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Volume 2, Issue 8, August 2006
 


Expansion plans of Kotak Life Insurance

Kotak Mahindra Old Mutual life insurance ltd. inaugurated their 52nd branch in the country, in Vashi. This is their 6th branch in Mumbai. It is reported that they have plans to increase their business by 100% on FYP base for which they intend to open branches at 24 more locations. Mr.Gaurang Shah their MD said that they are planning to increase strength of their ‘life advisers’ which is at present 13500 across 35 cities, to offer professional advice and customized ‘insurance solutions’. Branch Manager Mr. S.Kulkarni will manage their new branch at Vashi with a team of 20 Sales Managers and 300 life advisors, assisted by Asst. Manager Mr. Mukesh Jethwani. Kotak Life insurance has increased their capital by Rs.20 crores bringing total capital to Rs.317 crores. The percentage of holdings however remains unaltered at 26 and 74 between Old Mutual Plc and Kotak Mahindra Bank Ltd.respectively. Kotak Life Insurance declared a total return of 7% inclusive of 4% bonus on its participating Contracts for year 2005/06.

ICICI Prudential record 150% growth in premium

ICICI Prudential has posted a growth of 152% in first quarter 2007 on quarter on quarter basis, garnering a new business weighted premium of Rs.812 crores. Of this Rs.690 crores was from retail business premium. The company has issued 302482 policies and total sum assured is over Rs. 56000 crores. Funds under management are over Rs. 9300 crores. The successful quarterly performance equals 32% market share of private insurers and 12% of the total market. Ms. Shikha Sharma MD & CEO of ICICI Prudential Life said “ Product development to expand our offerings to customers seeking solutions to meet their specific goals of retirement, health, education insurance and wealth creation continues to be our thrust area. This will be coupled with an expansion of our distribution network through our own branches as well as those of our partners”. ICICI Prudential has commissioned 75 new offices during the past quarter and has about 83000 advisors in the country.

BOB entering Life insurance

It is reported from Kolkata that Bank of Baroda is in advanced talks with foreign and Indian insurance companies for setting up its life insurance venture.

Rural Markets attract Tata-AIG

Tata-AIG launched three new products to capture the huge rural market in Life Insurance. Their new products titled Navkalyan Yojana, Sampoorn Bima Yojana and Ayushman Yojana, it is reported by the company, are simple with ease of documentation. Nav Kalyan Yojana is a 5-year monthly income plan providing financial security to policy holder’s family with accidental death benefit rider. In Sampoorn Bima Yojana plan policy holders remits premium for ten years and is provided cover for fifteen years. Upon survival till maturity gets 100% return on the premium paid. Ayushman Yojana is a single ten-year protection plan with payment at the beginning of the term and the policy holder gets back the premium amount plus 25% on survival at the end of the term.

Only chit company in life insurance Shriram Life Insurance of Chennai

Shriram Life Insurance Company is a joint venture between Shriram group and South African Insurer Sanlam. It is targeting a turnover of Rs.110 crores for year 2006-07. The company collected Rs.8 crore annualized premium from April to June this year. During last quarter of last year the firm is reported to have done Re. 15 crore first premium business. They have issued so far 15000 policies. The insurance company has 10 divisional offices. Four of them are located in Hyderabad.

Standard & Poor’s report on life insurance sector

S&P, global rating agency, says India’s Life Insurance sector is expected to grow by 20% year on year, “spurred by improving economic conditions, growing affluence, the need for health protection and low penetration rates and driven by growing middle class and rising disposal incomes.” It further says that” a positive development will be the anticipated lifting of the governments ceiling on permitted foreign direct investment in insurance companies to 49% from 26%”. According to S&P, one of the growth drivers has been the pension fund plans. S&P says, “ LIC’s challenge has been to move away from guaranteeing long-term returns on life products and to improve its solvency ratio.” It further reports that the ability of the private players to bring in new and innovative products and services is expected to improve their market penetration.

Reliance Life Insurance Co’s maiden insurance product

The ADAG’s Reliance Life Insurance Co announced its first insurance product since acquiring the life insurance business of AMP Sanmar in October last. The product is called Reliance Connect 2 Life Plan. It is a 15-year insurance cum savings plan for individuals in 18 to 45 years age group with a minimum sum assured of Rs.1 lakh. The cover can be upgraded in the 2nd and 3rd year up to Rs 10 lakh. Reliance Life Insurance has 30000 insurance advisors in 158 branches across 143 locations and a call center to service customers. HDFC and UTI bank will be collection network. The company is also finalizing with banks for sale of the products thro’ Bancassurance mode. According to Shri. Nandagopal,.the Company plans to engage ten to twelve thousands more advisors who are already under training. Reliance Life Insurance has a capital base of Rs. 383 crores and 3654 employees. The Reliance Life Insurance has moved to 8th position from 13th position as of June 06.

Change of guard at Birla Sun Life

Mr. Nani Javeri CEO, Birla Sun Life Insurance is retiring from the company. Mr. SK Mitra director BSLI will oversee affairs till a new CEO is appointed. During the formative years of the company, Mr. Javeri had contributed immensely which has enabled the company earn local and international recognition for performance and excellence.

Life insurance cover to home loan borrowers from PNB

PNB has entered in to arrangement with Tata AIG for extending insurance cover to borrowers of home loan in order to attract more home loan borrowers. The cover will take care of the debt in case the borrower dies. The facility is called “mortgage reducing term assurance”. Under this scheme PNB offers cover of loan outstanding by paying a single premium to protect the house to the survivors in case the borrower dies. The one time premium for a forty-year-old borrower on repayment tenure of 15 years will be about 2.5% of the loan amount. “ This is one time premium financed by the bank as a part of the loan”. Maximum sum insured is rupees one crore. Policy will continue for the agreed period even if the loan is repaid. 10% discount on premium is offered to the younger spouse if she is a co-borrower. Cover is available for a period up to 20 years or 65 years of age whichever is earlier.

Bharti AXA starts functioning

Bharti AXA Life Insurance Company has started its operations by opening its first branch in Hyderabad. They are the 16th life insurers in the country. The plan is to leverage the large client base of Bharti Airtel the mobile service provider. Mr. Nitin Chopra CEO, Bharti AXA said, “there are several strategic partnerships in the pipelines. One of the major partnerships would be with the private cellular major Bharti Airtel, which has a large customer base of over 25 million, and is growing at a million new customers’ s month”. On the occasion the company released two unit-linked products – “ Future Confident” targeted at masses and “Wealth Confident” aiming for the affluent. Mr. Chopra further said that ‘we plan to invest approximately Rs.500 crores in three years. While we intend to roll out 30 branches by Dec 2007, we will be supplemented through other (banc assurance) partnerships as well’.

Service Tax on Insurance companies

The CBEC has said that life insurance companies should pay service tax on their asset management service. This charge might either increase charges for policy holders or add to the life insurer’s losses Hitherto insurance companies pay tax only on the risk premium, the charge levied for providing life cover. But Mutual funds with similar asset management pay service tax on their asset management fees. In normal policies all premiums go into the central life fund. All charges are deducted from the life fund and any surplus is distributed to policy holders either as bonus or dividend. Private insurers manage almost twenty thousand crores of rupees which were mobilized through unit linked insurance policies. Fees on this vary from 0.5% to 2%

ICICI Prudential’s new products

ICICI Prudential Life Insurance has floated two more products offering security to investors and retirees. The first is InvestShield Life-New. It is a premium guarantee product offering investors scope for long-term capital appreciation through exposure to markets without eroding their capital. It is long-term investment cum insurance plan that invests 40% in equity. This ensures the conservative investor to experiment with equity without losing his investment in case the markets go down. The plan is available for a minimum premium of Rs.8000 per year for a policy term of 10 to 30 years. On death, the policy holder’s nominee gets the sum assured plus the higher of the fund value and guarantee value (total premium paid), while on maturity, the higher of the fund value and guarantee value is paid to the policy holder.

The second plan, Immediate Annuity, provides retirees with a stable and secure income for life. A person between 45 and 80 years of age can purchase Immediate Annuity by making a single lump sum payment and can select any of their 7 annuity options. The pay out options are: annuity for life with or without return of purchase price; joint life (for annuitant and spouse) with or without return of purchase price and annuity for life guaranteed for 5/10/15 years.

Asset under management - Life insurers to disclose to the regulator

The insurance regulator brought out a new MIS format, which requires Life insurers to submit details of their assets under management. Till recently, companies furnished data pertaining to new business only. Under the system companies were ranked based on their first year premium. For achieving this companies resorted to selling short term policies to their existing customers additionally every year. Further AUM as a measure is expected to be better in ranking as it could reduce many other impacts such as lapsed policies pushing up business figures. Insures also say that AUM forms important parameter for measuring a life insurance company.

SBI Life to expand in Tamilnadu

Mr. Rajiv Gupta ,Senior VP (retail and corporate agency) SBI Life said that ‘the agency channel of SBI Life has set a target of Rs.1000 crores plus total premium for year 2006-07. We expect Tamil Nadu to contribute over 20% to the total business from the agency channel this year’. At present SBI Life operates at Coimbatore, Madurai, Trichy and Chennai and are intending to expand to Nagerkoil, Salem, Erode, Vellore and Pondicherry

Training agency force -the Bajaj Allianz Life new initiative.

In order to train their agency force to be better equipped to advise their customers on proper investments and coverage, Bajaj Allianz Life have launched new certification programs such as “certified Insurance Consultant Program” and ‘Velocity’. It is reported that they have recently updated their 75000 odd agency force with a special training module “CIP” Certified Investment Planner to meet the challenges brought in by the revised norms for ULIP & AML. The new CICP is over and above the mandatory 100 hours of training for agents. Velocity is a special initiative for outdoor training to their sales managers. Mr. Sam Ghosh, their chief executive officer said that they have a strong training force of 150 trainers supporting their branches of the agency channel and a separate training team for banc assurance and alternate channel.

Andhra Bank to enter life insurance business

Andhra Bank’s chairman Mr. Ramakrishnan said that Andhra Bank would be floating a subsidiary for its life insurance joint venture with the Bank of India and the Dai-ichi Mutual Life Insurance Company. The bank’s board has accorded a in principle approval to form a life insurance joint venture with the Bank of India and The Dai-ichi Mutual Life Insurance Company of Japan. Dai-ichi is the second largest life insurance company in Japan. Dai-ichi will hold 26% stake in the joint venture. Pattern of remaining holdings and further details are being worked out between the Indian partners.

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