`Insurance biz size may touch $60 b by 2010'

New Delhi June 21 The size of the insurance business will jump six times to reach $60 billion by 2010 from the current size of around $10 billion, according to industry chamber Assocham.
The projections are based on the feedback the chamber received from its constituents engaged in the insurance business.
The country's life insurance premium as a percentage of GDP is currently estimated at 1.8 per cent against 5.2 per cent in the US, 6.5 per cent in the UK and about eight per cent in South Korea.

Rural, semi-urban sectors
Rural and semi-urban India will contribute $35 billion to the insurance industry by 2010, including $20 billion by way of life insurance and the rest through non-life insurance schemes.
Urban sector insurance is estimated to reach $25 billion by 2010, life insurance $15 billion and non-life insurance $10 billion, according to the chamber.

Big avenues

The rural market offers tremendous growth opportunities for insurance companies.
The chamber found that there are a total 124 million rural households. Nearly 20 per cent of all farmers in rural India own Kissan Credit cards. The 25 million credit cards used till date offer a huge database and opportunity for insurance companies.

Source: Bureau, The Hindu Business Line

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Howden plans cover for human lab tests

India now attracts hundreds of clinical research service projects from both domestic and multinational drug makers

Howden Insurance Brokers India Pvt. Ltd, the Indian broking arm of the London-based Hyperion Insurance Group, is extending its services to the Indian clinical research services sector, trying to capitalize on a fast-emerging opportunity.
India now attracts hundreds of clinical research service projects from both domestic and multinational drug makers and contract research organizations (CROs) because of its cost advantages, availability of a varied genetic pool of subjects and a growing pharmaceuticals market.
At the same time, the high risk due to involvement of human subjects for testing new drugs has still not been brought under a foolproof monitoring system even as the regulator gets about 30 applications a month for new drug trials.
A clinical trial insurance will cover the risk of any legal liability arising out of physical injury, death or any harm caused to the health of the subject. According to industry analysts, Howden is the first insurance broking company looking at this opportunity in India.
In India, many players, including the four state-owned general insurance firms and a few private sector ones such as Bajaj Allianz General Insurance Co. Ltd and Cholamandalam General Insurance Co. Ltd , are ready to offer policies for clinical trials.
In most cases, these companies are going for re-insurance with international insurance firms as claims could possibly be huge.
As an insurance brokerage firm, Howden’s role will be to identify the suitable risk cover offered by the insurers looking at the nature of trials, number of human volunteers required for the trials, the capability of CROs, risk nature of the drugs under test, etc. A right risk analysis and a project-long follow-up by the broking firm would also help both the parties settle claims in the event of mishaps and litigations.
“The entry of globally experienced clinical trial insurance players into India will also help developing the right regulatory framework for this sector. In the recent past, litigations against clinical trials has increased manifold. CROs and their sponsors are sued for lack of care and negligence by human subjects for bodily injury and even death,” says Arun Bhatt, president, ClinInvent Research Pvt. Ltd, a local CRO.
“Clinical research is one of the areas which our group has expertise in. Since India is emerging as a preferred global destination for clinical trials, this is the right time to enter this space,” says Anup K. Mathur, vice-president (corporate business division) Howden India.
“Initially, we are not looking at expanding our topline by entering this sector. But it is more of an experimentation phase now in India and also a service to this high-risk sector,” adds Mathur.
According to him, insurance companies were not coming forward in the absence of a proper legal framework pertaining to clinical research, risk clauses of test subjects, recruitment procedures and compensation of volunteers.
“There is a need to create strong awareness about the possibilities of risk cover for all stakeholders, such as sponsors, CROs and the human volunteers,” Mathur adds.

Source: Mint

Insurer ordered to pay Rs1.6 lakh for repudiating claim

Consumer court says heart disease difficult to detect, does not qualify as pre-existing disease if claimant is unaware he suffers from it

New Delhi: The State Consumer Commission has pulled up an insurance company for denying mediclaim on the ground of “concealment of pre-existing ailment” and asked it to reimburse Rs1.61 lakh to a man who underwent cardiac surgery within days of purchasing the policy.
Terming the act as an example of “unfriendly approach”, the Commission headed by Justice J D Kapoor asked the National Insurance Company Ltd (NICL) to pay the amount, with interest, to the policy holder Raj Narayan in a month.
“Such an approach is not at all consumer friendly but is an approach accentuated and prompted by dubious design as to how to frustrate and reject the claim of consumer...,” the Commission said.
Denying its liability, NICL took refuge under the exclusion clause of the insurance policy which provided that mediclaims can be denied if it is proved the pre-existing disease was not disclosed by the insured at the time of purchasing the policy.
Heart disease is such an ailment which sometimes a person finds difficult to detect at first go, it said, adding “Unless a person is diagnosed and hospitalised for such a disease in the near proximity of obtaining insurance policy, he is not supposed to know as to from which disease he is suffering from”.
To expect a layman to come to the conclusion that he is having a heart disease merely because he feels chest pain or some other pain, was “too much,” the Commission said.
Narayan, a resident of Rohini in north-west Delhi here, was forced to undergo a heart surgery in July 1999 following his sudden illness and was denied reimbursement of Rs1.61 lakh incurred on his treatment.
Narayan, however, had challenged the repudiation of mediclaim, saying he had no history of any heart problem and hence, the stand taken by NICL was “unjustified and unfair”.
Making a strong remark on the structure of the proposal forms that are signed by the consumers in order to accept the terms and conditions of the policy, the Commission observed that no consumer was expected to understand these “micro printed terms running into pages”.
It has directed the NICL to pay Rs1.61 lakh towards reimbursement along with an interest of 10 per cent within a month to Narayan.

Source: PTI

Article: Distribution channels driving the insurance business in India

Distribution, mainly through insurance agents and banks, has emerged as the single most important factor driving the business of Indian life insurers

New Delhi: Eric B. Campbell recounts the tale with a smile. In 1976, a savvy insurance agent in the US discovered that Campbell was dating a girl, whom he would eventually marry, and pitched the need for a life insurance policy. Campbell succumbed and bought his first policy, one from New York Life.
Thirty-one years later, Campbell, now executive vice-president and chief distribution officer, New York Life International, Llc., visits India at regular intervals to sharpen the distribution network of the company’s joint venture, Max New York Life, and perhaps train his agents to be as savvy as the one who sold him his first policy.
Campbell’s visits to India come at a time when insurers’ premia are growing at a scorching pace. The annual report of the Insurance Regulatory and Development Authority (Irda) for 2005-06 said the industry’s premium collections in April-September 2006-07 grew by 162% year-on-year to Rs29,664.64 crore.
Distribution, mainly through insurance agents and banks, has emerged as the single most important factor driving the business of Indian life insurers. The complicated nature of an insurance policy has made the efficacy of distribution channels the key determinant in a company’s profitability.
“Insurance is sold, whereas a banking product is bought,” says U.S. Roy, managing director and chief executive officer of SBI Life Insurance Co. Ltd.
“Overall, the distribution channel is the primary deciding factor in customer choice. Trust takes a long time to build up,” he adds.
But once it does, it helps in a big way. “It is primarily the SBI brand which attracted me. I need not think twice, I know what SBI is,” says V. Amrithavarshini, a Chennai-based SBI Life customer who bought a policy last September.
SBI Life, where India’s largest bank State Bank of India (SBI) has a 74% equity stake and the balance is held by the French firm Cardif SA, broke even in March 2006, its the fourth year of operations, becoming the first private insurer to do so. SBI Life leveraged the 14,000-odd bank branches of its parent SBI to push insurance policies.
In India, penetration is very low, making distribution channels important, says Roy. India’s insurance penetration (gross premium as a percentage of gross domestic product) was 2.53% in 2005, against a global average of 4.34% the same year.
The distribution channels’ importance also puts them in a position to influence customer choice. “Most people do not understand insurance; what they understand is what is conveyed by distributors,”says Rahul Aggarwal, director, Optima Risk Management Services Ltd, which carries out broking in both life and non-life products.
The influence of distribution channels on customer choice holds the potential of partially neutralizing product innovations as they would push the product that is the flavour of the month.
For instance, unit-linked insurance products, which unlike traditional insurance products such as endowment policies, allow the customers to choose from one among the investment options offered by the company. Insurers offer equity investments as an option in unit-linked products, and in the wake of the boom in the stock market, these products are gaining market share.
Thanks to the bull run in the markets, distribution channels have been hawking these products regardless of the customer’s ability to bear the risk.
The market share of unit-linked products increased to 44.78% in 2005-06 from 32.54% in the previous year. “The customers’ response to the unit-linked products in the last two years clearly reflects their preference for such products,” said the Irda report for 2005-06.
Despite the huge influence of distribution channels, some insurers feel novelty in designing insurance packages has not lost its relevance.
“Product innovation will continue to be important, but it will not give you sustainable long-term advantage unless you keep innovating,” says Vivek Khanna, director, marketing, Aviva India.

Article By: Sanjeev Shankaran for Mint