Life insurance industry logs 34.4 pc growth
in H1
Life insurance Industry records a growth
of 34.4 pc in the first half. LIC records
a 23 pc growth in premium income. Life Insurance
companies premium collection grew from Rs.8.42
thousand crores to Rs11.32 thousand crores.
LIC records 1.75 pc increase in market share.
LIC has plans to launch a combo policy
with major four features such as whole-life,
money back, endowment and Maturity repayment
after Bima Gold and Jeevan Plus.
Thirteen private insurance companies have
increased their first year premium income
by 83 pc except Birla sun life and SBI LIFE.
Among these companies ICICI Prudential leads
the private players with 7.24 pc market
share with growth in premium income at Rs.819
Crores.
LIC welcomes
FDI in insurance biz
The IRDA had recently announced that they
are in favour of Foreign Direct Investment
from 26 pc to 49 pc. LIC has welcomed this
proposal. LIC Chairman Mr.Shukla is optimistic
about the concept and has said that this
plan will help the industry to grow. He
also said that, the industry needs capital
to meet the statutory solvency margins and
sustain developmental plans as the market
offered huge scope for growth. It generally
takes six to seven years for insurance companies
to get surplus. It is required to increase
the capital during this period. To allow
FDI, it would only help the industry to
meet its challenges. Mr.Shukla was confident
of achieving the requisite figure in a year.
Total investible
accretion fund of life insurance sector
falls
INVESTIBLE ACCRETION FUND FALLS BOTH IN
LIFE AND GENERAL INSURANCE SECTOR:
In the Life Insurance sector the total
investible accretion fund has dropped from
Rs.91000 crores to 75828 crores in the year
2004-05. Out of this 75828 crores a major
contribution of Rs.70330 crores is from
LIC, followed by ICICI with Rs.3470 crores,
Birla Sunlife with Rs.1296 crores and SBI
Life over Rs.1000 crores.
Total Life insurance industry has invested
about Rs.4, 28,452 crores in 2004-2005.
In the general Insurance sector the accretion
in asset funds for investments fell from
Rs.3740 crores to Rs.3337 crores in 2004-05.
It is noted that the industry has invested
in government securities to the tune of
40% of their investment. The industry exposure
of investment to capital market is limited
to only 41.2% of their total investment
in the year 2004-05 which was 47.7% in the
year 2002-03. The IRDA regulation permits
the industry players to invest up to maximum
of 55% of their investments to the capital
market. The scope for further improvement
in the investments from the industry is
evident.
`Cover
against cyber crimes vital' — Insurance
industry seeks tighter IT Act, tools to
assess losses
Nowadays, companies are doing massive
transactions online and the need to secure
against cyber crimes is strongly felt. The
feeling to get insured against losses due
to cyber crime is spreading. The chairman
of the National Association of Software
and Services companies Mr.Vijay Mukhi, said
that due to several software available in
the market the chances of hacking the data
and password is easy and it would be important
for the finance sector, banking sector etc.,
to get insured because of their vast online
transactions. Mr. Mukhi said. He was speaking
at a conference on "Cyber security
threats and the insurance industry".
"Currently, sectors like banking still
function as closed user groups. In time,
as business will move online as is the global
practice, they will be faced with the urgent
need to increase security and buy insurance,"
In the US, $100 million is paid as premium
annually to cover cyber risks, while the
claims paid out amount to $14 billion. Insurance
is purchased to cover business interruption
due to loss of data, cyber extortion and
terrorism. In India, liability insurance
covers to protect against cyber risks are
purchased mainly by companies in the IT
industry, which are listed in the US.
Mr.Rakesh Maini is in favour of the Information
Technology Act to be tightened as the Business
losses due to cyber crimes are increasing.
He said “The Act should give legal
authority to the insurance company to inspect
the computer of the victim as well as the
perpetrator in order to assess the claims”
Whereas in the part Insurance Companies
the quantification of losses in cyber crimes
is another problem. Mr. R. Chandrasekaran,
General Manager, GIC, said “currently
insurance companies did not have the authority
to examine evidence, which in turn made
it difficult to assess losses. Besides,
there was little information about how cyber
crimes were committed to design comprehensive
policies and assess the premium”
ICICI Profile
to open branch in Bahrain
ICICI Prudential has become the first private
life insurer to open branch in the Kingdom
of Bahrain. The new office targets the needs
of NRI’s in Bahrain such as Protection,
Investments and savings. They believe in
their wide range of products and hope to
replicate the success, which they had in
India. With these products they could capture
more than 30% share of private insurance
companies in Life insurance in less than
five years time.
Shikha Sharma, CEO & Managing Director,
ICICI Prudential Life Insurance, while speaking
at Bahrain Chamber of Commerce, Manama said
“Over the past five years, ICICI Prudential
has strived to help Indians meet their financial
needs in the most comprehensive and secure
manner possible. Today, we bring the same
brand, product range and service promise
that over one-and-a-half million Indians
have come to trust, to our countrymen in
Bahrain. As we establish our presence here,
we hope to partner with them as they secure
the future of their families and themselves
here and back home in India.”
The first international branch of ICICI
Prudential was inaugurated by Anwar Khalifa
Al-Sadah, Executive Director - BMA, in the
presence of Ms. Shikha Sharma, Ms Lalita
Gupte, Joint MD - ICICI Bank, Mr. N S Kannan,
Executive Director - ICICI Prudential Life
Insurance and other senior officials from
ICICI Prudential and ICICI Bank. The new
office is planned to provide service to
existing customers in Bahrain and also will
act as a Marketing hub for the Gulf region.
The new office will work closely with ICICI
Bank, which had successfully one year in
the Gulf and has a wide customer base.
Birla Sun
Life targets rural area
Birla Sun Life Insurance, the private life
insurer is focusing on rural opportunities
in the country. BSLI has built a strong
infrastructure in the rural areas of the
country to bring about a cost effective
distribution network in the past four years.
Nani Javeri, Birla Sun Life Insurance said
“while every year we have been surpassing
our rural targets we envision that going
forward our rural business will contribute
about 20 per cent of individual life sales
through the sales of packaged products like
Life Companion.”
To increase its reach BSLI has tied up
with some larges NGO’s, which are
doing excellent work in the rural areas
and also have commenced their sale of policies.
As an encouragement to their plan, the new
IRDA definition about the population falling
under the rural category has increased from
42% to 72%.
IRDA for hike
in FDI cap to 49%
The IRDA is in favour of increasing the
FDI cap from the present 26% to 49%. A report
is prepared and sent to the government for
legislation to the industry. The Chairman
of IRDA said that the hike in the FDI limit
would ease the financial strain of the Indian
Insurers and said that the IRDA is always
in favour of increasing the FDI limit to
49%. The increase in the FDI limit will
help the foreign investors to infuse additional
funds in the insurance companies to sustain
their growth.
While the foreign partners of the Indian
Insurance companies are in favour of increasing
the FDI cap, the left parties supporting
NDA government have opposed the proposal.
It is felt that the need to amend the insurance
act to allow rise in the FDI cap is important
since this is a statutory provision, whereas
the sectors like civil aviation and Telecom
has come through notifications.
To stress on the importance the IRDA has
constituted a committee of 11 members under
the chairmanship of K P Narasimhan, the
former chairman of the Life Insurance Corporation
of India to look into the recommendations
of the Law commission in the issue. The
committees report is forwarded along with
the proposal for a comprehensive legislation
Banks, insurance
companies lock horns over bancassurance
tie-ups
There is a friction between the bankers
and insurers, three years after the launch
of bancassurance.
Bankers are not fully satisfied in their
deal to sell insurance products, and claim
that the insurance companies are utilizing
their geographical presence to expand their
distribution network. Bankers feel that
they are not benefited when compared to
the Insurance companies in this deal. Bankers,
plan to approach the RBI to allow them multiple
tie-ups. As per the guidelines of the RBI,
any bank can have tie-up with one non-life
and one life insurance entity, on the contrary,
an insurance company can have tie-up with
multiple banks.
As P Subba Rao, executive director, Punjab
& Sind Bank (PSB) points out, "In
the present arrangement of bancassurance,
the benefits are not evenly spread. The
banks are acting as corporate agents of
the insurance companies. The cost-benefit
ratio of such tie-ups clearly shows that
greater benefits are accruing to the insurance
companies. Furthermore, we are handicapped
by the policy that we cannot tie-up with
multiple insurers
The bankers feel that the insurance companies
are incurring negligible overhead costs
for enhancing the insurance company's distribution
network. "The customer acquisition
cost is lower as they get readymade clients.
On the other hand, if the customer is not
serviced well by the insurance company the
image of the bank gets hampered," Mr.
Rao added.
The bankers are not satisfied with the
commission paid to them, they claim that
it is very low and it needs to be increased.
Birla Sun
Life shows 30% growth in lives insured for
young
Birla Sun Life Insurance records a distinct
increase of youth being insured. It is about
30% increase over the previous year and
the age group is up to 25 years. The increase
is also evident in parents buying life insurance
for their children. This was 19.2% by end
of March 05 and increased to 25% in September
05.
Anjana Grewal- Vice President, BSLI says,
“Our trends indicate who is currently
buying life insurance, what they buy, how
much they buy and the amount they spend
on life insurance. One can examine the reasons
why Indian households are underinsured and
how life insurance fits into the overall
financial well being of their households.
Also, it is a healthy trend for us as a
life insurance company to see a distinct
increase in younger lives being insured.”
ICICI Prudential
premium income up 66% in H1
ICICI Prudential life Insurance company
records 66% growth in premium during the
half year ended sep05. The premium collected
amounts to 668 cores. They sold 283818 policies
with the sum assured of Rs.7131 crores.
Policy renewal premiums were collected to
the tune of Rs.493 crores.
In the press, Shika Sharma, CEO &
MD, ICICI Prudential said, “As life
insurance business grows, renewal premium
becomes a very important indicator of a
company's sustainability and potential for
profits. Being in our fifth year, this is
as an important parameter to track and we
are so far very satisfied with the progress
we have made on this front.''
With an increase of the capital base by
Rs.160 crores the total paid up capital
base of ICICI has increased to Rs.1085 crores.
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