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Vijaya Bank withdraws
Vijaya Bank would be withdrawing from its intended life insurance joint venture with PNB and Principal Group of US, because IRDA objected to the bank being an investor in broking arm and also a corporate insurance agent. Their board of Directors has also approved this. As a result their foreign partner Principal Group of US may have to look for a new Indian partner for its venture.
Kotak Insurance Expands
Kotak Mahindra Old Mutual Life Insurance plans to open more branches and recruit financial advisers in order to expand its reach. It is likely to invest Rs.30 crores to increase its branch strength from 81 to 125 before the end of the year. On training its agents Rs.12 crores is expected to be spent. The focus would be in the South and for the purpose it plans to recruit 1500 advisors initially and it has opened its third branch in Chennai. Mr.Gaurang Shah, MD of Kotak Mahindra said that the company would now turn to bringing up more retirement and pension policies and whole life plans. He further said that the target for the current fiscal would be 1700 crore rupees of premium income against Rs.972 crores reached during last year. It may be mentioned that so far the company focus was mainly on unit-linked plans.
ICICI Prudential Life turns to health
Though Health Insurance was attended to by general insurers so far, ICICI Prudential Life Insurance Company is entering this sector in a big way. Mr. Kannan ED of IPLI said that the growth in health insurance market at 44% in 2007 and its penetration being very low they are confident of making it. However IPLI would be directly competing with their sister concern in general insurance, ICICI Lombard, in this sector. On this Mr.Kannan told that they would be targeting retail end of the market whereas their sister concern's focus was on corporate relationships. The company has already launched insurance plans for cancer and diabetes. Presently it has bought out plan named Crisis Cover for providing protection against 35 conditions. It includes cover for coronary bypass surgery, angioplasty, brain surgery and kidney failure among others. Mr. Kannan further said during the occasion that the life insurance companies could expand the health insurance market thanks to the insurance agents. As a result of the aggressive expansion of insurance companies the ratio of insurance to GDP is presently at 4% and is positioned to rise to 6% by 2010.
Basel II Qualification Must for banks in insurance
The IRDA has decided to make it mandatory for banks which plan to enter insurance sector that they should establish that they have necessary resources to meet Basel II capital requirement norms. Basel II is the new international framework on capital adequacy norms for banks. This requirement is expected to come into effect from 2008. During the last year many banks such as Canara Bank, Bank of India, Union Bank, Bank of Baroda, Andhra Bank and Punjab National Bank have planned to enter insurance sector and some have already signed joint venture agreements with foreign insurers. According to estimate, banks would need about Rs.50000 crores to meet Basel II norms and though insurance venture initially requires Rs.100 crore in investments, continuous capital infusion would be needed.
Birla Sun Life adds capital
Birla Sun Life ‘s total capital reached Rs.777 crores, as on July 31,2007, with the latest addition on it. During the period from April to July 2007 the company added Rs.105.5 cores to its capital base to meet regulatory norms and also to fulfill its expansion plans by strengthening its distribution network.
Do”s and Don't s while taking insurance policy.
Follow the basic policy of honesty, which is the best policy.
Give full medical history at the time of application.
Do not worry if the premium is higher because of this. It will avoid heartburns for dependants later.
Study and fill the application yourself.
Do not rely on false promises; insist on writing down of the assured benefits.
Do not delay payment of premium.
Check policy exclusions.
Avoid claim related issues.
Low insurance in urban areas also
A report in Economic Times states that the insurance penetration in urban areas is also very low. It is stated, on the basis of a study of IT/IteS companies on tax saving, that 41% of respondents did not have any form of insurance cover. It is depressing in the scenario where respondents in the age group of 21 to 30 years of age form bulk of the Indian population. The study indicated that the maximum insurance penetration was in the age group of 30 and 39 years and that too at 26%. It was also reported that 48% of the respondents did not have any medical insurance.
ING Vysya Life's new product
ING Vysya Life Insurance has brought out yet another saving proposal in the new Unit Linked product ING Positive. Features of this policy are premium payment options, not requiring medical underwriting, investment options, sip provisions and partial withdrawal. The product targets regular saving segment and is available to customers up to 50 years of age.
PNB to decide on insurance in Dec.
The proposal of joint venture insurance foray by Punjab National Bank with Berger Paints, Principal Financial Group and Vijaya Bank, out of which Vijaya Bank has already pulled out, would be decided upon, by the month of Dec.2007 as informed by the CMD of Punjab National Bank Mr. KC Chakrabarty.
IRDA Stops sale of difficult ULIPs
Insurance Regulatory Authority of India banned sale of actuarially funded complex Unit Linked products. The ban will affect Bajaj Allianz Life Insurance and Aviva Life Insurance. “Actuarially funded units have a complex structure where the insurance company allocates significant sums to the policy holder's account in the first year. These allocations are notional and convert into real money only in the future. There is not much balance in the policy- holder's account in the initial years, which he does not know. However, it is claimed that there is no disadvantage to the policy holder over a period of time vis-à-vis regular unit linked policies. Mr.C.S. Rao Chairman IRDA said ‘there is no transparency in these actuarially funded policies and we are concerned that the policyholder may suffer. These units are not totally backed by actual investments and hence actual expenses are loaded at a later stage of the policy'. Though some were permitted earlier, due to complaints, it was decided in a meeting of actuaries that these products should not be allowed. So these products are to be disallowed within the next 15 days.
SBI Life performance
SBI Life insurance have posted a profit of 4.8 crore rupees during the first quarter of 2007-08 as against their net profit for whole of 2006-07 at Rs.3.9 crores. SBI Life has achieved this profit at lower investment compared to other life insurance companies. This was achieved by better capital utilization and due to their distribution network, and also by offering credit protection to home loan borrowers. The company has a net paid up capital of Rs.500 crores.
Insurance agents' training
IRDA, it is reported, is considering reduction of training duration for agents of insurers from 100 hours to 50 hours. The industry was wailing on the high cost of training of its huge force of agents. It was reported that training one agent costs the company about Rs.4000/. With the attrition level being high the cost to the insurer could be huge. It is also claimed by the insurers that as the training period is spread over 18 days, it is difficult to find suitable candidates. Because of reduction in training duration more people would be attracted to job, the insurers claim.
Along with the number of hours the authority has also decided to change syllabus for the training. The new syllabus is expected to be more contemporary from the present one, which was based on material drawn from olden days when LIC was the only life insurer.
SBI Life to replace credit protection products.
Mr. Pier Paolo Dipaola deputy chief executive officer of SBI Life told that SBI Life has decided to withdraw its current set of credit protection products and replace them with a single policy that will cover all risks. It is also planned to introduce over the counter insurance policies in the traditional product categories. These policies are simple and easy to understand without much explaining to do. SBI Life is aiming to double its premium income to Rs.500 crores from this policy.
Apex Court rules
“Insurance companies cannot be compelled to pay compensation to all passengers in road accidents involving overloaded vehicles of public transport as the liability is restricted only to the authorized number of passengers.”
Insurance from' India Post' in 2008
Many of us may not know that postal department is selling insurance policies for more than a century. It has seven products under two main heading namely Postal Life Insurance and Rural Postal Life Insurance. The seven products are Santosh, Suvidha, Suraksha, Sumangal, Yugal Suraksha, Gram Priya and a children's policy. Postal Life Insurance products are sold mainly to employees of government departments, institutions and enterprises. It was born in 1884 to insure the lives of postal employees of Indian origin when other insurance companies existing then refused to cover the ‘native's life. After nationalization of all insurance companies in 1956, the postal life insurance in-spite of its vast network of branches could not make headway. The formation of IRDA strangled it further as it could not offer any new product. All these difficulties arose despite the fact that postal life insurance was offering better return, which is more than market rate of return at very low premium. As the govt.'s support for its products is no longer available and it was asked to manage its funds, the department has decided to follow the IRDA guidelines in this regard. It is looking for capable fund managers to take care of investments in financial market. So it may be expected to enter life insurance sector actively from year 2008.
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