National Insurance Company (NIC) is in the process of an elaborate overhaul of its business processes to take on competition in the deregulated general insurance market.
Working on the prescriptions of consultants Price Waterhouse Coopers (PwC), the nationalised major is working on product and distribution led strategies with a projected target of Rs 4,500 crore premium collection in 2008-09, a roughly 12% growth.
As part of the restructuring, the company has relocated a few offices in Mumbai and Kolkata. It had hired PwC to work on its business re-engineering initiative last year.
Sharing some of the company's key initiatives this year, V Ramasaamy, NIC chairman and managing director, told DNA Money, "There are a host of recommendations from PwC, which we have started adopting in our processes as per our convenience. We are striving for a 25-30% growth in health insurance as part of the retail initiative.
Various such initiatives would include selling cheap flat and house insurance at discounted rates for which we are preparing sales campaigns targeting flat owners."
There will be a distinct focus on corporate clients this year. NIC has selected a few regional offices in Mumbai, Delhi, Chennai, Kolkata and Hyderabad to deal exclusively with corporate clients who pay annual premiums in the range of Rs 25-50 lakh.
"Cross selling of our products with our agency force will be significant this year." Ramasaamy said. "We have projected that 20% of the business should come from agents this year from 9-10% till now. The potential available in bancassurance is huge and the focal point would be encouraging agents to go to banks and drive businesses."
Following a PwC recommendation, NIC has introduced a centralised claim settlement system. As a pilot, it has started the process with one of its offices in Kolkata. This exercise, according to the chairman, has halved the time for settlement of motor claims from 40 days to 20 days.
The second-largest general insurance company by premium income and market share, NIC mopped up Rs 4,030 crore of premium in the financial year 2007-08, registering a growth of 5.7%.
"In 2007-08, the decline in insurance rates was lower than anticipated, down by almost 60-70%. We do not expect rates to come down any further this year," Ramasaamy said.
FY08 was a tough year for general insurers, as the free-pricing regime saw heavy discounting. Growth in premium collections fell at most companies as the sector grew just 12%.
In FY 08, NIC saw its premium from fire decline 22% to Rs 377 crore from Rs 481 crore the previous year. Motor insurance premium increased 6.6% to Rs 2,143 crore.
Owing to increase in rates, health premium grew 46% to Rs 685 crore, contributing close to 15% of the portfolio mix.
How has FY 09 year been so far?
"This year started on a good note with a 15.7% growth in April," Ramasaamy said. "We were able to clinch a group mediclaim in Andhra Pradesh and good support from bancassurance."
Source: DNA Money
Friday, May 23, 2008
Wednesday, May 21, 2008
NEW REINSURERS IN THE GULF TURN UP THE HEAT ON GIC
The oil boom has resulted in billions of dollars flowing into reinsurance, creating new capacity in the Middle East, which will provide stiff competition to General Insurance Corporation (GIC). GIC has had a leading position in the Afro-Asian region.
Speaking to ET, GIC chairman Yogesh Lohiya said that in the past 8-9 months alone, four reinsurance companies have come up in the Gulf region. Each of these companies has a capital of over $500 million, which gives them enormous capacity to provide reinsurance support. According to Lohiya, the emergence of new capacity will have an impact on GIC’s reinsurance business.
“These companies are willing to go wherever there is business. While there are many companies which have a level of comfort with GIC, there are insurers who are always looking for lower price and higher commission,” he added. Lohiya said that although reinsurance prices were down, reinsurers could not keep rejecting business merely because international prices are low. GIC or GIC Re, as the company now refers itself, is the national reinsurer with whom all companies need to compulsorily reinsure. However, the mandatory reinsurance requirement is being gradually diluted and is expected to be waived in the long term.
In the Middle East, petro dollars are fuelling growth in construction activity, which is boosting demand for insurance and reinsurance. Only last week, the largest Islamic reinsurance company in the world opened operations in Dubai. The firm, ACR ReTakaful Holdings, was promoted jointly by Dubai Group, Malaysian Khazanah Nasional and Singapore-based Asian Reinsurance. ACR ReTakaful Holdings was set up with a paid-up capital of one billion dirhams ($300 million).
Traditionally, GIC’s inward reinsurance business has been from developing countries in the Afro-Asian region. These were from insurance companies, which were too small for players in European markets to take notice of. Also, since the European markets had limited knowledge of the risks, the prices tended to be higher.
The softness in the reinsurance market is providing added impetus to the vigorous competition the domestic market is seeing, post-detariffication. According to Lohiya, because of the drastic fall in rates, most lines of business have seen a reduction in premium. “Were it not for the motor third-party liability, premium for many companies would have been lower,” said Lohiya. According to Lohiya, it is difficult to forecast when the soft cycle will end.
Although recent calamitous events — the cyclone in Myanmar, and earthquake in China — have not resulted in major insured losses, the events have reminded reinsurers of the weather risks in the region. Meanwhile, GIC is exploring opportunities outside property insurance. The corporation has for long been eyeing reinsurance for the life insurance business. It has recently held talks with Hannover Re to have a life reinsurance business in India. Hannover Re, one of the large reinsurers, is eyeing a presence in India.
Source:
Mayur Shetty, Mumbai
The Economic Times
Speaking to ET, GIC chairman Yogesh Lohiya said that in the past 8-9 months alone, four reinsurance companies have come up in the Gulf region. Each of these companies has a capital of over $500 million, which gives them enormous capacity to provide reinsurance support. According to Lohiya, the emergence of new capacity will have an impact on GIC’s reinsurance business.
“These companies are willing to go wherever there is business. While there are many companies which have a level of comfort with GIC, there are insurers who are always looking for lower price and higher commission,” he added. Lohiya said that although reinsurance prices were down, reinsurers could not keep rejecting business merely because international prices are low. GIC or GIC Re, as the company now refers itself, is the national reinsurer with whom all companies need to compulsorily reinsure. However, the mandatory reinsurance requirement is being gradually diluted and is expected to be waived in the long term.
In the Middle East, petro dollars are fuelling growth in construction activity, which is boosting demand for insurance and reinsurance. Only last week, the largest Islamic reinsurance company in the world opened operations in Dubai. The firm, ACR ReTakaful Holdings, was promoted jointly by Dubai Group, Malaysian Khazanah Nasional and Singapore-based Asian Reinsurance. ACR ReTakaful Holdings was set up with a paid-up capital of one billion dirhams ($300 million).
Traditionally, GIC’s inward reinsurance business has been from developing countries in the Afro-Asian region. These were from insurance companies, which were too small for players in European markets to take notice of. Also, since the European markets had limited knowledge of the risks, the prices tended to be higher.
The softness in the reinsurance market is providing added impetus to the vigorous competition the domestic market is seeing, post-detariffication. According to Lohiya, because of the drastic fall in rates, most lines of business have seen a reduction in premium. “Were it not for the motor third-party liability, premium for many companies would have been lower,” said Lohiya. According to Lohiya, it is difficult to forecast when the soft cycle will end.
Although recent calamitous events — the cyclone in Myanmar, and earthquake in China — have not resulted in major insured losses, the events have reminded reinsurers of the weather risks in the region. Meanwhile, GIC is exploring opportunities outside property insurance. The corporation has for long been eyeing reinsurance for the life insurance business. It has recently held talks with Hannover Re to have a life reinsurance business in India. Hannover Re, one of the large reinsurers, is eyeing a presence in India.
Source:
Mayur Shetty, Mumbai
The Economic Times
CHANDIGARH SELECTED FOR NEW HEALTH SCHEME ‘NIRMAYA’
The National Trust, Ministry of Social Justice and Empowerment, New Delhi, has selected Chandigarh, as one of the 10 centres, for the implementation of a new health insurance scheme – Nirmaya.
The scheme will cater to the health insurance of persons suffering from autism, cerebral palsy, mental retardation and multiple disabilities.
The Government Institute for Mentally Retarded Children in Sector 32, Chandigarh, which has been appointed as the State Nodal Agency Center (SNAC) is in the process of receiving applications for the scheme.
Source:
Chandigarh
The Indian Express
The scheme will cater to the health insurance of persons suffering from autism, cerebral palsy, mental retardation and multiple disabilities.
The Government Institute for Mentally Retarded Children in Sector 32, Chandigarh, which has been appointed as the State Nodal Agency Center (SNAC) is in the process of receiving applications for the scheme.
Source:
Chandigarh
The Indian Express
INSURANCE CLAIM CANNOT BE DENIED DUE TO DROWNING IN POOL
A company cannot deny an accident insurance policy claim to a man who had died due to drowning in a swimming pool, the National Consumer Commission has said.
"In our view, in the present case, the death caused to the insured is an accidental death as it was not natural and that the insured did not intend to die by drowning," Commission President Justice M B Shah said.
The apex consumer panel noted that as per the terms of policy, the insurance company was to pay the claims, if the insured sustained any bodily injury resulting solely and directly from accident caused by "external, violence and visible means".
"Violent means included any external, impersonal cause, such as drowning or inhalation of gas or even undue exertion on the part of the assured," the Commission Bench also comprising member Rajyalakshmi Rao explained. "In such cases, the death is not due to internal cause and that any cause which is not internal must be external. But this does not mean that the injury must be external," the Commission said, referring to the English laws as most of the companies had borrowed their forms of policy from there.
Holding repudiation of the claim as "totally unjustified", the Commission asked the National Insurance Company Ltd (NICL) to pay Rs 25 lakh to Chennai resident Padma Ramanathan, wife of deceased with an interest of 12 percent.
N Ramanathan, a parter in a Chartered Accountants firms, who obtained a personal accident insurance policy for one year period between June 1996 to 1997, had died within one month while swimming at Madras Gymkhana Club.
The NICL had denied his claims saying that since Ramanathan had not died due to bodily injury -- solely and directly -- caused by the external and visible means, so the claim did not come within the purview of the policy.
Source:
New Delhi
The Economic Times
"In our view, in the present case, the death caused to the insured is an accidental death as it was not natural and that the insured did not intend to die by drowning," Commission President Justice M B Shah said.
The apex consumer panel noted that as per the terms of policy, the insurance company was to pay the claims, if the insured sustained any bodily injury resulting solely and directly from accident caused by "external, violence and visible means".
"Violent means included any external, impersonal cause, such as drowning or inhalation of gas or even undue exertion on the part of the assured," the Commission Bench also comprising member Rajyalakshmi Rao explained. "In such cases, the death is not due to internal cause and that any cause which is not internal must be external. But this does not mean that the injury must be external," the Commission said, referring to the English laws as most of the companies had borrowed their forms of policy from there.
Holding repudiation of the claim as "totally unjustified", the Commission asked the National Insurance Company Ltd (NICL) to pay Rs 25 lakh to Chennai resident Padma Ramanathan, wife of deceased with an interest of 12 percent.
N Ramanathan, a parter in a Chartered Accountants firms, who obtained a personal accident insurance policy for one year period between June 1996 to 1997, had died within one month while swimming at Madras Gymkhana Club.
The NICL had denied his claims saying that since Ramanathan had not died due to bodily injury -- solely and directly -- caused by the external and visible means, so the claim did not come within the purview of the policy.
Source:
New Delhi
The Economic Times
DETARIFFING DEALS DOUBLE BLOW FOR GENERAL INSURERS
General insurers are faced with double whammy in terms of reduced premiums and fall in commission from reinsurance portfolio as the fallout of detariffing, which has removed all pricing controls on non-life insurance.
As it is — insurance premium is falling, but now reinsurers are paying lower commission to insurance companies, which would ultimately affect their bottomolines, said an insurer.
The price-war in post complete detarriffing from January this year has led to huge discounts on fire, engineering and other general insurance policies resulting in the premium reduction as high as 70-80 percent from earlier instalments.
With this, reinsurers have also reduced their commission to insurers for the cover they sought from the reinsurance companies. As per normal practice, a major chunk of the premium collected goes for reinsurance on which the insurers earn commission. Since in many instances, large risks are being placed at low premiums, reinsurers are reducing commissions to insurance companies upon the renewal of their treaties, the insurer added.
Source:
New Delhi, Deccan Herald
As it is — insurance premium is falling, but now reinsurers are paying lower commission to insurance companies, which would ultimately affect their bottomolines, said an insurer.
The price-war in post complete detarriffing from January this year has led to huge discounts on fire, engineering and other general insurance policies resulting in the premium reduction as high as 70-80 percent from earlier instalments.
With this, reinsurers have also reduced their commission to insurers for the cover they sought from the reinsurance companies. As per normal practice, a major chunk of the premium collected goes for reinsurance on which the insurers earn commission. Since in many instances, large risks are being placed at low premiums, reinsurers are reducing commissions to insurance companies upon the renewal of their treaties, the insurer added.
Source:
New Delhi, Deccan Herald
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