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
Wednesday, August 8, 2007
Saturday, August 4, 2007
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
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
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
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
Friday, August 3, 2007
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
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
Subscribe to:
Posts (Atom)
