Ram Informatics Ltd will be launching InsuranceOnline.com, a portal to cater to the needs of general public, insurance agents, brokers and other professionals. The portal would offer quick policy search, LIC forms, policy serving matters, value-added services such as policy marketing aspects besides updated information on insurance industry, according to a release. —
Source: The Hindu Business Line
Wednesday, July 18, 2007
Public sector non-life insurers comply with management ratio
Bangalore, July 16 For the first time this decade, public sector non-life insurance companies have complied with the statutorily prescribed management ratios.
The ratio is 19.5 per cent for non-life insurers under section 40C of the Insurance Act of 1938. The management ratio is a prescribed cost cap on wages, dividends and commissions. Till 2005-06 this ratio ranged between 23 and 25 per cent. But in 2006-07, PSU insurers have sharply pared it down to about 19.1 per cent. This was despite the high dividend payouts to its shareholders, entirely government.
Reliable sources said that the PSU insurers had largely managed to contain their costs during the year. However, in the case of private sector, the ratios are still well over 25 per cent with focus on business acquisition. For the private sector, this is the last year of the Insurance Regulatory and Development Authority’s six-year reprieve for complying with the management ratio. PSU insurers contained all the three components of management expenses during the financial year. The growth in business volumes also helped. Business volume growth was higher than the cost of acquisition, one of the crucial components of the management ratio.
Last year gross premiums grew 9 per cent over 2005-06. Wages grew less than five per cent during the year, the sources said. This was largely due to the absence of wage revisions in the industry since 2003. Besides, low inflation also ensured that the indexed components of salaries stayed at about 5 per cent. Moreover, the two rounds of voluntary retirement scheme effected in four PSUs had ensured a reduction in manpower.
The sources said that the profits realised from cost containment were ploughed back to bolster net worth. This had a favourable impact on solvency. As a result, New India Assurance Company reported a solvency ratio (the excess of the value of assets and capital over the insured liabilities) of close to 5 times, well above the IRDA’s prescribed figure of 1.5 times. For other PSU insurers like Oriental, it is about 2.2 times.
Source: The Hindu Business Line
The ratio is 19.5 per cent for non-life insurers under section 40C of the Insurance Act of 1938. The management ratio is a prescribed cost cap on wages, dividends and commissions. Till 2005-06 this ratio ranged between 23 and 25 per cent. But in 2006-07, PSU insurers have sharply pared it down to about 19.1 per cent. This was despite the high dividend payouts to its shareholders, entirely government.
Reliable sources said that the PSU insurers had largely managed to contain their costs during the year. However, in the case of private sector, the ratios are still well over 25 per cent with focus on business acquisition. For the private sector, this is the last year of the Insurance Regulatory and Development Authority’s six-year reprieve for complying with the management ratio. PSU insurers contained all the three components of management expenses during the financial year. The growth in business volumes also helped. Business volume growth was higher than the cost of acquisition, one of the crucial components of the management ratio.
Last year gross premiums grew 9 per cent over 2005-06. Wages grew less than five per cent during the year, the sources said. This was largely due to the absence of wage revisions in the industry since 2003. Besides, low inflation also ensured that the indexed components of salaries stayed at about 5 per cent. Moreover, the two rounds of voluntary retirement scheme effected in four PSUs had ensured a reduction in manpower.
The sources said that the profits realised from cost containment were ploughed back to bolster net worth. This had a favourable impact on solvency. As a result, New India Assurance Company reported a solvency ratio (the excess of the value of assets and capital over the insured liabilities) of close to 5 times, well above the IRDA’s prescribed figure of 1.5 times. For other PSU insurers like Oriental, it is about 2.2 times.
Source: The Hindu Business Line
ICICI Pru plans healthcare in UP
ICICI Prudential Life Insurance, in a bid to tap the potential in healthcare sector, has tied up with private hospitals and nursing homes of Uttar Pradesh.
Speaking to Business Standard, Pranav Mishra, senior vice-president, ICICI Prudential life insurance, said, “The Company at present has tied up with about 60 hospitals and nursing homes in the state to offer its hospital care plan. This will cover major cities like Lucknow, Allahabad, Kanpur, Varanasi and Agra.”
Hospital care is structured to ensure that customers receive a pre determined insurance amount for each procedure or hospitalisation, ranging from room charges, doctor and surgery fees and other incidental expenses.
“Our research revealed that many customers believe that existing health insurance policies would not cover all the expenses related to hospitalisation or surgical procedures, leaving them with a considerable financial burden,” Mishra said.
“This is compounded by the concern that these policies are not long term and that once a claim is made, it might not be renewed or will attract a higher premium. Our policy will fill this gap in health insurance and also offer customers control over their health spends,” he said.
The company already has six products in health insurance space and now has introduced hospital care to cover over 1,000 surgical procedures and hospitalisation.
“We have networked with 3,000 hospitals across the country for cashless facilities,” added Mishra. The company at present has 55 branches in 45 locations, in the state.
In the next one year, 5-6 more branches will be opened in the state. These will be centered in B category cities.
Source: Business Standard
Speaking to Business Standard, Pranav Mishra, senior vice-president, ICICI Prudential life insurance, said, “The Company at present has tied up with about 60 hospitals and nursing homes in the state to offer its hospital care plan. This will cover major cities like Lucknow, Allahabad, Kanpur, Varanasi and Agra.”
Hospital care is structured to ensure that customers receive a pre determined insurance amount for each procedure or hospitalisation, ranging from room charges, doctor and surgery fees and other incidental expenses.
“Our research revealed that many customers believe that existing health insurance policies would not cover all the expenses related to hospitalisation or surgical procedures, leaving them with a considerable financial burden,” Mishra said.
“This is compounded by the concern that these policies are not long term and that once a claim is made, it might not be renewed or will attract a higher premium. Our policy will fill this gap in health insurance and also offer customers control over their health spends,” he said.
The company already has six products in health insurance space and now has introduced hospital care to cover over 1,000 surgical procedures and hospitalisation.
“We have networked with 3,000 hospitals across the country for cashless facilities,” added Mishra. The company at present has 55 branches in 45 locations, in the state.
In the next one year, 5-6 more branches will be opened in the state. These will be centered in B category cities.
Source: Business Standard
PNB insurance foray hits roadblock
Punjab National Bank’s (PNB) proposed foray into life insurance with the UK-based Principal Financial Group, UK Paints (India) and Vijaya Bank has hit a roadblock, with some of the partners wanting to withdraw from the venture.
Berger Paints, which was to own 32 per cent in the new venture - ‘Principal PNB Life Insurance Compan - is considering withdrawing from the venture, while Vijaya Bank, with a 12 per cent stake, is weighing its options. Principal Financial holds the remaining 26 per cent stake , the maximum that a foreign partner can hold.
PNB, which has 30 per cent stake in the joint venture, said the venture needs to be reviewed.
“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 K C Chakrabarty, chairman and managing director, PNB.
In May, the Insurance Regulatory and Development Authority (Irda) declined to clear the R1 application of Principal PNB Life insurance and had sought clarifications. The clearance is basically an in-principle approval by the Irda to the proposed terms of an insurance company.
“We had asked for certain clarifications on which they have still not got back to us,” said an Irda official.
According to sources, the Irda had raised concerns on the participation of UK Paints in the venture. The Kolkata-based paints company was considering withdrawing from the venture.
The company’s officials could not be reached for comments.
Rajan Ghotgalkar, country head of Principal Financial in India, said: “We are reviewing the entire strategy. There is no talk about exiting. The issues could be long-term or short–term. We are having strategic discussions and are hopeful of resolving the issues . Currently, we want to put all the issues behind us and get the R1 licence.”
PNB’s Chakrabarty, however, said: “The company has still not been formulated. The entire company may be up for a rethink. The shareholding and constitution of the company may change.”
The four partners had entered into a memorandum of understanding way in April 2004 to roll out an insurance company.
“There could be issues like equity stakes. However, these should be sorted out,” said one of the partners.
The sources said Vijaya Bank which has only a 12 per cent stake may want to increase its stake in the venture.
Earlier, Andhra Bank, had pulled out of a life insurance venture led by Bank of India (BoI) and Dai-Ichi Mutual Life Insurance Company of Japan, as it was offered only a 23 per cent stake.
BoI was to hold 51 per cent with Dai-Ichi having 26 per cent stake. Union Bank of India subsequently replaced Andhra Bank as a partner with an identical stake in the venture but with the option of scaling up its stake along with the foreign partner.
The bank (Union Bank) will have the option of increasing its stake once the FDI (foreign direct investment) norms are liberalised allowing the foreign partner to scale up its stake from 26 per cent to 49 per cent,” said a senior BoI official.
Source: Business Standard
Berger Paints, which was to own 32 per cent in the new venture - ‘Principal PNB Life Insurance Compan - is considering withdrawing from the venture, while Vijaya Bank, with a 12 per cent stake, is weighing its options. Principal Financial holds the remaining 26 per cent stake , the maximum that a foreign partner can hold.
PNB, which has 30 per cent stake in the joint venture, said the venture needs to be reviewed.
“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 K C Chakrabarty, chairman and managing director, PNB.
In May, the Insurance Regulatory and Development Authority (Irda) declined to clear the R1 application of Principal PNB Life insurance and had sought clarifications. The clearance is basically an in-principle approval by the Irda to the proposed terms of an insurance company.
“We had asked for certain clarifications on which they have still not got back to us,” said an Irda official.
According to sources, the Irda had raised concerns on the participation of UK Paints in the venture. The Kolkata-based paints company was considering withdrawing from the venture.
The company’s officials could not be reached for comments.
Rajan Ghotgalkar, country head of Principal Financial in India, said: “We are reviewing the entire strategy. There is no talk about exiting. The issues could be long-term or short–term. We are having strategic discussions and are hopeful of resolving the issues . Currently, we want to put all the issues behind us and get the R1 licence.”
PNB’s Chakrabarty, however, said: “The company has still not been formulated. The entire company may be up for a rethink. The shareholding and constitution of the company may change.”
The four partners had entered into a memorandum of understanding way in April 2004 to roll out an insurance company.
“There could be issues like equity stakes. However, these should be sorted out,” said one of the partners.
The sources said Vijaya Bank which has only a 12 per cent stake may want to increase its stake in the venture.
Earlier, Andhra Bank, had pulled out of a life insurance venture led by Bank of India (BoI) and Dai-Ichi Mutual Life Insurance Company of Japan, as it was offered only a 23 per cent stake.
BoI was to hold 51 per cent with Dai-Ichi having 26 per cent stake. Union Bank of India subsequently replaced Andhra Bank as a partner with an identical stake in the venture but with the option of scaling up its stake along with the foreign partner.
The bank (Union Bank) will have the option of increasing its stake once the FDI (foreign direct investment) norms are liberalised allowing the foreign partner to scale up its stake from 26 per cent to 49 per cent,” said a senior BoI official.
Source: Business Standard
Tuesday, July 17, 2007
Insurers want more premium in cash
HYDERABAD/MUMBAI: The reporting norms for insurers to track individuals who are using unaccounted money to buy insurance policies are up for review. The move comes less than a year after the government made it mandatory for insurers to comply with the guidelines on anti-money laundering.
Money laundering is a practice of moving illegally-acquired cash through the financial system to make it legal. Authorities in India have shifted their focus to insurance since the life industry has been driven by investment products rather than protection policies in recent times. Insurers are now required to identify income sources and also report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND), a nodal government agency that tracks money laundering attempts and then probes them further.
Top FIU-IND officials met up with both general and life insurers earlier this month to take stock of their compliance levels. The results revealed a mixed bag with some insurers yet to come on board. Insurers, on their part, say there are a few glitches in implementing these guidelines. State-owned insurers, for instance, want the Rs 50,000 limit for accepting cash payments raised as rural customers do not have access to banking facilities.
According to the chairman of the insurance regulator, IRDA, C S Rao, any change in the rules will need the finance ministry’s approval. From FIU-IND’s perspective, a higher limit for premium payments in cash would mean adding more cash transactions in the economy. “Our goal is to encourage all stakeholders in the financial sector to move towards a cheque economy as this would help curb money laundering,” said a senior official.
Insurers also have to report integrally-connected cash transactions exceeding Rs 10 lakh a month to FIU-IND. Officials say there have been instances where individuals buy multiple policies and pay premium in cash. In many cases, the integrally-connected cash transactions are a tad short of Rs 10 lakh a month and thus escape from being reported.
The guidelines now in vogue require insurers to report suspicious transactions, including those which could be ‘structuring deals’. These are deals which are artificially carved into several transactions to avoid reporting requirements.
Some insurers, particularly state-owned companies, say their existing IT systems are not equipped to identify if a proposer has simultaneously made applications in various offices across the country. All insurance companies are now putting in place a software to identify multiple policies by the same customer.
“It is important to know this not just from the asset liability management guidelines point of view, but also for a company’s own risk management” says Deepak Satwalekar, MD, HDFC Standard Life. An insurer should know whether the proposal he has on hand is a single proposal for Rs 10 lakh sum insured or whether it is a part of multiple proposals that add up to Rs 1 crore on the life of the same individual, he adds.
It is tough to keep an audit trail of such transactions unless insurers report these as suspicious transactions. Indeed, some of them have done that. The regulator had, in fact, told insurers to look at lower thresholds for cash transactions when it issued guidelines for anti-money laundering last year.
A section within the government reckons that there is a case for lowering the threshold for premium payments in cash. Mutual funds, for instance, do not accept cash from investors. “If mutual funds can do it, why not insurance companies,” argues an official.
According to S V Mony, secretary-general , Life Insurance Council, the insurance industry is not opposed to anti-money laundering guidelines per se. But too many administrative procedures may be a deterrent to the sector’s growth. The photograph of the policyholders, for instance, is a must under the know-your-customer norms, though an exception has been made for micro-insurance. Insurers are finding it tough to comply with this requirement as well.
Source: Economic Times
Money laundering is a practice of moving illegally-acquired cash through the financial system to make it legal. Authorities in India have shifted their focus to insurance since the life industry has been driven by investment products rather than protection policies in recent times. Insurers are now required to identify income sources and also report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND), a nodal government agency that tracks money laundering attempts and then probes them further.
Top FIU-IND officials met up with both general and life insurers earlier this month to take stock of their compliance levels. The results revealed a mixed bag with some insurers yet to come on board. Insurers, on their part, say there are a few glitches in implementing these guidelines. State-owned insurers, for instance, want the Rs 50,000 limit for accepting cash payments raised as rural customers do not have access to banking facilities.
According to the chairman of the insurance regulator, IRDA, C S Rao, any change in the rules will need the finance ministry’s approval. From FIU-IND’s perspective, a higher limit for premium payments in cash would mean adding more cash transactions in the economy. “Our goal is to encourage all stakeholders in the financial sector to move towards a cheque economy as this would help curb money laundering,” said a senior official.
Insurers also have to report integrally-connected cash transactions exceeding Rs 10 lakh a month to FIU-IND. Officials say there have been instances where individuals buy multiple policies and pay premium in cash. In many cases, the integrally-connected cash transactions are a tad short of Rs 10 lakh a month and thus escape from being reported.
The guidelines now in vogue require insurers to report suspicious transactions, including those which could be ‘structuring deals’. These are deals which are artificially carved into several transactions to avoid reporting requirements.
Some insurers, particularly state-owned companies, say their existing IT systems are not equipped to identify if a proposer has simultaneously made applications in various offices across the country. All insurance companies are now putting in place a software to identify multiple policies by the same customer.
“It is important to know this not just from the asset liability management guidelines point of view, but also for a company’s own risk management” says Deepak Satwalekar, MD, HDFC Standard Life. An insurer should know whether the proposal he has on hand is a single proposal for Rs 10 lakh sum insured or whether it is a part of multiple proposals that add up to Rs 1 crore on the life of the same individual, he adds.
It is tough to keep an audit trail of such transactions unless insurers report these as suspicious transactions. Indeed, some of them have done that. The regulator had, in fact, told insurers to look at lower thresholds for cash transactions when it issued guidelines for anti-money laundering last year.
A section within the government reckons that there is a case for lowering the threshold for premium payments in cash. Mutual funds, for instance, do not accept cash from investors. “If mutual funds can do it, why not insurance companies,” argues an official.
According to S V Mony, secretary-general , Life Insurance Council, the insurance industry is not opposed to anti-money laundering guidelines per se. But too many administrative procedures may be a deterrent to the sector’s growth. The photograph of the policyholders, for instance, is a must under the know-your-customer norms, though an exception has been made for micro-insurance. Insurers are finding it tough to comply with this requirement as well.
Source: Economic Times
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