Bajaj Allianz reshuffles top management

MUMBAI: There has been a churn at the top management of Bajaj Allianz. Allianz country manager and Bajaj Allianz Life Insurance CEO Sam Ghosh is moving to Allianz’s operations in the Middle East. Kamesh Goyal, who is currently the CEO of Bajaj Allianz General Insurance Company, is stepping into the shoes of Mr Ghosh. Mr Goyal’s post will be now filled by Sawraj Krishnan, who is currently the general manager in the company. Mr Ghosh’s move is the third in line in the insurance sector. Dalip Verma of Tata AIG moved to the Middle East. He was followed by Anthony Jacob, who is also moving to the region to take up regional operations at Royal SunAlliance. Mr Ghosh will take over regional responsibilities in the Middle East. Mr Ghosh was the third CEO of the life insurance company. He was earlier working for Australian insurance company MMI which was acquired by Allianz. He was the representative of Allianz in India and was earlier the head of non-life company before he was shifted to the life insurance company. When he took over the company, it was languishing at number seven in industry rankings. Within two years, it became number two among private companies. He has been very aggressive in scaling up the company and has been focusing on volumes- growing premium income and distribution network. Mr Goyal was earlier the head of insurance practice with KPMG, when the sector was opened up. The market share of the company has gone up from 2.8% to 7.2% ever since he took charge in January 2004. He will now be Allianz’s representative in India. The general insurance company has made a profit before taxes of Rs 117 crore and a profit after tax of Rs 75 crore. In the first quarter of the current financial year, it garnered a premium income of Rs 574 crore and net profit of Rs 21 crore. The move has to be cleared by the boards of both companies and the regulator. Both insurance companies together would have an employee strength of over 30,000 while total revenues would be above Rs 10,000 crore. The shuffle is coming at a time, when Bajaj Auto is set to demerge the financial services company and list it separately. The German major is also on an aggressive rollout mode in the country. It is in the process of kicking off its mutual fund activities. The mutual fund will also be the responsibility of Mr Goyal. It is also looking at kicking off banking operations in India through Dresdner. Allianz had taken over Dresdner, internationally. Desdner earlier had operations in the country which it had closed earlier in the decade. Allianz has now applied for a banking licence to RBI. However, the German major is planning to use the Allianz brand for the bank.

Source: www.economictimes.com 16 Aug, 2007, 0449 hrs IST, Times News Network

Bajaj Allianz is worst hit by IRDA ruling on Ulips

DNA Money

Bajaj Allianz is likely to be hit the most by the Insurance Regulatory and Development Authority (IRDA) ban on certain category of unit-linked insurance policies (Ulips).

The "capital unit-linked" products, which were banned by IRDA on Thursday, account for 40 per cent of the company's premium income.

Bajaj Allianz CEO Sam Ghosh confirmed this to DNA Money.

"True, a large amount of premium comes from this category, but not everyone is financially astute. We will devise new products. The same happened with our single premium plans, which once constituted about 45 per cent of our premium, but now they account for just 7-8 per cent," he said.

The banned products, which the IRDA terms "customer unfriendly", are hot- selling cakes for insurers.

Ulips constitute the bulk of premium for almost all private life insurance companies as well as the Life Insurance Corporation, which has seen a rise in its premium, largely on account of Ulips.

While asking companies to withdraw the products, the insurance regulator said that even though the policies may be technically sound, they're quite complicated for the insured.

Said Ghosh: "IRDA has indicated that this is a complex product and should be withdrawn from the market. It feels that the customer may not understand the product. Such capital unit-linked products are sold in other countries but perhaps it is a difficult product for the regular customer."

Aviva India is another company that's likely to be hit by the latest IRDA directive.

While mis-selling has been a serious issue in the market in recent times, the stern action by IRDA on specific categories of unit-linked plans comes as the second major step since last July, when all unit-linked plans had to be locked in for a three-year period.

These unit-linked products, unlike other Ulips, are structured in such a way that they have two types of allocations in capital and regular units.

Ghosh said that as his company prepares new products, it would target more pension and children's products, for which it has applied to the regulator.

Bajaj Allianz is one of the few private life companies that have already started making profits. According to Ghosh, the company has a "cost under-run" as most of the expenses are covered within the cost structure.

An Aviva spokesperson said, "We have no communication from the IRDA on any ban on actuarial-funded products. All our products, including the one where actuarial funding has been used, have been pre-approved by IRDA and are designed on sound actuarial principles."

"We have been selling these products for years in the country and these have been approved by the regulator as they follow all guidelines and regulations laid down by IRDA. None of our products are detrimental to the interest of any existing or prospective customers. In fact, one of our actuarial-funded products was approved as recently as May 2007," the spokesperson added.

Ulip customers to sign certificate of approval

DNA Money

Customers will have to sign a "certificate" stating approval and satisfaction while buying a unit-linked insurance plan (Ulip) for the first time.

The Insurance Regulatory and Development Authority (IRDA), as part of its drive to prevent 'mis-selling', is in the process of asking companies to prepare a one-page document with each and every Ulip, which is being sold to the insured.

This comes as a major move by IRDA, after having clamped down on specific actuarially funded products of a couple of companies.

The insurance regulator plans to keep on "discovering" the various discrepancies which may arise and cause discomfort to customers.

"We want to facilitate some kind of understanding to customers and, hence, have thought of asking the customer to sign a certificate which should state that he or she is satisfied with what the agent has said and the buy has been an informed choice," C S Rao, chairman, IRDA, told DNA Money.

All insurance companies are likely to formulate questions on each product and submit them to the IRDA for approval.

This additional page, in the form of a certificate, will come with the policy document.

"Apart from some instances of mis-selling, we were concerned with a number of advertisements, which were not, however, technically advertisements, but kind of pamphlets with tall promises distributed with newspapers or communicated over telephone. These pamphlets, at times, carried just names of agents promising high returns," Rao explained.

The most rampant form of mis-selling is the financial advisor or agent misleading the customer to unrealistic promises of 40-50 per cent returns verbally, on the basis of the stock market boom last year, although, in reality, they cannot give indicative returns of more than 10 per cent a year.

FIPB nod to ICICI's insurance holding co stake sale

Press Trust of India

New Delhi: The Foreign Investment Promotion Board (FIPB) has given its approval for ICICI Bank's proposal to divest 24% stake in its holding firm for the insurance business.

National Insurance sees Rs 1,200 cr from investment

Reuters

Kolkata: National Insurance Co Ltd expects to earn Rs 1,200 crore from its investments in debt and equity markets during 2007/08, up from Rs 1050 crore earned a year ago, a top official said.

"We have a well managed portfolio and with the growth of the equity markets, it is expected to give handsome returns in the current fiscal," Chairman and Managing Director, V. Ramaswamy, told reporters on Friday.

The firm has an investment portfolio of Rs 5,600 crore, 45 per cent invested in state bonds and the balance in equity and other related instruments.

National Insurance is targettting a gross premium income of Rs 4600 crore in 2007/08, compared with Rs 3827 crore last year, he said.

The net profit is expected to be Rs 500 crore against Rs 418 crore a year ago, he added.

"The growth in investment income, focus on retail and health insurance would fuel the growth in profitability and premium income," Ramaswamy said.

State-run firms such as New India Assurance, Oriental Insurance and National Insurance dominate India's general insurance sector, although there are private firms such as ICICI Lombard, Bajaj Allianz and Tata-AIG.

Foreign holding in Indian insurance companies is limited to 26 per cent. The government wants to increase the cap to 49 per cent, but such a move is opposed by its communist allies.

Insurance cover exclusively for women

DNA Money

Insurance for women? Must be a marketing gimmick, one would think. A chauvinist might even ask, "What's the need? I am the earning member, so why increase the premium burden?"

But, there are medical needs specific to women, which could require cash outflows, and it helps take a policy that covers these. Life Insurance Corporation of India's (LIC) Jeevan Bharati is one such policy. In fact, it is the only women-specific insurance plan in the country today, since Birla Sun Life discontinued its Woman First Plan.

A money-back policy with a term of either 15 or 20 years, Jeevan Bharati pays a certain percentage of the sum assured to the policyholder at regular intervals. In case of a 15-year plan, it pays 20 per cent of the sum assured each after the 5th and 10th years, respectively and the balance at maturity. In case of a 20-year policy, 20 per cent of the sum assured each is paid after the 5th, 10th and 15th years, respectively, and the balance at maturity.

The entire sum assured is given to the policyholder if she is detected with the five women-specific critical illnesses. Also, if a policyholder below 41 years gives birth to a child who is detected with any of 8 other listed defects, then 50 per cent of the sum assured is paid out.

What's more, as the child disability benefit cover ceases once a woman turns 41 years, the policy premium reduces accordingly. For instance, if a 25-year-old woman takes a Rs 1 lakh insurance cover for 20 years, then her annual premium is Rs 7,345 until she turns 41 years and Rs 7,085 for the remaining years.

Though one can opt for a sum assured up to Rs 25 lakh, the benefits paid for critical illnesses for the mother are capped at Rs 2 lakh, while those for the child have a ceiling of Rs 1 lakh.

The critical illness benefits are not optional, but built into the product. As a result, the cost of Jeevan Bharati is higher than other money-back products in the market. An Rs 10-lakh policy of Jeevan Bharati would cost a 25-year old Rs 69,650 annually. In contrast, the annual premium for LIC's regular money-back policy for 20 years would cost Rs 61,729, while that for Jeevan Tarang would be lower at Rs 48,220.

In return, the policyholder also gets guaranteed benefits to the tune of Rs 50 per Rs 1,000 sum assured during the first five years of the policy. Bonuses are paid thereafter. Notably, in 2005-06, LIC paid a bonus of Rs 37-42 per thousand sum assured, depending upon the term, on its money-back plans.

Besides, if the policyholder doesn't survive the entire term, the sum assured in addition to the guaranteed addition during the first five years and bonuses thereafter are paid irrespective of the survival benefit paid earlier, which makes the policy all the more attractive.

But, what if you already have a life cover from another insurance company? If you have taken a policy from either Birla Sun Life or Bajaj Allianz, just add the critical illness riders for women that these companies offer to the existing policy. The edge these riders have over Jeevan Bharati is that they cover even primary illnesses such as heart attack, brain tumor, kidney failure, anaemia and arthritis, which women are prone to.

Indeed, according to Mumbai-based gynaecologist Dr Surabhi Dalmia, "Arthritis and anaemia are most common illnesses among women."

Birla Sun Life's Critical Illness - Woman Rider covers 29 illnesses, while Bajaj Allianz's MahilaGain offers benefits for 25 illnesses, apart from paying 30-40 per cent of the sum assured for reconstruction of breasts post breast cancer surgery.

It’s time Kumbhakaran woke up

Mumbai: Legend has it that Kumbhakarna, one of Ravana’s brothers in the Ramayana, had a boon from Brahma, which allowed him to sleep for six months at a stretch. He woke up to eat and then went to sleep again. A similar thing seems to be happening with the Insurance Regulatory and Development Authority of India (IRDA), the regulator, which has turned a complete blind eye to the mis-selling that has been going on in the insurance industry.

Every few months, the Hyderabad-based regulator evinces concern about the mis-selling, makes a few right noises about it and then goes to sleep again. The inactivity makes one wonder if it, too, has a “boon” from some higher power.

Most mis-selling typically involves selling a high-cost unit-linked insurance plan (ULIP) to an unsuspecting investor. Depending on the insurance company, the premium allocation charges can vary from 15 per cent to 71 per cent in the first year.

What this means is that if an ULIP charges a premium allocation charge of 30 per cent in the first year of the policy, only 70 per cent of the total premium paid actually gets invested. The premium allocation charges remain high even in the second year of the policy. These high charges are essentially used to pay fat commissions to insurance agents (which may be banks or individual agents or big corporate distributors).

Insurance agents do not inform the individuals taking such policies about the high upfront expenses involved. Also, most agents tell their customers that an Ulip is a three-year policy and that they can stop paying premiums after three years, which is far from the truth.

The reason agents do this is simple. Their commissions are not as high in the latter years of the policy as they are in the first three years. So, it is in their interest if the individual stops paying premiums after the first three years.

Once three years are over, the same agent can sell a new Ulip to the same individual and continue getting his high upfront commission. The sad part is that most individuals who are the victims of mis-selling belong to the great Indian middle class, who work hard to earn their money.

Insurance firms tell us that they can’t be held responsible for their agents’ mis-selling. Well if they are not responsible, who is? Agents are the face of an insurance company, considering an agent can sell policies of only one company. Logically, therefore, if the agents of a company behave inappropriately, it is the company that must be blamed.

And why do agents mis-sell?
Primarily because of they can earn a high upfront commission. In fact, a lot of new generation private sector banks and foreign banks have lately been concentrating primarily on selling Ulips, because the reward per unit of effort is much more compared to other financial products.

The high upfront charges mean that an individual taking the policy is left completely dependent on the insurance company’s performance. If a mutual fund does not do well, investors have an option to exit the scheme. Also, they can stop making further investments into the mutual fund. Besides, most mutual funds do not charge an exit load if the holding period of the investment is more than six months.

In case of an ULIP, however, the investor has little choice even if it does not give him good returns. He has the option to exit, of course, but after three years. By then, he would have already paid a lot by way of premium allocation charges and the amount he gets back, if he cashes out at the end of three years, may not even match the total premium paid.

Indeed, the high upfront charges make ULIP a very inflexible way of investing. If your ULIP does not perform, you are stuck. Insurance companies would like us to believe that their expense structure works out to be a lot lesser in the long run. Point taken. If that is the case, why not spread out the expenses over a longer term? Why is there such a haste to recover as much as they can from the investor in the first two to three years?

The rationale given is that selling insurance is much more difficult that selling other financial products and hence the agent needs to be adequately compensated. This argument is questionable.

Another argument is that the world over, ULIPs have high upfront charges. How does that justify having high upfront charges in India as well? Do two wrongs make a right?

So what is the solution? Instead of a premium allocation charge of say 60 per cent in the very first year of the policy, why not have a premium allocation charge of 3 per cent every year, over a period of 20 years? This will at least ensure that distributors stop getting the high upfront commissions, and hopefully stop mis-selling.

However, to implement this, IRDA must first wake up from its deep slumber, and wake up before it is too late, since a lot of private sector insurance companies have big plans for the rural market. Imagine the kind of mis-selling possible in the rural markets.

The regulator and insurance companies must remember that many retail investors have turned away from the stock market following the various scams over the years. Unless necessary action is taken at the earliest, the same story could be replayed in the insurance business as well.

Source: DNA Money

Aviva Life posts 29% growth in H1

Hyderabad: Aviva Life, a joint venture company with the Dabur Group, posted a 29 per cent increase in its business in the half year ended June 30, 2007.



The total sales increased to £221 million in the first six months of 2007 as against £173 million in the comparable period in 2006. The company has not disclosed the operating profits in the region.

‘`The life operating profit (on European Embedded Value -EVV basis) increased 24 per cent with growth across all regions (including strong growth from Asia) on worldwide sales growth of 25 per cent to £19,294 million inclusive of general insurance and asset management businesses,” Philip Scott, Group Finance Director, Aviva Plc told Business Line in a teleconference from London on Thursday.

However, the global operating profit of the UK-based major decreased by 8 per cent to £1,541 million in the first six months of the current year as against £1,699 million in the comparable period previous year.

This was due to 34 per cent decrease in general and health insurance profits in the UK market on account of bad weather, he added.

According to Simon Machell, Chief Executive, Aviva (Asia), the company had put in place a new business model to operate on a regional basis. This would drive business further in potential growth regions such as Asia-Pacific, he added.

On the plans for India, Bert Paterson, Managing Director (India and Sri Lanka) said the growth momentum in Indian market was expected to continue. The company would add 4,000 more personnel to current 27,000 strong direct sales force in the country, he said.

Source: The Hindu Business Line

Corporates run for kidnap cover

These are one of the most hush-hush and discreetly sold policies in extreme privacy by the insurer to the corporates.



Call it the kidnap, ransom, extortion, K&R cover or crisis coverage insurance. They are gaining much ground these days and enquiries of such policies are said to be going up by 15-20 per cent.

Once supposedly opted by companies for kidnap-prone areas like northeastern India, and, more recently, for Naxalite- and Maoist-prone areas, Indian corporates are opting this cover for their executives travelling or working internationally in countries like Latin Amercia, Gulf countries or Africa.

Insurers and corporates are extremely tight-lipped when it comes to disclosing the names of companies taking this cover.

Coporate houses are also secretive about these policies- that seems obvious as disclosing any information would put them in the public domain.

Companies like Tata AIG, ICICI Lombard, National Insurance and Bajaj Allianz have devised these policies.

But insurers said that the growth of these policies have gone up in recent times - be it for the alleged kidnapping of a corporate in Gurgaon last week or the high-profile kidnappings in Noida or a Food Corporation of India official in Assam.

Being very sensitive, a K&R policy is issued in strict confidence with only the top-level officials in insurance companies and corporate houses knowing about it.

DNA Money spoke to a host of insurers and corporate houses to get a feel on the significance of such policies.

"We've been receiving enquiries of such policies in recent times. These are wide covers that encompass various parameters like the ransom payment, fee of the negotiator, expenses of counselling families, psychiatric care, medical help and rehab expenses. But the strength of the policy lies in the efficient claims-settling process, where professional firms generally come into the picture," Anuj Tyagi, national manager, reinsurance, ICICI Lombard Insurance, said.

"The profile of a customer is generally varied, including manufacturing, IT and civil contractors with exposure, in say, Gulf countries like Afghanistan. All these policies are largely reinsurance-driven," Tyagi said.

The premium depends on a number of risk features and broadly this could vary between 2-5 per cent of the limit of the liability. While there are no upper or lower limits, the policy cover may vary between $1 million and $5 million (about Rs 4-22 crore).

Barun Das, company secretary, Exide Industries, said, "We have never looked at this policy. We offer a standard accident cover and covers to protect physical disability. In places like Gurgaon, there is display of lavish opulence, which leads to discontent and, hence, such incidents of kidnapping."

McLeod Russel, the largest plantation company in the country, also does not have this cover for its executives.

"I do not think it is needed for Assam, where we operate as we are adequately protected by the special police force of the state government. We are yet to consider whether we would take a call in future," K K Baheti, director, McLeod Russel, said.

According to D P Chakravarti of Goodricke, these policies were very complex and phenomenally expensive.

Source: DNA Money

Actuarial-funded ULIPs to be phased out

The Insurance Regulatory and Development Authority (IRDA) has decided to phase out actuarial-funded products in the Unit Linked Insurance Product (ULIP) segment.

In a release issued here on Saturday, IRDA said though technically there was nothing wrong with the actuarial products, the objective of the move was “to remove the complexity in the unit linked products and ensure comparison across ULIPs of all companies.”

IRDA had asked companies having actuarial-funded products to withdraw them over a period of time, the release said without, however, mentioning the specific time frame.

The interests of the existing/new policy holders would be protected by the insurer and the Authority, it added.

Meanwhile, in a statement on IRDA’s decision, Mr Bert Paterson, Managing Director, Aviva India, said, “We are happy to see the clarification issued by IRDA, today, saying that there is nothing technically wrong with actuarial-funded products.”

Phase-out impact
The company did not respond when asked about the likely impact of the phasing out of actuarial fund products on its business.

Actuarial-funded products differ from the other products as the initial allocations of the sums by the insurer to the policyholder’s account in the first year would be done in the form of actuarial units which would be converted into real money later.

Source: The Hindu Business Line

SBI Life plans to expand business to Rs 6,000 cr

‘Potential for growth in insurance high’

‘The focus so far has been on topline growth but we would like to lay emphasis also on bottomline growth through offers of proper product-mix.’

In its bid to double the size of business to more than Rs 6,000 crore in the current year over last year, SBI Life Insurance, the life insurance arm of State Bank of India, has initiated several measures.

These include, among others, creating more zones, delegating more authority to each zonal head and broad-basing the incentive mechanism for distribution of products through the banking channel.

“Our health insurance products will hit the market shortly,” Mr Uday Sankar Roy, Managing Director & CEO of SBI Life, told Business Line here on Monday. “The products will be very customer-friendly”. The mirco-insurance products, especially for self-help groups too, would be ready within the next few month, he said.

More zones
The number of zones, he pointed out, had been increased to eight from four. For example, the east zone now comprised West Bengal, North-East and Andaman & Nicobar Islands.

Earlier, Orissa, Bihar and Jharkhand were under the east zone. Orissa has now been tagged to Andhra Pradesh while Bihar and Jharkhand to Uttar Pradesh.

The zonal heads would now also coordinate the operations of different distribution channels to achieve growth through inter-channel homogeneity, Mr Roy said.

“The focus so far has been on topline growth but we would like to lay emphasis also on bottomline growth through offers of proper product-mix,” he said.

Since the banking channel accounted for 55 per cent of SBI Life’s total business, it was imperative that those active in the channel were suitably rewarded to make them responsive to the current market dynamics, he said.

Growth areas
SBI Life, according to its Managing Director and CEO, has noted that predominant growth areas were not necessarily the metros.

“The predominant business modules are mostly cities and towns outside the metros and we’re therefore focusing on certain non-metro areas to tap our business,” he said.

“The potential for growth in insurance business is very high,” Mr Roy said pointing out that despite competition the state-owned Life Insurance Corporation of India was posting 100 per cent growth. “In due course, we would like to position SBI Life as the alternative to LIC,” he added.

Source: The Hindu Business Line

Munich Re keen on India ventures

Group company Ergo in talks with potential partners

Munich Re Group, the world’s second-biggest reinsurer, hopes to capitalise on the growth opportunities in India. With its group company Ergo International AG, it is looking for joint venture partners in the life and non-life business.

Addressing a press conference here on Thursday, Dr Nikolaus von Bomhard, said, “Ergo is currently involved in promising talks with potential partners. We welcome joint ventures with banks or any other companies operating in other lines of business as long as they have a strong brand name and presence across the country.”

Munich Re wants its future India joint ventures to be among the top five in their segment within a time frame of five to ten years after their launch, and forecast double-digit growth in the country.

MoU by year-end
The company said that it was close to finalising memorandums of understanding (MoU) with partners in the life and non-life business and expects at least one of the MoUs to be signed by the end of the year. “Looking at the way things are moving, we expect to sign the non-life business before the life business. But then things might change as we move ahead,” Mr von Bomhard said.

Regarding reinsurance, Mr von Bomhard said that the Indian market continues to be heavily regulated with the State-owned re-insurer occupying ‘a quasi-monopolistic position’.

“As soon as legal circumstances permit, we will establish a reinsurance base in India,” he added.

Market potential
According to estimates, the insurance market in the country is expected to grow five-fold to €100 billion ($138 billion) in 10 years’ time, bolstered by strong economic growth and a burgeoning middle class already numbering 300 million people.

Munich Re this week raised its 2007 earnings target range to €3.5-3.8 billion from €3-3.2 billion previously, partly on expectations of a lower tax burden, after delivering stronger-than-expected second quarter earnings.

Source: The Hindu Business Line

Motor pool seen positive for PSU insurers

Technical glitches to be ironed out by month-end

Transfers of third party covers to motor pool would help contain claims. The pool, being a specialised agency, would manage risks better and help plug leakages that have so far been the bane of the public sector insurers.

Underwriting margins (UM) of public sector insurance companies are expected to improve with the India Motor Insurance Pool (IMIP) in operation now.

Speaking to BusinessLine, the Oriental Insurance Company Ltd Chairman and Managing Director, Mr M Ramadoss, said, “The pool will certainly have a positive effect on the underwriting margins of PSU insurers.”

So far each of the PSU insurer’s underwriting margins have been pulled down by losses in the motor vehicle segments. Claims ratio in the motor third party was close to about 150 per cent for the industry during the last financial year. OICL’s losses in third party claims were in the region of Rs 300 crore.

The losses have kept underwriting margins low. Underwriting margins is a computation used to determine the amount of underwriting loss or gain—based on 100% being the break-even point. Any time the total loss ratio and expense ratio versus the amount of premium written is less than 100%, it is indicative of an underwriting profit. If over 100%, it shows an underwriting loss.

The margins for the PSU insurers are very slim - between 0.5 and 1 per cent implying low levels of profitability. Sources said that since most private insurers have consistently stayed away from motor third party risks, their underwriting margins were close to about 5 per cent, implying high levels of profitability. However, Mr Ramadoss, who is also the chairman of the General Insurers Public Sector Association, emphasised, “Underwriting margins will change and will improve. I cannot give a time frame. It could happen this year or even next year. But it will definitely improve.”

The optimism stemmed from the fact, that transfers of third party covers to IMIP would help contain claims. The IMIP would take the risks off the insurers’ books. Motor TP comprises about 30 per cent of PSU insurers’ premiums. Moreover, he said, the pool, being a specialised agency, would better manage the third party risks and help plug leakages that have so far been the bane of the public sector insurers. But the pool itself is faced with technical problems.

Mr Ramadoss said that the problems would be ironed out by the end of this month and data transfers from all the PSU insurers to the IMIP would be completed by then.

The reduction in losses and improvement in margins would also be helped by the installation of Core Insurance Solutions (CIS). Only OICL has completed the installation of this software. But other PSUs are also expected to complete CIS this year.

Besides, what was also expected to help the underwriting margins for the PSU insurers was the fact, that barring motor third party, all other portfolios have claims ratios of less than 60 per cent.

Source: The Hindu Business Line

Insurers here feeling US sub-prime heat

Private players may take harder hit

The contagion effect on domestic capital markets such as fall in Sensex and hardening yields imply a depreciation in the value of financial assets of the insurers.

India’s general insurers are becoming nervous as the meltdown in the US sub-prime mortgages market gathers momentum.

The jitters come even as domestic reinsurance requirements are on rise. Some of the major reinsurance companies with whom Indian general insurers have treaties and facultative Reinsurance (FacRe) arrangements include European reinsurers.

Speaking to Business Line, the General Insurers Public Sector Association Chairman, Mr M. Ramadoss said, “We are watching the situation. But there is no worry. PSU reinsurance arrangements are only with AAA-rated reinsurers.&# 8221;

However, even AAA-rated reinsurers, such as Munich Re have revealed that they had exposures equivalent to €600 million ($822 million) in the US sub-prime market.

The exposure of Allianz Insurance, the Europe’s largest insurance company, is estimated at €1.7 billion.

But Indian insurers also have reinsurance arrangements with lower rated companies for their FacRe contracts.

(In FacRe contracts, reinsurers have no underwriting obligation, but can assess each risk individually).

‘No fear’
Insurers said they feared no defaults from reinsurers, in view of their global size and the comparatively small size of Indian liabilities.

But domestic insurers have suffered reinsurer defaults from Asia companies in the past.

In fact, the Insurance Regulatory and Development Authority has already sent a note to all the general insurance companies seeking details of such past defaults. Indian insurer defaults from reinsurers are estimated at close to about Rs 1,000 crore, mostly from East Asian companies due to insolvency.

But sources said the sub-prime meltdown was likely to hit the private sector insurers worst, in view of their high reliance on reinsurance markets.

The high reliance was largely for meeting the stringent regulatory solvency margin of 150 per cent and low retention ratios. Solvency marginis the excess of capital and value of assets over the insured liabilities.

High retention capacities
In the public sector, however, the combined capitalisation of the four companies – New India Assurance Company Ltd, National Insurance Company Ltd, United India Insurance Company Ltd and Oriental Insurance Company Ltd, is about Rs 15,000 crore, implying very high retention capacities. But even PSU capital may be insufficient, if insurance coverage is to increase to Asian levels of 6 per cent of GDP.

The sources said the sub-prime impact on the insurers would also be felt due to the contagion effect on domestic capital markets. Falling values of the Sensex and hardening yields implied a depreciation in the value of financial assets of the insurers. This depreciation, the sources said, would have a direct impact on the solvency margins of the insurance companies.

This was especially at a time when insurers were preparing to move into a regime of dynamic solvency reporting instead of the current annual reporting.

Source: The Hindu Business Line

Andhra Bank eyes insurance partner

Hyderabad-based Andhra Bank was scouting for strategic partners to foray in life insurance sector by the end of the financial year 2007-08, said K Ramakrishnan, chairman and manging director Andhra Bank on the sidelines of annual Ficci Banking Conclave on Thursady.

Ramakrishnan said the bank intended to hold at least 26 per cent stake in joint venture company, and Bank of Baroda was one of the potential partners for the project. He further said the bank was keen to enter general insurance sector in partnership with other banks in the near future.

“Currently the insurance venture is in a nascent stage and we are yet to decide on the partners,” he said, adding, “we have a strong synergy with the Bank of Baroda.” This apart, the bank plans to open representative offices Saudi Arabia, Oman, Kuwait and Qatar by the end 2007-08.

“We are looking for a presence in the Middle East to tap a few million expatriates from Andhra Pradesh,” he said.

The bank plans to open its second overseas office in New Jersey after the necessary approvals from the US government.

Currently, the bank has one foreign office in Dubai, and is looking for a presence in Malaysia in alliance with with the Bank of Baroda and Punjab National Bank.

Domestically, the bank plans to open 85 new branches and 200 ATMs this year across the country. Nearly 50 per cent of the branches would be in rural areas, said Ramakrishnan. At present, the bank has 1,303 branches in the country, with nearly 900 in Andhra Pradesh.

With the current business of around Rs 70,000 crore, the bank plans to reach the 1 lakh crore mark by the end of 2009. Also, this fiscal the bank is looking at 25 per cent and 23 per cent increase in credit and deposit respectively.

The bank has identified education and housing as priority lending sectors, and plans to decrease the lending rates in the two sectors by 25 basis points across segments in the coming months. Last year the bank disbursed Rs 1,000 crore as education loan, and Rs 3,900 crore as housing loan.

With the headroom of around Rs 3,000 crore, the bank plans to raise Rs 400 crore in the tier II category by December 2007.

Source: Business Standard

Complex ULIP face Irda whip

Irda bans unit-linked insurance plans which charges are based on complex structure.


The Insurance Regulatory and Development Authority of India (Irda) has banned unit-linked insurance plans (ULIPs) in which charges are based on a complex structure, making it difficult for policyholders to comprehend.


Such products in insurance parlance are called acturial-funded products. The ban would require Aviva Life Insurance to withdraw all its 14 ULIP products, while Bajaj Allianz one of its ULIPs called Capital Unit Gain.

Bajaj Allianz has been directed to withdraw Capital Unit Gain, the deadline for which is the end of next week, while the regulator has been a little considerate with Aviva Life Insurance. Irda has not set any deadline for Aviva to withdraw its ULIP products as the company would need more time to develop new products and then seek the regulator's approval.

“Bajaj Allianz has been given a time frame of 15 days. Aviva Life will have to introduce a new set of products to replace the ones they are using right now and will, therefore, be given more time,” said C S Rao, chairman, Irda.

Insurance sources said Bajaj Allianz Life reported a profit of Rs 30 crore in the first quarter of 2007-08 and Rs 63 crore in 2006-07 mainly on account of Capital Unit Gain.

Under the other ULIP schemes, charges are deducted upfront when the premiums are paid, which could range up to 40 per cent in the first year.

In acturial funded products, the first-year premium is treated as initial premium and is put under an initial management account called acturial funding. Every year 5 per cent of the premium is deducted as initial management cost and 5 per cent as premium allocation charge.

In the second policy year, again a 5 per cent charge is deducted as premium allocation and another 5 per cent from the first year premium as initial management cost. So, for every year a customer loses 5 per cent as premium allocation and 5 per cent as initial management charges.

Assuming that the policy tenure is 20 years and the customer wants to withdraw after three years, the policyholder loses 100 per cent of premium net of charges, 75 per cent if his policy tenure is a 15-year policy and 50 per cent if it is a 10-year policy.

“Acturial-funded products mislead customers into feeling that they have more benefits. While normal ULIP products charge policyholders upfront for all administration and fund management expenses, an acturial funded product will spread it over a period of time. So, a policyholder feels that he has got a larger number of units. Such products are not in the larger interests of the policyholders,” said Rao.

“In several western countries, regulators realised that these products are misleading and have asked companies to withdraw them,” said Rao.

When asked why the Irda approved these products in the first place, Rao said, “It is only after a product is marketed that you realise all the loopholes and then you make a correction. Three weeks ago, the Irda had asked the Acturial Society of India to give its opinion on acturial funded products and it was suggested that these products are not appropriate.”

Bajaj Allianz officials were unavailable for comment. An Aviva spokesperson said: “We have had no communication from Irda on any ban of actuarial-funded products. All our products, including the ones where actuarial funding has been used, have been pre-approved by Irda and are designed on sound actuarial principles. We have been selling these products for years in the country, and these have been approved by the regulator as they follow all guidelines and regulations laid down by the Irda. None of our products is detrimental to the interest of any existing or prospective customers. One of our actuarial funded products was approved as recently as May 2007.”
--------------------------------------------------------------------------------


THE ORDER

The ban would require Aviva Life Insurance to withdraw all its 14 ULIP products
Bajaj Allianz will have to withdraw one of its ULIPs called Capital Unit Gain
Bajaj Allianz has been directed to withdraw Capital Unit Gain, the deadline for which is the end of next week
IRDA has not set any deadline for Aviva to withdraw its ULIP products as the company would need more time to develop new products and then seek the regulator's approval

Source: Business Standard Reporter

PNB to review holdings in joint ventures

Punjab National Bank (PNB), the third largest public sector bank, is reviewing the shareholding patterns of all its existing joint ventures.

PNB has three operational joint ventures with the US-based Principal Financial Group and a 20 per cent holding in Nepal’s Everest Bank.

The three JVs are Principal PNB Asset Management Company, PNB Principal Financial Planners, an investment advisory and financial planning services company, and Principal PNB Insurance Advisory Company, an insurance broking firm.

“We are reviewing the operations and (shareholding) structures of these companies. We will then see whether we want higher stakes in the ventures or sell our stakes. We have informed our partners that we are reviewing the ventures. As of now, the ventures stand,” PNB Chairman and Managing Director K C Chakrabarty said.

PNB has 30 per cent stakes each in Principal PNB Asset Management and PNB Principal Financial Planners with Principal owning 65 per cent stake and Vijaya Bank the remaining 5 per cent. In the insurance advisory venture, PNB holds 30 per cent equity, with Principal holding 26 per cent, Berger Paints 25 per cent and Vijaya Bank 19 per cent.

Mangalore-based public sector bank Vijaya Bank has decided to exit all these JVs and also the proposed life insurance venture, as the stakes do not make any significant additions to its revenues.

PNB is likely to complete the review in six months. The bank is also having a relook at the need to continue with its subsidiaries, PNB Gilts and PNB Housing Finance. The bank is examining whether greater shareholder value could be derived by merging the two subsidiaries or by keeping them as subsidiaries.

“The reason for the review is that we have too many subsidiaries (ventures). We need to see how to capitalise them. Besides, some of the subsidiaries are over-capitalised. The bank also has capital adequacy issues. We need to look at more effective use of capital,” Chakrabarty said.

The bank’s capital adequacy ratio stood at 12.41 per cent at the end of the first quarter of 2007. The bank requires at least Rs 4,000 crore over the next two years. The government holds 57 per cent stake in PNB, which is closer to the minimum required 51 per cent.

Chakrabarty said raising capital was not on immediate agenda, and the bank had room to raise Rs 1,500 crore of tier-I capital through perpetual debt and another Rs 1,500 crore through tier-II bonds.

“Vijaya Bank is still in the process of working out the modalities of its exit. The bank is likely to finalise (modalities) in the next 10-15 days,” said Prakash Mallya, chairman and managing director of Vijaya Bank.

“If we are approached by Vijaya Bank to buy its stake, we would then ask them to first let us formulate our view and to wait for two more months or so. If Vijaya Bank wants to sell their stake to a third party, then we have no problem,” said Chakrabarty.

The proposed life insurance foray of PNB, Principal, Berger Paints and Vijaya Bank has already hit a roadblock and looks unlikely to get off the ground.

“There has to be some rethink on the proposed venture. There is a problem as some of the shareholders are not willing to participate,” said Chakrabarty.

Source: Business Standard

INSURANCE BLUES:IRDA bans acturial funded products

The Insurance Regulatory and Development Authority, or IRDA, has decided to ban unit linked insurance products, or ULIPs, that are too complicated for the customer to understand, reports CNBC-TV18.

Among the products to be pulled off the shelf, in the next fortnight, is Capital Unit Gain, Bajaj Allianz Life's most popular product. This product was solely responsible for the Rs 90 crore profit recorded by the company this year. The regulator has given Bajaj Allianz 15 days to pull the product off the shelves.

Apart from that, Aviva Life also has five acturial funded products.

IRDA has decided to ban acturial funded products. This means that while normal ULIP products charge you upfront for all the charges of administration and fund management, an acturial funded product will not charge you upfront. They will invest all your money on your behalf and will charge you at the end of every month, by deducting some money out of your unit fund.

The IRDA has decided that these products are really too complicated for a consumer to understand how much at risk he is and what sort of charges are being deducted from his fund. So, they have decided to ban the fund altogether from the market.

The biggest product that is acturially funded in the market right now is Bajaj Allainz Life's Capital Unit Gain. It was mostly responsible for Bajaj Allianz breaking even last year and recording a profit of Rs 9 crore last year and in the first quarter of this year.

“The committee of acturists have looked into it and have suggested that the acturial funding may not be appropriate. Though, technically, there is nothing wrong with it, but the product is so complicated the investor does not know what risk he is running. So, they suggested that this may be withdrawn and we are going to take action about it,” said C S Rao, Chairman, IRDA.

Another company that is going to be drastically hit is Aviva Life. It has 14 ULIPs, most of which are acturially funded products. So, their entire bank of unit-linked products are going to be wiped out and they are going to have to replace them.

The IRDA will give 15 days to pull the product of the shelves. Aviva Life is going to have to introduce a whole new set of products to replace the ones they are using right now and may probably be given a little more time than 15 days.

It is clear that these companies will have to completely rework their entire product strategy as these products are were really the pillars of their business right now.

ING Vysya Insurance to open 53 new branches

Bangalore: ING Vysya Life Insurance, a leading private sector insurance company, proposes to open 53 new branches in India during the current fiscal, thus taking its total number of branches to 330 from the present 277 spread out in 186 cities.



Speaking to newspersons here today, after announcing company's new product 'ING Positive Life' a unit linked insurance plan, company Associate VP and Head (Product Development) Y V D V Prasad said the bank had opened 130 branches during the last nine months all over India, besides making tie-ups with Cooperative Banks for sale of the ING Vysya products.

An application had also been filled with the Regulator to introduce 'Group Policy' in rural areas. This policy, under micro insurance, would be linked to loans issued by private finance institutions in rural areas.

Explaining the salient features of the new plan 'ING Positive Life', he said it was an attempt to reach all the segments and was developed based on feedback received from the customers. The main features included flexible premium paying options and investment options, no medical under-writing, systematic investment benefit and partial withdrawal option.

He said the ING Positive Life, for individual customer in the age group of 0-50 years, was targeted at the regular savings segment.

The policy terms would be 10, 15 and 20 years. The plan would service as a 'Systematic Investment Plan' mode of investment.

The premiums paid could be invested in a choice of five - Debt, Secure, Balanced, Growth or Equity - fund options, based on an individual's risk appetite.

During the policy term, the customer could switch between these funds or redirect future premiums into the available options.

Source: UNI

Insurance products likely to become cheaper

Kolkata: Prices of general insurance products in the detariff regime are slated to fall by over 60 per cent with the onset of the second phase of reforms in the next couple of months.



Aggressive pricing is already beginning to trigger serious price wars in the market. This is set to intensify once the terms and conditions of policies or product formats begin to change over the next few months.

The sense of aggression in the detariffed general insurance market is already palpable, with cash discounts of almost 20 per cent being offered by some insurance companies over and above the maximum 51.25 per cent discount on individually rated risks.

A possible trend of market segmentation is likely to emerge as well. Each segment in the general insurance business is expected to become competitive and a clear segmentation in terms of the insurer’s experience on various portfolios within motor, fire and engineering are likely to emerge.

“While there would be an expected drop in fire and engineering premiums, companies would have to rake up big volumes through retail. For example, we expect to garner larger volumes from retail, which includes motor, shopkeepers and householders’ insurance, and the SME sector,” Ajit Narain, managing director and CEO, Iffco-Tokio, told DNA Money.

“Absolute premiums may not go down but what will happen is that the cash discounts which are offered may get absorbed in the product pricing. Hence prices on fire and property could go down by 61-70 per cent. The next one year could see aberrations in prudent underwriting at times and grabbing of market shares,” Rahul Agarwal, CEO, Optima Risk Management Services, told DNA Money.

“However, some of general insurance products will see an increase in prices over the next one year and competition will further hot up with three to four companies to start business,” he said.

While the general insurance market has grown by 12.03 per cent over the first quarter of the current fiscal, 8 private companies have grown by 26.11 per cent and have notched up almost 35 per cent of the over Rs 25,000 crore general insurance market.

Source: DNA MONEY

... shortlists 3 for general insurance venture

Kolkata, Aug 2 State Bank of India (SBI), thecountry’s biggest lender, has shortlisted three foreign partners for its proposed foray in the general insurance venture, chairman and managing director OP Bhatt said on Thursday, Bhatt told reporter on the sidelines of the Banking Conclave here there was a possibility that the general insurance company would be formed in the current fiscal. He said SBI would form a holding company for SBI Life and SBI Mutual Fund shortly. Strategic investors might also be given a part of the stake in the holding company.

Source: THE FINANCIAL EXPRESS

Chola MS General Insurance looks for a new core insurance solution

Chennai: The Chennai-based private non-life insurer Cholamandalam MS General Insurance Company Limited, part of the $2-billion Murugappa group, has decided to go in for a new core insurance solution.

The company has short listed three vendors and a 15-member multi disciplinary team is evaluating the proposals in depth including their pricing and would shortly decide on the preferred vendor.

Declining to reveal the names of three short listed software companies to S S Gopalarathnam, president, operations, says the company has budgeted around Rs11 crore for core insurance solutions as well as the hardware. "We will take care of the hardware needs ourselves."

It has become imperative for Indian no-life insurers to revamp their information technology (IT) solutions to cope with the changes arising from the four major lines of business — fire, engineering, motor and workmen compensation insurance — recently being freed from the administrative pricing mechanism. In addition from next April onwards the companies, will be free to custom design their products. There is a view that the Insurance Regulatory and Development Authority (IRDA) might advance this to 1 January, 2008.

The non-life insurers have to launch several products and the current IT systems used by most of the insurers are inadequate and inflexible to meet the future needs.

Says Gopalarathnam, "We plan to launch 20-25 products in - fire, engineering, motor and workmen compensation- business lines."

With the freedom to decide on the rates and the risk covers, insurers have to mine data and do a detailed actuarial analysis to price their products adequately. All these years, a body called Tariff Advisory Committee (TAC) had determined the premium rates and the insurers just loaded the rates in their systems.

"Lot of data analysis had to be done and the core insurance solutions should be robust enough to do that. Products and pricing are the levers on which the new IT systems have to work," remarks Gopalarathnam.

One of the fast growing Indian non-life insurers, the Rs314 crore premium income Cholamandalam MS General Insurance, expects the new core insurance solution should be robust enough to web enable many of its products effortlessly.

"The solution we look at should address the needs of all core insurance functions like underwriting, sales, marketing, agents related work including commissions, data mining, data analysis and many other things," he adds.

According to him the core insurance solution should be compatible with specialised stand alone solutions like human resource rating, reinsurance analysis.

Source: Domain-b

Munich Re Q2 profit crosses target

Aug 6 Munich Re, the world’s second-biggest reinsurer, reported profit that beat analysts’ estimates because of a lower tax bill and raised its earnings forecast.

Net income in the second quarter advanced to 1.14 billion euro ($1.57 billion), or 5.22 euros a share, from 1.12 billion euro, or 4.90 euro, a year earlier, the Munich-based company said. Analysts estimated an 888 million-euro median profit. Income taxes fell to 298 million euros from 623 million euro a year ago. Munich Re, which helps primary insurers such as Allianz SE shoulder risks including catastrophe claims for clients, increased its 2007 profit target to 3.5 billion euro to 3.8 billion euro.

Source: THE FINANCIAL EXPRESS

Birla Sun Life expands capital base

Birla Sun Life Insurance has infused additional capital of Rs 105.50 crore into its capital base. The capital base of the company stands at Rs 777 crore as of July 31. The additional capital will help expand the company’s distribution network and conform to the solvency margin requirements as stipulated by the Insurance Regulatory and Development Authority, said a release. The capital infusion was made in several tranches between April and July this year. The company plans to expand its network by September by opening additional branches in smaller towns across the country. “We are upgrading our technology platforms to support this voluminous growth,” said Mr Vikram Mehmi, President and CEO. –

Source: THE HINDU BUSINESS LINE

Taking insurance to rural India

Start-up broking firm does it with mobile office


Hardsell: A mobile office of Allegion selling insurance in a village in Tamil Nadu


Chennai, Aug. 8 In all his 51 years, Sakthivel of Mannur had only heard blares of political propaganda interspersed with Tamil film music over van-mounted loud speakers.

Last week, to his surprise an unusual message issued out of one such loud speaker — the people of Mannur should buy insurance. Sakthivel cocked his ears towards it.

Presently, the vehicle rolled into sight. A Maruti Omni van with its back rebuilt as a counter. Inside it sat a man with a computer, a printer and other office paraphernalia.

Intrigued, Sakthivel cut through the small crowd that had gathered around the vehicle and approached the man in the counter.

“What are you selling?”; “Insurance”; “What is insurance?”

That is the difficulty in taking financial products, particularly insurance, to rural populace. In the best of places, insurance is hard to sell — you ask for money in return for a promise. It, therefore, costs money to sell the product. Here you have to start from the scratch. Besides, the ticket size is so small, the cost-return equation is hard googly to play.

So, find a cost-effective way of selling insurance to Sakthivel and others, you have a winning proposition.

Alegion Insurance Broking Ltd believes it has found a way — a mobile office.

According to Mr N. Raveendran, Managing Director, Alegion, test marketing with one refurbished Maruti van has showed that it is possible to sell insurance products cost effectively in small towns and villages. Now, Alegion intends to buy 30 more such vehicles, initially, to cover the four southern States. The grand plan is to buy at least 500 vans — one for each revenue district in India, over the next 18 months. “I have already spoken to Maruti,” says Mr Raveendran.

But how would a start-up broking firm shell out Rs 20-odd crore needed for the project? Mr Raveendran’s answer is simple. A lot of insurance companies see value in the proposition and have committed funding. Some of the larger funders may also have their names painted on the sides of the vans or their commercials aired on the loud speakers.

Alegion intends to sell both life and non-life. “Most of the rural folk have never bought an insurance product because they’ve never been sold one,” says Mr Raveendran. Now, the man in the van will do that. The vans, linked to a ‘control centre’ in each State, will be able to cover a lot of ground. Each van will cover the entire district at least once in a fortnight.

“We are creating an enabling infrastructure that could be used by all companies,” notes Mr Raveendran.


Source: THE HINDU BUSINESS LINE

New India skips motor policies to post 104% net rise

New India Assurance Company, the country’s largest general insurance company, more than doubled its net profit to Rs 1,459.95 crore in 2006-07 from Rs 716.38 crore a year earlier by underwriting less of the loss-making motor insurance business and increasing business in profitable lines such as fire and engineering.

The public sector general insurer’s decision to do less of motor insurance business helped it reduce its net incurred claims ratio to 76.68 per cent for the year from last year’s 83.64 per cent.

However, this strategy resulted in a marginal growth in the company’s gross premium income. Its premium income grew by 4.71 per cent to Rs 5,017.20 crore for the year from Rs 4,791.49 crore a year earlier. The increase in the public sector general insurer’s premium income in 2005-06 was 14 per cent.

“We did selective underwriting for the year. The accretion percentage is less than the previous year due to strict underwriting of motor third-party insurance, a loss-making segment. The growth in motor portfolio was 3 per cent this year, compared with 15 per cent last year. However, the growth in other profitable lines was ensured. Fire business grew by 8 per cent compared with 6 per cent in FY06,” said A R Shekhar, general manager, New India Assurance.

New India has operations in 26 countries with direct operations in 23 countries and subsidiaries in West Indies, Nigeria and Sierra Leone. The gross premium income from overseas operations (excluding three subsidiaries) increased by 4.02 per cent to Rs 919.58 crore against Rs 884.05 crore a year earlier.

The gross direct global premium registered a growth of 4.60 per cent to Rs 5936.78 crore against Rs 5675.54 crore a year ago. The global net premium rose by 9.42 per cent to Rs 4751.76 crore for the year compared with Rs 4342.66 crore a year ago.

New India has set a target of Rs 5587 crore of gross direct premium in India and Rs 1013 crore from its foreign operations with a global target of Rs 6,600 crore, an accretion of 11.17 per cent.

Source: Business Standard

Royal & Sun bullish on India

United Kingdom’s second largest insurer, Royal & SunAlliance Group (R&SA) is bullish on India. It expects the share of its Indian presence to rise four-fold to 40 per cent of total income from its operations in emerging markets by 2010.

The foreign insurer is present in India as a promoter of Royal Sundaram General Insurance Company with a 26 per cent stake.

R&SA’s operations in emerging market consists of seven countries in Latin America, China, India, Saudi, Oman, UAE, Singapore and Hongkong besides countries in Central, Eastern Europe and three countries in the Baltics.

At present, the Royal Sundaram contributes 5 per cent to R&SA’s profits from emerging markets and 10 per cent to income.

“India is one of the biggest markets. At present, the Indian contribution is not major but its potential is very big like China, Brazil and Mexico. We expect our India business to be at least four times of the present business by the year 2010. Beyond that the growth potential is still large,” said Paul Whittaker, CEO, emerging markets, R&SA.

With the Indian non-life industry on the verge of being fully detariffed, R&SA will be replicating better price sophistication, distribution model and products from other countries in India.

“In the emerging markets, we have two measures to calculate the market potential - GDP growth and insurance penetration. In the UK, GDP growth is 2 to 3 per cent while in India it is close to 10 per cent. In the UK, the insurance penetration is saturated with 3.65 per cent of GDP being spent on insurance while the insurance penetration in India is 0.65 per cent. There are different products and different levels of penetration,” said Whittaker.

Speaking about the impact of detariffing, Whittaker said, “In all countries prices have fallen initially and profitability is lost. But over the time market matures. Risk-based pricing comes into effect. But in one to two years, normality will return.”

Royal Sundaram General Insurance started its operations in 2001. Antony Jacob, CEO, Royal Sundaram General Insurance said, “The first five years we have focussed on building a large happy customer base. We have 1.7 million customers and our customer rating is 82 per cent as per the AC Nielson survey. We are looking at improving visibility, distribution and brand. The second phase we will focus on accelerating the growth.

Royal Sundaram General Insurance will be increasing the branches to 60 by March 2008 from the present 60. The company reported a Gross Written Premium of Rs 601 crore and a profit after tax of Rs 21 crore , for the year ended 31st March 2007.

Royal & SunAlliance is one of the world’s leading multinational quoted insurance groups, with the capability to write business in over 130 countries and with major operations in the UK, Scandinavia, Canada, Ireland, the Middle East and Latin America.

Focussing on general insurance, it has around 24,000 employees. In 2006, its net written premiums were 5.5 billion pounds. With an almost 300 year heritage, Royal & SunAlliance is the oldest insurance company in the world still trading under its original name.

Source: Business Standard

Disputes over mediclaims settlement on the rise

Hyderabad, Aug. 7 Complaints pertaining to settlement of mediclaims by health insurance companies are on the rise, according to the data available with the Insurance Ombudsman.

Also complaints relating to issues such as lack of transparency in settlement of medical claims are growing of late, Mr P.A. Chowdary, Ombudsman, told Business Line.

“While most of the claims are being rejected by the insurance provider on the grounds of ‘pre-existence of disease’, there is no clarity on the upper limit of claims and diseases covered,” he said.

Settlement of overseas mediclaims was also becoming an issue with the increase in the number of people going abroad on work, he added. In both life and non-life, complaints on settlements are on the rise.

For instance, as per the data of office of the Governing Body of Insurance Council, about 7,420 complaints were made to Insurance Ombudsmen in the 12 circles in the country between April and December 2006. Kolkata has a major share with over 1,300 complaints, followed by Mumbai with 1091 , Lucknow 907, Chennai 870 and Hyderabad 947, among others.

“Generally there are more complaints (about two-thirds) from non-life pertaining to motor insurance and other related aspects. Over two thirds of the complaints settled were in the non-life sector,” Mr Chowdary said.

According to Mr Srinivas Rao, Deputy Secretary (Non-Life) office of Insurance Ombudsman here, the reason for increasing litigation in motor insurance was the non-transfer of insurance documents in the pre-owned vehicle segment.

Source: The Hindu Business Line

Insurers seek time on pricing

The proposed full pricing freedom to general insurers will have to wait till November 1 this year. At a meeting with the Insurance Regulatory and Development Authority (Irda) yesterday, general insurers have sought more time to better their risk under-writing guidelines to face another round of pricing competition.

Accordingly, Irda has decided to remove the 51.2 per cent cap on discounts from November 1 instead of September 1 this year, industry sources said.

The full pricing freedom was expected to result in another round of pricing war with discounts expected to rise up to 70 per cent in fire, engineering and motor covers. When general insurance was partly detariffed in January this year, insurers were allowed to give discounts on premiums up to 51.2 per cent on individually rated risks.

However, industry sources say many insurers have already violated this restriction on discounts by offering higher discounts than permitted in anticipation of full pricing freedom from September 1.

“At this point it is not clear how to guide clients on what is the right price. The market has not bottomed out yet and with insurance companies testing new bottoms regularly, we can only look to mature markets for guidance on what is a fair price for our clients,” said Pavanjit Singh Dhingra, Vice President, Prudent Insurance Brokers.

While there will not be any major impact in terms of day to day decision making for clients making their buying decision, it is possible that the short time gap between complete pricing de-tariffing and the freeing up of policy terms and conditions planned on January 1, 2008 may not make the process smooth.

“Everyone feels uncomfortable when the pricing gets too low; even clients feel that too low a price would eventually impact the claim paying ability of insurance companies and yet one cannot ignore market realities”, added Dhingra.

Source: Business Standard

ING Vysya Life hopes to double premium income

ING Vysya Life Insurance Company Ltd, headquartered in Bangalore, expects to capture a 2 per cent share of the insurance market in the country by the end of 2008.

Kshitij Jain, managing director and chief executive director of ING Vysya Life, told a news conference in Hyderabad on Wednesday that the insurance market in the country was growing at upwards of 30 per cent in premium terms, and the company hoped to grow at double that pace by 2008.

ING Vysya Life achieved a market share of 1.1 per cent in the first quarter of the current fiscal. Its premium business stood at Rs 700 crore during the last financial year.

The company announced the launch of ‘ING Positive Life’, a unit-linked insurance plan designed for ING Vysya Bank customers. The plan allows the customer to enter at as low as Rs 834 a month.

The premium can be invested in any of five fund options – debt, secure, balanced, growth or equity – besides offering liquidity when needed by allowing one partial withdrawal each year after the fifth year of the policy.

Jain said, “We will leverage ING Vysya Bank’s network of over 400 branches, understandings, sign-ups and referral agreements with about 100 co-operative banks and the more than 40,000 tied agents in 173 cities across the country, to access the 1.5 million customers of the bank for this product. Though we have introduced this unit-linked plan only for the existing customers, we are also looking at the possibility of acquiring new customers significantly.”

ING Vysya Bank contributes 10 per cent to the overall business of ING Vysya Life and that is expected to go up with the launch of the new product.

“ING Positive Life will facilitate access for ING Vysya life insurance products to the rural markets, where the life insurance business is yet to pick up,” Jain said.

About 100 ING Vysya Bank’s branches are located in rural areas. The interior markets accounted for 28 per cent of ING Vysya Life’s total insurance business last year.

In Andhra Pradesh, the bank has some 200 branches, which account for 25 per cent of ING Vysya Life’s business.

Source: Business Standard

Apollo Hospitals, DKV in health insurance JV

Apollo Hospitals Group and DKV, Europe’s largest private health insurer and a Munich Re Group company, today launched India’s second standalone health insurance company.

Apollo Hospitals Group holds 74 per cent while DKV holds the remaining 26 per cent stake in the joint venture company — Apollo DKV Insurance Company – which is expected to roll out products by middle of September this year.

The two companies have together invested a total of Rs 108 crore in proportion to their shareholding, and they expect to offer cashless products and services in over 4,000 hospitals across the country and on a reimbursement basis in all hospitals.

“Pricing will be risk-adequate and at par with other players. But our products will have much more value-added services in-built and will give true value for money,” said Shobana Kamineni, director, Apollo Hospitals Group.

To begin with, the health insurance company will offer traditional products such as in-patient hospitalisation cover, critical illness cover, overseas travel & health cover and personal accident cover. Later, the company will launch user-friendly products for both individuals and groups.

“We expect to cover one million lives in the next two-three years,” said Jochen Messemer, Director, Apollo DKV.

Apollo DKV is the second health insurance company after Star Health and Allied Insurance, which was launched in 2006.

“Though health insurance industry is growing at 30 per cent, the health insurance penetration in the country is only 2 per cent. Against the potential of Rs 15,000 crore business, the 13 health insurers operating in the country managed to collect only Rs 3,300 crore in 2006-07,” added Kamineni.

Source: Business Standard

IRDA sets November date for total pricing freedom

MUMBAI: Insurers wanting complete freedom in pricing insurance policies may have to wait till November. The Insurance Regulatory and Development Authority (IRDA) has decided to give the industry more time, as boards of companies will now have to decide on the extent of leeway that they have in pricing of products. Earlier, insurers said complete freedom in pricing would bring down property insurance cost down by 20%. This reduction was expected on the back of the fall in rates that had already taken place since January this year, following the dismantling of the tariff regime. However, even after detariffing, the regulator had placed restrictions on pricing by setting a floor rate which was up to 50% of the old tariff rates. These floor rates, too, are set to go from November. In the free-pricing regime, boards of non-life insurance companies will have far more responsibility in deciding the extent to which an insurer can overstretch pricing. IRDA has asked insurance companies to ensure that the board fixes a ceiling on an insurance company’s ability to retain risks for large projects which require specific reinsurance cover. The regulator has also said that once the ceiling has been decided by their boards, insurance companies should not play around with retention levels. In the past, public sector insurers had used their balance sheet strengths to offer terms to customers better than what was being offered by the reinsurer. The issues of free pricing and reinsurance terms were taken up by the regulator in its General Insurance Council meeting with non-life insurers in Hyderabad on Monday. Speaking to ET, Iffco Tokio General Insurance MD Ajit Narain said companies have already stopped undercutting each other and prices have started to firm up in business segments such as group health. He pointed out that insurers have turned cautious because of floods across the country which could result in higher claims. Other insurers feel that some of the discounting that has been happening clandestinely will now take place openly. According to Prudent Insurance Brokers vice-president, Pavanjit Singh Dhingra, the highest discounting was expected to take place in engineering and some infrastructure projects where there are rumours of deals were being struck at 10% of tariff rates. He feels that the pricing would stabilise around April 2008 when the next round of big renewals take place. There was also a chance that prices would firm up if there was a natural catastrophe like flood. He added that pricing would be also determined by National Reinsurer GIC Re which now has large exposures in Africa and the Gulf region. Any increase in international claims could result in a tightening in India even if there are no claims locally.
Source:Economic Times

Interest rate hike takes toll on insurance

New Delhi: Rising home loan rates and a recent surge in stock markets are weaning away household savings from the life insurance industry, which has witnessed a nine per cent drop in total premium collection during the first quarter of this fiscal.

The total premium fell to Rs 12,511.8 crore during the quarter ended June 30, as against Rs 13,737.4 crore in the corresponding period last fiscal.

The industry posted a 110 per cent growth in total business at Rs 75,406.52 crore in 2006-07 from Rs 35,897.96 crore in the previous year.

Home loan interest rates have risen by about two per cent in the last one year. Barring the 514 points crash on the Bombay Stock Exchange on July 27, the markets have been on an upswing.

The BSE 30-share index touched an intra-day high of 15,868.85 on July 24. It closed at a new peak of 15,794.92 points on the same day.

According to a senior LIC official, a hike in interest rates on home loans has resulted in an unexpected rise in the equated monthly installments (EMIs). As a result, many people have deferred their plans to save in insurance policies.

Besides, the surge in stock market over the last few months has also attracted people to invest in equities and mutual funds.

During the first quarter this fiscal, single premium collection on polices dipped more than 57 per cent at Rs 3,137.35 crore as compared to Rs 7,312.99 crore in the same period a year ago.

Source: PTI

Private sector peers outsmart LIC in Q1

Private players are growing big in insurance. The first quarter of the current fiscal has seen them notch up over 31 per cent and 22.6 per cent shares in the life and non-life space, respectively.

The overall life premium garnered by insurance companies declined by close to 9 per cent to Rs 12,512 crore in the period from the corresponding quarter of the previous year.

The decline in the life premiums was largely due to a 20 per cent drop in collections from life behemoth Life Insurance Corporation (LIC). Private players saw a 33 per cent rise in life premiums in the period. On the other hand, there was a 12 per cent increase in the overall general insurance premium in the first quarter of the current year.

These figures are based on approximate statistics of the Insurance Regulatory and Development Authority (IRDA) collated by DNA Money over the first quarter of the year.

Insurance industry analysts say the first quarter has thrown up some interesting trends in the sector. Compared to the first three months of the current year, single-premium plans raked in the moolah for all companies in the first three months of 2006-07.

The comparative drop in premiums this year is mainly attributed to the modifications on unit linked plans which came through last July and companies went overboard in selling policies before the changes. Unit linked policies constituted a major portion of the individual single premium plans in the first three months of 2006-07. Premiums from single premium plans in the first quarter this year constituted 25 per cent of the overall portfolio against 53.2 per cent last year.

Individual non-single premiums comprised of 61 per cent of the total premium in the first three months in 2006-07 compared to 36 per cent last year. In the midst of the overall premium change in the first quarter, LIC's share dropped to 68.6 per cent till June 30, as against 78.5 per cent in the corresponding three- months of 2006-07.

Source: DNA Money

Don’t wait for the agent to pay your insurance premium

Mumbai: Gone are the days when you had to wait for your insurance agent to collect cash or cheques in favour of your insurance company. Tired of matching the agent’s time with their own, some people investing on a monthly basis were forced to hand over the agent the premiums for a few months at one go.

Needless to say, such investors lost the opportunity to gain appreciation on the advance premium they paid. They could have earned a minimum of 3.5 per cent interest on an annual basis even if the money was left in their savings bank accounts.



Today, most insurance companies have introduced facilities to help investors pay insurance premium as per their convenience and by themselves well after the business hours. Besides saving on transportation costs, electronic payments make sure that the premium is paid the same day and not with the time lag associated with cheque payments.

One could choose from among facilities like electronic clearing service (ECS), auto debit, Netbanking, credit cards, ATM centres and e-pay sites like Bill Desk and Bill Junction. Here are some points to keep in mind:

The customer needs to give a mandate to the insurance company in case of an ECS and to the bank for an auto debit from his/her account.

One could pay through ATMs of banks that an insurance firm has a tie-up with. For instance, SBI Life has one with parent State Bank of India.

Some insurance firms offer the facility of paying through Netbanking. LIC, though, currently offers the facility only for non-ULIP products. However, you would be disappointed if you are looking to pay LIC premium through credit cards.

Other firms have also started offering payment facilities on cell phones. ING Vysya Life, for one, has launched a facility wherein one can pay premium via short message service. With mobile penetration deeper than that of internet, such facilities could be of help to more customers. Currently, however, only account holders of Corporation Bank and Citibank can pay their premium for ING Vysya Life through this route.

Yet other insurance firms have installed electronic data capture machines at their branch locations.

All the same, like in the case of other services provided by banks and insurance companies, these new premium-paying facilities can be availed only after registering. In most cases, the registration has to be done only once. Also, facilities such as ECS and payment through pay sites are available only in select cities, while auto debit is available on select banks.

Source: DNA Money

Education loans may come with life cover

PSBs may be told to provide online facility

The bank would be able to recover the loan amount from the insurance amount in the case a borrower’s death.

New Delhi, July 31 The Government wants the existing education loan scheme to be modified to add on a life insurance cover on the student going in for an education loan from a public sector bank. All public sector banks (PSBs) may also be asked to introduce facility of online request for education loans.

An insurance policy on the life of the student at the time of granting of education loan is likely to result in benefits for both the bank as well as the student.

The issue of modifying the existing education loan scheme (2004) is likely to come up for discussion during the Finance Minister, Mr P. Chidambaram’s meeting with the chief executives of PSBs here on Wednesday.

On the benefits of insurance cover, official sources said that the bank would be able to recover the loan amount from the insurance amount in case of an unfortunate demise of the borrower.

For the student, a habit of taking insurance would be inculcated. A student, who is once covered by life insurance, even after repaying the bank loan, would be inclined to continue with the life insurance policy.

Union Bank already has a provision for an insurance policy in their education loan scheme. To lessen the cost of premium, a convertible insurance policy (convertible into an endownment assurance policy for 5 years) could be accepted, says the scheme.

In cases where the parent/guardian cannot bear the premium cost, the amount of premium during the period of education could be remitted by the bank to LIC to the debit of loan account.

Guidelines

Indications are that the Finance Minister may ask the Indian Banks’ Association (IBA) to incorporate specific clauses for life insurance (on the lines of the Union Bank’s scheme) in the model education loan agreement circulated by it to banks for implementation.

The IBA may also be asked to provide broad guidelines to banks regarding the material to be published in the loan forms about insurance options available to students.

Meanwhile, PSBs may also be asked to provide facility of web-based online request for education loans. A presentation is likely to be made by Corporation Bank, which already offers such a facility.

Source: K.R. Srivats for The Hindu Business Line

Technical glitches hit motor third party data transfer

Insurers have so far uploaded only 50% documents on to the pool

The India Motor Insurance Pool (IMIP) created by the 12 general insurance companies is faced with its acid test with the companies yet to complete transfer of data on third party risks.

The National Insurance Company Chairman and Managing Director, Mr V. Ramasamy, said: “There are problems due to inconsistencies in software between the IMIP and insurers, but these are being addressed.”

So far only one PSU and two private sector insurers have completed the data transfer to the IMIP, sources said. Only about 4 lakh documents have been uploaded on to the IMIP. This is less than 50 per cent of the actual number on third party risks.

The IMIP is created by public and private sector non-life insurers exclusively to take over all the third party motor risks. The share of each insurer in the pool is on the basis of gross direct insurance premium collected.

Software mismatch

The mechanism is to be administered by the national reinsurer General Insurance Corporation. The delays are caused by both technical and administrative problems. Technical problems relate to mismatch between the software used by the pool and insurers. The pool functions on a TCS supplied platform. Three of the PSU insurers work on GenSys Enterprise Management. One PSU insurer and almost all the private sector insurers work on their own proprietary systems.

The sources said, some operational mechanisms envisaged when the pool was created, was yet to be put in place.

The mechanisms involve settlement of claims directly by the pool. However, with the delay in data transfer, the claims settlement function is yet to become fully operational. As a result, settlements are being delayed. Faced with this situation, insurers are directly settling the claims.

Mr Ramasaamy said: “We settle the claims directly and reimbursement from the IMIP.”

But reimbursements already face delays. This is because all the members are expected to participate in the settlement process on a pro rata basis. The reconciliation delays have also prompted the pool manager to threaten penal levies of 11 per cent. But the pool glitches have now attracted the attention of the Insurance Regulatory and Development Authority.

IRDA’s stern action

The General Insurers Council Secretary-General, Mr K.N. Bhandari, said: “The IRDA has asked for explanations. They are doing this regularly to ensure the success of the pool.”

This time the regulator has taken stiff line. It has convened a meeting of all the chief executives from the non life insurance companies next week to break the logjam.

Source: C. Shivkumar for The Hindu Business Line

False claims bleeding health insurers

The healthcare insurance industry is suffering losses of upto Rs 600 crore annually, on false claims every year, according to a survey by MediAssist.

MediAssist, a leading third party administrator, estimates the the number of false claims at 10-15 per cent of total claims.

''We found nearly 25 per cent of claim cases that could be categorized under false claims, but as the sample size increases we believe that this percentage would settle at 10-15 per cent of total claims which amounts to Rs 400 cr-Rs 600 cr,'' said B Madhavan, CEO of MediAssist. The survey had a sample size of 600 cases.

The main reasons for these false claim payouts, MediAssist found, were policyholders making claims for pre-existing diseases, or manipulating documents, or availing and providing treatment that is not reasonably warranted.

Hospitals were also over-diagnosing or overpricing the treatment to increase costs, after getting to know that the person was insured.

Moreover, third party administrators (TPAs) are not fully automated across the country and hospitals are not able to verify patient details immediately. Persons, who are not insured, were also found to be getting treatment under an insured person's policy details.

The total premium collection for medical insurance firms in the country is about Rs 4,000 crore, while total claims amount to about Rs 4,300 crore in a year. Less than one per cent of the country's population is covered under medical insurance.

MediAssist said hospitals need to work in tandem with TPAs to eliminate false claims, while TPAs should invest in infrastructure to improve verification and entitlement. It proposed that TPAs also blacklist hospitals that overcharge or over-diagnose.

MediAssist CEO said that health insurance was a bleeding sector and that the survey aimed to find the causes for the high claim ratio and bring about a consensus among stakeholders to work together to minimize malpractices.

Source: PTI

SBI to list life, MF holding firm soon

State Bank of India has firmed up plans to launch a separate holding company for its life insurance and mutual fund management arms within the next 2-3 months.

O P Bhatt, chairman and manging director of SBI, at the sidelines of Ficci Banking Conclave 2007, said merchant bankers have evaluated the valuation of the new company between $4 billion and $5 billion (Rs 16,000-20,000 crore).

The new company would be listed on the exchanges this year, he added.

The purpose behind floating a separate company was to obtain better synergies in the operations of life insurance and mutual fund wings of SBI, evaluate the valuation of the two subsidiaries and keep options open for fund raising by listing the new company.

This apart , the bank has shortlisted two to three partners for its general insurance foray. "The partners of the general life insurance venture would be finalised this year, though it may not be floated this year," he said.

Bhatt further said high government stakes in public sector banks constrained their lending capacity. With government's stake at SBI currently being 59 per cent, a further 4 per cent dilution of the stake was a possibility, said Bhatt.

"Even if a 4 per cent stake dilution is done, an additional Rs 5,000 crore capital could be generated, which would raise the lending limit just by Rs 50,000," he added.

Capital and resource crunch due to government regulations based upon ideological factors were the two basic shortcomings of the Indian banking system, said Bhatt.

"Money is available with the economy, but not with the banking system. We need and enabling mechanism to make the money available to the bank," he said.

Source: Business Standard

`We have set up a team for rural insurance`

Reliance General Insurance, a part of the Reliance Anil Dhirubhai Ambani Group, grew its business through aggressive strategies in 2006-07. It recently launched a health insurance product priced so low that rivals envy it. The company’s president and CEO, K A Somasekharan, tells Falaknaaz Syed in an interview that insurance is a volume game and claims minimisation efforts make it profitable.

You grew phenomenally in 2006-07. What do you attribute the growth to?

In 2006-07, our new business premium income was up 462 per cent to Rs 912 crore. Our focus on creating infrastructure, building a team and market penetration helped.

In 2005-06, we had only 15 offices. By the end of March 2007, we had 97 offices. The number of employees increased from 300 to 1,000 last year. Right now, we are a 2000-people team. We are planning to have 200 operational offices this year.

What are your plans for FY08?

We received the Irda approval last month for setting up 115 operational offices, which we will establish by September this year. After this, I will approach the Irda for setting up more offices. We now plan to move to tier-II and tier-III cities.

We will be penetrating rural areas in a big way. We recently set up a team only for rural insurance in the retail segment. For rural areas, we will be concentrating on popularising cattle insurance, health insurance and personal accident insurance.

In a few months, we will be launching weather insurance. We will this month launch rural insurance products initially in six states – Gujarat, Punjab, Haryana, Kerala, Maharashtra and partially in Uttar Pradesh.

With detariffing, all insurers are now focusing on retail. What is the business mix at present and what are your targets?

Retail, at present, constitutes 55 per cent of our total premium. We plan to grow our retail portfolio to 65 per cent this year. As you are aware, corporate business is shrinking with competition getting tougher. The future for general insurers will be in retail. So we will be concentrating in rural areas.

Reliance General is quoting a low premium of Rs 999 for Rs 1 lakh health insurance cover at a time when public sector insurers are raising rates, including exclusions and capping charges allowed. Would you be able to service and honour a large number of claims?

Insurance is a volume game. We have sold 1.5 lakh policies in the last three months. How many policies have all the companies sold during the same period? Our policy is very easy to get. For people below 45 years, there is no medical formality.

People don’t have to wait for the policy or the TPA cards. Everything is given over the counter. I have collected Rs 35 crore premium by selling health policies. I am sure that by the end of the year, we will collect Rs 300 crore of health insurance premium as there is a heavy demand for this product.

I will create volumes and insurance business is like that. Besides, a majority of the policies sold are for a higher sum insured. By managing false claims, losses are contained and increase in penetration (volumes) ensures profits.

How will Reliance General ensure low claims?

We have a dedicated claims minimisation team to ensure that policies are not sold to people likely to make claims within months. Through TPAs, we have a tie-up with 5,000 hospitals. TPAs bargain and negotiate with hospitals.

Fees and charges for various diseases are fixed. We will soon be introducing a ‘gatekeeper’ concept for large policies. We will engage doctors who would advise the insured on various aspects.

The doctors (gatekeepers) would ensure that the insured are admitted to hospitals where charges are lower and also advise them on tests required and specialists to be consulted. This will eliminate the chances of healthcare providers submitting inflated bills.

You have also been quoting aggressively to bag large corporate accounts. Won’t this impact your profitability?

My growth in corporate business is only 6 per cent, while the overall growth rate is 232 per cent in the last two months. If I am quoting aggressively in getting corporate accounts, then why is my corporate business not growing?

I have lost so many corporate accounts because I could not match rates quoted by other insurers. Since we are growing, people feel we are quoting aggressively.

Also, now we have to give a statement to the Irda every three months. According to our board mandate, the solvency should not be less than 1.8 times against the Irda norm of 1.5 per cent.

How much of your risks do you reinsure?

General Insurance Corporation is our treaty leader with 60 per cent reinsurance support. As you are aware, 15 per cent is the mandatory cession that goes to GIC. You retain 5 per cent and for the remaining 20 per cent, we go for facultative reinsurance. In the retail business, we retain 20 per cent and reinsure 80 per cent.

Source: Business Standard