Fresh Capital infusion by ICICI Prudential Life

India’s top life private life insurance company ICICI Prudential Life has added on Rs.245 crores to their capital taking their total capital to Rs.2060 crores. It is the fourth capital infusion by them during the last financial year. Contribution of the capital is, ofcourse, in the permitted proportion of 74% and 26% respectively between ICICI Bank and Prudential Life. Thus this insurer continues to be the largest among the private sector insurers of the country. Ms.Shikha Sharma MD and CEO of the company said that “both ICICI Bank and Prudential Life plc have recognized the promise of the life insurance industry in India and have regularly committed the resources required for ICICI Prudential to grow and maintain its clear leadership in the category.” She also said “we believe our success stems from our strategy that keeps customers’ evolving needs at its centre and also encourages employees to pursue new opportunities and in the process learn and grow. It is this philosophy that has driven the company to constantly innovate”. The additional capital would be used to meet the high cost and meet solvency norms stipulated by IRDA. It is also meant to meet the expenses for expansion plans and scaling up operations. The company has crossed 4 million policies last month and its market share of weighted premium among private insurers is 30.3%.

LIC introduces Micro-Insurance

It is reported that LIC have engaged the services of 3i Infotech, a global provider of IT solutions to enable micro insurance agents, NGO’s, SHG’s and micro finance institutions to transact insurance business on behalf of LIC in online/off line mode. LIC plans to offer a policy for people of age 18-60 years under their micro insurance focus. The policy will be for a minimum sum assured of Rs.5000. With the help of this software LIC will offer this policy to the rural and semi urban people thru’ their 10000 agents spread across the country. Micro insurance agents can completely manage their insurance portfolio and provide reports with the help of the software. The system will provide LIC with good control over its micro insurance activities. LIC expects to cover one crore micro insurance policies in a period of 2/3 years out of the huge micro insurance market of the country. LIC said “Our Micro Insurance initiative is first of its kind and will cover the length and breadth of the country”.

Ulips grow fast

It is reported that the ULIPS of Private Insurers have performed better than the 30 share sensex in the last six months. The sensex gained 10.6% between 1st Sept.’06 and 28th Feb,’07. As per data from Insurance Research and Consultants, Tata AIG Ulips gained 13.62%, AVIVA’s gained 13.04%, ING Vysya gained 12.4%, Kotak Life 11.74% and Bajaj Allianz 11.34%. Even during the fall in sensex the Ulips of the above insurers fell only marginally.

Modes and rationale of ULIPS

Mr. Vijay Sinha Asst. Director of Tata AIG says:

The different types are – Aggressive are those who invest 80 to 100% in equities, Balanced Ulips are those that invest 40 to 60% in equities, Conservative are those who invest only 20% in equities. Ulips are useful for investors who want to be insured at the same time and also interested in investments. Ulips are generally long term in nature and over a period are expected to provide both positive and attractive returns. Being a life insurance cover they provide tax benefits both on invested premium and the fund value on exit.

April 10,’07

SBI Life Insurance an LIC alternative

Mr. Uday Shankar Roy, MD & CEO of SBI Life Insurance said on his taking over this post that they consider only LIC as their competitors and to take them on he said that they would not copy LIC model but use other modes for reaching the non- customers, such as using their bancassurance more aggressively and leveraging the 14300 State Bank Group branches. He further said that they are working on a hybrid distribution channel which is innovatively designed and deployed and which will be in place within a year.

Banks leverage their strength to choose MNC Insurers

It is reported that the Banks with vast network of branches are attracting a premium on the shares of their new insurance ventures with insurance MNC’s for partnering with them. For example, Allahabad bank led non life insurance venture got a premium of Rs.22 per equity share of Rs.10 each from their Japanese partner Sompo. Many other similar or additional one time payments from MNC partners are reported to have taken place.

IRDA extends norms for bonus payments

After examining the requests of the insurance companies, the authority has extended the earlier relaxation announced on 23-3-2004 up to the first seven financial years from the time life insurance business operations are started by an insurer, for payment of bonus despite having a deficit life fund. This was announced by Mr.C.S.Rao chairman IRDA. All other conditions as stipulated in the March 2004 circular under reference would continue to be applicable.

Bank of Baroda looking for another life partner

Bank of Baroda, which has a tie up with UK’s Legal and General for their joint venture in life insurance, is open to associate an industrial house as a third partner in their life insurance business. This was told during a press meet by Dr. A.K. Khandelwal CMD of BOB. He further said that the new company would have an initial capital of Rs.200 crores.

Vijaya Bank’s new move

Vijaya Bank may terminate its life insurance joint venture with PNB and Principal Financial Group of US and enter insurance sector directly as told by its CMD Mr.Prakash P. Mallya. He cited the objections raised by IRDA over it being agent for National Insurance Company and also participating in an insurance company concurrently. He further said that it was disadvantageous for their revenue after it closed its corporate agency in 2005 due to IRDA pressure.

Left parties against insurance reforms

Left parties disrupt Insurance reforms. The Leftist political parties have objected to raising capital of LIC from Rs.5 crores to Rs.100 crores as it would dilute dividend payout. They are also objecting raising the limit of foreign equity holdings. They also are opposed any dilution of public sector character in Insurance PSUs. Therefore the Government has decided to convene another meeting later to thrash out the problems.

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