, “Generally, players tend to follow the leader. But in this case, though companies will take a conservative stance, there won’t be any sudden reduction in increments or promotions.
Organisations are bullish on the people front and perceive compensation as a strategic lever in attracting and retaining talent. ICICI is the leader amongst private banks and hence it can afford to not be aggressive on promotions and increments. A decision like this can trigger attrition at the junior level.”
Attrition is a good 20-25% per annum for the larger players in the banking industry.
Subhro Bhaduri, executive vice-president, human resources at Kotak Mahindra Bank said, “Though we have taken a cautious approach, we have nevertheless given promotions wherever necessary. Our average increments this year will be in the range of 13-15%.”
Kotak, which has about 9,000 plus employees, does not have any plan to slow down hirings. Going by Bhaduri, it will hire around 4,000-5,000 people at various levels this year.
S. Bhattacharya, president HR at Axis Bank, said, “ICICI’s decision can soften the market in terms of pay hikes. But we are not cutting down on our hikes and increases this year would be normal, in the range of 13-15%.”
On the flipside, he said ICICI’s decision can trigger attrition in that bank to a certain extent and this can increase supply in the market, thereby reducing the bargaining power of those looking to quit and take up other jobs.
ICICI Bank, with an employee base of over 40,000, is one of the largest recruiters in the private sector, inducting approximately 15,000 people each year. But this year, the bank feels little need to recruit either internally through promotions or externally in an aggressive manner.
However, about 2,500 campus recruits and 1,000 from ICICI Manipal Academy are expected to join the bank this year.
Kris Lakshmikanth, founder CEO and managing director of Bangalore-based HR firm HeadHunters India Private Ltd points out that increments for key performers at ICICI in the past have even been a whopping 100% of basic salaries.
“ICICI may have effected a tight purse as it has one of the largest exposures to overseas assets. It is also their way of telling employees that last year was good, but this year won’t be the same, and thereby arrest unnatural expectations of employees,” he said.
The bank had about $2.2 billion worth of exposure to credit derivatives, and though it has not directly invested in the US market, it has taken a beating due to the depreciation in the value of securities in the global markets, say HR experts.
Meanwhile, the insurance sector, which is grappling with annual attrition as high as 50% in the sales division, and 20-25% in the non-sales divisions, is also seen going slow on increments.
Priya Ranjan, director-HR at Bharti AXA Life Insurance, said, “Last year, the insurance sector witnessed increments to the tune of 14-15%. This year, we will give increments to the tune of 16%, but I think there will be many players who would give much less.”
R. Krishnamurthy, MD (distribution consulitng) of Watson Wyatt, an HR consulting firm for insurance and financial services, said, “ICICI Bank’s decision is a good move to consolidate the frenzied movements in terms of salary hikes that had crept into the BFSI sector. Players will act in a responsible manner, taking stock of the economic situation, and bringing in moderation in pay hikes.”
“The financial services sector could see hikes in the range of 10-15%. This will be the case with insurance also,” he added.
Source: DNA
Tuesday, May 13, 2008
Insurers take cos to forum for tall claims, poor refunds
Tuesday, 06 May
However tall the claims of insurance companies may be regarding settlements of claims, record books of District Consumer Grievances Redressal Forum have an entirely different story to tell. Almost 469 cases pertaining to claim settlements have been registered against insurance companies in the last two years.
The list includes all the prominent companies including LIC, New India Assurance Co. Ltd, ICICI Lombard, Oriental Insurance, United India Insurance etc.
Nor surprisingly, the largest has the biggest share with close to 50% of these complaints, 227 to be precise, being registered against New India Assurance Company, which is the largest general insurance company in the country.
The other public-sector companies like United India Insurance, National Insurance Company and Oriental Insurance have 82, 41 and 36 cases, registered against them, respectively.
Among the private players, ICICI Lombard has 33 cases registered against it, while 18 cases were against IFFCO TOKIO. Two cases were against Bajaj Allianz.
"The number of cases is surprising for consumers. Most of these cases are related to health insurance or mediclaim, as is popularly known," says Shreyas Desai, a leading advocate dealing with such cases. And the common predicament, where the claims are generally denied by the companies, is related to pre-existing diseases, Desai said, adding that in majority of the cases, the verdict goes in favour of the complainant.
While the above mentioned figures pertain to health and non-life insurance claims, the life insurance companies seem to perform better, with only 30 cases filed against them during the same period.
With 25 cases against it, state-owned Life Insurance Company (LIC) leads the group, followed by ICICI Prudential with three cases, and Max New York Life and Tata AIG with a case each, respectively.
Source: DNA
However tall the claims of insurance companies may be regarding settlements of claims, record books of District Consumer Grievances Redressal Forum have an entirely different story to tell. Almost 469 cases pertaining to claim settlements have been registered against insurance companies in the last two years.
The list includes all the prominent companies including LIC, New India Assurance Co. Ltd, ICICI Lombard, Oriental Insurance, United India Insurance etc.
Nor surprisingly, the largest has the biggest share with close to 50% of these complaints, 227 to be precise, being registered against New India Assurance Company, which is the largest general insurance company in the country.
The other public-sector companies like United India Insurance, National Insurance Company and Oriental Insurance have 82, 41 and 36 cases, registered against them, respectively.
Among the private players, ICICI Lombard has 33 cases registered against it, while 18 cases were against IFFCO TOKIO. Two cases were against Bajaj Allianz.
"The number of cases is surprising for consumers. Most of these cases are related to health insurance or mediclaim, as is popularly known," says Shreyas Desai, a leading advocate dealing with such cases. And the common predicament, where the claims are generally denied by the companies, is related to pre-existing diseases, Desai said, adding that in majority of the cases, the verdict goes in favour of the complainant.
While the above mentioned figures pertain to health and non-life insurance claims, the life insurance companies seem to perform better, with only 30 cases filed against them during the same period.
With 25 cases against it, state-owned Life Insurance Company (LIC) leads the group, followed by ICICI Prudential with three cases, and Max New York Life and Tata AIG with a case each, respectively.
Source: DNA
Monday, May 12, 2008
INS COM CAN NOW INVEST UP TO 25% IN THEIR GROUP COMPANIES
Mumbai: Insurance companies can now invest up to 25 per cent in their group companies - that is what is being proposed in the investment guidelines to be notified by the Insurance Regulator IRDA, next week.
Earlier, insurance companies were allowed to invest only 10 per cent in their group companies.
Not only that, unit linked insurance products - popularly known as Ulips will come under investment regulation for the first time.
But insurance companies say that not much will change for them.
Source : IBNLIVE
PITAMBER
Earlier, insurance companies were allowed to invest only 10 per cent in their group companies.
Not only that, unit linked insurance products - popularly known as Ulips will come under investment regulation for the first time.
But insurance companies say that not much will change for them.
Source : IBNLIVE
PITAMBER
Heavy discounting stalls growth in non-life sector
The growth momentum in the general insurance industry has dropped by almost 50% in 2007-08.
A year of deregulated rates and huge discounting in premiums has seen a 12% growth during the year, against a 25% growth the previous year. The year saw gross premium underwritten of Rs 28,130.68 crore.
The four nationalised companies - New India Assurance, Oriental Insurance Co, National Insurance Co and United Insurance - together underwrote a premium amount of Rs 16899.49 crore in 2007-08, although their combined market share declined to 60% in 2007-08 from 80% two years back.
Meanwhile, the eight private sector insurers, with a 40% market share, grew 29% and garnered a total premium of Rs 11,231.19 crore.
Currently there are 10 private players operating in the general insurance space, including Tata AIG, Iffco-Tokio, Cholamandalam, and HDFC Ergo.
Two players - Future Genrali and Universal Sompo - have commenced operations later, so comparable data for these firms is not available.
Data with the Insurance Regulatory & Development Authority (Irda) shows that Reliance General grew the fastest - over 113% - during the year, while all the other companies grew in double digits, the fastest among them being Cholamandalam at 79%. The third-fastest grower, Bajaj Allianz, boosted gross premium by 33%.
While the industry was expecting a decline in premium growth, the 50% drop has been driven by what the industry observers call "reckless discounting" of almost 70-80% on fire and engineering premiums.
Covers for these two areas accounted for a major chunk of business for all general insurance companies earlier. But the free market rates from January 2007 have resulted in a 50% drop in fire and engineering premium rates and some decrease in motor own damage premium. The subsequent heavy discounting by companies of the lower premiums has hit growth in the sector.
Separately, standalone health insurance companies have grown manifold, records show.
While Star Health & Allied Insurance has grown 669% to collect Rs 173 crore premium in 2007-08 from a low base of Rs 22 crore, Apollo DKV, which commenced operations in November 2007, collected premium of Rs 2.98 crore.
Source: DNA
A year of deregulated rates and huge discounting in premiums has seen a 12% growth during the year, against a 25% growth the previous year. The year saw gross premium underwritten of Rs 28,130.68 crore.
The four nationalised companies - New India Assurance, Oriental Insurance Co, National Insurance Co and United Insurance - together underwrote a premium amount of Rs 16899.49 crore in 2007-08, although their combined market share declined to 60% in 2007-08 from 80% two years back.
Meanwhile, the eight private sector insurers, with a 40% market share, grew 29% and garnered a total premium of Rs 11,231.19 crore.
Currently there are 10 private players operating in the general insurance space, including Tata AIG, Iffco-Tokio, Cholamandalam, and HDFC Ergo.
Two players - Future Genrali and Universal Sompo - have commenced operations later, so comparable data for these firms is not available.
Data with the Insurance Regulatory & Development Authority (Irda) shows that Reliance General grew the fastest - over 113% - during the year, while all the other companies grew in double digits, the fastest among them being Cholamandalam at 79%. The third-fastest grower, Bajaj Allianz, boosted gross premium by 33%.
While the industry was expecting a decline in premium growth, the 50% drop has been driven by what the industry observers call "reckless discounting" of almost 70-80% on fire and engineering premiums.
Covers for these two areas accounted for a major chunk of business for all general insurance companies earlier. But the free market rates from January 2007 have resulted in a 50% drop in fire and engineering premium rates and some decrease in motor own damage premium. The subsequent heavy discounting by companies of the lower premiums has hit growth in the sector.
Separately, standalone health insurance companies have grown manifold, records show.
While Star Health & Allied Insurance has grown 669% to collect Rs 173 crore premium in 2007-08 from a low base of Rs 22 crore, Apollo DKV, which commenced operations in November 2007, collected premium of Rs 2.98 crore.
Source: DNA
LIC pulls down overall industry growth rate
Friday, 09 May , 2008
High growth in previous years including FY 2007, volatile markets in the last quarter of fiscal 2008, which accounts for a large chunk of business, and a mere 6% in new business collections by the Life Insurance Corporation of India have cut the industry’s growth rate to 23% in fiscal 2008, from last year’s 110%.
The growth rate of private insurers has also declined to 74% from 90% a year ago. Reliance Life, Birla Sun Life and SBI Life were the top performers in attracting new business. The industry collected Rs 92,989 crore of new business premium in FY 2008, registering growth of 23%. LIC new premium collection was Rs 59,182 crores, up just 6% from last year’s Rs 55,935 crore.
Private insurers contributed Rs 33,807 crore in new business, up from Rs 19,472 crore last year. Reliance Life recorded the most growth in new business — 196% more than the previous year’s. ICICI Prudential’s new business grew 58% year-on-year, while Bajaj Allianz life registered y-o-y growth of 52%.
LIC has taken a hit in the 'individual non-single premium’ segment. While private insurers managed 90% growth in new business, LIC’s collection was less than last year’s.
In this segment, private players collected Rs 26,198 crore in the year ended March, while LIC collection dropped to Rs 23,583 crore from Rs 23,899 crore a year ago. In the 'individual single premium’ segment, LIC managed 21% growth.
An LIC official said the company collected more than Rs 1.5 lakh crore of regular premium in fiscal 2008 and attributed the drop in growth of new business to LIC's high growth in previous years. The official indicated the firm needed to increase its network of agents, which currently numbers 12 lakh, to match private insurers, some of which have more than 10 lakh agents, despite being operational for just seven to eight years.
SBI Life registered an increase of 87% in premiums from a year ago. “Our growth is a result of SBI's brand strength, capital efficient multi-distribution model and customer-centric approach. We will continue to balance high growth with profitability,” said U S Roy, MD, SBI Life Insurance. New policies issued by private insurers grew 67% from a year ago, while LIC registered a drop in new policies.
“Volatility in the stock markets in the last quarter of the financial year, which is the most important period for business, has affected business of life insurance companies,” said senior vice president-agency west and south, Max New York Life Insurance, Rajendra Sud.
Source: DNA
High growth in previous years including FY 2007, volatile markets in the last quarter of fiscal 2008, which accounts for a large chunk of business, and a mere 6% in new business collections by the Life Insurance Corporation of India have cut the industry’s growth rate to 23% in fiscal 2008, from last year’s 110%.
The growth rate of private insurers has also declined to 74% from 90% a year ago. Reliance Life, Birla Sun Life and SBI Life were the top performers in attracting new business. The industry collected Rs 92,989 crore of new business premium in FY 2008, registering growth of 23%. LIC new premium collection was Rs 59,182 crores, up just 6% from last year’s Rs 55,935 crore.
Private insurers contributed Rs 33,807 crore in new business, up from Rs 19,472 crore last year. Reliance Life recorded the most growth in new business — 196% more than the previous year’s. ICICI Prudential’s new business grew 58% year-on-year, while Bajaj Allianz life registered y-o-y growth of 52%.
LIC has taken a hit in the 'individual non-single premium’ segment. While private insurers managed 90% growth in new business, LIC’s collection was less than last year’s.
In this segment, private players collected Rs 26,198 crore in the year ended March, while LIC collection dropped to Rs 23,583 crore from Rs 23,899 crore a year ago. In the 'individual single premium’ segment, LIC managed 21% growth.
An LIC official said the company collected more than Rs 1.5 lakh crore of regular premium in fiscal 2008 and attributed the drop in growth of new business to LIC's high growth in previous years. The official indicated the firm needed to increase its network of agents, which currently numbers 12 lakh, to match private insurers, some of which have more than 10 lakh agents, despite being operational for just seven to eight years.
SBI Life registered an increase of 87% in premiums from a year ago. “Our growth is a result of SBI's brand strength, capital efficient multi-distribution model and customer-centric approach. We will continue to balance high growth with profitability,” said U S Roy, MD, SBI Life Insurance. New policies issued by private insurers grew 67% from a year ago, while LIC registered a drop in new policies.
“Volatility in the stock markets in the last quarter of the financial year, which is the most important period for business, has affected business of life insurance companies,” said senior vice president-agency west and south, Max New York Life Insurance, Rajendra Sud.
Source: DNA
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