ICICI Lombard first insurer to cross Rs 1,000 crore mark

The General Insurance Industry has grown by 15.5% till November this year. ICICI Lombard is the first one to collect premium over RS.1000 crores among the private players. In contrast, both National Insurance and Reliance General have reported a fall in their business.

According to the Data available from the IRDA increased competition from private players saw them grab 26.7 per cent of the market as the 12 players together collected Rs 13,422 crore in premium in the April-November period, from Rs 11,619 crore a year ago

With five players — New India and Oriental Insurance from the public sector and ICICI Lombard, Bajaj Allianz and Iffco-Tokio from the private space — having left no stone unturned to increase their market shares, policyholders can expect improvement in service.

Market leader New India grew by 13 per cent to collect Rs 3,094 crore in premium and occupied a market pie of 23.05 per cent of the non-life industry.

Among private players, ICICI Lombard became the first insurer to cross Rs 1,000-crore mark as it doubled business to Rs 1,094 crore and grabbed a market pie of 8.15 per cent.

Good potential for life insurance

In a seminar about the Potential of Life Insurance in India, Mr.Anil Jhala, CFO of Birla Sunlife Insurance, while talking about the key drivers of the Insurance industry said that India offers tremendous potential, since the country still represents just 0.66 percent of the $3.2 trillion global insurance premium market. Adding to it he argued that factors such as raising population, greater per capita income, improved regulatory mechanisms and more household savings would create a boom in the insurance sector. Mr.C.J.George, Managing Director of Geojit Securities limited, said the current trend driven by the FIIs has to be balanced with a large number of retail investors and domestic financial institutions. The growth of Indian secondary market is in the international stature with most efficiency and transparency to the world.

Mr Manish Gupta, Head, Structured Trade, Citibank, gave a detailed overview of the new paradigm of lending, where the bank almost entirely mitigates the borrowing company's risk, by paying directly to the borrower's suppliers, and receiving payments from its buyers. Mr Hemant Tanna, VP Investment Banking, ING Vysya gave the concluding address at the seminar he said that the external commercial borrowings is the single most important reason for India being relatively insulated from the South-East Asian Crisis. He concluded the talk with a brief overview of project financing and mentioned how it was not just about cash flow predictions but rather about allocating the various risks associated with the project to the parties best suited to address these

PSBs keen on insurance venture

A minimum capital of Rs.100 crores is required to initiate an insurance company as the guidelines of the Insurance Regulatory and Development Authority (IRDA). Insurance sector has attracted lot of private entrants since privatization. Now, PSBs (Public Sector Banks) are interested to plunge into the business of insurance. Since, any foreign partner cannot hold more than 26 percent stake in the venture PSBs such as Punjab National Bank, Bank of Baroda, Indian Overseas Bank, Industrial Development Bank of India etc., are in the plans to join hands for its insurance foray. We can expect fresh insurance companies in the Indian Market soon.

State Bank Of India is the first Indian bank to move in this direction having a joint venture with French based Cardiff and launched SBI Life Insurance. Announcements from banks such as Allahabad Bank, Indian Overseas Bank and IDBI have come that they are in the look out of foreign partners in their insurance business.

January 16, 2006

Mumbai floods test insurers' settling ability

Private insurers paying ability is tested by the claims, which had come because of floods in the month of July in Mumbai. Some companies have received claims more than their net worth. Although reinsurance has protected their balance sheets for this year, private insurers may have to pay more for reinsurance renewals. Pharma companies have significantly claimed and they account their losses because of three reasons, most of the pharma companies have their warehouses at Biwandi the area which was worst affected, Medical material is always expensive and of high value, partially or damaged material cant be used for any purpose and are destroyed. Claims settled by ICICI amount up to Rs.45 crores for the damages of Medicines. Of this, the larges claim is for RS.23 crore. It has also settled two major claims from an electronic company and a steel and metal manufacturer for Rs 3 crore each. The largest claim settled among private insurers, so far, is a Rs 30 crore paid to a pharma company by Bajaj Allianz. The company has also settled a 11 crore textile claim and two major claims from pharma companies for Rs.12 Crores and 15 Crores respectively.

Royal Sundaram has settled over 1250 claims to the tune of Rs.67 crores and they still have to settle 300 claims worth Rs.25 crores. Antony Jacob, MD, Royal Sundaram, said: "Although we have received gross claims of close to Rs 100 crore, the net impact on the balance sheet will be only Rs 7 crore." He added that as of now he expected the company to continue to report a profit despite the claims. " He added that as of now he expected the company to continue to report a profit despite the claims. "For the current year our reinsurance programs will protect our balance sheet" said Arun Agarwal, chief executive, Cholamandalam General Insurance. But in the long run the companies will have to pay for it through their reinsurance programmes, he added.

Uninsured vehicles mount up

A surprise but a fact that one out of three vehicles running on the Indian roads are uninsured. In spite of compulsory third party liability insurance it is surprising to note the number of uninsured vehicles in the Indian roads. The Third party liability insurance covers liability of the insured towards any personal or property damage due to an accident. The main reason for this large numbers of uninsured vehicles is that the insurance companies do not encourage standalone third party insurance since it is a loss making business for them.

Since the premium paid is comparatively lower than that of the payout the insurance companies do not offer insurance coverage to old vehicles hence the vehicle owners go against law. Private insurance companies have tied up with vehicle manufacturers by offering them a fair deal, as the premium for new vehicles is fairly high as against a liability-only cover.

LIC records 46% growth during April-Nov 1/16/2006 11:47:36 AM IST

Life Insurance Corporation of India has achieved a 36% growth in business during the period April to November 2005. The overall growth of the Life insurance industry records 46% due to the strong performance of all the players. The 14 life insurers collected a premium of Rs.166.04 bn during this period when compared to the previous year same period it was only Rs.113.37 bn according to the data available with IRDA.

LIC collected Rs.122.71 bn premium selling over 130 million policies against stiff competition. An increase in the market share is also noted from 73.82% to 73.91%. Birla sunlife and SBI life insurance continue to see fall in Business.

Among the private insurers, ICICI is the top to collect a premium of Rs.11.8 bn achieving a growth of 73% followed by Bajaj Allianz to collect a premium of Rs.10.16bn

Munich Re looks to carve out micro-insurance role

Munich Re the German reinsurer has expressed their interest in the micro-insurance in India. The group is supporting this nascent branch of insurance through Munich Re Foundation, a trust that looks at development and social obligations. “At this stage, micro-insurance and agro insurance has more social obligations than business interest,” said Sanjib Chaudhuri, chief representative for India.

But micro-insurance is an area through which the objective of increasing insurance penetration can be achieved, he said. Mr Chaudhuri said a team is working on a business model for agro insurance in India, drawing support from the University of Heidelberg and an Indian university. The team will come up with a business model for Indian insurers by mid ’06. At the same time, Munich Re in Kolkata is doing a study on how insurance companies in India have responded to the micro-insurance regulations.

“We have offered them support from Munich Re Foundation’s program for process design, product design and actuarial support,” said Mr Chaudhuri.

A seminar on micro and agro insurance is going to be held in Goa in September conducted by this group and this will attended by global experts. Prof. Mohammed Yunus the pioneer of Grameen Bank in Bangladesh is likely to attend the seminar. Mr.Chaudhuri said “We are not debating the micro-insurance regulations. It is purely a social project”. On the other hand, Munich Re also said that they will support the efforts of Indian insurance industry in the implementation of micro-insurance. . “In this regard, it has already set up a roadmap to support the efforts of selected non-life insurance companies in India by providing technical expertise and share international experiences on micro-insurance,” said the statement

Rabi season...IFFCO-TOKIO introduces cover against frost & rainfall

IFFKO-TOKIO General Insurance company has launched a new unique Whether insurance Policy for the Wheat farmers in India. The policy covers the loss of yield due to irregular whether conditions during this Rabi Season which is between November to March. The policy will cover the loss during the month January due to Frost considering the daily minimum temperature and during the month of March the policy covers the damage due to excessive heat and it does also cover any damage due to unseasonal rainfall in the month of March or April during the maturity season.

During the Launch of this Insurance product the Managing director of the company said, “Wheat is the most important crop for India. It is cultivated mainly in North India including the states of Uttar Pradesh, Madhya Pradesh and Rajasthan where the policy will be available to farmers. This unique weather insurance product from IFFCO Tokio provides insurance protection to the farmers for uncontrollable weather risks like rainfall and temperature."

To ensure the transparency in the settlement process of the policy claims the company shall obtain the temperature data from the Indian Metrological Department and settle according to the temperature and rainfall data. The claims will be settled with in 30 days from the availability of the data from IMD post expiry of the cover period.

HDFC Chubb’s insurance innovation for mid-sized companies

A Innovative insurance for the medium-sized companies is launched by HDFC Chubb General Insurance. It is called as “Forefront Portfolio”. The protection is given to the Financial Well being of the Directors and offices of such companies such as personal liabilities and losses to their offices.

The additional feature of the product offers cover for the following: employee theft, entity employment practices, trustee liability outside directorship coverage and Internet liability coverage. The choice is left for the companies to choose any of the option. This is first of its kind in general insurance in India.

Insurers wait IRDA approval

There is a recent announcement from the Oriental Insurance Company to revise its existing Mediclaim policy. Clear terms are expected to be defined in the new policy regarding the Pre-existing and the illness that will be covered.

All the Indian General Insurance companies such as Oriental Insurance, United India, New India Assurance and National Insurance are planning to hike the minimum sum insured from the present amount of Rs.50000 to Rs.100000.

The importance is given for family medical insurance with a standardized cover for all the family members for the young applicants these companies also require them to have a pre acceptance health check.

The Insurance Regulatory and Development Authority (IRDA) have demanded these companies to justify the changes that are intended to effect.

Bharti to enter into Life Insurance

Bharti Enterprises, a holding company of Bharti group companies, has announced that they are ready to foray into Life Insurance segment by April. They await approval from the IRDA. Mr. Sunil Bharti Mittal, The Chairman and Managing Director of Bharti Enterprises said that they have tied up with UK based Multinational AXA India Holdings to launch the life insurance company.

Mr.Mittal said that the group companies excluding Bharti Televentures Limited, which may not hold stake directly, would jointly hold the Stake of 74%.

He said "We are ready to launch the insurance company from April, but subject to IRDA approval,"

When asked about reports that the Foreign Investment Promotion Board has put the venture on hold, Mittal said, "there is no problem and they (FIPB) will approve once IRDA gives its approval."

Meanwhile, speaking at the Partnership Summit 2006 on the Indo-British Trade Relations Mittal said, "UK can partner with India in several sectors."

Foreign insurers for tie-ups with PSBs'

In the near future the Indian Insurance Industry could see the entry of more Foreign Insurers in tie-ups with PSU Banks in India. G.C. Chaturvedi, Joint Secretary, Ministry of Finance (MOF) said foreign insurance companies have expressed interest in such joint ventures.

The Foreign Insurance prefers banks rather than private investors because the former can provide capital. Talking about this Mr.Chaturvedi said, "It is not difficult for a public sector bank to provide Rs 100-200 crore of capital as compared to private players." He also said "A consortium of banks will soon enter the insurance industry. It is on the horizon,” Banks are interested in both life and non life insurance sector.

Bank of Baroda, IDBI Bank, Allahabad Bank, Punjab National Bank and Vijaya Bank have expressed their interest to enter in the insurance industry in the past.

Chaturvedi said that amendments to the Insurance Act of 1938 were on the anvil.

Insurance employees oppose hike in FDI

The Insurance Employees associations are opposing the decision of the Government to enhance the Foreign Direct Investment cap in the insurance companies from the present level of 26% to 41%. The LIC Class-I Officers Association, National Federation of Insurance Field Workers of India (NFIFWI) and Insurance Corporation Employees Union (ICEU) has opposed the move by UPA Government.

In a press conference, Mr.B.B.Ganesh Secretary of the ICEU warned any move by the Government to weaken LIC or to hike the FDI in the insurance sector will be appropriately resisted.

He also said that Foreign companies will not invest in infrastructure projects as hoped by the Prime minister, who reportedly stated that India requied Rs seven lakh crore in the next ten years for development of the sector. He said ''It is imprudent to expect foreign companies put their global premium funds in Indian infrastructure. None of the companies in private insurance sector had invested in infrastructure, even with the premium they had locally mobilized. Public Sector LIC alone was capable of mobilizing the required funds, provided its present status is left undisturbed. Now we want to involve common people to thwart the Central Government's move to disinvest government's stake in public sector insurance companies. “

Few takers for disability insurance cover

Insurance Cover is there for every thing today. There are many types in Insurance cover available that some of them go unnoticed. The 'Unborn Child Welfare Insurance Scheme' is one such example. The coverage is offered up to Rs.75000 to the unborn child with a one-time premium payment of RS.1500. It covers lung, heart defects, etc. It is observed that one out of every three children born are prone to serious illness at the time of birth and many parents cannot afford huge expenditure to treat such diseases.

Indian parents are ready to pay the treatment bills but are not ready to opt for such insurance for the unborn child. They believe that insuring an unborn child against such diseases will bring bad luck to the child. New India Assurance Company offers medical coverage up to Rs 75,000 under their 'Unborn Child Welfare Insurance Scheme'. This policy has been in force since 1987 but has found only a shocking 200 policy takers.

The number of disabled children born in India is quite high but sadly due to superstitious reasons the policy has not performed well. Parents need to think that a right decision taken by them can give a new life to a baby.

IRDA slams insurance companies

A Third Party insurance cover is mandatory for all types of cars. Insurance companies do not encourage Third party insurance for cars and refuse to collect premium from the customers. On receipt of several complaints from the customers, the Insurance Regulatory and Development Authority (IRDA) has taken a strong stand against such companies who have refused third party insurance to their customers. The IRDA has clearly warned the insurance companies that they cannot refuse or reject Third Party Insurance cover to any customer.

A letter from the IRDA is sent to the non-life PSU Insurance companies stating that they cannot reject a third party insurance cover to a customer who has a valid license and registration certificate.

Sources from one of the large insurance companies said most of the complaints have come from commercial trucks, which were insured last year but have been denied renewal policies this year because of a high number of claims.

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