Bajaj Allianz to increase paid-up equity by Rs 60 cr

Bajaj Allianz Life Insurance Company is going to rise its paid-up equity by another 60 crores. The Chief Executive Officer and Allianz Country Manager, Mr. Sam Ghosh told the press “The capitalisation is required to sustain our growth”. This increase in the paid-up equity will figure to 368 crores. The last capitalization was done in August 2005. Mr.Ghosh said that the company is targeting very high growth and to achieve the same such capitalization is required. The company has recorded 300 percent in premium accretion till October this year. He also said that this capitalization would offset the depreciation in their investments in government securities. Bajaj holds 74 percent of equity in the joint venture with the German partner Allianz.

Bajaj Bancassurance Tie-up:

Bajaj Allianz has tied up with Syndicate Bank to strengthen its distribution network through Bancassurance arrangements such as Bank-sponsored regional rural banks. The officials sign a memorandum to this effect. The Chairman of Syndicate bank said that this arrangement would double the number of employees selling insurance. He also quoted that the bank has generated Rs.100 crores of business for the company and 30% of Bancassurance business.

MR.Ghosh said that the bancassurance arrangement hopes to a better reach in the rural markets to sell structured products to the farm sector such as term plans and savings-linked policies. He also said that, wherever the income level is high there they would attempt selling unit-linked insurance plans.

Birla Sun Life to target SMEs for group business

Birla Sun Life Insurance is targeting in the small and medium enterprise segment, where it is felt to be untapped by the Indian Insurers. BSLI is devising special sales strategies for both large clients and the Small Medium Enterprise segment.
The COO of Sun Life Financial, Mr. Jim Prieur, the Joint Venture Partner in BSLI said that this SME segment is potential for group Business schemes. To increase the reach in this country, BSLI has plans to open offices in 20 new cities in the first round and also will increase the product range.

Admitting the competitive atmosphere he said “The intensifying competition within the industry has resulted in players resorting to extremely fine pricing. Additionally, the levying of the Fringe Benefit Tax (FBT) has compelled corporates to have a rethink on their policies on employee benefits. One would expect a definite shift from defined benefits to defined contribution plans, as these plans help corporates manage costs and empower employees to manage their retirement savings better”

BSLI recently received a mandate from leading corporates in the FMCG and Banking sectors to manage their group funds of over 350 crores. These funds will be transferred to the company in phases. Some Aditya Birla group companies also have plans to manage their employee Benefit funds.

Banks tying up with insurance firms, MFs

Banks are tying up with insurance companies as a matter of Financial Convergence where they place Mutual funds as one of the key options in the financial products. ICICI Prudential has tied up with Bank of India to provide Life insurance cover for the “Star” customers who take up home loans from the bank. This insurance cover is for the overall outstanding of the loan, which takes care of the borrowers family is not pushed into liability in case of any casualty.

Dena Bank has tied up with LIC; LIC’s mutual fund schemes are operated through select branches of the Bank. This arrangement is expected to boost the distribution network of LICMF and also third party products of the bank.

These Insurance products comes with additional features such as Low premium, loan for paying insurance premium, higher non medical limit etc.,

Hefty flood claims — Private insurers set to hike tariffs

Large flood damage claims rocks the general insurance sector. Companies have started under-bidding to grab competitors business. Almost all the general insurers have suffered heavy payouts due to natural calamity this year. The beneficiaries are the IT companies in Bangalore, Chennai and Mumbai. IT companies generally drive down their premium by group insurance offer to their employees. Some insurance companies have clubbed both asset risk and group medical cover as an offer to their corporate clients. The clubbing is done with the expectation of asset risk, especially fire risk that would yield better premium with which even high medical claims could be managed. But the scenario has changed. Mr.S.Sreenivasan, Chief Financial Officer of Bajaj Allianz General Insurance co., said to the Business line "Each portfolio will be evaluated separately now."

Floods are part of the fire insurance portfolio; such claims have put general insurers to heavy losses due to claims this year. The loss is close to 70% in this portfolio, which has dented the offer of clubbing asset risk with medical risk coverage. If clubbed, the general insurers prefer to raise medical risk premium to the higher side.

There is a rise in reinsurance premiums from 0.4% to 0.08% this year. This is a positive indication for the general insurance sector because they are largely dependent on this. Those software companies, which have enjoyed high claims this year, will have to take up higher premiums in the following year. Mr. Sreenivasan said. The increase would be for both group and retail medical covers.

IRDA sets up institute of surveyors, assessors

As per the recommendations of the “Bhandari Committee” the Ministry of Finance has directed the IRDA to promote an institute for surveyors and Loss assessors. The model suggested as the institute of CA’s and ACS. According to the IRDA Executive Director, Mr. P.C. James, the institute would be considered for conferment of a chartered status from three years of its establishment

Indian Institute of Insurance Surveyors and Loss Assessors' incorporated under Section 25 of the Companies Act, 1956, with its registered office in Hyderabad. The main objectives of the institute are promotion of quality in the profession of surveyors and loss assessors through education and training, introduction of best practices among its members and conduct of professional examinations relating to the profession of surveyors and loss assessors

The enrollment of members is in progress and the form is available in IRDA website.

IRDA all set for amendment to Insurance Act

The Insurance Regulatory and Development Authority is in the process of finalizing their recommendations to the Finance Ministry on the proposed Insurance Act amendments to the Government. The KP Narasimhan Committee report is received by the IRDA. The IRDA would hold talks with the various stakeholders before finalizing the report.

“The report would be finalised only after we have held talks with the stakeholders, primarily the insurers, so as to be as industry-friendly as possible,” an IRDA official told FE. But, this issue is not expected to be discussed in the current session of the Parliament.

The IRDA proposes to have different capital base for different segments of insurance. The proposed capital base for Health Insurance is 50 crores and 100 crores for life and general insurance. Focus on health insurance is high and the regulator encourages stand-alone health insurance companies to operate in the country.

Sources said, “Though there has been huge pressure from the insurers to reduce the minimum capital base norm, the regulator feels that there is no immediate need to do so. The capital base has not proved to be a hindrance as there are a number of players in the field already,”

The regulator proposes the increase of FDI from the present 26% to 51%. The Government is in favor to this to allow the increase up to 49% but Left parties in the UPA oppose to this proposal.

ICICI Lombard to up health biz to 18% of portfolio

ICICI Lombard General Insurance is going to increase its health insurance portfolio close to 18%. The company plans to have a separate health set up in the organization. Mr. Sandeep Bakhshi, MD, ICICI Lombard General Insurance said “We have created an independent health vertical and have already employed 10 doctors. It is like having a health insurance company within the company,” To increase its presence in health the company has launched a new product —10K tax saver health insurance plan which offers policyholders a menu of benefits for family health insurance all of which is available for a flat premium of Rs 10,000. The 10K plan is a floater policy where the whole family is covered under a single sum insured.

Health insurance is 10% of total non-life insurance business in India. On the other hand public sector companies are reluctant to raise their share to Health insurance because of increasing adverse claims ratio. Claims for the Industry are almost 100% of the premium.

Private companies interest in Health Insurance is growing. Bajaj Allianz General Insurance has formed a separate team to manage their Health insurance division called as Health Administration Team. IRDA has received a proposal from “STAR HEALTH” a stand-alone health insurance company promoted by private investors and led by former Chairman of United India Insurance Mr. Jaganathan.

Multiple bancassurance tie-ups may get nod

The IRDA may allow banks to have tie-ups with multiple insurance companies for bancassurance. The present rule allows having tie-up arrangement with only one insurance company. Realizing that the tie up arrangement not only help the banks but also will help the new entrants to the insurance segment to get their footing in distribution network. On the other hand, there may not be many banks to make such move as all the major banks have joined hands with existing insurers.

A senior official of Bank of India (BoI) said “The IRDA has understood the problem and is believed to be considering banks’ multiple insurance companies on a case by case basis,”

The Banc assurance tie up has become a bone for contention for both banks and insurers. Banker feel what they benefit out of selling insurance of a particular company, is negligible when compared to the benefit attained by the insurance company.
On the other hand the insurance companies feel that granting multiple tie-ups, the banks may not be fair in promoting a particular company due to clashes of interests.

Insurance companies may be allowed pension biz under existing entity

Indian Insurance companies may be allowed to enter the pension sector. They need not float a separate entity to manage pension funds. They can manage with the existing set up itself. The interim Pension Fund and Development Authority (PFRDA) is checking on the feasibility factors to permit insurance companies to operate the pension business. The PFRDA awaits the Parliaments nod on the proposed New Pension System (NPS).

The Chairman of PFRDA Mr.Swarup told the press “We are yet to take a final decision on whether an existing insurer may be allowed to undertake pension business without having to float a separate entity that would act as a pension fund manager (PFM) or whether a separate legal entity would be a must."

The regulator is studying, whether the companies could keep a clear distinction between these two businesses, if offered. Mr.Swarup said "We have to see whether the insurance companies would be able to build a Chinese wall between their insurance and pension businesses”.

There was a initial apprehension that housing the Insurance and Pension businesses under the same roof and the entity being governed by two regulators might lead to confusion. However, insurance companies are more inclined to take up the opportunity since most of them offer pension products at present.

Indian Bank ties up with LIC to offer customers 4 products

INDIAN BANK with LIC has launched four new insurance products for their account holders- the IB Jeevan Kalyan, IB Griha Jeevan, IB Jeevan Vidya and IB Insured RD. Indian bank has also launched 3 new savings bank accounts with free insurance cover, a silver bank account with minimum balance of RS.5000/=, a gold savings account with a minimum balance of Rs.10000/= and a platinum account with a minimum balance of Rs.25000/=. Additional 1 lakh insurance cover is given for Platinum customers who were in the age group of 18 to 45.

Mr.Venugopal, Executive Director LIC Pension and group schemes said that the policies cover the age group of 20 to 60. He said that the south zone was a good market for LIC and the targets were achieved. The coverage was 3.48 lakh people against 3 lakhs of the previous year with a premium income of Rs.208 crores as of 15 Nov 06.

Bajaj Allianz pips ICICI Pru in premium income stakes

For the first time, since inception ICICI has dropped down in the scale of highest premium collections amongst private insurance companies in Sep 2005. Bajaj Allianz Life Insurance has emerged as fastest growing company with a premium collection of Rs.214.42 crores as on Sep 05 whereas ICICI’s premium collection during this period is Rs.195.35 crores. Bajaj Allianz first year premium income grew 237.80 per cent in the first half year of 2005-2006 with a premium collection of Rs.643.59 crores while the year-to-year growth of ICICI shows 71.39% with a premium collection of Rs.819.75 crores.

ICICI Prudential Life Insurance’s chief financial officer, Sandeep Batra, said, “Our market share could fluctuate. We don’t look at private sector leadership only. We are more interested in our share of the total industry (including Life Insurance Corporation).”

Bajaj Allianz’s first year premium income in the first half of 2005-06 was 5.68 per cent, up from 3.39 in 2004-05. It has increased its offices to 560 from 200 at the end of March 2005 and increased the employees to 8,000 from 3,000.

“We have spread our reach to places where private sector competition is absent. Of the 560 offices, 450 are in small towns where the only alternative is the LIC,” said Bajaj Allianz CEO Sam Ghosh. Bajaj has plans to extend their presence in 750 towns later this year.

Mr.Ghosh Said ““We will have new premium income of over Rs 2,000 crore in 2005-06 against Rs 900 crore in 2004-05”

Bajaj Allianz now also has 75,000 agents across the country against ICICI Prudential’s less than 70,000 agents.

ICICI Prudential’s market share during April-September 2005 was 7.24 per cent against 6.25 per cent in 2004-05.

Bajaj Allianz Life gets Rs 60 crore capital infusion

Bajaj Allianz has received new capital infusion of Rs.60 Crores, with this infusion the paid up capital of the company has increased to Rs.368 crores. Mr. Sam Ghosh, Chief Executive Officer of Bajaj Allianz Life Insurance company said “This infusion of capital will enable us to continue with our expansion plans and achieve sustained growth year after year. We already have our own offices in 352 districts capitals across the country and with this capital infusion, we will soon be able to reach the remaining 234 district capitals in the country and also move into rural areas.”

ICICI Bank's public issue subscribed 1.86 times

Domestic Offering of ICICI Bank for Rs.5750 crores was subscribed 1.86 times. Maximum bids were at Rs.505 per share. The price band in expectation was between Rs.505-545 per share for public issue through the book-building route. Including the green-shoe option the bank is raising Rs.5750 crores from the domestic market.

Pvt non-life insurers cover 26% of market

Growth in the general insurance industry is 15% in the first half of this year. The contribution to this growth has come from ICICI Lombard, Bajaj Allianz and IFFKO-TOKIO due to their strong performance. These private insurers have gained 26% share of the market. The total non-life premium collected last year by all the insurers amounts to Rs.9025 crores, this year it has increased to Rs.10415 crores according to data collected by IRDA.

Amidst stiff competition between the private and public sector insurers, the private insurers have gained fairly. They have increased their market share from 18.55 last year to 25.8% this year.

Market leader New India Assurance grew business by 10.6% to collect Rs 2,282 crore in premium till September this year and had a market share of 21.9%. Despite over 6% fall in National Insurance’s business, it was at the second spot by collecting Rs 1,780 crore with a market share of 17.1%. Oriental Insurance collected Rs 1,761 crore by logging 12.6% growth in premium income and cornered 16.9% of the market.

United India grew by a mere 2.9% to collect Rs 1,628 crore in premium and a market pie of 15.6%. Among private players, ICICI Lombard was at the top by doubling business to Rs 823 crore and cornered 7.9% of the market.

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