LIC TARGETS 40 LAKH RURAL MICRO-INSURANCE POLICIES

Mumbai: LIC has set a target of selling 40 lakh micro-insurance policies this year, said Mr T.S. Vijayan, Chairman, LIC. With the establishment of a technology platform and tie-ups with NGOs, micro-finance organisations, co-operative societies and rural banks, the corporation expected to sell 40 lakh micro-insurance policies this year, against 8 lakh policies in the previous year, Mr Vijayan said, speaking at the SKOCH Banking Financial Services and Insurance summit.

LIC’s micro-insurance policy, “Jeevan Madhur” was launched in 2006 and, offers the option of a minimum weekly premium payment of Rs 25. He said the corporation had devised new products, both in terms of payment schedule and delivery, for the rural areas keeping affordability of the rural people in mind.

Mr Vijayan said that distribution costs in the case of micro-insurance policies were high.
“It has been estimated that, if the cost of a policy is Rs 300-400, the cost of distribution is double that,” he said.

He suggested that as in the case of micro-credit, the insurance sector should also have access to technology funds for micro-insurance, “There is a technology infusion fund available with the Reserve Bank of India for micro-credit and another one with Nabard for giving micro-credit. These or some such additional measures should be made available to the insurance sector,” he said

Integrated product
The Chairman also called for all-round pooling of resources of insurance companies to evolve an integrated insurance product covering life, health as well as other areas.
“For this, insurance companies will need to come together as a “virtual corporation” offering a combined micro-insurance face while the technology handles the back-end break-up of who gets to service what part.

A business structuring for a settlement and servicing mechanism can also be worked out,” he said. In the last fiscal, the insurance industry sold over 5 crore policies of which 1.1 crore were sold in rural areas. However, in terms of penetration, urban India remains ahead. Penetration in urban India is 47 per cent, while it is only 27 per cent in rural areas.

Source: The Hindu Business Line

NEW IRDA CHIEF J HARINARAYAN WANTS TO FOSTER COMPETITION

Hyderabad/New Delhi: Jandhyala Harinarayan is the new chairman of the Insurance Regulatory Development Authority of India (IRDA). The government cleared the order for his appointment on Tuesday.

Mr Harinarayan, who was a former chief secretary of Andhra Pradesh, will have a five-year tenure at IRDA. He succeeds CS Rao who retired in May this year. He was chosen for the top job based on the recommendations of a search committee headed by finance secretary D Subba Rao.

“My mission would be to widen and deepen insurance penetration in India and encourage competition among insurers to give a better deal to consumers,” Mr Harinarayan told ET on Tuesday.

According to him, new channels of distribution have helped improve insurance coverage. But more needs to be done. “We need to look at the role of various distributors, including agents and brokers and also encourage direct marketing of retail insurance products,” he said.

Insurance penetration in India is low compared with developed countries such as the UK and Japan. Measured in terms of premium collections, the penetration is close to 4.1% of GDP in life and 0.6% of the GDP in the non-life segment.

Penetration in the non-life segment is expected to improve, with free pricing and product innovation. But IRDA is yet to allow insurers the freedom to design their own products.

Mr Harinarayan reckons there is a case for lowering the premium on mediclaim policies to make it more affordable to consumers. Mediclaim is a voluntary health insurance policy and normally comes up for renewal annually.

“Companies can perhaps look at a longer renewal period. On their part, policy holders should start off with medical insurance schemes as early as possible, as it would mean ammortising risk over a longer period of time,” he said.

Many senior citizens’ organisations have registered complaints with the insurance regulator on surging premiums and denial of fresh insurance covers.

An expert committee that examined these complaints recommended universal coverage for health insurance. It has also made out a case for a health insurance pool, factoring in the high claims ratio in medical insurance. Here again, the regulator is yet to take a view on these suggestions which can help improve insurance penetration.

According to Mr Harinarayan, there is also need to ensure greater transparency in unit-linked insurance plans, a popular savings instrument that offer protection in terms of life cover and flexibility in investments to the policyholder. “IRDA has already initiated work on this, asking insurers to give a break up of the exact amount that will be available for investments during the premium period. But there is no doubt that investors need greater clarity on ULIPs,” he said.

Source: The Economic Times

UCO Bank, Liberty to form non-life JV

There would be another nationalised bank as a partner in the joint venture besides UCO. Liberty will hold 26% as per regulatory norms.

Kolkata: UCO Bank has decided to enter into a joint venture agreement with the US-based Liberty to foray into non-life insurance business during the current financial year.
“After deciding to enter the non-life insurance business, the bank was in talks with several foreign players like the Liberty of US, Engine of Italy and a few other Japanese firms for roping in a foreign partner as per IRDA regulations,” a bank official told PTI.
While UCO would have a minimum stake of 30% in the JV, there would be another nationalised bank as a partner in the joint venture. The foreign company would hold 26% as per regulatory norms.
The official, however, declined to divulge the name of the nationalised bank.
“UCO would take a period at least three months to ink an agreement among the three partners. Then a subsidiary firm would be formed,” the official added.
Restructuring capital
The bank would raise Rs325 crore in the form of perpetual preference cumulative shares during the last week of June.
Although the bank has obtained the Finance Ministry’s nod to restructure its capital, it was yet to get the approval of the Cabinet. ”The Cabinet approval is expected any moment,” the official said.
On getting the Cabinet nod and depending upon the capital market conditions, UCO would go for a follow-on public issue to raise Rs450-500 crore from the market. “We expect the market to improve by September,” the official said.
Post follow-on offer, government holding in the bank would come down to 54%. It had approached the government for restructuring of its capital base in order to reduce the Rs800 crore equity base with a view to enhance EPS.
On the bank’s earlier plans of entering the derivatives market, the official said seeing the experience of other banks, it was not advisable to venture into this area.
At the end of March 2008, Capital Adequacy Ratio (CAR) of the bank stood at 10.09%.

Source: LiveMint 8/6/2008 (PTI)

General insurance industry logs 14% growth in April

The general insurance industry grew by 14 per cent in April led by strong growth in premiums collected by private sector insurers, including Bajaj Allianz and Reliance General.
The 17 non-life insurers collected a total of Rs 3,593 crore premium in April this year, against Rs 3,141 crore during the same period in the previous year, according to the industry data. During the period, the four public sector non-life insurance companies collected Rs 2,015 crore in the reviewed month, against Rs 1,864 crore in the year-ago period. Private players increased their business from Rs 1,278 crore to Rs 1,578 crore during the period, a significant growth of 23 per cent in the month. While growth of public sector firms dropped to 8 per cent in the period. State-run New India Insurance maintains its position at the top with the highest premium collection of Rs 694 crore in April, while ICICI Lombard is at the second slot with premium of Rs 543 crore in the month. Private insurers like Reliance General Insurance and Bajaj Allianz are contesting strongly to grab the second position in the insurance industry. Bajaj Allianz witnessed a growth of 28 per cent in the month with its premium growing to Rs 276 crore from Rs 215 crore in April last year. While Reliance General Insurance, which has been among the fastest growing firms, witnessed an increase of 24 per cent in its premium of Rs 274 crore in the month.
ET

How to make the best use of cashless mediclaims

MUMBAI: Cashless hospitalisation is in today. If cashless were to be efficiently used, you can simply walk into a network hospital, flash your card and undertake treatment without paying a penny. But these “hassle-free” plans can actually end up being more painful for you. Here is a checklist which could come in handy at stressful times. If it’s a planned hospitalisation, talk to your third-party administrator (TPA). Get an estimate of the medical cost for your treatment and choose the hospital from the mentioned network accordingly. n Keep your mediclaim cards handy. Also, keep the contact details of your TPA. Check the list of network hospitals covered under your mediclaim policy along with the room specifications. Check the room details, as some mediclaim policies accommodate only simple air-conditioned rooms as against deluxe rooms, because of rising medical costs. Some policies also have imposed sub-limits. The most common sub-limits imposed by insurers are room rents, doctors’ fees and diagnostics. So, when you sign up for a policy, check if the insurer has assigned a maximum amount for a specific expense. If you have a sum insured of Rs 1 lakh and the insurer has capped your room rent at 1-1.5% of the sum insured, then your room rent cannot exceed Rs 1,000. Similarly, insurers cap the doctor’s fee at 25-30% of the bill amount. If the actual bill amount exceeds any of these sub-limits, then you will have to pay the balance from your pocket. Stay within the sum assured of your mediclaim. If you hail from a small or mid-sized town, you should look at a cover of Rs 2-3 lakh. If you reside in a metro, you should not look at covers less than Rs 4-5 lakh. Finally, cashless mediclaim does not cover OPD consultation/procedure done in pre-hospitalisation period. The recent budget has given an additional deduction of Rs 15,000 year under Section 80 D if you pay medical premiums for your parents. Earlier, you could avail of deduction up to Rs 15,000 per annum on the premium payment for dependent parents, spouse or children. The money should be on its way. Although there are administrative hassles in a cashless product, you can’t rule it out. It’s a must have in your financial kitty today.
ET