News Blog

Religare to exit Religare Health Insurance for Rs 1,040 crore

Sun, Apr 9, 2017General Insurance

Religare Enterprises will sell its entire 80 per cent stake in Religare Health Insurance to a consortium of investors led by private equity fund True North Managers for an estimated Rs 1,040 crore. "The company has entered into definitive agreements with a consortium of investors led by True North Managers, an India based private equity fund, to divest its entire stake in Religare Health Insurance Company Ltd (RHI)," Religare Enterprises Ltd (REL) said in a BSE filing today. "This transaction values Religare Health Insurance at Rs 1,300 crore and Religare Enterprises currently has 80 per cent shareholding on a fully diluted basis in the company," it said further. Union Bank of India and Corporation Bank also hold 5 per cent stake each in RHI. The consortium of buyers includes domestic investors such as Gaurav Dalmia and Faering Capital. Religare Enterprises said the transaction marks the single largest nvestment in a standalone health iinsurance company in India.

The Economic Times

Insurers repudiated an unacceptable Rs 701 cr in life insurance claims; Parliament must step in

Wed, Oct 12, 2016Life Insurance

The Insurance Regulatory and Development Authority’s (IRDA) Annual Report for 2014-15, states that R701.69 crore life insurance claims were repudiated by insurers. The report further highlights that “during the year, insurers have repudiated 8% of the number of claims handled … claims repudiation was high for benefit-based policies at 22%.” This is a disturbing trend as 22% repudiation of claims is unacceptably high for such simple products. In a developing economy like India, where one has flagship schemes of the Modi government focussing on crop, life and health insurance for the downtrodden on the one hand and “Make in India” on the other, it is vital to have an insurance regulator absolutely committed to policy holders’ rights. Had there been a parliamentary oversight in insurance matters, our MPs would have found the amount of claims repudiated unacceptably high in products like life insurance. Even, IRDA in its report does not mention the steps being taken to reduce the repudiation ratio. This is startling, since they are tasked primarily to protect the interest of policyholders. Individual health insurance: General insurers aggressively sell travel health policies. If the intention is to cover emergency medical expenses incurred by Indian citizens travelling abroad on a holiday or business, the IRDA has defeated this objective by allowing insurers to exclude pre-existing diseases. Imagine the plight of an Indian resident travelling abroad on a holiday, requiring emergency hospitalisation because of a heart attack, being denied the claim because he had a history of heart disease. The medical costs abroad would bankrupt most middle class citizens. Ideally, a travel health policy should reimburse expenses incurred for emergency medical treatment to stabilise the condition of the policy holder so that he is fit to return home for further treatment. Instead of underwriting risks, insurers use travel agents and travel portals to push sales to healthy people, but deny coverage (even after selling the policy) as they tend to exclude anyone who has a history of heart ailment or diabetes or any other pre-existing condition. This again needs Parliament’s immediate attention. Corporate commercial lines of insurance: Coming now to the commercial general insurance (covering fire, marine, engineering and miscellaneous classes of business), IRDA does not report the statistics of claims repudiated in fire, engineering, marine or miscellaneous insurances with a detailed analysis of claims. The raison d’être of the insurance industry is to make good insured economic losses. It then becomes imperative that IRDA reports facts relating to claims reported, paid, outstanding and repudiated in greater detail. Repudiation of claims is a serious issue. While individuals can approach the ombudsman’s office for Redressal of grievances, the IRDA has failed to ensure a viable mechanism for commercial entities. There is no mechanism for speedy resolution of disputes, such as Alternate Dispute Redressal. Mechanisms, such as mediation and arbitration, should form part of the policy conditions. With courts clogged with pending cases, ADR is the way forward. We need a regulator who is more forward looking than is presently the case. IRDA, in its annual report, categorically states that they do not interfere in claims disputes. While that is so, the IRDA should recognise that they must institutionalise a mechanism for speedy dispute resolution. The system should be such that a policy holder should not be required to borrow money from a bank to restart his business. The insurers must meet their liability as quickly and definitely within a fixed time. IRDA had a ‘File & Use’ system, now modified to ‘Use and File’, whereby each insurance company has to file the full policy wordings to the regulator for approval. However, does IRDA have a mechanism to see whether products approved by them for marketing, respond to genuine claims of the insured? The answer is in the negative—again a pointer towards a very passive regulator. Whereas contract certainty is an article of faith for insurance regulators the world over, in India the regulators think their role is over once the guidelines are issued. Some of the regulations are baffling to say the least. For instance, those concerning the surveyors. Contrary to international best practice, the IRDA requires surveyors in marine insurance claims (an important class of general insurance) to not only comment on the proximate cause of the loss and the extent of the claim, but also interpret policy terms and conditions. This has virtually killed the remarkable expertise the four PSU insurance companies had in the past. With the exception of a diligent few, most officers now conveniently pay or reject claims on the basis of the surveyors’ comments thereby minimising for themselves any adverse audit reports. Honest officers who take decisions suffer. Those who do not take any decisions over-ruling surveyors avoid an audit or vigilance enquiries against themselves, thereby enhancing their chances of promotion! The time taken to enforce contracts in court, unfortunately, creates a situation where very few policyholders resort to litigation. Therefore, survey reports do not face the critical scrutiny that they deserve from the courts. Interestingly, IRDA has not taken action, even where the courts pointedly commented on surveyors’ failure to maintain impartiality. IRDA does not keep track of decisions of the High Courts, Supreme Court and the National Commission. Unless IRDA institutionalises such a mechanism, they will fail to take corrective measures, including forcing insurers to change policy wordings to keep pace with judicial pronouncements. This oversight must also include adverse observations of courts on the conduct of surveyors. There is a need for the IRDA annual reports to focus on data collected from insurers and surveyors to objectively gauge the efficacy of regulations, particularly in the area of policyholder protection. This will ensure a greater focus on policyholder protection. Till then there is a very strong case for greater parliamentary oversight of IRDA.

The Financial Express

Bariatric surgery to save life isn’t cosmetic, insurer must pay: Forum

Wed, Sep 14, 2016General Insurance

Observing that bariatric surgery performed to save a life doesn't come under the category of cosmetic surgeries, a consumer forum directed ICICI Lombard General Insurance Company to pay a customer Rs 5 lakh spent on surgery for his wife who was diagnosed as morbidly obese. "The evidence produced by the complainant (woman's husband) is sufficient to show that it was life threatening. Therefore, surgery was conducted to save her life. Surgery to save life is not excluded in the policy," the forum said.

The Times of India

Soon, get baggage, mobile insurance on trains

Tue, Sep 13, 2016General Insurance

With 40 lakh people opting for passenger insurance since its launch early this month, Railways is now planning to roll out baggage insurance which also includes mobile and laptop in the insurance cover. There are also plans to expand the existing passenger insurance from trains and include station and ticketing areas so that passengers get the cover in case of any untoward incident on station premises. According to IRCTC, there is immense potential to expand the insurance cover and this is also likely to bring down the premium amount. IRCTC along with three private companies provide the insurance cover. “As of now the insurance covers passenger from boarding to alighting from train. We are planning to extend it on station and ticketing areas also. There is potential to extend it to baggage and other valuables like mobile and laptop,” said IRCTC CMD A K Manocha. He said the response to passenger insurance is massive and modalities to extending the insurance cover needs to be worked out. The IRCTC is also planning to extend the service to unreserved passenger category and is changing option in booking website so that medical insurance automatically gets added to the ticket and a passenger has to opt out in case of not interested in getting the cover. At present, it has to be checked in. Passengers booking tickets online from September 1 have an option to get an insurance cover of upto Rs 10 lakh by paying 92 paise premium. It is available in untoward incidents, including terrorist attack, dacoity, rioting, shootout or arson, occurs. “Number of people opting for new insurance scheme crossed 4 million mark. Scheme a great success and it is one among many passenger friendly initiatives,” Railway Minister Suresh Prabhu tweeted Tuesday. The scheme offers travellers/nominees/legal heirs a compensation of Rs 10 lakh in the event of death or total disabilty, Rs 7.5 lakh for partial disability, upto Rs 2 lakh for hospitalisation expenses and Rs 10,000 for transportation of mortal remains from the place of a train accident. Three companies -- ICICI Lombard General Insurance, Royal Sundaram General Insurance and Shriram General Insurance provide the insurance. The three selected insurance companies will get to issue the insurance policy on a rotational basis through an automated system. They have been engaged for one year with the provision of extending the contract on a performance basis.

The New Indian Express

Bitter truths on the insurance front

Sun, Sep 11, 2016General Insurance

In a severe indictment of malpractices prevailing in the insurance sector, P.K. Vijayakumar, the outgoing Insurance Ombudsman for Kerala, has said that the mandatory medical check-ups for mediclaim insurance policies have become a big farce and that doctors acting in collusion are guilty of professional misconduct. In an interview to The Hindu , Mr. Vijayakumar, who is set to demit office on September 13, singled out a section of insurance agents bent upon furthering their means as the principal instigators behind the unhealthy practice, giving the entire insurance sector a bad name. “They discourage policyholders from disclosing their actual health status at the time of buying the policy by dangling the carrot of lower premium. But the policyholders realise their folly only after their claim is denied and the policy is cancelled by the insurance company on charge of suppressing information,” Mr. Vijayakumar said. Clinical evidence Insurance companies establish through clinical evidence that the policyholder had the illness at the time of buying the policy, which he had not disclosed then. Mr. Vijayakumar said the agents arrange for medical reports from pliable doctors who give clean medical reports without even seeing the policyholder. There was even an instance in which even the height of the policyholder was wrongly entered in the report by a doctor. Porting of policies Such suppression of information is also rampant in the porting of insurance policies from one insurance company to another, especially in the case of mediclaim policies and vehicle policies when false disclosure of no claim bonus benefit land policyholders in trouble. Mis-selling of insurance policies based on half truths was rampant, which amount to cheating. There are also instances in which anti-customer provisions are surreptitiously included in the policy documents. For instance, a mediclaim is sold to a senior citizen promising coverage of all diseases without disclosing the fact that degenerative diseases common to people of their age would not be covered. Mr. Vijayakumar said that insurance companies challenging the ombudsman’s orders through writ petitions in the High Court, which was rare previously, has assumed disturbing levels of frequency of late. “This goes against the sprit of creation of insurance ombudsman,” he said.

The Hindu

Govt's new crop insurance scheme to be Rs. 18k cr biz

Tue, Aug 23, 2016General Insurance

Mumbai: Out of almost nowhere, the government has created a new market of Rs 17,000-18,000 crore with its new crop insurance scheme.This segment will be almost twice the size of the fire insurance business of non-life companies, which includes premium from covering buildings, factories, houses and shops. Until last year, crop insurance was a business that generated less than Rs 5,000 crore of premium and most of it was the Agricultural Insurance Corporation.The reason for the change in fortunes is the new scheme -Pradhan Mantri Fasal Bima Yojana (PMFBY). In the earlier National Agriculature Insurance Scheme (NAIS), both premium and claims were capped for the insurer. This time, the government has freed the pricing.In exchange, insurers undertake to fully compensate the farmer for any loss. So while the government has an initial outgo in the form of a premium subsidy, it does not have to pay out anything even if there is widespread crop failure. “Subsidising the premium paid by the farmer is done in most countries. This is because in farming every aspect of production is out of the control of the farmer and there is a need for risk mitigation in the form of in surance,“ said Bhargav Dasgupta, md & ceo, ICICI Lombard General Insurance.The private insurer has bid for several states as the riskbased premium now makes crop insurance a viable business. Although farmer pays a flat of 2% of the sum insured for Kharif and 1.5% for Rabi insurance companies are free to charge as 12% if claims in earlier years justify that kind of pricing. The difference between the subsidized rate the farmer pays and the actuarial rate will be paid by the government. “The farmer now sees more value in farm insurance as the entire crop is now covered. The policy also covers pre-sowing and post harvest risks,“ said Dasgputa. According to G Srinivasan, chairman, New India Assurance earlier only 15% of loanee farmers (farmers with bank debt) were purchasing insurance because the premium rates were high. Now with premium rates for farmers being capped more and more people are taking it “.Our target is to take it to at least 50% of the loanee farmers. Even if it reaches 30%, we should see premium of Rs 15000 crore,“ said Srinivasan. The combination of higher sum insured and more farmers joining the scheme has increased the risk for Indian companies. All the companies will have to go for reinsurace, because it is too big for any company to retain on its own book as there could be catastrophic claims. Both GIC Re and international reinsurers have given support,“ said Srinivasan. Going ahead the pricing of premium is set to get even more scientific. “We will use satellite imagery and drone photography to develop our models. These will be co-related with earlier data which will give us the change in yield,“ said Dasgupta. For present the government requires that estimation of yield has to be done by actual crop cutting experiments.

The Time of India

9 Traits of a Good Insurance Brokerage Firm

Tue, Aug 16, 2016General Insurance

For a layman, the world of insurance can be extremely baffling and confusing. There are too many technicalities and clauses that make itdifficult to understand the policy just by reading a brochure. It is why most people prefer meeting up with an insurance broker or avail services of an insurance brokerage firm if they are interested in policies like health insurance, term plans, home insurance, travel insurance, etc. The advantage of approaching insurance brokerage firms is not just limited to technical understanding, but they also assist in customizingthe plan as per individual needs. Today, various insurance broker companies in Indiaoffer their services online, but it is always better to consult them in person. At the same time, it is extremely important that the brokerage company you are relying upon for your insurance needs is an accredited agency and has the requisite expertise in the insurance field. The practice of mis-selling is a common trend in the insurance sector,and therefore, here are some of the traits that you should examine before finalizingan insurance brokerage company in India: 1. Value needs of the client 2. Years of experience 3. Knowledge 4. Passionate 5. Communication skills 6. Accessible 7. Professional 8. Good listeners 9. Follow-up

The Hans India

National Insurance’s solvency levels down

Tue, Aug 16, 2016General Insurance

MUMBAI: National Insurance Company's solvency ratio has fallen below the level mandated by the regulator, making the state-run general insurer less palatable for investors in the planned initial public offering. The company's solvency margins have fallen to 1.2 times against the prescribed levels of 1.5 times. Solvency margin is the minimum prescribed surplus of assets over liabilities. The Insurance Regulatory and Development Authority has prescribed that all insurance companies maintain 1.5 times surplus over liabilities at all times. All life, general and health insurance companies have to maintain the minimum prescribed limit by the regulator. "We have presented our case to the regulator where we have said that we will be exiting high risk portfolios," said National Insurance Company chairman K Sanath Kumar. "We'll be writing more retail health and motor (policies), which have low risk and capital requirements," he said. The insurer will have no issues if the fair value and real estate is used in improving solvency margins to the prescribed level. The company has fair value of Rs 6,000 crore and many real estate properties which are not used in calculating solvency.

The Economic Times

Insurers will have to deal with more taxes in GST regime

Fri, Aug 12, 2016General Insurance

The report added that the reinsurance industry is undergoing a major change, with foreign insurers being permitted to set up branch offices in India. Insurance companies will potentially have to deal with more taxes once the GST is implemented with the emergence of the Centre and states as dual stakeholders, a report said. The number of taxes will increase as calculation of input-output tax credits will be done separately for each individual state in which they are earned, it added. Insurance, being a service industry, deals with one single tax (service tax) with one administering authority (the Central government), the EY and CII ‘Insurer of the Future’ report said. “One of the significant impacts on insurance industry under the dual GST structure would be the emergence of dual stakeholders in every taxable supply of service, the state government, where the supply is made and the Centre,” it said. From dealing with a central service tax for pan-India operations, insurers now will potentially start dealing with 38 taxes, including 35 state GSTs (SGSTs), including Union Territories, one Central GST (CGST) and IGST on inter-state supplies, it pointed out. The report added that the reinsurance industry is undergoing a major change, with foreign insurers being permitted to set up branch offices in India. The new rules are expected to create an even greater focus on services by foreign insurers as they compete for a share of the market, it added. The market for emerging risks such as cyber insurance, customised liability insurance and specific disease insurance is expected to grow, driven by the willingness of customers to pay a premium for specialised and innovative solutions. Reinsurers have a key role to play in helping the insurance industry innovate and cover new frontiers, as the industry looks to them when it comes to exploring the unknown. The report also stated that technology will form the backbone for this transformation, acting as both an enabler and disruptor. Its role is expected to rapidly change from its current ancillary function to becoming a core competency for insurance businesses. Solutions such as data analytics, robotics process automation, block chain and cloud, which are already being implemented, however, is only the tip of the iceberg in terms of their potential applications and overall ability to transform businesses. The digital bar for insurers is rising continuously and the companies that can meet this challenge will build greater customer loyalty, improve cost efficiency and increase profitability, it added.

The Financial Express

Regulating India’s regressive health insurance

Fri, Aug 12, 2016General Insurance

Why India’s health insurance models frustrate and exclude a large part of the population. Three quarters of India’s population has no health insurance. Union Health Minister Jagat Prakash Nadda said in May 2016 that only about 24 per cent of the population has some form of medical insurance. That includes private and public sector insurance, and the Central scheme for weaker sections, the Rashtriya Swasthya Bima Yojana. In 2015, there were 20 Central and State-sponsored insurance schemes in operation and the Insurance Regulatory and Development Authority of India estimates that 28.8 crore individuals were insured as of 2014-15. India primarily relies on commercial health insurance now.

The Hindu