Non-acceptance by some insurers; Regulator opts for step-by-step approach
Bangalore, July 19 Implementation of Solvency II guidelines prescribed by the International Association of Insurance Supervisors (IAIS) is likely to be delayed in the country.
The Insurance Regulatory and Development Authority (IRDA) made it clear that it was no hurry to implement Solvency II guidelines.
Its Chairman, Mr C.S. Rao, said: “We are in no hurry to immediately implement the guidelines.”
The IAIS final guidelines released in February this year address material risks that insurers face — underwriting risk, market risk, credit risk and operational risk.
Solvency margin is the excess of the value of assets and capital that non-life insurers have to maintain over the insured liabilities.
Solvency regime
Under the current solvency regime, insurers are expected to maintain a 150 per cent margin over the insured liabilities. Solvency II however, does not imply any change in the margin. The new guidelines make the solvency margins dynamic.
But according to industry sources, the regulator’s balking at migration to Solvency II guidelines has more to do with the ground situation in the country. This implies that some of the insurers are simply not ready for migration. The situation is somewhat identical to the situation faced by the banking sector’s migration to the Basel II capital standards. Solvency II is the insurer’s equivalent of the Basel II.
Step-by-step approach
Instead, the insurance regulator has opted for step-by-step approach. As the first step, life insurers are now expected to file their audited reports on solvency compliance on a quarterly basis effective from this financial year. For the non-life sector, the IRDA has indicated that the reporting would be done on a half-yearly basis, though this is likely to begin only after the completion of tariff deregulation.
However, the public sector Oriental Insurance Company Chairman and Managing Director, Mr M. Ramadoss, said: “We are ready for moving into half-yearly reporting. This is not an issue. It is up the regulator to decide the timeframe.”
Complete transition
The migration though would still be short of a complete transition to Solvency II. This is because the asset valuation is currently done on a year-end basis. A half-yearly solvency regime would imply that the asset valuations would also have to be on similar terms.
“Yes valuation of investments would have to be done on a half-yearly basis. Equities could be done on a half-yearly basis. For Government securities we need a regulatory direction,” Mr Ramadoss said.
Government securities are still valued on a book value basis by the insurers.
Moreover, some of the western countries that have implemented advanced management information solutions (MIS) are also yet to fully accept the IAIS guidelines, the sources added.
The absence of such MIS in the Indian insurance industry is a major stumbling block for migration to new solvency guidelines.
Only the private sector is in readiness for the migration, though they account for only about 30 per cent of the domestic market.
Source: The Hindu Business Line
Friday, July 20, 2007
Rajan Raheja, Australia’s QBE setting up insurance co
Mumbai, Jul 19 The Rajan Raheja Group (RRG) and the Australian QBE Insurance Group (QBE) have signed a joint venture agreement to establish a general insurance company in India.
QBE will hold a 26 per cent equity stake in the joint venture company, while Prism Cement Ltd, an RRG company, will hold the remaining 74 per cent stake.
QBE will leverage its expertise in technical insurance functions as well as process and systems.
RRG will assist in distribution and other areas through its knowledge of the Indian market, said a press release.
QBE is Australia’s largest international general insurance and reinsurance group. It has offices in 45 countries and is listed on the Australian Stock Exchange with a market capitalisation of approximately $23 billion.
Lineage
The company traces its origins back to North Queensland Insurance Company Ltd, founded in Australia in 1886.
Interestingly, its antecedent companies had insurance operations in India for close to 50 years until the sector was nationalised in 1972.
The Rajan Raheja Group has interests in a range of industries including cement, automotive and industrial batteries, real estate development, ceramic tiles, ready-mixed concrete, life insurance, asset management, retailing, cable television, publishing, petrochemicals and software.
“This entry into the general insurance market in India is part of QBE’s ongoing strategy of product and geographic diversification and strengthens RRG’s interest in the financial services sector, which currently includes shareholdings in ING Vysya Life Insurance and ING Mutual Fund,” said the release.
The licensing of the company is subject to approval by the Insurance Regulatory and Development Authority and other applicable approvals.
According to the release, Mr Frank O’Halloran, QBE’s Group Chief Executive Officer, said: “We are delighted to partner with the Rajan Raheja Group which has extensive interests in India and a track record of successful joint ventures with foreign partners.”
Source: The Hindu Business Line
QBE will hold a 26 per cent equity stake in the joint venture company, while Prism Cement Ltd, an RRG company, will hold the remaining 74 per cent stake.
QBE will leverage its expertise in technical insurance functions as well as process and systems.
RRG will assist in distribution and other areas through its knowledge of the Indian market, said a press release.
QBE is Australia’s largest international general insurance and reinsurance group. It has offices in 45 countries and is listed on the Australian Stock Exchange with a market capitalisation of approximately $23 billion.
Lineage
The company traces its origins back to North Queensland Insurance Company Ltd, founded in Australia in 1886.
Interestingly, its antecedent companies had insurance operations in India for close to 50 years until the sector was nationalised in 1972.
The Rajan Raheja Group has interests in a range of industries including cement, automotive and industrial batteries, real estate development, ceramic tiles, ready-mixed concrete, life insurance, asset management, retailing, cable television, publishing, petrochemicals and software.
“This entry into the general insurance market in India is part of QBE’s ongoing strategy of product and geographic diversification and strengthens RRG’s interest in the financial services sector, which currently includes shareholdings in ING Vysya Life Insurance and ING Mutual Fund,” said the release.
The licensing of the company is subject to approval by the Insurance Regulatory and Development Authority and other applicable approvals.
According to the release, Mr Frank O’Halloran, QBE’s Group Chief Executive Officer, said: “We are delighted to partner with the Rajan Raheja Group which has extensive interests in India and a track record of successful joint ventures with foreign partners.”
Source: The Hindu Business Line
Apollo Hospitals to launch health insurance scheme
Jointly with Germany-based DKV Health Insurance
Apollo Hospitals will be launching, on August 8, a health insurance scheme jointly with Germany-based DKV Health Insurance with an initial corpus of Rs 100 crore, said Dr Prathap C. Reddy, Chairman, Apollo Hospitals, here on Thursday.
To be inaugurated by Union Finance Minister, Mr P. Chidambaram, the scheme would bring in new and innovative packages with a focus, especially on school children, he said in an exclusive interview to Business Line .
Speaking further, Dr Reddy said that Apollo Hospitals has been trying to build chest pain centres across the country where primary care would be ensured.
The centres, to be manned by doctors from Apollo, would be coming up within a radius of 50 miles from a major hospital identified in an area where further treatment would be possible.
Hundred centres have been planned to be established before September this year, he mentioned. He underscored the need to bring about awareness on preventive check up.
Asked on global expansion plans of Apollo, Dr Reddy said that they were in the look out for acquisitions in South East Asia and China and were not in a hurry, as right pricing needs to be ensured for better and cost effective delivery of health care.
Referring to Madurai Apollo Speciality Hospitals, he said that plans are underway to make the 300 beds plus hospital, a Centre of Excellence in Cardiology and Cancer together with research. Lands have been identified but are to be finalised yet, for the proposed cancer institute to be established in association with CBCC, US, in the city, he added.
Source: The Hindu Business Line
Apollo Hospitals will be launching, on August 8, a health insurance scheme jointly with Germany-based DKV Health Insurance with an initial corpus of Rs 100 crore, said Dr Prathap C. Reddy, Chairman, Apollo Hospitals, here on Thursday.
To be inaugurated by Union Finance Minister, Mr P. Chidambaram, the scheme would bring in new and innovative packages with a focus, especially on school children, he said in an exclusive interview to Business Line .
Speaking further, Dr Reddy said that Apollo Hospitals has been trying to build chest pain centres across the country where primary care would be ensured.
The centres, to be manned by doctors from Apollo, would be coming up within a radius of 50 miles from a major hospital identified in an area where further treatment would be possible.
Hundred centres have been planned to be established before September this year, he mentioned. He underscored the need to bring about awareness on preventive check up.
Asked on global expansion plans of Apollo, Dr Reddy said that they were in the look out for acquisitions in South East Asia and China and were not in a hurry, as right pricing needs to be ensured for better and cost effective delivery of health care.
Referring to Madurai Apollo Speciality Hospitals, he said that plans are underway to make the 300 beds plus hospital, a Centre of Excellence in Cardiology and Cancer together with research. Lands have been identified but are to be finalised yet, for the proposed cancer institute to be established in association with CBCC, US, in the city, he added.
Source: The Hindu Business Line
Insurers get core equity leeway
Insurance companies will have more infrastructure firms in their equity investment portfolio soon.
At a meeting with the finance ministry, the Insurance Regulatory and Development Authority (Irda) has agreed to allow insurance companies to invest in equities of non-dividend-paying infrastructure companies.
Currently, an insurance company is allowed to invest in an infrastructure company only if the latter pays dividend not less than 4 per cent for at least seven out of nine immediately preceding years.
“Relaxation will enable investment in such companies on the basis of project risk assessment and developers’ risk-rating,” the Irda said.
The Irda is also planning to allow insurance companies to invest in highly-rated mortgage-backed securities and securitised assets with underlying infrastructure assets. The regulator may also allow insurance companies to invest in equity derivatives to hedge risks.
An executive of a public sector insurance company said life insurance companies looked for long-term investments for better asset-liability management. The relaxation in norms would give them more avenues to invest in long-term equity instruments.
“Mortgage-backed securities are like debt papers and give a minimum assured return. This instrument is suitable for general insurance companies, whose funds are short-term in nature,” a senior executive of Oriental Insurance Company said.
Source: Business Standard
At a meeting with the finance ministry, the Insurance Regulatory and Development Authority (Irda) has agreed to allow insurance companies to invest in equities of non-dividend-paying infrastructure companies.
Currently, an insurance company is allowed to invest in an infrastructure company only if the latter pays dividend not less than 4 per cent for at least seven out of nine immediately preceding years.
“Relaxation will enable investment in such companies on the basis of project risk assessment and developers’ risk-rating,” the Irda said.
The Irda is also planning to allow insurance companies to invest in highly-rated mortgage-backed securities and securitised assets with underlying infrastructure assets. The regulator may also allow insurance companies to invest in equity derivatives to hedge risks.
An executive of a public sector insurance company said life insurance companies looked for long-term investments for better asset-liability management. The relaxation in norms would give them more avenues to invest in long-term equity instruments.
“Mortgage-backed securities are like debt papers and give a minimum assured return. This instrument is suitable for general insurance companies, whose funds are short-term in nature,” a senior executive of Oriental Insurance Company said.
Source: Business Standard
Tata AIG to ramp up operations in TN, Kerala
Tata AIG General Insurance Company Limited (Tata AIG), a joint venture between the Tata group and American International Group, Inc. (AIG), is to open more outlets in Kerala and Tamil Nadu.
V Vendhan, head - branch operations, Tata AIG, on the sidelines of opening a distributor office at Trichy recently said the company planned to open extension branches at Salem and Erode before month end in Tamil Nadu.
Similarly, in Kerala it would open branches at Thiruvananthapuram, Palakad, Thrissur and Kozhikode of which at least two will come up by August end.
The southern region comprising Kerala, Tamil Nadu and Puducherry collected about Rs 70 crore premium in the year 2006-07 and for the current fiscal, this is expected to touch Rs 80 crore, added Vendhan.
Source: Business Standard
V Vendhan, head - branch operations, Tata AIG, on the sidelines of opening a distributor office at Trichy recently said the company planned to open extension branches at Salem and Erode before month end in Tamil Nadu.
Similarly, in Kerala it would open branches at Thiruvananthapuram, Palakad, Thrissur and Kozhikode of which at least two will come up by August end.
The southern region comprising Kerala, Tamil Nadu and Puducherry collected about Rs 70 crore premium in the year 2006-07 and for the current fiscal, this is expected to touch Rs 80 crore, added Vendhan.
Source: Business Standard
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