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SBI General (SBI-G) insurance company plans to introduce an ‘inherent defects’ insurance policy for real estate developers. HDFC Ergo launched their similar product last November. As per the Real Estate Regulation and Development Act (RERA), 2016, builders would be liable to pay for any structural flaws in their buildings as detected within five years, from the date of purchase of the property. The ‘inherent defects’ policy will cover issues discovered because of poor workmanship, structural defects for example. “For years the product was available abroad, but now with the new real-estate regulations coming in, demand from builders has grown. That is the immediate trigger,” says Puneet Sahni, Assistant Vice-President of Product Development at SBI-G. The 5-year inherent defects product would be launched in the next 6 to 8 weeks and has received the Insurance Regulatory and Developmental Authority of India’s (IRDAI) approval. “RERA says builder says builder should be making-good of any loss because of inherent defects within five years of handing over the possession to the end-buyer. At this point in time, the product is only for residential buildings. Given that it’s a new product and new risk, once we build our book and gain some experience, we will extend it to commercial properties,” said Sahni. From the time of construction till the time the project is completed, SBI-G would be conducting around eight technical inspections, through a competent technical and investigative agency, to check the quality of construction.
A digital branch service named ‘Mosambee’ was recently launched by Bajaj Allianz Life Insurance. It is a handheld device to work as a mobile branch and assists customers with services such as obtaining premium payment certificates, procuring account statements, paying renewal premiums, checking claim status, knowing fund value, locating branches, etc. It also provides SMS services for updating PAN, Aadhaar details, updating mobile number and email IDs. . Customers can pay their renewal premium through all modes such as cheque, DD, credit and debit cards, online payment. The e-wallet option shall also be available soon. The company has also recently launched virtual chat assistant ‘BOING’, which is available on the company’s Facebook page, apart from their website.
The Central government is looking at allowing 100% foreign direct investment (FDI) in insurance broking. A committee comprising senior officials from finance ministry and department of industrial policy and promotion (DIPP) will review the idea, a senior government official said. At present, up to 49% FDI is allowed under the automatic route in the insurance industry, including insurance broking companies. “The proposal has been there for a long time. There were some reservations from the insurance regulator, so now it is being deliberated at the highest level,” the official said. The industry seems divided on the issue. A senior executive with an insurance broking firm said brokers are akin to financial intermediaries and under the existing FDI policy, full foreign investment is allowed for intermediaries. However, there is some opposition from existing brokers, many of whom started operations from 2003, the executive said. “They don’t want to be overtaken by their foreign partners.” He said Insurance Brokers Association of India had also raised concerns over increasing the limit.
The Kalyan crime branch unit of Thane police arrested six people, including two Mumbai based doctors and a Thane civic-run crematorium employee, for allegedly preparing death certificates of people who were alive and claiming insurance. The police said the mastermind, Kalyan resident Chandrakant Shinde (65), in connivance with Tejpal Mehrol, a sweeper at Thane Municipal Corporation’s Mumbra crematorium, and Dr Abdul Siddiqui (38) and Dr Imran Siddiqui (41), who issued at least 10 bogus death certificates, claimed compensation of Rs 80 lakh from two private insurance firms. They also managed to procure death certificates from the TMC of three people who live in Andhra Pradesh and sought Rs 50 lakh as payout, said the police. The others arrested were Chandrakant’s son Narayan and daughter-in-law Laxmi, who were the beneficiaries. The police said other beneficiaries were Chandrakant’s relatives who were unaware about the insurance money claimed on their names as most of them are illiterate. Investigators are also probing the role of the insurance company officials and TMC employees. The police said Chandrakant, who used to sell cutlery items in a local trains, started the scam in 2015 and roped in Mehrol. Explaining the modus operandi, the police said Mehrol would fill TMC forms required to get a death certificate. He would give Dr Abdul and Dr Imran Rs 2,000-Rs 10,000 to give a fake doctor’s certificate showing the cause of death as ‘natural’. Using the fake doctor’s death certificate, Mehrol would then get a death certificate from the civic health department and hand it over to Chandrakant, who would claim the money from the insurance company. Chandrakant had also claimed Rs 12.9 lakh by submitting a ‘death certificate’ of his daughter-in-law Laxmi. Narayan was the nominee in her policy, said the police. The racket came to light when Thane resident Venkat Shinde, who is Chandrakant’s nephew, checked his life insurance policy document and found his death certificate instead. He immediately called up the insurance firm and was shocked to learn that Rs 4.8 lakh payout had already been given. He then approached the Kalyan crime branch unit. Senior inspector Sanju John formed a team under assistant police inspector Santosh Shevale, who questioned Chandrakant as he had bought the policy for Venkat. John said: “Chandrakant confessed to the crime and spilled the beans on Mehrol and the doctors.”
Allianz Global Corporate and Specialty (AGCS) announced setting up a new India reinsurance branch through which it plans to further expand its presence in the Asia-Pacific region. AGCS India Branch will initially offer facultative, proportional and non-proportional reinsurance solutions in areas such as property, liability, marine, financial lines, construction and engineering and in energy. In particular, it is interested in large-scale construction projects under the Bharatmala initiative, sectors such as electronics, automotive and high tech communication industries as well as sectors like cyber and initial public offerings. "We had filed the R1 application with IRDAI, which was granted in November 2017 and AGCS India went operational from September 15, 2018," said CB Murali, CEO, AGCS India branch, adding that the reinsurer has "fairly ambitious plans" for the next five years. AGCS had set up an embedded desk in Bajaj Allianz in 2013 and had commenced writing Indian commercial business as well as for some global clients too. "The offshore business will move to India in 2019," said Murali, adding that AGCS has brought $127 crore of capital as required by IRDA. It expects to break even in India in the next three to five years.
Allianz Global Corporate and Speciality announced setting up a new India reinsurance branch through which it plans to further expand its presence in the Asia-Pacific region. Allianz India Branch will initially offer facultative, proportional and non-proportional reinsurance solutions in areas such as property, liability, marine, financial lines, construction and engineering and in energy. In particular, it is interested in large-scale construction projects under the Bharatmala initiative, sectors such as electronics, automotive and high tech communication industries as well as sectors like cyber and initial public offerings. "We had filed the R1 application with IRDAI, which was granted in November 2017 and AGCS India went operational from September 15, 2018," said CB Murali, CEO, AGCS India branch, adding that the reinsurer has "fairly ambitious plans" for the next five years. AGCS had set up an embedded desk in Bajaj Allianz in 2013 and had commenced writing Indian commercial business as well as for some global clients too. Murali noted that over 22 per cent of the reinsurer's global clients businesses in India were protected under its international reinsurance program and accounts for 48 per cent of the global premiums from Allianz Multinational Programs. This accounts for nearly $15 billion volume of business is serviced through India. Another $ 10 million of Indian business inherited out of Singapore while some of the domestic aviation business is written from AGCS's London office. "The offshore business will move to India in 2019," said Murali, adding that AGCS has brought $127 crore of capital as required by IRDA. It expects to break even in India in the next three to five years. Mark Mitchell, Regional CEO, AGCS Asia Pacific said the insurer will take up selective business due to concerns of over pricing and profitability in writing some commercial lines.
Successive governments have launched crop insurance schemes for farmers but they have not been able to push the benefits among the farmers. Many state government have implemented the agriculture insurance schemes for farmers which have met with different degrees of success. In order to really benefit the farmers the governments will have to focus more on creating awareness among farmers through training about the benefit of the scheme at Krishi Vikas Kendra and rural NGOs. Provision should be made to improve the infrastructure of all rural banks with internet connectivity which will help farmers to enroll under the scheme. This will help government to achieve target penetration of crop insurance to 50 percent in three years.
Bajaj Allianz General Insurance, the second-largest player and most-profitable general insurer in the industry, posted a 27 per cent increase in net profit at Rs. 921 crore for FY2017-18, compared to Rs. 728 crore in the previous year. The gross written premium (GWP) of the company increased by 23.4 per cent to Rs. 9,487 crore in FY18. Underwriting profit soared more than four-fold to Rs. 293 crore, against Rs. 64 crore in the previous year. Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance Co, said this was the result of its consistent riskbased pricing and prudent underwriting philosophy. Acknowledging an improvement in the overall market, he said that the general insurance industry, on its part, has been more careful about price discipline in the past year. He said that the company’s experience with crop insurance had been positive so far. The company will neither be underweight nor overweight on any sector, he emphasised. The company’s combined ratio improved to 92.3 per cent in FY18 against 96.8 per cent during the previous year. Its solvency ratio rose to 276 per cent against a regulatory minimum of 150 per cent, signifying its sound claims-paying ability. Focus areas Tapan said that there would be continued focus on retail business lines such as motor, health and property insurance, along with increasing footprint in newer geographies across the country. The company has also begun implementing a vertical sales structure for greater customer connect, he said. A number of initiatives for digitisation, use of chatbots and risk-based pricing, have been done to improve customer service as well as profitability, he said. Interestingly, the company has not infused any capital for a decade and accumulated profits constitute 94 per cent of its net worth.
Bharti AXA General Insurance, registered a maiden profit of Rs 3.3 crore in the first six months of the current fiscal 2018-19. This company recorded a 38 per cent increase in gross written premium in the first-half this fiscal to Rs 1,087 crore (Rs 788 crore). Bharti AXA General Insurance, which started its national operations in 2008, had posted profits in each of the two quarters this fiscal, it is learnt. “We are pleased to be on the path of profitability and this has been an outcome of superior risk selection, improved operating efficiencies and our razor-sharp focus on automation and digitisation. These efforts have resulted in posting maiden profits for the company in the first half of financial year 2018-19 and will help drive the growth momentum,’’ Sanjeev Srinivasan, Managing Director and CEO, Bharti AXA General Insurance said. This general insurer’s combined ratio, a measure of profitability that takes into account claims and expenses as a proportion of premiums, improved by over 15 percentage points to 116.5 per cent in the half-year to 2018-19 from 131.6 per cent in the same period of 2017-18. At the same time, its loss ratio has reduced to 77.8 per cent in the first half of the current fiscal from 85.7 per cent in the same period a year ago, while the expense ratio witnessed a significant dip at 38.7 per cent in the half-year of 2018-19 against 45.9 per cent in the corresponding period of 2017-18. “We are focused on building sufficient scale to face market competition. Emphasis on channel and segment diversification, digitisation, better expense management, prudent product pricing and customer-centricity will help the company boost growth. We expect to maintain the growth momentum while continuing to focus on profitability and superior risk selection,’’ he added.
MAHESH BALASUBRAMNIAM, MD AND CEO EXPECTS KOTAK GENERAL INSURANCE TO CLOSE THE YEAR WITH A TURNOVER OF RS. 180-200 CRORE AND ABOUT 60% OF THE BUSINESS HAS COME FROM THE BANK CUSTOMERS. POINTING OUT THAT BUSINESS WAS MORE ABOUT ‘CLAIMS SETTLEMENT’ RATHER THAN ‘PREMIUM GATHERING’, MAHESH SAID THAT THE KGI WOULD AIM AT KEEPING THE COMBINED RATIO (A PERFORMANCE METRIC THAT INCLUDES CLAIMS, ACQUISITION COST AND OPERATING COSTS) UNDER CONTROL AND BRINGING IT TO BELOW 100 % AT THE EARLIEST. MAHESH SAYS THE FOCUS WILL BE PREDOMINANTLY ON MOTOR AND HEALTH, THE TWO MAIN LINES OF BUSINESS IN THE GENERAL INSURANCE INDUSTRY WHICH IS GROWING AT THEIR FASTEST PACE. THE EMPHASIS IS ON HAVING A SIMPLE SUITE OF PRODUCTS THAT ARE EASY TO UNDERSTAND AND FACILITATE EASE OF BUSINESS, HE SAID. HE WAS CATEGORICAL THAT THE COMPANY WOULD AVOID CROP INSURANCE, A SEGMENT THAT SAW THE MAXIMUM GROWTH DURING THE PAST YEAR. IT REMAINS UNCLEAR WHETHER THE CLAIMS EXPERIENCE BEARS OUT THE VIABILITY OF THE PORTFOLIO FOR THE INDUSTRY. KGI WOULD, THEREFORE, WAIT A BIT MORE, HE SAID. THERE HAS BEEN A CAPITAL INFUSION OF RS. 40 CRORE IN THE FIRST QUARTER OF THIS FISCAL TAKING THE CAPITAL BASE OF THE COMPANY TO RS. 175 CRORE AND THIS SHOULD COVER THE REQUIREMENTS FOR THE IMMEDIATE FUTURE, HE SAID.
The forthcoming Budget may make a provision for Rs 4,000 crore capital infusion for public sector general insurance companies to revamp their capital. According to sources, the Department of Financial Services has sought Rs 4,000 crore in the Budget for fund infusion in three insurance companies, National Insurance Company, Oriental Insurance Company and United India Insurance Company. Depending on the capital that the Budget provides, individual allocations will be made, sources added. As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 crore and a market share of around 35 per cent. Their combined net worth is Rs 9,243 crore, with total employee strength of around 44,000 spread over 6,000 offices.
After the initial public offerings of General Insurance Re and New India Assurance last year, the government is planning to reduce its stake further in the two companies with offers for sale later this year. Additionally, the Centre’s plans to merge National Insurance, Oriental Insurance and United India Insurance and list the merged entity on the bourses has effectively been put on the backburner for now, with officials admitting that just merging the three companies will be a time-consuming process.
According to Tajinder Mukherjee, CMD, National Insurance increasing customer expectations has been changing the landscape of general insurance products in India. The change in consumer preferences is likely to drive product innovation in the general insurance industry in India. “Super flexible insurance solutions such as use-based insurance and telematics-based where we can have options such as pay as you drive or pay how you drive are in the offing. There is also increasing talks on devising products that can be customised based on individual behaviour,” said Mukherjee. The general insurance industry has grown at a CAGR of nearly 13 per cent in the past five to six years, and is currently estimated to be close to Rs. 1,50,000 crore. Given the kind of growth of the economy and supported by a rising middle-class population, the industry is likely to touch Rs. 4-lakh crore by 2025.
Cholamandalam MS General Insurance Company Limited (Chola MS), a joint venture between the Murugappa Group and Mitsui Sumitomo Insurance Group, Japan has achieved a Gross Written Premium of Rs 4103 crore during FY 2017-18. This is the third consecutive year the company has reported a GWP growth in excess of 25 per cent, according to a company statement. Retail has been the dominant growth strategy with Motor, Health and Crop insurance contributing over 80 percent of the premiums. Its profit before tax grew 17 per cent at Rs. 347 crore, supported by strong investment income of Rs. 489 crore, with an investment corpus of more than Rs. 6,300 crore.
The West Bengal Fire department is making fire audit compulsory for high-rises, shopping malls, market complexes and business establishments of similar nature once in a year. Malls and marketplaces might also lose their right to do business if they do not conduct the audit every year. "All the high-rise buildings, malls and marketplaces need to do fire audit every year else their business license will be cancelled. I shall go through the present act and if there is no provision, then the government will bring in a new act for the same," state Fire minister Firhad Hakim said in the state Assembly. "A number of high-rises, shopping malls and the like have in-built firefighting system. They will have to conduct fire drills every three months and get the clearance certificate from the Corporation or the local civic bodies. All the fire safety equipment will have to be functional," he reiterated. "There have been 4,629 incidents of fire in the state till date this year. Recently, a team went to Paris for training. We will be imparting specialised training to our firefighters so that they can work more effectively to control the flames." In a stride towards transparency in the issuance of fire certificates, the minister said that the entire system will become online and people will get their certificates within one month. "Even if it is rejected, the Fire department will provide clarification online so that people can apply in a proper manner. There will be a map at the entrance of a mall or marketplace detailing out the source of the water, exit route and other important information so that the firefighters can get a clear idea of the complex or area," he added. The minister also announced that all the fire stations will be connected through a GPS system so that if there is any distress call at 101, the nearest fire station can respond immediately.
Insurance Companies are designing policies to cover individual insolvency professionals against charges of sabotage and negligence during the time bound resolution of bankruptcy cases. The insolvency resolution professional is appointed as the CEO in charge of a company by lenders during the bankruptcy proceedings at dedicated insolvency courts. Many default cases are now being tried under the insolvency and bankruptcy Code (IBC), and there are mounting concerns that IRPs may be exposed to litigation by erstwhile promoters and managements. IRPs are typically attached to accounting firms. Insurance brokers are in touch with insolvency professionals who have received some work or the other in some form .They have made representations to the committees or creditors(CoC) to make the policy compulsory for all IRPs. “Insurance brokers are in touch with 750 IRPs who have received some work or the other in some form”, said Amit Agarwal, director, JLT development insurance brokers.” We have made representation to CoCs to make the policy compulsory for all IRPs.” “We have made representations to CoCs to make the policy compulsory for IRPs. If the Coc could bear the cost of the policy, individual IRPs would have the policy in hand. IRPs are covered for $2 million to $30 million” said Agarwal. The policy available in the market covers directors’ and officers' liability and professionals indemnity arising as a result of errors and omissions. Insurance brokers have brought in policies to provide cover to crisis responses, such as instances of kidnapping and demands for ransom.
Demand for purchasing insurance policy against online cyber attack is rising rapidly. Recently Cosmos Co-operative Bank, had a sizeable online fraud and caught the bank unaware. Banks are getting them insured to safeguard against the risk of Cyber attacks. It has been learnt that on an average private sector banks are incurring $10-50 million, and one public sector bank bought a cover of $100 million. In the last year, more than 3,000 online banking frauds were reported. According to industry estimates, one cyber attack happens every 10 minutes with most cybercrimes reported in Maharashtra and Uttar Pradesh. “Indian companies are increasingly seen opting for cyber insurance to get aspects like forensic costs, cyber extortion costs and other first-party expenses covered,” said Manoj Kumar AS, senior vice-president, Global Insurance Brokers. “There has been a growth in the number of policies by almost 25% cumulatively over the past four years and we expect this figure to go up by another 30% post implementation of Personal Data Protection Bill.” The obligations of the proposed bill by Justice BN Srikrishna will lead to the data liability cover with companies taking adequate cyber risk cover and enhancing the existing ones, experts feel. The ministry of information technology recently released the Personal Data protection Bill of 2018 in line with the European Union’s GDPR. “The bill has come at the time of major international events such as the recent breach by a British consultancy firm, the WannaCry and Petya attacks, banking data theft and at the advent of strong international privacy laws,” said Kumar.
DHFL General Insurance has launched a customisable online motor insurance policy which offers customers 19 add-on options based on their specific needs. The product known as COCODrive, offers many nonstandard add-ons such as enhanced owner, occupant and paid driver personal accident cover. It also offers personal accident cover that can go up to Rs.35 lakh. “Other add-on options include EMI Protector and Outstanding Loan Protector for cars on loan, which will help in vehicle financing in case of accidents during the loan period,” the insurer said. Additionally, apart from providing coverage across India, the product also covers neighbouring countries such as Nepal, Bhutan, Pakistan, Bangladesh, Sri Lanka and Maldives.
Launches a mobile protection plan to insure screen damages, for an amount as low as Rs 150 Get Flat 20% of the invoice amount in case of screen damage Zero Deductible, Zero Depreciation Benefits also include Worldwide coverage, IMEI linked cover Digit Insurance has partnered with India’s largest ecommerce platform Flipkart, to launch a Mobile protection plan intended for people who purchase smartphones on Flipkart’s platform. Digit insurance has designed this product keeping in mind the gap between the mobile policies currently available in the market and customer expectations. The objective is to make the insurance claim process simple for customers. And for this they have come up with a disruptive model of insurance, an insurance product for mobile screen damage only with pre-decided fixed benefit, a first for an insurance company to introduce in India, for smartphones. The key feature of this product is that if a screen damage happens, customers get this pre-decided amount i.e. flat 20% of the invoice value of the phone. Key Product highlights: Flat 20% of the invoice value of the phone First time in India, a Zero deductible plan Zero Depreciation – During claim, invoice value of the phone is considered & not current market value i.e. no depreciation is accounted for No Activation – the phone is covered from the time it’s delivered, no lengthy process or app download required for activation IMEI linked cover – the phone is covered, no matter who uses it Worldwide coverage – Delhi, Rio, New York, no matter where the damage happens. Speaking about the new product, Jasleen Kohli, Chief Distribution Officer, Digit Insurance said, “One of the biggest areas of discontent people have with insurance companies is claims- the effort and time it takes. And given that we say that ‘We love claims’, we had to work out a product that lives up to it. The beauty of this product is that it reduces the claim processing time drastically which adds to the convenience for the customers. ZERO bills required in this process which is otherwise a process full of frictions. Also, it makes sense for us as an insurance company, as it reduces our operational costs.” The other process which fastens the claims process is their remote self-diagnosis process, wherein whenever a screen damage happens, customers can shoot the external damages to the phone and share it with Digit. After approval, the fixed claim amount is processed. This has proved to be working for Digit till now: 77% of the claims get done through their Video/Self-diagnostics app and 94% of the mobile claims have been approved within 24 hours of customers’ doing the self-inspection on their smartphones. Highlighting the importance of the partnership, Prakash Sikaria, Senior Director, Monetization, Flipkart said, “Flipkart offers extended warranty and device insurance across mobile and other electronic devices. At Flipkart, we strongly believe in our “Customer First” approach and are always finding ways to reduce customer pain points while their purchasing online. We identified a major gap in the consumer experience of claiming insurance for mobile phone damages and derived at a proposition to solve this. Digit helped us in beautifully converting this proposition to a plan that significantly reduces the hassles involved in a claim process.” About Digit: Digit is a new General Insurance company started by Kamesh Goyal, who has been associated for long in the Insurance space in India, and is backed by Fairfax Group, which is amongst the largest General Insurance companies in the world. With a mission to ‘Make Insurance, Simple’, Digit is reimagining products and redesigning processes to provide simple and transparent insurance solutions that matter to consumers. Digit is building a technology driven platform that can offer customized products at reduced cost and provide a great customer service. Digit is headquartered in Bangalore and the team is a great mix of Industry veterans who know what’s working and new age technology specialists who know what could be improved. Digit started with a capital base of around INR350 crore which is one of the highest, that any insurance company has started with. It is also one of the fastest to market, having launched products across 3 categories (Motor, Travel, Personal accessories) within the first 12 months of starting operations.
Digit Insurance has raised Rs 315 crore in a second round of funding from Fairfax Holdings. This fund infusion will help the company to expand its footprint across the country to smaller towns and strengthen its tech platform as well. In first round of investment, Prem Watsa owned Fairfax’s had put in Rs 350 crore in 2017. Fairfax is the largest shareholder of Digit. Digit Insurance is a subsidiary of GoDigit Infoworks which has raised the funds, while it has channelised Rs 310 crore into Digit Insurance, Rs 5 crore has been invested in the parent company. Digit is planning to make buying and claiming insurance products simple and completely digitised for Indian consumers. The company has come up with innovative products like jewellery insurance, insurance against flight delays and others. “We are looking at major expansion opportunities for our product line as well as our locations of operation and staff strength, looking at the growth path we felt the need for this second round of funding,” said Kamesh Goyal who is the chief executive officer and the other major shareholder after Fairfax in the company. Goyal said that the locations that they are targeting are spread across towns like Siliguri, Ranchi, Patna, Gauhati in the east, Nagpur in Maharashtra, Coimbatore in Tamil Nadu and Srinagar in Jammu and Kashmir among other places. “Though our product line is mainly digitised, we have some physical presence in these locations mainly for sales support and relationship management,” he said. “We have 525 people at present and we wish to scale it up by another 200 by September this year. The company which claims to settle claims within 10 to 20 minutes over a phone call, is targeting to reduce the time taken to seven minutes. Over mobile, the company is settling around 20 claims per day which they intend to scale up to around 100. With around 12 partnerships with corporate entities like Flipkart, Amazon, Paytm, Sterling Resorts and 1500 retail agents across India, Digit is already selling around 6000 policies per day.
Digit Insurance, has launched a pet insurance product in the Indian market in partnership with Vetina, a US-based company. “Initially, it will be a reimbursement product and over period of time we want it to go more and more on cashless,” Kamesh Goyal, Founder and Chairman, Digit Insurance told. ‘Vetina’s Pawtect Plan offers three different plans divided under categories — Silver, Gold and Platinum — that covers major illness, accidental injury cover, third party liability cover (any bodily injury or damage to third party property) depending on the plan one chooses to buy. “We have started only with dogs. Our research shows that in India cats are not that popular. Over a period of time we will start offering cover for cats also,” he said. Goyal highlighted that pet insurance is already popular in UK, Australia and Canada. Also, recent social trends suggest that more people above 60 years have begun keeping pets at home. “People are now ready to spend more on their pets and this is reflected in the increased number of good hospitals for pets, spas for dogs and more branded pet food players,” he noted.
The digitisation hits insurance field and some of the country’s biggest insurers are moving to a digital-first approach, reducing the dependence on agents for selling an insurance product. Edelweiss Tokio, one of the insurance entrants, thinks of itself not as an insurance company but a technology company in the insurance business and that makes all the difference“, said the Chief Retail Officer Anup Seth. He added that the company has adopted a completely digital policy even for its offline channels such as agents and company distributors. “Digital has not only given the customer the power to access information as per his convenience. In addition, the use of digital and analytics tools like AI have helped improve the recommendations and enhance customer experience,” he said. “Offline businesses are depended on the agents’ competency and how he sees the product in his mind. Digital has taken that arbitrage away by giving him the clear idea. Agents no longer end up selling what they want to sell,” said an insurance industry professional. “The list of prospects is run through an algorithm; it tells you which five of the 40 you put are more likely to buy insurance if they are told a certain story. We have started to run a predictive model. However, this can be done only when the agent has information like estimated income range, age, life stage, etc,” said Manik Nangia, chief digital officer at Max Life Insurance. Now-a-days the companies are approaching digitisation in two ways – intending to increase online sales as well as focus on making their field executives digitally. A large variety algorithm and machine learning tools are used to predict what a customer might want before expressing their desire.
Edelweiss General Insurance is offering a policy rider where the second-year cover is free if there are no claims. The premium on the policy is in lines with other health covers. But what differentiates it is the free renewal feature available with the purchase of an add-on rider for 25% additional premium. “The feedback we got was that many young people are reluctant to buy health insurance as they feel the premium they pay is a loss if they do not claim,” said CEO Anup Rau. The company is still working on what incentives can be offered for subsequent years of no claim. “We are open to looking at different combinations,” said Rau. Under the policy, a 30-year old can get a Rs 5-lakh mediclaim for a base premium of Rs 5,549. An additional Rs 1,387 will get him a Health 241 rider, which entitles the policyholder to a free second year cover if there are no claims in the first year. Together with GST, the total payout comes to Rs 8,185. Besides the free renewal, the policy has other features such as covering treatment under Aayush (Ayurvedic, Homeopathic and Unani medicines) and bariatric treatment, which is excluded in many policies. It also covers the policy holder for any medical expenses, should he choose to donate an organ. “We have 18 procedures for which we have tied up with several hospitals where the discharge time is zero and he does not have to wait for approval,” said Rau. He added that both the list of procedures and the number of hospitals are growing.
Marathwada, which is notorious for farmer suicides had pinned hopes on the new crop insurance scheme – Pradhan Mantri Fasal Bhima Yojana (PMFBY) to save its farmers. But it has been a complete disappointment. Farmers of the region are in despair for they have not yet received the settlement for the crops lost in 2017, despite having paid the premium. The Kharif season in 2017 in Parbhani district of Marathwada was covered by Reliance General. Farmers had lost their crop because of monsoon failure in that season. A farmer activist, Maulik Kadam, District President of Shetkari Sanghatana told that a total of 2,79,000 farmers in the Parbhani district paid Rs.19.27 crore as premium for soybean in the kharif 2017 to Reliance General. It was only after farmers of the district joined hands and took the problem to the District Agriculture Department and the Collector in May 2018 and went on a hunger strike that Reliance General settled the claims of soybean farmers in Sonpeth, Palam, Sailu and Purna taluks. However, till today, farmers from two large taluks - Parbhani and Jinthur, have not received even partial settlement of their dues. There are many gaps in the framework of PMFBY which is being exploited by insurance companies. The government needs to plug these for ensuring effective implementation of the scheme. The role of the Revenue Department in CCEs is important and there should be a mechanism to check that it carries out its role satisfactorily.
Farmers are still unaware of the details of the Pradhan Mantri Fasal Bhima Yojana even as the government and insurers are trying to increasing the penetration in the non-loanee segment, said climate risk management firm WRMS. However, in many states, high satisfaction has been seen among the enrolled farmers and reasons for the same were proper implementation in terms of assistance to farmers, involvement of the insurance company and the high percentage of insured farmers receiving payouts, it said. The PMFBY, launched in 2016, is the most important tool today to insure agriculture against climate and other risks. The scheme which is an improvement over the previous agri insurance schemes not only provides subsidised insurance to the loanee farmers but also offers it to non-loanee farmers. “In a recent survey done in eight states (Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Chhattisgarh, Nagaland, Bihar and Maharashtra) by BASIX, it was found that only 28.7 per cent of the sampled farmers are aware about PMFBY,” Weather Risk Management Services Pvt Ltd (WRMS) said. Per the survey’s findings, farmers complain that the process for enrolment as non-loanee farmers is difficult. They have to obtain sowing certificates and land records from the local revenue department, which is time consuming. Further, bank branches and customer service centres are not always available for enrolment as they are pre-occupied with other works, it showed. “Farmers are not told why they have received or not received claims and what is the basis for the claim calculations,” it noted. According to the survey, 40.8 per cent gathered information from formal sources such as the agriculture department, insurance companies or customer service centres and rest were informed by specific channels creating awareness. From those who were aware of the scheme only 12.9 per cent could get their crop insured of which 77 per cent were linked to loan. “41.3 per cent of the farmers cited lack of necessary documents as the major challenge to get insurance and the other challenges were small land holdings (21.4 per cent), lack of assistance from government officials (26 per cent) and inefficiency of online systems (17.3 per cent),” the WRMS said about the findings of the survey.
Fasal Bima Yojana launched in the 2016-17 kharif (summer sown crop) season, has reported a 15% decline in coverage of farmers in its second year (2017-18). The prime reason for this decline is said to be the loan waiver announced by several states last year. According to the data shared by the government in Parliament, farmers' enrolment declined from 57.3 million in 2016-17 to 48.8 million in 2017-18 with Karnataka, Rajasthan, Uttar Pradesh, Bihar and Maharashtra reporting substantial decline. Incidentally, four of these five states - Karnataka, Rajasthan, UP and Maharashtra - announced loan waiver schemes last year, affecting the spread of the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18. The agriculture ministry in its written response to a question in Rajya Sabha said, "This is mainly due to factors like announcement of debt waiver scheme in Maharashtra and Uttar Pradesh, farmers' perception of mitigated risk in 2017-18 which was a good monsoon year, de-duplication due to Aadhaar being made mandatory for coverage etc." Figures shared by the ministry in Parliament showed that overall premium and claims under PMFBY increased in 2017-18 compared to 2016-17 despite decline in enrolment. Gross premium increased from Rs 165 billion in kharif 2016 to Rs 195 billion in kharif 2017 while approved claims increased from Rs 104 billion to Rs 137 billion during the period.
The Finance Ministry said it is planning to come out with a share-sale offer of two recently listed PSU insurance companies — GIC and New India. The Department of Investment and Public Asset Management (DIPAM) invited expression of interest (EoI) from merchant bankers and selling brokers for managing the offer-for-sale of GIC and NIA.
The finance ministry will be holding a performance review meeting of PSU insurance companies, including the LIC. The exercise will also set the pace for consolidation, said a finance ministry official, adding that all the three insurers have already been directed to align their operations. The underwriting losses of PSU general insurance firms increased 43.89% to Rs. 15,591 crore in 2016-17, from Rs. 10,835 crore in the previous year. “We are hopeful that the firms will improve their performance, and we will be able to merge these companies in the next six months and after that we will look at listing,” he said. “This will also be an opportunity for these three firms to sit together and undertake a preparatory exercise for reorganization of offices and manpower,” said the above quoted finance ministry official, adding that it has been observed that traditionally there has been a high concentration of offices in certain areas in metro and other big cities. The government wants the general insurers to contain the under- writing losses. “We are evaluating all options as to how the combined entity can be strengthened given the losses of PSU firms have not come down significantly,” said the finance ministry official.
India loses at least Rs. 1,100 crore due to forest fires every year, says a new World Bank Report. The report, “Strengthening Forest Fire Management in India”, jointly prepared by the Ministry of Environment, Forest, and Climate Change (MoEFCC) and the World Bank says forest fires are today a leading cause of forest degradation in India. The report discusses policies on forest fire prevention and management (FFPM) at the national, state and local levels, underscoring the need for a comprehensive national policy and guidelines. It provides recommendations on five broad themes – policy, institutions and capacity, community engagement, technology, and data and information and looks at national and international best practices in FFPM. “Forest fires are a challenge across many countries. They lead to the loss of lives and livelihoods for people directly dependent on forest produce. This report discusses policies on forest fire prevention and management and underscores the need for better fire prevention practices and a well-equipped and trained workforce to fight fires,” said Junaid Ahmad, World Bank Country Director in India. “We are delighted to have this opportunity to work with the MoEFCC on this important agenda, and to contribute towards informing its National Action Plan on Forest Fire Prevention and Management in India.”
Union minister Nitin Gadkari on Thursday asked automakers to work towards having safer designs and explore possibility of use of silicon in tyres as part of efforts to reduce road accidents. “Automobile makers should come forward in the initiative for reducing road crashes. There should be research and innovation,” he said.
General insurers in India are facing challenges in implementing the Supreme Court order asking them to issue three-year and five-year insurance policies for new four-wheelers and two-wheelers, respectively. General insurers have recommended bifurcating the mandatory third-party insurance cover and the optional ‘own-damage’, or comprehensive insurance cover, which compensates for vehicle damage. According to sources the key challenge would be in pricing the long-term cover given current regulations and practices. Currently, insurance commission is paid up-front. Additionally, capital has to be set aside based on premium collected while the advance premium cannot be recognised as earnings. This will increase the capital requirements for non-life companies. The price of third-party cover is revised every year, depending on compensation awards in the previous year. Since awards go up every year the absence of annual revision would hurt insurers. Digit Insurance chairman Kamesh Goyal said, “On the one hand, the SC has asked insurers to ask for a PUC vehicles on Indian roads. Goyal has suggested that instead of putting the onus of enforcement on the insurance companies, insurers could pay the distribution charges to police, who could issue on-the-spot policies to those caught without mandatory cover. If insurance regulator IRDAI were to allow bifurcation of the motor insurance into a third-party and a stand-alone comprehensive cover, it would require extensive changes to the insurers’ IT systems. Additionally, companies said that getting the products in place and IT systems changed in one month will not be possible.
GIC Re has got an in-principle nod to create a new syndicate from Lloyd’s Franchise Board. The syndicate will enable GIC Re to broaden and diversify the group’s international portfolio. GIC Re has partnered with Ironshore’s Pembroke Managing Agency (Pembroke) to establish and manage the syndicate. Pembroke, a Liberty Mutual company, is a specialist provider of Lloyd’s, managing agency services to third parties and has a proven track record of guiding new entrants through the Lloyd’s approval process. Lloyd’s is the pre-eminent reinsurance market in the world with access to speciality risks that complement GIC Re’s existing lines of business. The combination of Pembroke’s speciality lines underwriting capability and GIC Re’s regional expertise will create mutually beneficial development opportunities for GIC Re, Pembroke and other participants in the Lloyd’s market, a statement said.
GIC Re has emerged as the 10th largest global reinsurer in the latest global ranking exercise by Standard & Poor's Munich Re. Swiss Re and Berkshier Hathway Re are the top three global reinsurers in the latest ranking of top 50 global reinsurers.
GIC Re, has reported net profit of Rs 672 crore for the quarter ended December 2017 against net loss of Rs 400 crore a year earlier, followed by better underwriting and lower claims. "Prudent underwriting, business diversification and focus on risk selection has helped report an increase in profit," said Alice Vaidyan, chairman at GIC Re. The company reported an underwriting loss of Rs 420 crore, down for the third quarter as it focused on prudent underwriting and hardening prices across lines. Its gross premium rose 8% in the quarter to Rs 8,869 crore. Crop insurance has become the third largest segment for general insurance industry on the back of crop insurance scheme by the government, said Vaidyan. The company reported combined ratio of 101 per cent for the nine months ended December, down from 105.9 per cent a year earlier. A decline in combined ratio - which is calculated summing the incurred losses and expenses and dividing the sum by the total earned premiums - indicates a rise in profitability. Return on equity improved to 15.9 per cent in the nine-month period, up from 4.8 per cent in the year-ago period. GIC Re has diversified geographically to grow business and profitability as well as to maintain a balanced portfolio of risks. For the third quarter, it paid claims worth Rs 6,000 crore where Rs 1,200 crore were towards crop insurance.
GIC Re posted a 63.8 per cent drop in its net profit to Rs. 513.84 crore for the second quarter of the fiscal due to higher underwriting losses. Its net profit stood at Rs. 1,419.11 crore as on September 30, 2017, and it had also reported a 98 per cent rise in net profit for the first quarter of the fiscal at Rs. 771.42 crore. GIC Re has also reported a near 29 per cent drop in net profit to Rs. 1,285.27 crore for the first half of the financial year 2018-19 as against a net profit of Rs. 1,809.22 crore a year ago. The re-insurer’s underwriting losses amounted to Rs. 2,264.88 crore for the July-September quarter of this fiscal, as compared with a profit of Rs. 703.74 crore in the same quarter a year ago. Its underwriting losses saw a sharp increase across almost all segments including motor, aviation, engineering, health and marine cargo. However, its gross premiums written rose 15.5 per cent to Rs. 8,325.95 crore for the quarter ended September 30, as against Rs. 7,209.61 crore for the same period of 2017-18. During the reporting quarter, its total income rose to Rs. 12,879.90 crore from Rs. 10,714.69 crore a year ago. “Other income includes forex gain of Rs. 164.87 crore for the half year ended September 30, 2018,” GIC said. It had a solvency ratio of 1.73 at the end of the reporting quarter, which is in line with 1.72 a year ago. It is also well above the minimum required solvency ratio of 1.5 times.
GIC Re's UK-based Lloyd's syndicate - GIC Syndicate 1947 - has received permission to commence operations from April 2018 in accordance with the Lloyd's agreed business plan. GIC Syndicate 1947 is the first Lloyd's syndicate to be backed solely by capital from an Indian reinsurance group. Pembroke, a Liberty Mutual Company which is a specialist provider of Lloyd's managing agency services will manage the GIC syndicate. In December 2017 Lloyd's Franchise Board granted in principle approval to GIC to create GIC Syndicate 1947. GIC has appointed Neil Attwood as the Active Underwriter for the syndicate. Pembroke's expertise in specialty lines coupled with GIC Re's underwriting and distribution capability in India and other global markets will further develop business opportunities for GIC Re, Pembroke and other participants in the Lloyd's market. Lloyd's is an insurance market with more than 50 leading insurance companies, with over 200 registered Lloyd's brokers.
Go Digit Insurance, has launched a pet insurance product in the Indian market in partnership with Vetina, a US-based company. “Initially, it will be a reimbursement product and over period of time we want it to go more and more on cashless,” Kamesh Goyal, Founder and Chairman, Digit Insurance told. With this launch, Digit is among a select group of private insurers offering pet insurance in the country. Goyal said that ‘Vetina’s Pawtect Plan, powered by Digit Insurance’ is now being offered as insurance for pet dogs. The product offers three different plans divided under categories — Silver, Gold and Platinum — that covers major illness, accidental injury cover, third party liability cover (any bodily injury or damage to third party property) depending on the plan one chooses to buy. “We have started only with dogs. Our research shows that in India cats are not that popular. Over a period of time we will start offering cover for cats also,” he said.
The government's plans for the merger of three general insurance companies to create one large entity seem to have hit a roadblock. The Department of Financial Services (DFS), which oversees the operations of insurance comnpanies, has written to the DIPAM not to proceed with the merger plan in haste and let it examine the proposal afresh and untangle complex operational issues first. The fresh impediment has already removed the merger plan from this year's disinvestment calendar prepared by the Department of Investment and Public Asset Management (DIPAM). Sources now say that with the Finance Ministry raising fresh concerns, it would be difficult for the merger plan to go through even next year when a new government comes in at the Centre. The government had announced the merger of three public sector general insurance firms: National Insurance Company, United India Insurance Company and Oriental India Insurance Company, in Budget 2018. The move was billed as the biggest ever merger in the insurance sector with the new entity having a valuation exceeding Rs 1 lakh crore. It intended to complete the exercise in FY19 itself. "The DFS is concerned that a merger without looking at the exercise from different angles could lead to problems for the new entity emerging from the coming together of three general insurance firms. Besides, there are also issues of further cutting losses and making operations of companies efficient and low cost. These have been highlighted by the DFS in its letter that virtually stalls the process and seeks more time to complete the merger," said an official source privy to the development. "The proposed merger of the three state-owned general insurance firms will happen only in the next fiscal now.
The government has held preliminary meetings to set in motion the proposed merger process of three state-owned general insurers, sources said. The proposal for merger of Oriental Insurance, National Insurance Company and United India Insurance was announced in the Budget for 2018-19. A couple of meetings have taken place but these are preliminary in nature, sources said. The roadmap for the merger is yet to be laid out by the government, they added. Finance Minister Arun Jaitley in the Budget speech had announced that National Insurance Company Ltd, United India Assurance Company Limited and Oriental India Insurance Company Limited would be merged into a single insurance entity and would be subsequently listed. The three insurers together collected a total premium of about Rs 44,000 crore in 2016-17 and their combined market share was close to 35 per cent in the general insurance industry. The merger of these three state-run insurers will lead to the creation of a mammoth non-life company and is expected to be a major contributor to the divestment target of Rs 80,000 crore set for the fiscal year 2018-19. The profitability of most general insurance companies including the state-owned ones has been under pressure owing to rising underwriting losses and higher claims.
The 2017-18 subsidy bill for the states and the Centre due to the Pradhan Mantri Fasal Bima Yojna (PMFBY) is set to increase 10-15 per cent as the scheme enters the second year. The farmers' coverage is expected to increase by 10-15 per cent. In several states, insurers have raised premium quotations by five-seven per cent.
HAL has filed an insurance claim of Rs 273 crore on an under-production Sukhoi jet that recently crashed during its test flight near Nashik. This is the first of its kind insurance claim involving a fighter jet in India. The claim was filed with a group of re-insurers led by GIC Re and sole insurer New India Assurance. Though usually defence and military projects and materials are not insured, HAL has insured the Sukhois as they were in under-production stage and these jets are yet to be inducted into Indian Air Force, said an NIA official. The insurance cover is valid only till the aircraft is handed over to the Air Force in view of the security issues after induction. During 2017-18, NIA was the sole primary insurer for the Sukhoi project with a total sum assured of Rs 11,240 crore. HAL has paid a premium of around Rs 18-19 crore during the year and may have to shell out 20 per cent higher premium next year due to the Nashik claim, officials said.
In spite of huge losses caused to home and property due to natural calamities, there are very few buyers for home insurance in India. The premium for home insurance is very cheap in comparison to commercial insurance covers. Home insurance currently accounts for less than 1 per cent of the premium collected by insurance companies in the country. The main reason behind low penetration seems to be lack of awareness among people to get their property covered. “Whenever there is any such natural calamity of such magnitude, then we suddenly see a surge in inquiries for such (home insurance) products. However, the interest dies down soon and very little of it actually translates into sale,” Amit Bhandari, Chief Technical Officer, Magma HDI General Insurance. A majority of the home insurance products available in the market comes as bundled offerings along with a home loan, and is often a ‘push product’ rather than a ‘pull one’. The small ticket size of such products also gives little incentive to insurers to come up with ‘innovative’ offerings catering to the needs of the segment. “Distribution is also a major roadblock. We are, in fact, working on how to make the product more available through various channels, including bancassurance,” he said. When it comes to retail insurance, it is still life, health and motor that dominate the space. “The penetration of home insurance depends on the value of the asset,” said Sukhesh Bhave, Head – Accident and Health Claims, SBI General Insurance. “Nearly 30 per cent of India’s landmass is susceptible to earthquakes of severe destructive force, while another 27 per cent is liable to face moderate earthquakes. This apart, close to 76 per cent of the country’s coastline is prone to tsunamis and cyclones, while 12 per cent is prone to floods,” said Mahavir Chopra, Director - Health, Life and Strategic Initiatives - Coverfox.com.
Insurance Australia Group is considering selling a stake in SBI General Insurance. IAG, currently holds 26% in the general insurer. IAG is likely to sell its stake in multiple tranches. The Sydney-based company might sell a part of its stake before a proposed initial share sale of the local general insurer, and a part in the initial public offering, the person said, adding that it might sell more over a period of time. IAG declined to comment on its stake sale plans.
ICICI Lombard, has entered into a strategic tie-up with AnyTimeLoan.in (ATL), a lending platform, to provide insurance cover for the latter’s lenders and borrowers. The partnership aims to derisk exposure of its lenders and borrowers arising from uncertainties such as accidents, critical illness, death, disability, and loss of job, among others. ICICI Lombard will offer its proprietary policies – Group Secure Mind and Group Personal Accident – to the customers of AnyTimeLoan.in. This will cover borrowers of all types of loans facilitated on AnyTimeLoan.in, with minimum policy term of one year to a maximum of three years. The insurance cover for lenders comes with free premium for the first year. Sanjeev Mantri, Executive Director, ICICI Lombard, said: “We are delighted to partner with AnyTimeLoan.in and provide their customers with our diverse range of non-life insurance solutions.”
ICICI Lombard General Insurance has started automatic approval for cashless treatment in hospitals which are part of its network. According to the Lombard officials, the process involves using artificial intelligence (AI) to scan documents sent by the hospital and matching them with the coverage. According to ICICI Lombard executive director Sanjeev Mantri, use of AI would reduce the time taken to authorise cashless treatment to one minute from 60 minutes at present.
First of its kind, cybercrime insurance cover can be bought by individuals, including loss of funds to online fraud, identity theft, cyberstalking and extortion, phishing and malware attack. Customised cyber liability cover for businesses has been around for years, but these were not over-the-counter covers that could be bought by individuals. The Cyber Safe policy designed by Bajaj Allianz General Insurance is aimed at improving the level of comfort among individual internet and ecommerce users. "This cover is the first of its kind designed keeping in mind the changing risk profile of the consumer. A couple of decades ago the biggest risk was having your pocket picked. In this day and age covers against pickpockets do not help when the bigger risk is of cybercrime," said Tapan Singhel, MD & CEO of the firm. "In today's digital world, the amount of personal data being generated, transmitted, and stored on to various digital devices is growing. The critical nature of this data and the complexity of the systems that support its transmission and use have created a gamut of cyber risks," said Singhel.
IRDAI has advised Public sector insurers to expedite claim process in Kerala. Motor insurance is expected to generate largest claims for the companies whereas for crop insurance, the Agriculture Insurance Company (AIC) is expecting claims of about Rs 150-160 million. Mr. Girija Kumar, Oriental Insurance CMD, said: “We have simplified the claim processes in Kerala. We have established various collection centres and are deploying more people in the state for faster claim settlement. We are expecting a huge claim outgo in motor, household and shopekeepers insurance. At the moment, it would be difficult to assess the extent of damage.” “The second round of floods has been particularly devastating and we are expecting a large claim. Unlike Chennai floods, in Kerala, all the districts are impacted. The economic loss is going to be huge. We are yet to assess the insured losses. We are trying to settle claims fast. Through advertisements in various media we are asking people to contact us for the same,” said the spokesperson. Insurance claims in Chennai during floods in 2015 were estimated to be close to Rs 45 billion, a majority of which were motor.
A study by the Central Marine Fisheries Research Institute (CMFRI) has revealed that insurance remains under-utilised in fisheries compared to other agriculture sub-sectors. The fisheries sector has received little attention either at the Central or State levels except for the presence of a few public insurance companies and co-operative bodies at the local level with limited scale of activity. Major risks involved in the sector include accident risks of fishermen, loss of or damage to, fishing vessels and gear, and damage to assets of fishermen are covered only on a limited scale across the country, including Kerala. Insurance cover is also available for risks like large-scale decline in the stock of fish species, damage of sea cages, loss of fish crops, damage to farm structures, etc. The study was conducted both in the capture and culture sectors across 14 fishing centres in Kerala, Tamil Nadu, Andhra Pradesh, Gujarat and Odisha and among the fish-farmers of Kerala and Tamil Nadu. The level of adoption of insurance in aquaculture is also very low. The study also found that the provision for vessel insurance, gear insurance and coastal asset insurance was quite low, with only one case of gear insurance reported from Kerala and a mere 14 per cent of fishermen from Tamil Nadu taking coastal asset insurance. Insurance coverage of income risks owing to decline in fish stocks and price risks due to market price fluctuations were not reported by any of the respondents. According to Shinoj Parappurathu, a CMFRI scientist and leader of the study, lack of awareness among the fishing community on the need for, and benefits of, insurance schemes is one of the major reasons behind the situation. The trust deficit between insurance companies and the fishing community was also a contributing factor for the low coverage.
Insurance claim payment to train accident victims have increased by five times in FY18 against the previous fiscal despite drop in the number of accidents. This trend is visible mainly because of IRCTC has extended free insurance cover to passengers booking online tickets starting December 2016, as part of the Governments digital push. Insurance Companies paid a total claim of Rs. 3.5 crore in FY18 from insurance companies, 5 times of Rs. 75.5 lakh paid out in FY17. The optional travel insurance scheme is handled by three companies: Royal Sundaram General Insurance, Shriram General Insurance and ICICI Lombard General Insurance. Paying Rs. 1 for insurance up to Rs. 10 lakh was optional for online ticket booking between September and December 2016. A larger segment passengers who booked tickets online opted out of the insurance scheme. The fact that the scheme started in September 2016, half-way through FY17, was also a reason for the lower numbers. From December 2016, the insurance scheme was made available free of cost for all e-tickets, with IRCTC bearing the cost. The digitisation push of November 2016 is hitting on IRCTC pocket. Not only did it lose earnings from the service charge on e-tickets, it also ended up paying insurance premium for an increasing number of passengers (about 65 per cent of the total) booking tickets online.
Moody's Investors Service said India's insurance and reinsurance sectors will grow strongly driven by strong economic growth and evolving regulatory regime. It said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years. During fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 per cent to Rs 6.1 lakh crore (USD 94 billion), bringing the 5-year compound annual growth rate (CAGR) to 11 per cent. "India's strong economy and evolving regulatory regime continue to support growth for its insurance and reinsurance sectors," Moody's said in a report titled Insurance - India: Continued regulatory evolution is credit positive for India's insurance sector. Moody's said it expects India's real GDP to expand by 7.4 per cent and 7.3 per cent in fiscal 2019 and 2020, making the Indian economy one of the world's fastest-growing. IRDAI is proactively introducing regulations that will support insurers' balance sheets and improve their access to capital, a credit positive," Moody's Assistant VP and Analyst Mohammed Londe said. Liberalisation of the reinsurance sector - with the admission of foreign reinsurers since 2017 and IRDAI's steps to ensure that they can compete with incumbents - will specifically benefit the non-life sector. Regulatory reforms will also improve the sector's capital strength, Moody's said.
As per the directive given by the Ministry of Road Transport and Highways, the General Insurance Companies have expressed displeasure, to provide third party insurance cover only to vehicles which possess valid pollution under control (PUC) certificates. The Ministry had earlier said, "It must be ensured that no third-party insurance policy is issued or renewed without ascertaining the availability of a valid PUC. In the case of transport vehicles, the availability of a valid fitness certification is also mandatory." However, according to insurance companies it's not practical to execute the Ministry's latest directive. "It may not be possible to implement this directive. We are planning to meet the officials of the IRDA to explain the difficulties involved in implementing the PUC certificate order," said a senior official of a leading general insurance company. In an order dated August 10, 2017 passed by the Supreme Court in Writ Petition (C) No. 13029 of 1985 in MC Mehta vs Union of India and others, Court had directed that the insurance companies will not insure a vehicle unless it has a valid PUC certificate on the date of renewal of the insurance policy. The order also added that the fitness certification is also a mandatory requirement for all validly registered transport vehicles,"
General insurers have sought more time from the Supreme Court to implement its directives on making long-term third-party insurance mandatory and ensuring pollution under control (PUC) certificate is in place before motor insurance is issued. Supreme Court had earlier directed the IRDAI on July 20 to ensure that from September 1 third-party insurance is in place for three years in case of four-wheelers and for five years in case of two-wheelers before vehicles are sold. “We are discussing the long-term third-party motor insurance issue with the regulator and will file an appeal petition with the Supreme Court seeking adequate time on smooth implementation of the directive,” said R Chandrasekaran, secretary general of General Insurance Council. Insurers said that long-term third-party cover would lead to customers losing out on the benefits of discounts on premium. “There will be no differentiation between good and bad risks, hence a good customer will end up subsidising for bad risks,” said Kamesh Goyal, Chairman, Digit Insurance. “All no-claim bonus customers will be locked at nil no claim bonus for three years. Therefore, there will be no benefit for long-term claim-free experience.” To increase the number of insured vehicles on roads, the Supreme Court Committee on Road Safety asked IRDAI to offer a mandatory long-term policy for vehicles at the time of sale.
Insurance companies are most likely to enter into reinsurance treaties for the fiscal 18-19 based on the existing guidelines, as the draft policy on reinsurance released by IRDAI will take some time. IRDAI had constituted an expert committee on reinsurance in May 2017, based on which it had proposed the draft regulations and had invited comments and suggestions on the draft. Insurance companies usually commence their annual reinsurance programme in the beginning of every financial year (starting April 1). The insurers are also required to submit their Board-approved Reinsurance Programme along with retention policy for each forthcoming fiscal to IRDA atleast 45 days before the commencement of the financial year. According to Sasi Kumar Adidamu, Chief Technical Officer, Bajaj Allianz General Insurance, the reinsurance guidelines, which are currently in the draft form will review the stakeholders' feedbacks and suggestions and follow a certain process before getting fructified into final regulations. "In India reinsurance treaties (for a given year) are renewed with effect from April 1. In case, the proposed reinsurance draft guidelines are not effective in time, the industry will have to follow the existing reinsurance regulations, which are enforced currently," Adidamu said. The draft guidelines have prescribed a specific order of preference for placement of reinsurance business in India, wherein GIC Re is likely to retain first preference followed by foreign reinsurance branches (FRB) in India and lastly the cross-border insurers. They also suggest that the risk can be placed with the Indian reinsurer and FRB without cession limits. According to Insurance Brokers Association of India, prescribing a specific order of preference for placement of reinsurance business in India would lead to extreme form of anti-competition. "Individual and corporate policyholders' cost, coverage, service will get severely compromised and innovation in wordings, products severely constrained," the association observed.
Insurance companies are looking to tap into the steadily growing pet market in India by either reviving existing cover or designing new products to suit consumers. According to data available on the India International Pet Trade Fair (IIPTF) website, the pet population in India has grown from 70 lakh in 2006 to one crore in 2011. On average, six lakh pets are adopted every year. The Indian pet market is estimated at more than $800 million, and is expected to register strong double-digit retail value growth in the coming years. Higher disposable incomes, smaller families, sensitivity to animals, and social-media craze are the key contributors to the rise in pet ownership, studies point out. This, coupled with an increase in awareness about pet health, is driving people to look for pet insurance cover. A number of public sector insurance companies, including National Insurance Company (NIC) and United India Insurance Company, have pet insurance products, and offer cover against death due to accident or disease, and third-party liability. However, these products have not been able to make a mark due to the lack of awareness and poor inclination among agents to sell these products, as well as the absence of a proper distribution model, said a senior official at one of the public sector insurance companies. Hence, the number of policies sold and premium collected is very small.
In order to stop delayed payment of crop insurance claims Central government is proposing to slap 12% interest on delayed crop insurance claim payouts under the Pradhan Mantri Fasal Bima Yojana (PMFBY). Agriculture Minister, Radha Mohan Singh, said that “We want to ensure that the affected farmers are compensated in time.” He added, “We are considering a proposal to levy 12 per cent interest on claim payments that are not settled within two months. Whoever is responsible for the delay — be it the crop insurance firm or the State government — may have to bear this interest,” Singh said. He, however, did not elaborate when the measure would roll out formally. The PMFBY guidelines stipulate the settlement of claims within two months of harvest and within 21 days of receipt of yield data by the companies from the State governments. According to Singh, there have been many teething issues relating to PMFBY implementation for all stakeholders, particularly for State governments, as the scheme was launched just two years ago. Acknowledging that there has been a drop (14 per cent) in the area covered under PMFBY in 2017-18, he said: “This was mainly due to our attempts to bring in some transparency in the scheme by adopting technology. In the early days of PMFBY, as the scheme was heavily subsidised, the area covered in many places was more than what should actually be covered.” According to government data, the percentage of total cropped area covered was 29 per cent in 2016-17, it came down to 25 per cent in 2017-18. “Say, for instance, a village had 200 hectares under notified crops, and thus was eligible for insurance cover, the area covered used to be more than 200 hectares. But, the increasing adoption of technology is making such frauds difficult,” said Singh. While only 10 lakh non-loanee farmers enrolled for PMFBY during the last kharif season, the number has gone up seven times to 70 lakh farmers, according to the latest estimates, the Minister said.
Nolife insurers have decided to reduce their premiums in the ‘own damage’ segment by 5-20% for the existing and new customers of private and commercial vehicles as the new regulations of the IRDAI have led to a cut in the commission offered by them to auto dealers. The reduction in premium is largely due to the IRDAI’s MISP (Motor Insurance Service Provider) circular which reduced the commission to auto dealers. Insurance regulator has capped distribution fees payable to auto dealers at 22.5 per cent for two-wheelers and 19.5 per cent for four-wheelers and sports utility vehicles (SUVs). Earlier, general insurers used to pay the distribution fees in the range of 30-40 per cent across the segment. According to sources, almost all the general insurers, including New India Assurance, United India Assurance, Bajaj Allianz General Insurance, ICICI Lombard, Tata AIG and SBI General Insurance have revised their ‘own damage’ premiums on vehicles downward despite incurring higher claims. M.N Sarma, CMD, United India Insurance said: “Earlier, since the sector was detariffed, we used to give up to 40-45 per cent discount. After MISP norms were unveiled, we have increased the discount up to 60 per cent. This has been possible as there is a cap on commission to be given to the dealers and we want to pass on the saved commission to the car owners. Now, the total discount on the segment has gone up to 95 per cent. Still, we are happy as we are able to do the business with even 5 per cent margin left with us.’’ G Srinivasan, CMD, New India Assurance, said post MISP, the motor insurance market will witness a differential pricing scenario where customers with good claims records will get reduction in the pricing while the premium will go up for a bad customer. “There wouldn’t be any uniform revision in pricing in the OD segment… We will review all the accounts and the premiums, for the accounts where our experience is bad, will be hiked,” he said. K Sanath Kumar, National Insurance Company said: “We are not sure about the impact of the new MISP guidelines as the claims in the OD segments are rising.’’ Sharad Mathur, head of sales and distribution, SBI General Insurance, explained that as far as premiums are concerned, it is likely that industry might move towards risk-based pricing. Until now, premiums were largely formula-based across the country, but now we might witness premiums going down in the region where loss ratio is less or customers who drive safely.
Karnataka Government is proposing to start its own crop insurance scheme. “There are apprehensions that the policy being implemented by the Centre is not beneficial to farmers as we feel that the parameters adopted to assess crop losses are complicated and the claims process is also delayed,” said NH Shivshankar Reddy, Karnataka Agriculture Minister. Some of the claims for the 2016-17 cropping season estimated at around Rs. 150 crore are still pending. “We are examining the scheme adopted by Bihar and also studying the financial implications of having our own crop insurance scheme,” Reddy said. The state has budgeted Rs. 845 crore towards crop insurance premiums. Bihar had launched its own crop insurance scheme during the kharif season this year to compensate farmers better. Karnataka, which is reeling under drought due to a weak southwest monsoon, has pegged the crop losses at Rs. 16,662 crore. The State has sought assistance to the tune of Rs. 2,434 crore from the Centre under the National Disaster Relief Fund. Reddy said crops such as maize, groundnut, jowar and pulses have suffered damages on account of the rain deficit.
Kotak Mahindra General Insurance said it has signed an agreement with Repco Home Finance to distribute its insurance products. Repco Home Finance will act as the Corporate Agent of Kotak General Insurance. “We believe Repco (Home Finance’s) strong network coupled with our ability to offer superior solutions will lead to a worthwhile proposition for all stakeholders,” Kotak General Insurance, MD and CEO, Mahesh Balasubramanian said. “Arrangements like these are essential to encourage prospective customers to sign up for insurance products..”, he added. Commenting on the partnership, Repco Home Finance, compliance officer, K Prabhu said, “The synergies that will be generated out of this association will not only offer an enhanced value proposition to customers, but most importantly will empower them to mitigate their risks and secure the future”.
Life insurance Companies in India have demanded a lower Goods and Services Tax (GST) rate of 12 per cent on the ground that it has impacted premium costs. At present, GST at the rate of 18 per cent is levied on most insurance schemes, compared to a previous service tax of about 15 per cent. “It has been difficult for life insurers to absorb the higher GST rate. Premiums are already low and so we have had to pass it on to customers,” said an industry official, pointing out that the GST Council has revised rates on many items and they are hopeful that life insurance would also be taken up for a review. “Unlike in the case of general insurance, which is a fixed expenditure, life insurance is a choice-based product. “If the tax is high, it impacts the pricing and takes away the attractiveness of the product,” said another executive with a life insurance firm who did not wish to be named. Gross premium income of life insurers grew by 17.65 per cent to Rs.1,39,992.03 crore between April 2017 and February 2018. This is lower than the near 31 per cent increase in gross premium income in the previous fiscal. Life insurers had earlier sought zero rating of insurance schemes under GST but are now pitching for a 12 per cent rate. The GST Council had in January exempted reinsurance schemes from GST, such as the Pradhan Mantri Fasal Bima Yojana. A number of other schemes such as the Janashree Bima Yojana, Aam Aadmi Bima Yojana and micro insurance products of up to Rs.2 lakh are also exempt from GST. Meanwhile, the industry, including both life and non-life insurers, has now settled into the system of multiple registrations under GST, which was originally seen as a big challenge. At present, under GST, insurance firms, along with other companies, such as banks, have to register and file returns in every State of their operations. “It has been some time since GST was rolled out from July 1, 2017. Most companies now have their systems in place for compliance,” noted an executive with a non-life insurer, a view which was echoed by life insurers as well. However, a system of single registration would also be welcome, they added.
General insurance companies are understood to have sought an extension of the March 31 deadline for linking the policyholders’ accounts with Aadhaar number. G Srinivasan, Chairman and Managing Director of New India Assurance Company, said, “It will be a mammoth task considering that we do not have the technology in place for seeding of accounts with Aadhaar and in many cases, we do not have the contact number of the policyholder to get on to the job on a war footing. “We have, over the last couple of weeks, started collecting details from customers who have either sought to renew their existing policy or bought a new policy. Only when the technology is in place, will we be able to link the customer’s account with the Aadhaar number.” While the company is in the process of putting in place a technology solution to address this issue, Srinivasan said, “When a policy is bought online or when an individual takes delivery of a vehicle, the dealer helps the buyer with the insurance cover. In such instances, we hardly get to see the customer. The seeding of the policy with Aadhaar is therefore, going to be an uphill task for insurance companies.” The company services 2.7 crore policies, and all these will have to be linked with Aadhaar within the next 11 weeks.
As one of the leading candidates to buy out or pick up, Max Life Insurance Co. Ltd may invest to attain majority stake in IDBI Federal Life Insurance Co. Ltd. In 2017, Analjit Singh-promoted Max Life’s proposed merger with HDFC Standard Life Insurance Co. Ltd collapsed after failing to win regulatory approval for a union that would have created an insurance giant with Rs1.1 trillion in assets.
The merger of the three public sector general insurance companies -- National Insurance Company (NIC), United India Insurance and Oriental Insurance Company -- is likely to be completed before the end of the next financial year. "The merger is expected to be complete before the government presents the vote of account early next (calendar) year," said M N Sarma, CMD, United India Insurance. He added that the merger would lead to rationalisation of offices, but would not entail any job cuts. Union Finance Minister, Arun Jaitley, in his Budget speech, had announced a proposal to merge the three public sector general insurers into a single company. The combined entity would be subsequently listed, Jaitley had said while presenting the Budget 2018-19 in Parliament. Earlier, K Sanath Kumar, CMD, National Insurance too had said the government that the merger is likely to be complete by the end of next financial year. "I was told that the merger would be most likely finalised by the end of next financial year. The Insurance Nationalization Act has to be amended and necessary permission for the merger has to be acquired from the IRDAI. Share transfer is not a challenge, as 100 per cent of it is held by the government," Kumar had earlier told.
The proposed merger of the three public sector general insurance companies is likely to take place in current fiscal, according to sources. “We will further bring down the losses before setting up a combined entity,” said one of the officials. The other official said the government is also looking at issues such as the need for a review of the HR practices across the three firms. “Right now there are no synergies,” the official said. “Any merger will further impact the commercial interest of these insurers.” The government had plans to list the merged entity. In 2017-18, it had listed Newindia and GIC RE, divesting 11.65% and 12.5% stakes, respectively, in the two companies. An executive at Oriental India Insurance said that the government is also expected to infuse some capital to help these companies. In quarter ended September last year, the three insurers had posted a combined loss of around Rs. 1,800 crore. Oriental had posted a loss of Rs 240 crore in the second quarter of this fiscal, against a profit of Rs 200 crore in the quarter ended September 2017. Market share of National Insurance Company for gross direct premium till December 2018 fell by 9.52% to 8.63%. United India Insurance share also came down by around 4.88%. Last year, the government had initiated a six-point reform agenda for general insurers which included sustainable and prudent business, talent management and customer orientation.
Two-wheeler buyers in India have to pay nearly 10% of the vehicle's price upfront towards insurance premium, while car-buyers are seeing the cost of motor cover double from last month. The premiums have jumped up significantly as a result ofcourt orders. The first makes purchase of a long-term, third-party insurance cover mandatory, while the second forces vehicle owners to buy an Rs 15 lakh personal accident cover, which is priced exorbitantly by insurers. Any person who buys a two-wheeler must purchase a five-year, third-party cover, and an annual personal accident cover. This is in addition to a comprehensive cover that is sold at the time of purchase of the vehicle. As a result, for a 150cc bike costing Rs 75,000, the insurance premium would be Rs 7,600. In the case of cars, the owner must pay premium for three years of third-party insurance and an additional Rs 750 towards a personal accident cover. For cars, a three-year, third party insurance and additional personal accident cover is in addition to the comprehensive cover sold by the dealer. For the buyer of a car with engine capacity of over 1,000 cc, the payout towards insurance has doubled to nearly Rs 20,000 from Rs 10,000 earlier.
A motor accidents claims tribunal has asked the Thana Municipal Corporation in Maharashtra to pay a compensation of Rs. 60 lakh to the family of a traffic policeman who died in a road accident while on duty in 2016. The tribunal held that just because the family had received insurance and provident fund pay-outs, it cannot be deprived of the compensation.
New India Assurance Company has launched a global mediclaim policy that will offer lifelong cover for global hospitalisation expenses including cancer, neurosurgery, heart surgery, organ transplant, and bone marrow transplant in hospitals outside India. The plan offers hospitalisation coverage in Asian countries as well as other parts of the globe. The Asian countries medical coverage plan offers a lifetime cover of USD 1 million and the worldwide lifetime coverage insures an individual for USD 2 million. The policy covers an entire gamut of services like medical second opinion for the covered illness of the insured to the expenses like travel, accommodation, and treatment in a foreign land. Depending on the age of the insured and their medical history, the premium could also be loaded between 25 percent to 100 percent. For a 30-year-old individual, the premium without loading is Rs 9,003 per annum for Asian countries) and Rs 11,453 per annum for other countries outside Asia. While pre-existing conditions are not covered, there is a 90-day waiting period only after which will a claim be paid. Also, any medical expenses like chemotherapy incurred in India will not be payable under this policy. The policy will also pay airport pick-ups as well as repatriation of mortal remains of the insured up to USD 15,000 per insured. This is a fully cashless policy and a second medical opinion will be taken before an insured is given a policy to avail of treatment abroad.
New India Assurance Company holding a formidable share in Indian Insurance market expects the momentum of high growth to continue for some more time with increasing insurance penetration, according to its Chairman and Managing Director G Srinivasan. “The company is focussing on retail business and on digital technology in a big way,” he told. New India recently concluded Rs.3-lakh crore insurance business of Reliance Industries and bagged the health insurance scheme of the State of Rajasthan covering four crore people with a premium income of Rs.1,200 crore. The company also concluded a deal with Deccan Aviation, which made a re-entry into the regional air space. In the bancassurance space, the company has tied up with three banks in the public sector — Bank of India, Punjab National Bank and Canara Bank — and two private banks — South Indian Bank and Bandhan Bank. This would further accelerate the insurance major’s growth, he said. About 15 per cent of business is secured through digital means and this is expected to grow rapidly in the coming months. The company has invested Rs.400-500 crore during the current fiscal in technology. “We are a big player in the cyber insurance segment, providing cover to major financial institutions,” he said, before hinting at its proposed entry into the title insurance segment. Property developers opt for title insurance cover to ensure that title deeds are clear. This is expected to become mandatory for developers, considering that many States have already digitised their land records. “We will be rolling out tailor-made title covers soon,” he said.
New India Assurance Co, has reported a 187 per cent increase in net profits for the second quarter ended September 30 at Rs.748 crore. This was its first results announced after its listing on the stock exchange. The gross written premium was Rs.6,489 crore, a growth of 12 per cent compared to the same quarter last year. G Srinivasan, CMD of New India Assurance, said the results had improved substantially due to drop in claims ratio and operating expense ratio, thanks to various steps taken by the company. This was achieved by repricing health insurance products as well as claims control being done more efficiently, for instance by recruiting more doctors on their panel, he added. There was a 25 per cent increase in retail health premiums while corporate health premiums were hiked between 20 and 40 per cent, he said. Claims ratio in health had come down from 111 per cent to 102 per cent while motor claims ratio was down from nearly 88 per cent to 83 per cent. Srinivasan said operating expenses were also down by 4 per cent, mainly due to scaling up of business without any increase in costs. This helped in reduction of combined ratio at 111.76 per cent, against 119.81 per cent in the previous year period. The company would grow in line with the market and increase its market share marginally, as it has been doing for the past five years, he added. New India has a share of 15 per cent in the Rs.1.30 lakh crore general insurance market. The company's solvency margin was at a comfortable 2.24, Srinivasan said.
G Srinivasan, Chairman and Managing Director, New India Assurance, stated that the company had achieved 19 % growth in premium income last year to reach Rs26,500 crore. “We are targeting 18 per cent growth this year. Indian general insurance industry is on a high growth path as there is increasing awareness and better disposable income at present. This is a conservative target though,” he said. Adding to the fact that crop insurance was a major growth driver in the market. “If Ayushman Bharat materialises, we will surpass our target. This has not been factored in. Current indication is the scheme will be rolled out in October,” he said. Health and motor insurance claims are its two challenge areas, whereas the Company focusses on retail sector.
The labour ministry has proposed a high-level board that will work upon to set standards for occupational safety and health. The board would also oversee the implementation of standards for all workers at factories and enterprises. As per the draft Labour Code on Occupational Safety, Health and Working Conditions, 2018, the National Occupational Safety and Health Advisory Board will be set up for three years and renewed thereafter and will be assisted by the advisory committees. The ministry has sought stakeholder comments on the draft code after which the code will be finalised and moved for the Cabinet’s approval. The board is expected to prescribe health and safety standards for workers in factories, mines, dock work, building and other construction work and other establishments.
With the increasing number of women’s working in the night shift in IT companies and other sector, their safety is a cause of concern. The Insurance Companies are devising covers to provide them an extra layer of security. Some of the cover includes night roadside assistance (RSA), hailing of a cab service, assistance to an emergency medical centre, and even a night’s stay at a nearby hotel. Some insurers offer this kind of service as an add-on whereas Insurers like ICICI Lombard and Bajaj Allianz offer the service free for women customers. ICICI Lombard General Insurance executive director Sanjeev Mantri said, “For decades, insurers have offered services such as RSA to motor insurance customers. The problem with RSA is that it is a one-sizefits-all type of service.” ICICI Lombard realised from customer calls that it needed a specific facility for women. “In one case, a woman customer would always return at 10pm after work. Another had to drive late when her inlaws faced a medical emergency. In both instances, their prime requirement was immediate and assurance of support,” Mantri said. So the insurer has recently launched Women Assist — a programme available in 13 cities, including New Delhi, Noida, Mumbai, Bengaluru, Hyderabad and Chennai. The service is available between 8pm and 6am, with access to a pan-India network of 3,500 garages, taxi partners and hotels. In case the customer is too far from home, the insurer will arrange for a night stay at a hotel with a budget of up to Rs 5,000 a night. In case of minor repairs, while the vehicle is being attended to, refreshments will be organised. Bajaj Allianz’s policy has a 24/7 Spot Assistance for women that includes urgent message relays, assistance to an emergency medical centre, fuel refills of up to 3 litres of petrol/diesel, and taxi service anywhere up to 50 km from the spot where the insured was immobilised. The person also gets Rs 1,000 per day per occupant. Bajaj Allianz General CEO Tapan Singhel told, “If you have an accident at any time during day or night, we will help with paperwork, conduct a spot survey, and even provide legal advice over phone if necessary. We help with drained batteries, minor repairs, techni- cal issues, or tow away the vehicle to the nearest Bajaj Allianz preferred workshop.”
Paytm is planning a major thrust in the financial services sector. In coming months, the company is planning to launch services including mutual funds, general insurance, life insurance and a number of banking services via its payments bank. It shall also provide option to transact offline with a physical debit card. "There is a lot of interest among consumers for physical debit cards. Within a time period, we have received orders from 850 towns. We are in the process of setting up banking outlets that will provide deposit, cash withdrawal, money transfer and other permitted banking services to the segment of customers who require assistance," said Renu Satti, managing director and chief executive officer, Paytm Payments Bank, said. The company is set to add more than 100,000 Paytm banking outlets to expand the reach of its banking services. It has committed $400 million over the next three years to expand offline distribution network by allowing trusted local partners to act as potential cash-in and cash-out points."Some of the services, especially wealth management, lending and insurance, will be provided in partnership with other banks and financial institutions after due regulatory approvals," Satti said. Paytm Money, the company set up recently to deal in money market fund, is in discussions with asset management companies to offer direct mutual fund investments.
PolicyBazaar has suggested that the Finance Ministry give separate tax relief to those buying pure life insurance cover or term insurance. PolicyBazaar has urged the government to introduce a separate tax deduction of Rs. 20,000 for pure life insurance cover beyond the existing Section 80C deduction of Rs. 1.5 lakh. Yashish Dahiya, Founder and CEO of PolicyBazaar, told that the government should give tax benefits to people who want to invest in pure life insurance. “It is one of the best things to do. It will also create a favourable environment for pure life insurance... Only 8 per cent of the people in India are covered by insurance, which includes health and other ULIPs. “Health insurance has a slab. So, why not have a slab for term insurance,” Dahiya said, adding that more and more people will get insured for Rs.1 crore cover by paying as low as Rs.9,000 in their thirties, and tax benefit would further expand the market. Dahiya said that not even a per cent of what insurance companies sell would be pure life or term insurance and many of the people are not even aware of what kind of products they are buying.
Reliance General Insurance is still keen on listing on the bourses, though its regulatory approval for the initial public offering has lapsed. “The market conditions are not very conducive and we are also close to some elections. We are waiting for favourable conditions,” said Rakesh Jain, Chief Executive Officer, Reliance General Insurance, adding that the insurer is still “IPO-ready”. According to data available with SEBI, the regulator’s approval for IPO expired on November 29. It was valid for one year. “Our approval has lapsed but we can revalidate it,” Jain told. He added that the insurer is not desperate to hit the markets as the current volatile conditions could impact value. “Last six to eight months have been a bit unfortunate as the markets have been a bit choppy,” he said.
In the first quarter of the fiscal, Reliance General Insurance has recorded 30% increase in Profit after tax amounting to Rs.57 crore. The Gross Written premium by the company increased by 23 % (year-on-year) to Rs. 1,571 crore in the quarter ended June 30, 2018. “We have witnessed growth of 23 per cent in the first quarter of the fiscal against the industry growth of 12 per cent,” said Rakesh Jain, Executive Director and CEO, Reliance General Insurance Company. Reliance General has an market share of 8.8%. The investment of the company stood at Rs. 8,261 crore as on June 30, 2018, signifying an increase of 20% from the last year.
Reliance Industries has bought one of the largest petrochemical policies in the world with an insurance cover in excess of Rs 3 lakh crore for its refinery and petrochemical plants located at Jamnagar and Hazira in Gujarat. The cover has been provided by New India Assurance and other co-insurers with support from GIC Re, which bears the bulk of the risk in this cover. The Rs 3-lakh-crore policy is more than 33% higher than last year’s cover for a little over Rs 2 lakh crore. The rise in sum insured follows the increase in refining capacity to 1.24 million barrels of oil per day. The premium in respect of the cover has gone up to over Rs 725 crore as per sources. According to sources, the presence of domestic giants GIC Re and New India Assurance has helped RIL get a competitive cover as global markets have been hardening and are looking for opportunities to raise rates.
Reliance General Insurance, plans to file fresh documents with the Sebi to float an initial share sale as the regulatory approval for the insurer’s IPO is going to lapse this month, merchant banking sources said. The company failed to tap the primary markets as lack of investors’ appetite for the IPO and volatile equity market conditions has forced the insurer to postpone its plans. Sebi’s approval for IPOs is valid for one year, and it will expire on November 29 in the case of Reliance General Insurance Company, according to data available with SEBI. According to merchant banking sources, the company is very keen to come out with its IPO and will re file the draft red herring prospectus (DRHP) with Sebi very soon. The IPO comprised fresh issue of a little over 1.67 crore shares by the company and an offer of sale by Reliance Capital of 5.03 crore shares. The firm was planning to utilise the proceeds from the issue to augment its solvency margin.
IRDAI expects the proposed risk-based capital framework to facilitate the effective functioning of insurance companies that are focused on specific geographies or products. This would also help improve insurance penetration in the country. According to Nilesh Sathe, Member-Life, IRDAI, the framework, which is likely to be in place by 2020-21, will benefit insurers who are niche players, and can manage their risk well as it will ensure that the additional capital does not remain idle. Currently, insurance companies need to have paid-up capital of Rs.100 crore, irrespective of the sector they operate in. “Right now there is standard requirement of capital, irrespective of what business you do. But in advanced nations it is not so. If there are some players looking only for regional presence or are looking at some specific line of business, then there is no need to keep aside so much capital. This is what the risk-based capital will address,” Sathe told. The regulator is also working on adopting a sandbox approach to promote innovation, thereby improving the penetration and reach of insurance. IRDAI is likely to come up with the guidelines to this effect soon. “We have formed a committee, which is looking into this. We will come up with guidelines soon,” he said. A sandbox approach allows insurance companies to experiment and test certain innovative products even before filing for approval of the same. Apart from promoting innovation in the industry, this would also help contain the impact of failures.
SBI General Insurance reported a 53 percent rise in net profit at Rs 89 crore for the quarter ending December. Its net profit was Rs 58 crore in the corresponding quarter a year ago, SBI General said in a statement. SBI General recorded its sustainable underwriting profit of Rs 49 crore in quarter as against an underwriting loss of Rs 41 crore in the same quarter a year ago.
SBI General Insurance, posted a 64.4 per cent increase in its net profit at Rs. 217 crore for the first half of the current fiscal when compared to Rs. 132 crore a year ago. For the six months ending September 30, 2018, the company said it has made an underwriting profit of Rs. 37 crore when compared to an underwriting loss of Rs.60 crore in the same period a year ago. The gross written premium also increased by 30 per cent to Rs. 2,067 crore in the April to September period this fiscal, compared to Rs. 1,593 crore a year ago. SBI General Insurance said its solvency ratio in the first half of the fiscal was 2.46, and the combined ratio 96.8 per cent. “Our profits have increased by almost 65 per cent, excluding the profit impact of one-time reinsurance ceding in LTH,” said Rikhil K Shah, CFO, SBI General Insurance.
State Bank of India recently approved the sale of 4 per cent stake in SBI General Insurance for Rs 482 crore to two alternative investment funds (AIFs). The executive committee of SBI approved the sale of 86.2 lakh shares of Rs 10 each, equaling to 4 per cent stake in its subsidiary SBI General Insurance Company Ltd for Rs 482 crore (around USD 66 million), SBI said. New Opportunities AIF-I and PI Opportunities Fund-I, an AIF of Premji Invest, will purchase 1.65 per cent and 2.35 per cent stake, respectively, from SBI. The proposed transaction values SBI GI at over Rs 12,000 crore. After completion of the transaction, SBI will hold 70 per cent stake in SBI GI, while its joint venture partner IAG International Pty Ltd will continue to hold 26 per cent. "Insurance segment is still young and nascent in India, it is an underpenetrated market, we foresee a significant scope of growth for SBI GI to achieve size, scale and profitability," said SBI Chairman Rajnish Kumar. This transaction values SBI GI at around Rs 12,000 crore, reflecting significant value creation within 7 years of business operations, Dinesh Khara, managing director, Global Banking and Subsidiaries, said.
State Bank of India has informed the stock exchanges that its board is looking to sell 4% of its existing shareholding in SBI General Insurance to a non-promoter entity through small parcel share sale (SPSS). SBI General is a joint venture between SBI and the Insurance Australia Group. Once the sale is complete, SBI’s stake in its general insurance arm will come down to 70 per cent from 74 per cent. IAG has a 26 per cent shareholding in the company. The move could be construed as an exercise in price discovery ahead of the launch of its initial public offering (IPO). Pushan Mahapatra, managing director and chief executive officer, in recent interviews has said that they plan to launch the issue during FY20, and that preparations for the offering would require 12-15 months. Mahapatra also had said that IAG has expressed an interest to increase its stake in the joint venture.
United India Insurance Company announced the appointment of S Gopakumar as its Director and General Manager with immediate effect. Prior to taking up the new role, Gopakumar was serving GIC Housing Finance Ltd as its Managing Director and Chief Executive Officer, a company statement said. Gopakumar began his career with National Insurance Company and has held various responsibilities in his more-than-three-decade experience.
Shriram General Insurance posted an 82 per cent increase in its net profit at Rs. 400 crore in 2017-18. “Our net profit has risen mainly due to increase in investment income and reduction in the loss ratio,” said Neeraj Prakash, Managing Director, Shriram General Insurance. The net premium earned grew by 10 per cent to Rs. 1,855 crore last fiscal. Its investment income also increased by 28 per cent to Rs. 744 crore in 2017-18 from Rs. 580 crore in 2016-17.
Shriram General Insurance is planning to expand its operations in ‘C’ and ‘D’ tier cities, with plans to open 50 new branches over the next 12 months, a top official said. After this expansion, the private general insurer expects 25 per cent of its overall revenues to come from ‘C’ and ‘D’ class cities in 2019-20. At present, in terms of revenues, ‘C’ cities bring only 10 per cent of overall revenues. This proposed expansion, which is expected in the next 12 months, will take the company’s overall branch network to about 210 branches from the current level of 162, taking the share of ‘C’ and ‘D’ cities in overall branch network to about 50 per cent, Neeraj Prakash, Managing Director, SGI, told. As on date, SGI has only about 47 branches in ‘C’ cities, accounting for 27 per cent share of the overall branch network. Most of the expansion into ‘C’ and ‘D’ cities will happen in eastern India and in Gujarat and Maharashtra, said Prakash. While ‘D’ class cities are those with a population up to 15,000 people, ‘C’ class cities have a population ranging between 15,000 and 50,000. SGI will, next year, look to recruit 5,000 new employees, and increase the IRDAI-registered agents by 7,000 in 2019-20 so that the total number of agents goes up to 25,000. Currently, SGI has 17,000 IRDAI-registered agents, which will go up to 18,000 by the end of this financial year.
Shriram General Insurance Company is selling over 40,000 motor insurance policies per month through its mobile application M-Nova, according to the company. The policies being sold through the mobile application account for about 12 % of the total policies issued by Shriram as of February 28 in the last financial year .“During this period, the company also registered a premium growth of more than 150 per cent in issuing policies through its mobile app,” the insurer said in a press release.
Stocks of state-run insurers General Insurance Co. of India (GIC Re) and New India Assurance Co Ltd. (NIA) that went public recently have fared poorly since listing, raising questions on their issue pricing and future share sale plans of other public insurers. NIA, which went public on 13 November, fell 9.4% from its issue price on its listing day. Now, it is testing new lows daily and trades 27.44% lower than its issue price in less than a month. Similarly, GIC Re trades 11.85% lower than its issue price. This is in contrast to HDFC Standard Life Insurance Co. Ltd, which listed a mere four days after NIA. Not only did its shares gain 18.71% on debut, they now trade almost 34% higher than the issue price. Investment bankers said the government got the pricing for these issues wrong by comparing them with private sector rivals. “State-owned insurers did not leave much on the table for investors at their IPO, and that is reflecting now,” said R. Sreesankar, co-head of institutional equities at Prabhudas Lilladher Pvt. Ltd. “The similar preference battle that we have between private banks and PSU banks will come up in the insurance space too. For now, the private insurers look better than the state-run peers in terms of grabbing market share.” GIC Re and NIA are yet to be rated by analysts. Bankers who managed the issue also pointed out that investors were being cautious with insurance IPOs. “Top quality investors had lost money with ICICI Prudential. They were treading water cautiously,” said a banker who had managed one of the issues floated by the public insurers. ICICI Prudential Life Insurance Co. Ltd, which listed in September 2016, had seen its shares fall 10.88% on debut. A year later, the stock is up 9.85% from the issue price. “Plus, there was an oversupply of papers in the insurance space, which made it difficult to attract quality investors for these issues,” said the banker on condition of anonymity. Insurance companies collectively raised around Rs44,967.40 crore through IPOs this year as benchmark equity indices scaled new peaks. BSE’s 30-share Sensex has gained 23.75% this year. Another factor is the huge shareholding of Life Insurance Corp. of India. It holds 8.42% and 8.67% in GIC Re and NIA respectively. Dealers said that since a major chunk from the new share sales was bought by LIC—a long-term investor—it impacted the liquidity of these stocks.
The Steel Ministry will soon set up a Safety Directorate that will oversee the safety standards in the steel industry. Steel Minister Birender Singh said the safety directorate would be operational soon, an official statement said. Singh also said that a National Scrap Policy is also being drafted, which will be ready in a few months. This will make available nearly 7 million tonne scrap in the country. At present, the requirement of scrap is around 8.3 million tonnes and most of it is met with scrap imports.
Ageas Insurance International NV, Europe’s leading insurance group, has acquired 40% in Royal Sundaram General Insurance. The agreement was signed between Sundaram Finance and Ageas Insurance International in November 2018, following the approvals given by the Insurance Regulatory and Development Authority of India (IRDAI) and other regulators. As part of the agreement, Ageas has acquired 40 per cent of the share capital of Royal Sundaram General Insurance Co Ltd. The total value indicated for the deal was Rs.1,520 crore. Subsequent to the divestment, Sundaram Finance Ltd now holds 50 per cent, and some of the existing Indian shareholders hold the balance 10 per cent in Royal Sundaram. “Like Sundaram Finance, Ageas is a retail-focussed company with a strong Asia presence. As part of the go-to-market strategy of the JV firm, we are confident of tapping into their expertise and leveraging some of their best practices in claims management, automation in underwriting and analytics,” said TT Srinivasaraghavan, Managing Director, Sundaram Finance Ltd. The new JV will retain the existing ‘Royal Sundaram’ brand name. “The existing management team will continue at Royal Sundaram. Two executives from Ageas will be joining the Royal Sundaram team to work in specific areas where they can add value to the business, he said. Ageas is already present in the Indian life insurance business through IDBI Federal Insurance Co Ltd.
The Supreme Court has said third party insurance of four-wheelers and two-wheelers be made "mandatory" so that victims of road accidents could get compensation and insurance firms should look into it from a "human point of view" and not from commercial point. The apex court said this while referring to the recommendations of the Supreme Court Committee on Road Safety and observed that over one lakh people were dying in India every year in road accidents. The committee, headed by former apex court judge Justice K S Radhakrishnan, has recommended that at the time of sale of two or four wheelers, third party insurance should be made mandatory for a period of five and three years respectively instead of one year. In its report, the committee has said that around 18 crore vehicles were plying on the roads of the country out of which only six crore have third party insurance, and victims of road accidents were not getting the compensation as vehicles do not have third party cover. The bench said that third party insurance should be made mandatory for four wheelers for a period of three years and for two wheelers, it should be done for five years. During the hearing, the counsel appearing for IRDA said that third party insurance should not be made mandatory and the authority was also looking into the issue and they would take around eight months time to decide on it. "You are looking at it from the point of insurance companies. Now, there are people who are dying and there are people who have already died in road accidents. Number of deaths in road accidents is more than one lakh per year in India. Three people are dying per minute in road accidents," the bench said. The apex court asked the IRDA to take a decision on the issue on or before September 1.
Supreme Court has turned down the last-ditch attempt by the general insurers to extend the time-frame for implementing its order on issuing long-term motor policies. After hearing all parties including the General Insurance Council, and the Road Safety Council in India, the court told the insurance industry to implement its earlier order from September 1. The GI Council had argued that the industry needed more time as a lot of ground work needs to be completed apart from the fact that the state governments and Regional Transport Offices all over the country should be in position to supervise the issuance of long-term policies at the time of registrations of all new vehicles. The GI Council also pointed that the entire industry is now busy settling claims on account of Kerala floods. Puneet Sahni, Head, Product Development, SBI General, said that there is a substantial back-end work that is required to be done prior to entering the market with a new set of offering. “SBIG had anticipated the same and has been working on this for a while now. We would be able to offer the new set of policies well in time. The pricing of the Own Damage policies have to be worked out at insurer’s end and the benefit of savings in cost shall be passed on to the customer.” The pricing for Third Party premiums, however, has been implemented by the IRDAI. Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance, said, “the introduction of mandatory long term policies for new vehicles will go a long way in addressing the problem of under-insurance of motor vehicles. Today, as is widely estimated, around 60 per cent of two- wheelers and 35-40 per cent of four-wheelers are being driven on Indian roads without any motor insurance cover. With the launch of mandatory long term motor policies covering new two-wheeler and four-wheelers, we are sure that motor insurance penetration levels will rise further in the coming years.” Subrata Mondal, Executive Vice President (Underwriting), IFFCO Tokio General Insurance, said that the new regime will offer price stability and convenience as customers need not renew each year and they are insulated from the yearly hike in TP premiums. It will minimise the presence of non-insured vehicles to a large extent. One of the major disadvantages is that the upfront payment of premiums that may be unaffordable for some customers as almost 100 per cent of 4-wheelers are insured before they leave the dealerships.
Swiss Re is working on using technology to improve claim settlement in crop insurance scheme. “One example of the new technology we have brought into the country is in the agriculture sector. Satellite imaging is quite powerful these days,” said Amitabha Ray, Head of CM P&C, India, Swiss Re, India Branch. It can be used very quickly to estimate the drought level or soil moisture content level in the area, he added. Based on the image, in case the area is drought-stricken, farmers can get payments faster. Similarly, the technology can also predict if the soil moisture content is low, which would then mean that going forward the crop output is going to be low. “You can estimate the deviation that will happen and can settle claims,” said Ray, adding that the use of technology such as this can be a means of value addition to the current methods under the scheme. “We are a big agriculture insurer worldwide. We are trying very hard on making the claim settlement process much faster and smoother with the use of technology. We are also trying to use technology to understand crop losses better,” he said. In India, it services close to 8-10 per cent of the crop insurance market. Swiss Re, which is the world’s second-largest insurer, set up a branch office in India in 2017. Satish Raju, CEO, India Branch, Swiss Re, said the company is keen to work across all line of businesses in the country. “We want to utilise our international experience. We are keen to help support the country’s focus in terms of health, crop and help improve insurance penetration. This is our broad-based approach,” he said.
ACCORDING TO IRDA’S REPORT, THE GENERAL INSURANCE COMPANIES COLLECTED RS 26,523 CRORE UNDER THE THIRD PARTY MOTOR SEGMENT IN THE LAST FINANCIAL YEAR WHILE THE PREMIUM COLLECTED UNDER OWN DAMAGE WAS RS 23,727 CRORE. “THERE ARE VARIOUS FACTORS THAT HAVE PLAYED IN THE INCREASE OF THE THIRD PARTY POOL, INCLUDING REDUCTION IN OWN DAMAGE CLAIMS AND INCREASE IN PREMIUM FOR THIRD PARTY SEGMENT,” SAID SANJAY DATTA, HEAD OF REINSURANCE AT ICICI LOMBARD GENERAL INSURANCE. NOW, PRIVATE SECTOR INSURANCE COMPANIES HAVE BEEN WRITING THIRD PARTY INSURANCE MORE THAN MOTOR OWN DAMAGE. LAST YEAR, CHOLA INSURANCE WROTE RS 1,243 CRORE OF THIRD PARTY PREMIUM COMPARED TO RS 922 CRORE OF MOTOR OWN DAMAGE. SHRIRAM GENERAL INSURANCE WROTE RS 1,247 CRORE THIRD PARTY AND RS 589 CRORE OWN DAMAGE. SIMILARLY, RELIANCE GENERAL INSURANCE WROTE RS 1,011 CRORE THIRD PARTY AGAINST RS 952 CRORE IN THE LAST FINANCIAL YEAR. MOTOR THIRD PARTY COVER IS MANDATORY FOR ALL PUBLIC, PRIVATE VEHICLES AND COMMERCIAL VEHICLES. IT COVERS LIABILITY ARISING OUT OF THIRD PARTY CLAIMS DUE TO ACCIDENTS.
Toffee Insurance, has tied up with Eko, a digital lending platform, to distribute its ‘Salary Protect Plan’ (Kamai Bachao Yojana) through the latter’s nearly one lakh touch points. This plan is a product that protects a daily wage earner from loss of income in case of hospitalisation. It has been constructed out of the traditional hospital cash product as an income-replacement plan for daily wage earners, Rohan Kumar, CEO and co-founder of Toffee Insurance, told. “This is a product that has been created for developing the gig economy in India. It has been created initially for Eko channel only and the customers they serve. In due course, we will add more channel partners, including organised retailers, and pharmacists,” said Kumar.
Public sector general insurer United India Insurance Company (UIIC) has reported a profit after tax of Rs. 1,003 crore for the year 2017-18, compared with a loss of Rs. 1,914 crore in the previous fiscal, thanks to significantly lower underwriting losses. In 2017-18, the underwriting losses fell by almost half to Rs. 2,542 crore from Rs. 4,444 crore in 2016-17. In FY17, the company had to make a huge technical provision at one go, and hence, the underwriting losses were huge, which led to the company reporting a net loss of Rs. 1,914 crore. In 2017-18, net incurred claims were lower at Rs. 12,138 crore (Rs. 12,881 crore in FY17), while expenses dropped to Rs. 2,598 crore (Rs. 2,969 crore). Combined ratio (a measure of insurer profitability) of UIIC stood at 119.77 per cent against 136.94 per cent in 2016-17. Its investment income zoomed to Rs. 3,770 crore from Rs. 2,532 crore. The second-largest general insurer in the country managed to take the solvency ratio to 1.54 per cent (1.5 per cent is stipulated by the regulator) during FY18 against 1.15 per cent as of March 31, 2017. “This was achieved by measures such as underwriting control, focus on better-priced products and raise of subordinated debt of about Rs. 900 crore,” said MN Sarma, Chairman-cum-Managing Director, UIIC. Its gross premium income grew by 9 per cent at Rs. 17,430 crore (Rs. 16,063 crore), while net premium income stood at Rs. 12, 861, up from Rs. 12,032 crore.
United India Insurance has raised Rs 900 crore through subordinated debt to boost solvency capital, which is below the mandated regulatory capital requirement. The insurer has raised funds at 8.25 per cent for a 10-year period with a call option after five years, which will help the insurance company shore up solvency ratio to 1.40, against the necessary 1.5. "We have raised alternate capital in the form of non-convertible debenture at 8.25 per cent, with a call option after 5 years with a tenor of 10 years," said MN Sarma, the managing director of United India Insurance. "This will help in improving the solvency. This, along with quota share treaty, underwriting discipline, we are likely to touch 1.7 times."
A recent inspection report by IRDAI shows that business commissions worth crores were paid to insurance broker even when premium cheques submitted by them bounced. The inspection report, to which Sompo replied last month, pertains to accounting year 2016-17, where 4,059 premium cheques bounced, of which, 1,124 belonged to a single broker, Risk Care Insurance. The inspection report says the reason for the soft approach against Risk Care could be “close family connections” the broking company had with ON Singh, who has been the Non-Executive Chairman of Sompo for more than a decade now. The report says that the family members of ON Singh are shareholders and board members of Risk Care, which gives rise to “conflict of interest.” In fact, Singh is also a director at First Advantage Finance & Investments, which holds a 4.39 per cent stake in Risk Care. Other shareholders of Risk Care include Singh’s wife, daughter, son and daughter-in law, investigations show. In addition, payments made by Sompo to other vendors, including Adept Information Services, Mindpool Management Solutions, Krishi Care & Management Services, Principle Security and Allied Services, too, had links with the family members of Singh, the report shows. Ram Nath was a common director in both Sompo and Krishi Care, which was paid Rs.24 crore by the insurance company. Mindpool Management, Krishi Care, and Adept Information all shared a common address at Virwani Industrial Estate, Goregon, Mumbai. Advika International and Principle Security shared a common address in Jogeshwari. Payments made to vendors include for housekeeping, rent, and professional charges for IT, apart from insurance. These transactions are worth more than Rs.100 crore. Sompo, in its reply, said: “The IRDAI has observed certain operational issues that were responded and clarified with due details. The company strictly follows corporate governance in letter and spirit. Reasons for cheque bounces are verified by a dedicated team and system is updated for all such cases and policies are cancelled and premium register and commission statement is updated. Necessary action is taken in all such matters. Dishonoured cheques of Risk Care are only around 12-14 per cent of the total other intermediaries.” Sompo also denied that vendors named above were parties related to Singh.
Videocon Industries Ltd. will sell its entire 51.32 percent stake in its general insurance business to Diamond Dealtrade Ltd. and Enam Securities Pvt Ltd. for an undisclosed amount. Liberty Videocon General Insurance will be renamed as Liberty General Insurance Company Ltd., according to a stock exchange filing. U.S. based Liberty Mutual Insurance Group holds 49 percent stake. Diamond Dealtrade, part of the Gurugram-based DP Jindal group, will own 26 percent and Enam Securities will hold 25.32 percent. Venugopal Dhoot-led Videocon was named among the second list of stressed companies that the central bank had identified for resolution under the Insolvency and Bankruptcy Code. State Bank of India moved the National Company Law Tribunal to initiate insolvency proceedings against Videocon. The company had a debt of Rs 43,000 crore, according to a Care Ratings report of June 2016.
United India Insurance Company announced the appointment of K B Vijay Srinivas as its Director and General Manager with effect from July 1. Prior to taking up the new role, he was serving National Insurance Company Ltd as its Chief Marketing Officer and General Manager, a press release said. Srinivas, in his 37 years of service, has also contributed articles in journals of insurance, tax and other subjects. A recipient of many awards, Srinivas is also an associate member of Insurance Institute of India, it added.
According to IRDA’s report, the General Insurance Companies collected Rs 26,523 crore under the third party motor segment in the last financial year while the premium collected under own damage was Rs 23,727 crore.
“There are various factors that have played in the increase of the third party pool, including reduction in own damage claims and increase in premium for third party segment,” said Sanjay Datta, head of reinsurance at ICICI Lombard General Insurance.
Now, private sector insurance companies have been writing third party insurance more than motor own damage. Last year, Chola Insurance wrote Rs 1,243 crore of third party premium compared to Rs 922 crore of motor own damage. Shriram General insurance wrote Rs 1,247 crore third party and Rs 589 crore own damage.
Similarly, Reliance General Insurance wrote Rs 1,011 crore third party against Rs 952 crore in the last financial year.
Motor third party cover is mandatory for all public, private vehicles and commercial vehicles. It covers liability arising out of third party claims due to accidents.
First of its kind, cybercrime insurance cover can be bought by individuals, including loss of funds to online fraud, identity theft, cyberstalking and extortion, phishing and malware attack.
Customised cyber liability cover for businesses has been around for years, but these were not over-the-counter covers that could be bought by individuals. The Cyber Safe policy designed by Bajaj Allianz General Insurance is aimed at improving the level of comfort among individual internet and ecommerce users.
"This cover is the first of its kind designed keeping in mind the changing risk profile of the consumer. A couple of decades ago the biggest risk was having your pocket picked. In this day and age covers against pickpockets do not help when the bigger risk is of cybercrime," said Tapan Singhel, MD & CEO of the firm.
"In today's digital world, the amount of personal data being generated, transmitted, and stored on to various digital devices is growing. The critical nature of this data and the complexity of the systems that support its transmission and use have created a gamut of cyber risks," said Singhel.
Attention is drawn to circular no. IRDAI/ INT/ GDL/ MISP/ 202/ 08/ 2017 dated 31st August, 2017 on MISP. The Authority has received communication from various stakeholders seeking clarifications on some of the provisions of the MISP guidelines. In light of the queries raised the Authority issues the following clarifications on the provisions of the MISP:
1. Guideline 4(b) - Eligibility conditions for appointment of MISP – Main Objects:
IRDAI’s response: It is clarified that the Motor dealerships that are run as proprietorships or HUFs or other unincorporated entities and do not have any deed or document to prove the objects, may furnish a declaration to that effect.
2. Guideline 5(a) & 5(g) – Appointment of MISP – Sponsoring Entity(ies)
IRDAI’s response: It is clarified that the MISP can be sponsored by one or more insurer or one insurance intermediary and not both.
3. Guideline 5(e) – Appointment of MISP – MISP to maintain records for a period of at least 7 years from the date of Insurance Policy etc
IRDAI’s response: It is clarified that the MISP can maintain records either in physical or in electronic form.
4. Guideline 5 (f) – If an insurance intermediary appoints MISP, then it shall work for the number of insurers as allowed under the respective regulations governing the insurance intermediary. Can an insurance intermediary create a panel of insurance companies for selling motor insurance policies?
IRDAI’s response:An insurance intermediary based on an objective and transparent criteria can enter into service level agreements with general insurers for selling motor insurance policies.
5. Guidelines 7( c) – Aadhaar based Identification
IRDAI’s response: The persons of MISP involved in distributing motor insurance policies,living in North Eastern States and Jammu & Kashmir can be enrolled based on other KYC recognized documents and upload the same on the IIB portal.
6. Guidelines 9(a) & (b) – sponsoring entity is obligated to carry out a periodic review of controls, systems, procedures, and safeguards employed by the MISP - As MISP is allowed to work for one or more insurers/sponsoring entities hence do all insurers/ sponsoring entities need to perform the periodic review of operations of MISP?
IRDAI’s response: Every insurer shall undertake review of operations of its part as well as common generic business aspectswith the MISP in order to ensure that the MISP guidelines are followed in letter and spirit.
7. Guideline 10( c) - MISP to issue Motor Insurance Policy on obtaining the express consent of the prospect.
IRDAI’s response: Consent can be considered based on OTP sent to customers mobile. However declaration from MISP as customer consent is not acceptable.
8. Guideline 11(i) – Code of conduct of MISP – MISP shall not solicit motor insurance business from those persons who did not buy the automobile from it.
IRDAI’s response: It is clarified that the MISP shall not canvass for/solicit insurance policies by calling up the customer who did not buy the vehicle from it. However if the customer chooses to go to a particular MISP for renewal of his motor insurance policy either on account of transfer from one city to another or due to sale of the automobile or due to closing of the motor dealership, the same is permitted.
9. Guideline 11(j) – Code of conduct of MISP – MISP shall not issue a motor insurance policy or motor insurance cover note that carries name or logo or any other symbol, except that of the insurer
IRDAI’s response: It is clarified that the name and contact details of the insurance broker can appear on the motor insurance policy as per the size format decided by the general insurers through the General Insurance Council.
10. Guideline 15(16) – Existing arrangements
IRDAI’s response: It is clarified that MISP guideline is applicable for motor insurance only. The insurance intermediaries that are granted certificate of registration by the Authority can sell other insurance products.
11. Guideline 15(2)(a) – Disclosures
IRDAI’s response: It is clarified that while the primary responsibility of ensuring policy wordings and features is of the insurer(s), the insurance intermediary and MISP are also responsible for compliance of the same.
Other clarifications
1. If dealer would need to identify unique designated person for each insurer if in case he decides to go with multiple insurers.
IRDAI’s response: The same designated person can work for multiple insurers.
2. If one insurer appoints MISP then does that MISP (Designated Person) has to undergo training & examination again for other insurer.
IRDAI’s response: One training for the MISP person is sufficient.
3. Are OEM’s and financiers covered under these guidelines
IRDAI’s response: No, OEM’s and financiers are not covered under these guidelines. The MISP guidelines cover insurers, insurance intermediaries and automobile dealers.
4. Can ISP distribute Motor Extended Warranty Product
IRDAI’s response:So long as the product is categorised as a motor insurance product, the MISP can sell that product.
5. What is the procedure for making Designated person of MISP.
IRDAI’s response: the designated person of MISP will be identified by the MISP. He will undergo training and pass POS exam that will be conducted by the insurer or the insurance intermediary as per guideline 7. He will then be nominated as the designated person by the MISPand recognised as DP by the insurer or the insurance intermediary. The details of his Aadhaar number will be uploaded in the IIB portal by the insurer or the insurance intermediary in terms of guideline 15(13).
6. Whether the process of appointment of POSP will have to be completed by MISP?
IRDAI’s response: the process of appointment will be completed by the insurer or the insurance intermediary as the case may be as they are the sponsoring agency of the MISP.
7. We understand that appointment letter to POSP will be issued by designated person of MISP.Please confirm.
IRDAI’s response: Being a sponsoring entity the appointment letter to POS will be issued by the insurer or the insurance intermediary.
8. Whether data of POSP under MISP will have to be uploaded in POS database on IIB site and whether it will be uploaded by DP of MISP.Please confirm.
IRDAI’s response: Yes, the POS details under MISP will be uploaded in the IIB portal. As per guideline 15(13) the same have to be uploaded by the insurer or the insurance intermediary.
9. What will be procedure for switching over of POSP from one MISP/intermediary to the other?
IRDAI’s response: the switching over of the POS from one MISP/ intermediary to the other will follow the same procedure as laid down for POS / insurance agents.
10. The Distribution Fee payable to Motor Insurance Service Provider (MISP) should be treated as ‘Commission' or as 'Expense'.
IRDAI’s response: The distribution fees is the amount paid to the MISP for procuring motor insurance business. Therefore it may be treated as commission.
11. Can the periodic review be performed by sending a comprehensive checklist to MISP over e-mail and asking them to confirm compliance thereon along with relevant documentary evidence? Else this exercise may have huge cost implication going by the number and spread of the dealers (MISP), even if it is outsourced.
IRDAI’s response: This is an operational issue. The insurer should ensure compliance of the guidelines in letter and spirit.
12. Is it possible for an MISP to act for more than One Intermediary(Broker)?
IRDAI’s response: No. The guidelines do not allow this.
13. If the same Auto Dealership Company is having two different Manufacturer Dealerships is it possible for them (same MISP) to act for multiple Intermediaries?
IRDAI’s response: yes as the dealer is linked to the OEM.
14. Is it Possible for the same individual Designated person or same individual POS can act for and on behalf of multiple intermediaries?
IRDAI’s response: No. The MISP person soliciting and procuring insurance business will be attached to one intermediary.
15. Is it possible for the Dealership to maintain one same dedicated Bank account for receiving Distribution Fees from Multiple Intermediaries?
IRDAI’s response: No. A Dealer can be an MISP for only one Insurance Intermediary.
P.J. Joseph
Member (Non-Life)
If Taj Mahal was destroyed or damaged due to insured perils and with application of deduction for depreciation, the claim payable will be NIL |
The contract of insurance, unlike other civil contracts, is the contract of Indemnity, whereby in consideration of the premium, the insurer expressly undertakes and promises to pay or make good the loss or damage. The amount recoverable is measured by the extent of the assureds’ pecuniary loss up to the specified sum insured.
Indemnity means that the assured is adequately indemnified either by payment in cash or reinstatement against loss of property and so is restored to his original position which he occupied at the time of loss by the purchase of an equivalent or by reinstatement of the property destroyed. The amount of the indemnity must be sufficient for the purpose. Any shortfall of reimbursement either by amount or by inferior replacement of subject matter insured will be violation of the fundamental principle of the contract of insurance.
The principle of indemnity also stipulates that the assured is not to derive any benefit of betterment due to such repair or replacement and as such should make an allowance of benefit derived to the insurer. The benefit so derived is measured by the enhancement or increase in value of the subject matter being the difference between the value just before the loss and after the repair or replacement.
In order to defeat the purpose of the contract of indemnity, the surveyors and insurers have come out with a fanciful idea of depreciation which they deduct virtually from each and every claim on the pretext that the assured has derived benefit of betterment due to repair or replacement and deprive the policy holders of their rightful indemnity under the policy of insurance.
The surveyor/s and the insurer while deducting any amount of so called depreciation will have to show as to how the claimant is benefited after the repair or replacement in enhancement of the value of the subject matter. Simple presumption, without any evidence is not sufficient to create a benefit for betterment.
It is commonly known that:
1. A repaired vehicle even with new parts fetches less value than an accident free vehicle. The replacement of any new part/s after an accident, do not enhance the value of such vehicle.
2. A repaired wall or door in a building does not enhance the value of building, even with new bricks and fiberglass doors.
3. A repaired electrical apparatus or Television similarly will not fetch more value than what it could have before the loss.
4. A repaired portion of machinery or equipment in a factory does neither results in increase in value nor better efficiency in producing more units of product. These examples could be countless in policies of insurance.
From the above it can be concluded that actually the repaired article is less efficient and less valuable and therefore the assured is neither benefited by its betterment nor is at advantage in its enhancement of value.
REINSTATATEMENT OR REPLACEMENT AS NEW POLICIES: The insurer promises to indemnify the insured new for old in case of loss or damage to the insured subject matter to the extent of specified sum insured specially, in House hold, Buildings and Machinery policies. But as they say the old habits die very hard, they insert a clause in certain sections of the policies for deduction of depreciation by certain percentage per year aggregating to 50%. Even without a clause, the deduction is justified by the insurer as depreciation for the use of subject matter insured and technological advancement as benefit of betterment and deprive the Policy holder of rightful indemnity.
The Factual Example of adjustment of claim under Householders policy with reinstatement value clause by Bajaj Allianz Gen. Ins. Co. Ltd.
The Policy: House Holders Reinstatement Policy - Insured item T.V 42” sum Insured 60,000 insured since last 8 years- Premium rate @1%. Claim - Total Loss.
Insurers’/surveyors’ adjustment of claim payable:
Subject: Re: claim under House holders' policy OG-17-1901-4091-00000235
Dear Sir, Please find the loss assessment :- As described earlier service engineer informed that all damaged parts of television had got damaged and not available in the market right now and the television unit needs to be replaced with new one. Hence we are recommending settlement of the loss on constructive total loss basis. Our inquiries revealed that the above mentioned television is old model and the same model is not available in the market right now i.e discontinued model. Now a days the technological upgraded Full HD LED television are available in market for Rs.39,990/. For arriving at present replacement value of similar type of television; we have deducted the technology up-gradation @50% on upgraded model. Hence, the present replacement value of similar type of television works out to Rs.19,995/- and the same is taken for assessment basis.
The above television is adequately insured at this present replacement value. The above television is about eight year old; therefore depreciated value of television with maximum depreciation @50% works out to Rs.9,997/-.We have estimated salvage value for television of Rs.250/-.Therefore, amount of loss after deducting salvage value works out to Rs.9,747/-. After deducting excess of Rs.2,500/-(5%of the loss amount minimum to Rs.2,500/-) the net adjusted loss works out to Rs.7,247/-.
With this analogy, if Taj Mahal was destroyed or damaged due to insured perils and with application of deduction for depreciation, the claim payable will be NIL.
Surveyors’ Report of claim adjustment will be as follows:
Dear Sir, Please find the loss assessment :- Taj Mahal was build by Shah Jehan in the year 1643 but was completed in 1653. The monument is as old as 364 years. As per the UNESCO World Heritage estimates, the present replacement cost will be Rs. 53.8 Billions.
Policy No. 0000000? Sum Insured Rs. 54 Billions. adequately covered. Similar monument could be built at Rs. 50 Billion. Assessment: Rs. 50 Billion
1. Considering the importance of monument 1% depreciation per annum of assessed amount for use and age, 364 yrs ................................................................... Rs. 182 Billions
2. Technological up gradation in Marble, Cement etc. 10% .......... Rs. 5 Billions
3. Salvage of marble jalis, motifs, decorations, paintings 10% ..... Rs. 5 Billions
4. Policy Excess 5% ..................................................................... Rs. 2.5 Billions
5. TOTAL Depreciation ........................... Rs.194.5 Billions
Claim Payable NIL (Negative Indemnity -144.5 Billions)
The insurer writes to the assured: As per direction of the Insurance Regularity Authority, we have accepted the report of recommendations of the Surveyor. The claim payable is nil. The claim file is closed.
Many people buying insurance don’t have the experience or understanding of their potential financial risks. Insurance is a modern day blessing and quite naturally one would expect the general public to embrace this gift. However, the numbers reveal a startling fact about uninsurance and low penetration in India. Sometimes people know they need to buy insurance protection, but don’t trust that the insurance company will fairly pay claims. Maybe they have had a bad experience with insurance companies or didn’t understand a claim outcome in the past. Surprisingly only about 0.2 percent of the total population have health insurance policies in India. While the insurance rates in the urban areas are promising, very few people living in the rural areas have their own insurance policies. The insurance sector is a rapidly growing in India. Around Rs 77,538 crores was collected as general insurance premium in 2013-14. However, number of facts show that a vast number of people in India do not have insurance. Only about 25 percent of the people have general insurance cover. Moreover most of the people who have insurance are either over-insured or have inadequate amounts of coverage! Nearly 70 percent two-wheelers and 30-35 percent of four wheelers are uninsured. It is clearly a challenge to society as victims of accidents caused by these vehicles do not get adequate compensation. The condition of health insurance in India is pathetic. 85% of Indian population does not use health insurance to finance their medical expenditure. Health insurance coverage is also needs to be stepped up immensely as more than 70 per cent of healthcare expenses in India are self funded. The reality is that most people in India are not insured and more than 70 per cent of healthcare expenses are self funded. Even in other poor and developing countries the ratio is not this high. In developed countries, the ratios are much lower.
Beyond a policy document, insurance is an intangible product. It is a conditional contract with a promise of potential future financial benefit, not an automobile or box of chocolates. Any insurance other than life insurance falls under the general insurance category. These are Property, Health, Motor, Travel, Cargo and Personal accidents. The main reason to insure is to protect one’s assets against any unforeseen financial loss. The law also states that it is compulsory to insure against certain liabilities. If we cause a loss to another person, the person is entitled to compensation, and to be sure that we can afford to pay that compensation, the law requires one to purchase liability insurance to transfer the responsibility of paying the compensation to an insurance company. The amount one insures for is called the assured sum. Normally a policy must cover the market value of the asset or the cost of replacing the asset if it is destroyed, lost or stolen. The premium is calculated based on the sum assured. People buy general insurance to protect their assets against losses due to fire, theft etc. An individual can insure his or his dependant’s health and well being through personal accident and hospitalization policies. Most general policies available in the market are issued on a yearly basis, but some policies are valid till longer periods, like fire insurance for business premises, certain policies are valid for a shorter time span like insurance for cargo transportation or for medical treatment during traveling abroad. Today many health policies have, that cover hospitalization costs, also offer a cashless settlement of claims. In such cases, the Insurance company has a Third Party Administrator, who pact directly with the hospitals and directly pay for your treatment as per the terms and conditions of the said policy. Any general insurance policy is not meant to be that for savings or investment returns, its only purpose is protection. This is not the correct approach as there is a price to pay or protecting assets worth of lakhs for just a few hundred rupees.
UNINSURED VEHICLES:
Uninsured vehicles is one of the structural issues faced by the non-life industry in writing motor-third party insurance as nearly 70% of two wheelers and 35% of four wheelers are uninsured. Legally no vehicle is allowed to be driven on the road without a valid insurance. It is a compulsory requirement for any person who uses vehicle to be used on a road to have correct and valid insurance against third party risks. However based on statistics provided by the insurance company’s one – third of the cars and two – third of the two wheeler vehicles run on the roads without compulsory third party liability insurance. The base of this statistical data is by the number of vehicles registered to the total number of policies issued. Further with the help of latest technologies it has been observed that, to make the matter worse, many companies have found forged motor insurance policies in circulation. With the innovation in printing technology, it is possible for fraudsters to reproduce policies of the insurance companies. Also the insurers are of the view that due to fake policies in circulation large number of vehicles remains uninsured. Second reason for such a large number of vehicles remaining uninsured is that vehicle owners in small cities and villages do not face any inspection of their documents. It is clearly a challenge to society as victims of accidents caused by these vehicles do not get adequate compensation. The other issues are rigid prices and tendency of court awards to go up in keeping with inflation. To control this issue, the insurer has issued the guidelines to provide long term policies. However, issuance of long term motor vehicle policy is a challenge because it is difficult to estimate the future income and inflation over a long period. So far the long-term insurance policy is for two wheelers only which may be filed with the regulator for approval shortly. However in many cases third party proposal comes after a break in insurance and hence in such cases underwriting must be more strict which is difficult to put into action online. In some markets in Europe and USA, insurers issue only six month policies.
LOW PENETRATION RATE:
Apart from uninsurance, the other problem that plagues the sector is low penetration. Penetration of insurance is calculated as the ratio of insurance premium to the GDP. In urban areas penetration of life insurance in the mass market is about 65 percent, and it is considerably less in the low-income unbanked segment. One of the main reasons for this is the mis-selling of insurance products. The most of the grievances registered with them were regarding mis-selling of insurance policies. There also is a need to design insurance products in a more customer-friendly manner; that would appeal to the general public The above mentioned facts clearly highlight the shocking state of affairs in the seemingly successful insurance sector. While the figures in urban India are promising, insurers cannot rely simply on them and ignore the rural sector. There is an urgent need to revamp the insurance products in general to attract more customers. There is also a need to educate people about the need and benefits of insurance. Only then can the issues of uninsurance and low penetration be tackled. A robust and vibrant distribution model too is imperative for deeper proliferation so that the general insurers can reach even the remote areas. The changing regulatory environment and opening up of new channels of distribution like bancassurance will also propel the growth of the sector. The problem in a country like India is that a large percent of people are uninsured. These people do not have health insurance that could offer them help in paying off medical expenses. Thus, when they come across any medical emergency in their life, they are left with no solution, other than to face financial hardships. A person should buy health insurance, as it is the only tool that can help them in seeking quality medical treatment.
AWARENESS SURVEY:
Insurance Regulatory and Development Authority (IRDA) engaged the National Council of Applied Economic Research (NCAER) to carry out a pan-India survey to assess the levels of insurance awareness in the country. The survey was undertaken in 29 states/union territories. The survey has brought out various findings from the information it gathered relating to the socio-economic profiles of the insured and the uninsured in both rural and urban areas and correlating it to various life and general insurance parameters. The survey shows that most of the insured are salaried, regular wage earners or self-employed. Insured households possess a high level of education as opposed to uninsured households which are mostly illiterate.
REGULATORY STEPS:
It is the time to review the steps taken by IRDA in fulfilling its twin mandates of Policyholders' protection and development of insurance industry. Imparting financial literacy is very important for improving financial inclusion and individuals' financial well being which directly impacts the financial stability. The insurers should realize that providing for an effective mechanism to enable consumers to voice their grievances and ensuring that the grievances are acknowledged, examined and resolved expeditiously, will inspire confidence in the consumers, facilitating greater insurance inclusion. There are various issues concerning one of the fastest growing segments of insurance sector in India i.e. health insurance. Out of 28 non-life insurance companies, 5 private sector insurers are registered to underwrite policies exclusively in Health, Personal Accident and Travel insurance segments. Health insurance plays a very significant role in reducing the severity of impact that ill-health and cost of treatment could have on personal finances. Ensuring policyholder servicing and protection through an appropriate service delivery framework and putting in place systems for fraud management were the issues highlighted during this session, which if focused upon can serve both business and social purposes. Other significant steps taken by the IRDA are as follow:
In order to sensitize general public about IRDA, its role and initiatives in insurance sector regulation and development as well as policyholder protection and welfare, a documentary film has been prepared for extensive use and launched by IRDA. This documentary film not only disseminates generic information about insurance but also highlights various initiatives taken by IRDA in the field of educating customers and redressal of grievances. The awareness is must for healthy and sustainable growth of the insurance sector and also to strengthen trust and faith of the policyholders in the insurance framework of the country.
'Bima Bemisaal' is the brand name for IRDA's insurance awareness campaign. It is a consumer education initiative and has the tagline "Promoting Insurance, Protecting Insured." Bima Bemisaal educates policyholders about their rights and obligations and informs them about the complaints resolution methods available to them. It also creates awareness about insurance among the general public. The Bima Bemisaal campaign uses various media like print, radio and television. This website is also part of the Bima Bemisaal initiative.
In order to ensure that the insurance products offered by the insurers are of value to the policyholder and that their pricing is appropriate and fair between the insurer and the insured, IRDA insists on the requirements of filing of insurance products under File & Use guidelines before selling any life/general insurance product in the Indian market. As per the File & Use guidelines, the insurer needs to justify the rates, terms and conditions of insurance policy to be offered while filing the product with IRDA. The insurer is not permitted to offer any product for sale until IRDA confirms in writing that it has no further queries in respect of that product. Here is the list of products offered by various insurance companies that were given clearance under File & Use procedures by IRDA
4. Grievance redressal:
For unhappy policyholders with the insurance company, the Regulator has introduced the following procedure:
NEED TO IMPART FINANCIAL LITERACY:
Insurance must be mandate in most of the social and political gatherings and it must be the priority in economic development during parliamentary sessions. Now, with the proposed plan of opening windows to 49% FDI, the regulatory framework can be more open to technology, compliance and global competition. The insurance penetration will certainly increase if people of India can be made aware of the various risks associated with their life, business and the internal and external environment. Nevertheless, insurance business is the art of selling promise and providing economic security which is the need of the hour to every individual is being cautiously provided through insurance, thereby strengthening the Nation’s economy and growth. Insurance is available for unpredictable events such as death, accidents, sickness, loss or damage to property. A common person needs life insurance, accident insurance, health insurance and insurance for property like - motor vehicle, house and so on. There are more complicated risks like legal liability and various risks that commercial enterprises face. For these too there are various special policies available. While life insurance and some types of accident and health insurance are offered by life insurance companies, property insurance, health and accident insurance are offered by non-life insurance companies (also known as general insurance companies). The insurance policy that a policyholder buys must meet his requirements. This means one must identify what his needs are first. As a man of ordinary prudence one should also join a health insurance scheme while young and to renew it continuously. While third party insurance for motor vehicle is statutory, that is, it is required under the law, it would be wise to buy a comprehensive policy that covers the vehicle against own damage as well. Protecting the house and contents against the risks of fire and flood will secure the hard-earned savings. The use of technology and innovation through technology was the need of the hour to capture the eyeballs and imagination of the people, especially the young, for imparting financial literacy. Several innovative ways in which technology can be leveraged for consumer education were discussed. There is a need to increase the number of insured individuals in India. Working in this direction, every individual, every medical care provider and every health insurance company should play an active role. It is only then possible that people would be able to avail quality healthcare in times of medical emergency. Insurers have designed plans, but people should be encouraged to buy them so that the overall condition of medical care insurance in the country can be improved. The Government should educate people about the rise of medical costs and the importance of these products. Regulators should bring change in the guidelines, allowing only the right players to enter the health insurance market. Health insurance providers should design products, according to health needs of target customers and encourage people to buy them. The combined efforts of all these bodies will surely bring some improvement.
The industry is going through a difficult time, but insurers have to rely on diversified growth on the back of segments like health and weather insurance, which has improved the market share. Private sector general insurers gained their combined market share to 44% in FY14 despite the depressed economic scenario, at the cost of the state-owned insurers. Private sector general insurers had a combined market share in terms of gross premium collection at 44% in FY14, up from 42.77%, while public sector companies' share declined to 55.84%, from 57.04%, according to the data. The combined ratio which determines the profitability is a crucial parameter to be monitored among the race for market share. The combined ratio in FY14 for the industry was over 110%. People are risking their lives and property instead of paying a small amount of premium. The tendency is alarming as the number of road accidents in India have never gone down in the past several decades. In this scenario, uninsured vehicles on the street are the biggest risk in multiple ways. More than one third private four wheel vehicles in India are not insured, as per estimates. This figure goes to above three fourth when we talk about two wheelers. These numbers are astounding. With the reforms in the insurance market in India and the entry of private insurance companies, premium for vehicle insurance has gone down considerably. Companies are competing with each other in a healthy manner and ready to offer better and better deals. But regretfully, despite the availability of cheap insurance plans, people are still ignoring them at their sweet will and taking risks of life and assets.
The Regulator has empowered insurance companies to open branches in Tier-II cities. Rashtriya Swasthya Bima Yojana needs to be extended to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers. A comprehensive social security package is to be evolved for unorganized sector by facilitating convergence among different schemes. The drives run by traffic police reveal such deviations on an ongoing basis. Millions of people pay a penalty for not renewing their vehicle insurance plans, but the number of non-renewal is not decreasing. The vehicle insurance industry, at the other end, has accepted that most of their business would come from either sale of brand new vehicles or vehicles which are 1-5 years old. Insurers should innovate in producing simple, standardized, reasonably priced and easily comprehensible products. They should take steps to curb fraud in health insurance as this has an adverse impact on the cost of taking health insurance for consumers. Honoring a claim is not a favour done by the insurer to the insured but a contractual obligation. Innovations in product and service offerings along with focus on quality of service have helped us build a reputation and grow as a business. All insurers should come together along with the life and general insurance councils to spread insurance literacy among all sections of the society.
References:
Author
SHWETA RANA
Asstt. Professor (IT),
71/143-A, Opp. K.V. NO: 5
Mansarovar, Jaipur-20
Abstract –
The
research paper dwells upon the historical reasons that propelled the present
government to go for universal health coverage for its deprived population. The
paper advocates the values of Primary Care and suggests that India’s healthcare
should be woven around Primary care. The paper also throws light on the various
health inequalities and the shortcomings and strength of the present health
insurance mode. The paper also tries to fix the boundary of care.
The budgetary announcement
of this year for initiating massive health insurance scheme through health
insurance protection scheme is a much awaited and welcome decision. India can
march towards economic advancement only when it addresses the much needed
healthcare needs of its vast population. The need for universal health coverage
was felt by all signatory nations including India at Alma -Ata Declaration way
back in 1978. The Alma Ata Declaration laid emphasis for promoting primary
health care. The whole emphasis was to address the main healthproblems through
community participation, thereby, promoting equitable access to promotive,
preventive, curative, palliative and rehabilitative healthservices. It was felt
then that promoting and protecting health is crucial to human welfare and
sustained economic and social development. It was also felt that health for all
would make the world a better place to live in terms of quality of life, global
peace and security.In 2005, again the pledge was renewed by all WHO member
States that they would strive for universal health so that their people could
access health services without paying for them.India’s march towards universal
health is not, therefore, sudden as many people tend to believe. A High Level Expert Group Report on Universal
Health Coverage for India Instituted by Planning Commission in a report
submitted in 2011 defined universal health in elaborative terms. The report
maintained all Indian citizens should have equitable access to affordable,
accountable, appropriate health services and that also of assured quality .The
assured quality should include promotive, preventive, curative and
rehabilitative care. The report suggested that public health services should
address wider determinants of health as well. The report emphasised that the
government should play leading role by being guarantor and enabler of universal
health coverage .The goal of National Health policy 2017 aspires for highest
possible level of health and well-being across all age group, through a
preventive and promotive health care orientation. The policy advocates going
for universal health in a graduated and progressive manner, realising very much
the difficulty of implementing universal health cover.
A good health system that strives for universal
health coverage can survive and sustain itself if it is built around the values
of Primary healthcare. Every country aspires that its health systems to become
equitable, inclusive and fair. The strong core values of Primary care are
directed at social justice, the right to better health for all, participation
and solidarity.
In this context, one needs
to understand what constitutes Primary care and how has it changed over a
period of time in response to the healthcare needs of the community it serves.
It has come out of the narrow confines that once used to define it. Today it is not defined in terms of the
availability of doctors or making available the basic drugs and amenities to
rural poor essentially. Primary care today tries to serve the entire
population. It attends to broader range of morbidity and therefore, it not
cheap. It encourages community participation. The level of primary care varies
from country to country. The misplaced idea that it is cheap makes it
restrictive in its coverage in a country like India. A good primary care stresses
on disease prevention and timely detection of disease.The focus has shifted to
promoting healthier life style which in the process ensures enhanced value.
The healthcare scheme
proposed by government of India, however, seeks to address the secondary and
tertiary care. One gets the feeling that preventive and primary care has not
been given its due. The world Health Report 2008 on Primary Health Care
recognises the fact that social justice and health equity can be guaranteed
when we move towards universal health coverage. The healthcare has to be woven
around Primary care that seeks to address the healthcare needs and expectation
of the community it serves. The proper healthcare need assessment would not
only make the delivery system both relevant and responsive. In that scenario,
the healthcare infrastructure and the delivery mechanism both need to be
designed as per the needs of the community and not as per the needs of the
service providers.
A good healthcare system
should be wedded with the values of equity. It is true that we don’t live in an
egalitarian society but the time has come to address the existing health
inequities in India. The inequities are far too many. In the reference year
2015-16, in theOverall (Health) Performance Index Score, Kerala notched up the
top position with 76.55 points while Uttar Pradesh languished at
33.69.Similarly the divide between rich and poor and the healthcare access
across the various social strata continues to be disturbing. Health equity is
possible when universal access is made possible through social health
protection .The government has to come forward as a payor by taking proactive
measures. Most people cannot buy healthcare or access healthcare because the
healthcare cost is most often beyond their reach. The social health protection
can come through either through community driven pooling or pre-payment instead
of out-of-pocket payment at the point of receiving the care. The out of pocket
expenditure in India alone is the sole cause of people falling into debt trap. India’s
out of pocket expenditure (OOPE) constitutes more than 60% of all health
expenses- in the process, it has reduced India’shealthcare as an impoverishing
care. This has led to exclusion instead of inclusion which universal care looks
at.
Large segment of the Indian population
is poor.The healthcare delivery needs to be reformed to deal with the massive
reach out as envisaged in the budget. The overt hospital centrism as prevalent
today needs to be looked at seriously .Over specialisation and over reliance on
technology has led to inefficiency and also inequality. Ideally, People should
be at the centre or focus of a vibrant healthcare system –instead we have moved
away from them. The over reliance on curative care, thus marginalising the role
of primary care in the process has been the bane of current healthcare system.Health
system- in India in the absence of good primary care has drifted towards
unregulated commercialization.
Every government aspiring
for universal health cover for its population needs to answer one very
important question- How would it finance its health system in a sustained
manner .The government needs to allocate higher priority to health by making
higher budgetary allocation. Innovative financing is another way of looking at
it. The tax on long term capital gains (LTCG) on equity investments can help
government raise necessary resources. The World Health report -2010 suggested
that India can raise a very large amount every year if it goes for a currency
transaction levy of 0.005% on its foreign exchange transaction. In 2010, it was estimated that India could fetch
close to US$ 370 million if it levies the above tax on its annual foreign
exchange turnover.
The second pertinent issue
that government needs to address relates to optimum use of available resources.
The Health report 2017 rightly points out that we need to put faith in our
Public Health Care System particularly in rural areas where most people cannot
access healthcare for more than one reason. Either they don’t exist or even if
they exist, they are mostly non-functional. If government is serious about
implementing UHC – it needs to build the trust of the common man from the scratch
in public health care system. India has huge network of health care centres
like Sub Centres (SCs),Primary Health
Centres (PHCs),Community Health Centres (CHCs),Sub-divisional Hospitals (SDHs)
\Districts Hospitals (DH). There are still shortages of these facilities but unfortunately
even the existing ones don’t deliver as per the expectation of the deprived population.If
government wants to implement universal health though the route of insurance,
it needs to strengthen the existing infrastructure. Health insurance companies
need to look for some reward mechanism to invigorate these institutions. Some
state health schemes did try to work with these institutions but without much
success. One cannot create health infrastructure overnight. The existing
healthcare system in rural areas can be made financially viable if insurance
companies start paying them for the services rendered by them. Certain portion
the amount paid should be necessarily be spent on infrastructure development and equipping
these units with required instruments. Doctors and other health workers should also
be adequately rewarded for the services rendered. The need of the hour is
therefore, strengthening the primary care and slowly build on secondary and
tertiary care .There would be mushrooming of hospitals of all sizes and shapes
If the focus gets diverted to secondary and tertiary care .In that case greed
would drive the healthcare and the fruits of universal healthcare would remain
elusive to a big poor population.
The insurance route
has been a mix bag. It suffers from inverse care .In inverse care people with the more resources and less
healthcare needs tend to consume more care. On the other hand, people with more
healthcare needs are deprived of healthcare facility.
Group Business (other
than Govt. Business)covers only 16% people of the total 4375 lakh people
covered by health insurance in 2016-17as per IRDAI Annual Report -2016-17 .These
groups of people mostly corporate employees and reasonably well off financially
consume the most health care The utilization rate expressed in terms of incurred
claim which indicates the claim outgo is significantly high at 125% (for every
premium of Rs.100, the claim outgo is Rs.125)for these groups of people.Health
insurance companies have failed to garner individual business .Only 7% i.e.
close to 320 lakh people are covered by individual health insurance policies
.The incurred claim ratio of individual class of business is 76% much lower
than government sponsored health insurance policies (122%).But individual
policies don’t sale in the market for they are extremely costly and offer restrictive
cover vis-a-vis group insurance policies. Unfortunately individual class has to
subsidise the cost of the effluent section of the society.The total incurred
claim ratio of health portfolio was 106% in 2016-17 and it had remained more
than 100% in the last three years. This clearly shows that health insurers have
failed to handle this portfolio efficiently. The utilization rate across
certain specific diseases, hospitals and geography has been high .In that scenario,Government
would find difficult to sustain this scheme over a long period of time. But
insurance companies have great reach and tons of experience in dealing with the
rural population. They would also be
able to calculate the objective risk in a much scientific manner given the
large number that they would deal with in days to come.
The fear is that our
healthcare system would driftmore and more towards Misdirected Care as resource
generated would be spent for curative care. There would be steep rise in
speciality and super speciality healthcare centres. The fear can be dispelled
if the potential of primary and preventive care is realised. The primary
healthcare to a considerable extentcan lessen the load of curative care .The
government policies have often led to fragmented care. The excessive stress on
disease specific control did not allow holistic growth. Realising this, the
current budget has rightly increased the total health budget by 2.8% by
reducing budget on specific disease control. This was much needed to arrest the
fragmentation of healthcare.
Health insurers must
know how to purchase healthcare services. Today, theycommand more than Rs.30,000crore
business and would grow further. The healthcare providers in India are largely
unregulated segment .Stringent acts on the pipeline may not help the cause. In
that scenario, health insurers should use their collective bargain skillsto
raise their own standards to evaluate the services of health providers to keep
them in check. The initiative of National Pharmaceutical Pricing Authority
(NPPA) to cap the prices of coronary stents both metal and drug eluting is a revolutionary
development .The implementation has suffered as bigger hospitals have stayed
away from introducing these prices at flimsy grounds..
The RSBY scheme,
despite its many failings was both revolutionary and revealing. It failed owing
to dwindling political will. Some state governments went on to introduce their
own schemes often for the same population. Maharashtra was one such example. The
concept of smart health card along with screening and health camps was indeed a
great move to sensitise the rural population. The foundations of world’s
biggest healthcare should be laid on pragmatic note with the thrust on
preventive and promotive care.
References:
1. The World Health Report –Primary Health Care –Now More Than Ever –WHO -2008-http://www.who.int/whr/2008/whr08_en.pdf
2. Funding Indian healthcare -Catalysing the next wave of growth- https://www.pwc.in/assets/pdfs/publications/2017/funding-indian-healthcare-catalysing-the-next-wave-of-growth.pdf
3. Research for Universal Health Coverage WHO 2013 http://apps.who.int/iris/bitstream/10665/85761/2/9789240690837_eng.pdf?ua=1
4. HEALTH SYSTEMS FINANCING -The path to universal coverage-WHO-2010-http://www.who.int/whr/2010/10_summary_en.pdf
5. IRDAI Annual Report -2016-17 -file:///C:/Users/abhijit/Downloads/English%20annual%20report%202017%20(1).pdf
6. National Health Policy -2017 -http://cdsco.nic.in/writereaddata/National-Health-Policy.pdf
7. A High Level Expert Group Report on Universal Health Coverage for India-http://planningcommission.nic.in/reports/genrep/rep_uhc0812.pdf
8. http://social.niti.gov.in/hlt-ranking
Author: Prof.(Dr) Abhijit K.Chattoraj, Chairperson, Centre For Insurance & Risk Management –Birla Institute of Management Technology(BIMTECH) Greater Noida.
The difference between stranding and grounding of the vessel was necessary when F.P.A. warranty or policy franchise did not apply to the claim for stranding of a ship but did apply where the claim was for grounding of the ship. However, both are similar types of incident. The marine underwriters practiced with old type of SG (A standard policy known as “SG” with a schedule) cover considered that “stranding” occurs when the carrying ship or craft runs aground and remains therein for an appreciable period of time (say, 15 minutes or more) thereby opening the warranty in the memorandum. Since there is no memorandum or F.P.A. form of cover under the 1982 Clauses, the definition is no longer of consequence.
A vessel struck upon a rock, whilst going into harbour , for ninety seconds. Here he said “ if it is touch and go with the ship there is no stranding…..If by the force of the elements she is run aground and becomes stationery, it is immaterial whether this be on piles, on the muddy bank of the river, or on rocks on the sea shore; but a mere striking will not do, wheresoever that may happen.
It was held by the learned judge that if a ship struck upon a rock, remaining there for 15 to 20 minutes, it was sufficient to constitute a stranding.
Where a ship deliberately takes a ground as, for example, on a berth where the ship lies in the river mud at low tide, then any accidental loss of or damage to the cargo attributable to that grounding would be covered.
When a ship or craft runs aground, it is possible that the packages stored therein may be damaged/crushed by the impact related to the impetus of the movement forward. Such damage is covered under the policy. The same rule is also applicable to the deck cargo thrown overboard by the impetus of the carrying vessels, as it stops abruptly on grounding.
The depth of the Ocean varies. The depth In some parts of the ocean may be double the height of Mt Everest whereas in some parts are so shallow that one can walk through the sea. Hence, if the draught is not adequate for the vessel to ply, she will be grounded.
Since smooth navigation of the ship depends upon the depth of the sea, some ports of the world will not allow ships of various sizes to take berth. If we consider the depth of the Haldia port, West Bengal, India, the higher size ship like VLCC or ULCC cannot enter into the port .due to poor draft. In some ports, the higher capacity ship can take berth but deposition of silt, mud in the port due to poor dredging prevents the ship to enter. The higher capacity ship runs aground due to poor draft when she enters into the port.
There are many ports where the ship is allowed to enter during high tide but the ship is grounded during low tide.
If soft grounding occurs, there may not be serious effect to the ship. The ship may be stranded due to mud, silt deposited in the port. However, the underwater survey should be done to ascertain the damage to the bottom portion of the hull under supervision of the surveyors engaged by the Classification society.
The wallop grounding causes extensive damage to the hull. The serious crack may develop in the ship’s structure. The structural stresses of the ship with heavy load may cause serious casualty.
If grounding occurs there will be a serious effect to the cargo and the ship. If crack develops in the ship’s structure due to heavy impact, the water will penetrate inside the cargo holds of the ship causing damage to cargo. If the ship emits pollution after the casualty, there will be a detrimental effect on the environment and marine life.
The cost of repairing of the damaged ship will be substantial. The ship will be unemployed until repairing is complete. The classification of the ship will be withdrawn until the class is reinstated.
The grounding generally occurs due to human error and lack of information on navigational hazards. The ship may be grounded due to faulty manoeuvring during adverse weather condition. In some cases the ship may also be grounded due to loss of centre of gravity if weight of the cargo therein was not equally distributed.
It is said that a ship has sunk when she is immersed in water and cannot sink further. In the case of Bryant and May Limited v London Assurance (1886) 2 TLR, the vessel laden with matchsplints from quebec to London, arrived at Gravesend, having sprung a leak with part of her deck just under water. The jury found that the ship had not sunk; and of course being laden with timber, could not sink in the ordinary sense of the word. It would seem , a ship must be submerged and must touch bottom to constitute a sinking.
However, capsize does not have to be so extreme as to cause the ship to sink as “sinking” is a separate peril. The term capsized means that the ship or craft is turned over or, atleast “wholly healed over”.
It has been clarified by Ms Susan Hodges in Law of Marine Insurance that “ on a strict interpretation it would seem that a vessel, even if seriously damaged in a storm, but which does not actually strand, ground, sink or capsize, would not attract the operation of the clause 1.1.2 of Institute Cargo Clauses (B) and ( C)
1.1.2 vessel or craft being stranded, grounded, sunk or capsized
Therefore, unless one of the events stipulated actually occurred, any loss of or damage to insured cargo caused by the mere rolling of a ship in a storm will not fall within the Clause.
Author :
Sumon Ganguly- Consultant Marine Insurance
Source:
