News Blog

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

Centre to provide medical insurance to road accident victims

Fri, Aug 12, 2016General Insurance

NEW DELHI: Government will soon provide universal insurance cover to all those who get injured in road crashes so that they are not deprived of immediate medical care. In a significant move, the road transport ministry in its proposed amendments to the Motor Vehicles Act has provisioned for a fund that will ensure free treatment of grievously injured victims. The amendment bill introduced in Lok Sabha on Tuesday has proposed setting up a motor vehicle accident fund, which will be used for medical expenses of grievous hurt persons till they stabilise. The provision gains importance considering the fact that at least five lakh people were left injured in road crashes last year and according to government reports at least 50% lives can be saved, if they get quick medical care within the first one hour of a crash. Road crashes claimed 1.46 lakh lives in 2015. According to the bill, the fund can be created by collecting certain cess or tax, any grant or loan made by the central government or any other source of finance as may be prescribed by the government. "The fund shall be constituted for the purpose of providing compulsory insurance cover to all road users in the territory of India," it says. The bill states the fund shall be utilised for treatment of grievously hurt persons, for paying compensation to representatives of persons killed or seriously hurt in hit and run motor crashes. Government would come out with the maximum liability amount that shall be paid in each case. It also says in cases of people who have medical or life insurance cover, the payment made by government shall be deducted from the claim they receive from the insurance companies. The bill also provisions that the central government shall launch a scheme for cashless treatment of victims of the road crashes during the golden hour (first hour of crashes).

The Time of India

Private general insurer overtakes state-owned insurer

Thu, Aug 11, 2016General Insurance

Private-sector non-life insurer ICICI Lombard has overtaken state-owned Oriental Insurance to become the fourth largest general insurer in India in terms of gross written premium. This is a milestone development because it is the first time after the industry opened up in 2000 that a private insurer has surpassed a government-owned rival. ICICI Lombard achieved gross premium of INR2,880 crore (US$432 million) for the quarter ended June 2016. The figure represents an increase of 41% over the previous year and a market share of 11%. The private-sector insurer beat Oriental Insurance, whose premium income rose by 15% to INR2,508 crore in the same quarter, representing a market share of 9%, reported the Times of India. As a whole, the April to June period, which was the first quarter of the current fiscal year, was good for non-life companies, which collectively grew by nearly 17%. Private insurers grew at about 21%, faster than the four state-owned general insurers which together saw growth of nearly 14%. For one and half decades, the top four slots had been held by New India Assurance, which continues to be the market leader, and the three other public-sector units - National Insurance, Oriental Insurance and United India Insurance. The state-owned insurers have a combined market share of nearly 52%. Among privately held general companies, the top five companies for the April-June quarter were ICICI Lombard, Bajaj Allianz (6% market share), IFFCO Tokio (4%), Tata AIG (3.4%) and Reliance General (3.2%). The five account for more than half of the total business of private insurers.

Asia Insurance Review

HDFC Life Insurance, Max Life seal three-step merger deal

Tue, Aug 9, 2016Life Insurance

The merged entity, a listed firm, will be named HDFC Life; it will also licence the Max brand for seven years. Mumbai: The boards of HDFC Life Insurance Co. Ltd and Max Life Insurance Co. Ltd on Monday signed off on their merger, which will create India’s largest private-sector insurer. It may also set in motion the process of long-awaited consolidation in the insurance sector. With Rs.1.1 trillion of assets, the merged entity will overtake ICICI Prudential Life Insurance Co. Ltd as India’s No. 1 non-government insurer, although it will be dwarfed by state-owned Life Insurance Corporation of India (LIC), which had Rs.21.70 trillion of assets at the end of March 2016. Under the three-step merger process, Max Life will first combine with its parent Max Financial Services Ltd. In the next stage, the insurance unit will be demerged from this entity into HDFC Life. Finally, the non-insurance businesses of Max Financial will merge into group company Max India Ltd. The boards of all four firms approved the terms, the companies said in a joint statement.

Live Mint