Premium on life policy to increase

The finance ministry is considering levying service tax on the fund management fees, that is, the investment part of the insurance policy. This in turn could result in increase of premium paid by the policy- holder. Decision on this issue is likely in two/three weeks.

Government’s view is that 50% of life insurance policy holders use insurance as tax saving and investment tool in the country and 85% of the consumers seek policies which offer risk benefits and investment opportunities, so if this is brought under tax it would enhance the govt.’s revenue. Insurance firms are charging fund management fee on Ulips and similar insurance products, which is absorbed by the policyholder as it is factored in NAV of the unit.

Life insurance companies opine that the tax imposition on investment component would not have any big impact on the industry, as the component would not be significant for an individual customer.

Reliance to increase investment in life insurance.

Reliance capital’s chairman Shri Anil Ambani announced, during the AGM of the company that they would infuse over Rs.2000 crores in life insurance business. Reliance is the only company that goes solo in both life and non-life insurance business. For year ended March’07 Reliance Life Insurance collected new premium of Rs.930 crores recording a growth of 381%, which is the highest among all life insurers.

The company proposes to recruit several lakh agents during the current financial year to achieve their growth ambitions. Reliance acquired the life insurance business of AMP Sanmar in India while their general insurance business was their start up.

Bajaj Allianz’s new launches

In West Bengal Bajaj Allianz Life Insurance Company has launched three attractive micro insurance plans. With a low premium of Rs.15/- per month, the sum assured spreads from Rs.5000/ to Rs.50000/ and these are for individuals from 18 years of age to maximum of 70 years.

The plans are:

1. Alp Nivesh Yojana – It is an endowment plan with life cover and maturity benefit equaling sum assured and vested bonus, with a guaranteed surrender value and additional benefits for accidental death and accidental disability.
   
   
2. Bima Kavach Yojana – is the most economical term insurance plan with return of premium on maturity and guaranteed surrender value with benefits for accidental death and accidental disability.
   
   
3. Jana Vikas Yojana – This is a life cover with maturity benefit of 125% of the single premium payable on survival till the end of the policy term with guaranteed surrender value.

AVIVA’s rural insurance product

As per its plan to enter rural market for insurance, Aviva Life Insurance brought out a low premium insurance plan for customers of BASiX, a micro finance and rural livelihood support services entity. The plan called, Grameen Suraksha, offers a villager at least Rs.25000/- as sum assured after five years with premium ranging from a low of Rs.575/- per year for two years according to an announcement by the company. Under the plan, the insured is required to pay premium for two years and then avail the term benefit for 5-10 years. If the insured is unable to pay the second annual premium, the plan will still offer full cover for 18 months or 48 months from due date of unpaid premium of 5-10 years.

Mr. Bert Paterson, Managing Director of Aviva India said,” with the launch of Grameen Suraksha, we hope to increase our reach and provide the benefits of life insurance to maximum number of people in the rural and social sector”. Aviva India is a joint venture between UK based Aviva Plc. and Dabur, and has covered 900000 lives in social sector so far in association with Basix and other micro insurance organizations, as per Mr. Bert. Basix provides livelihood support services in the field of finance and institutional development in 10 states including Delhi, Tamilnadu, Andhra Pradesh, Madhya Pradesh and Rajasthan.

Bharti AXA to use Airtel base for insurance.

In the state of Uttar Pradesh, Bharti AXA Life Insurance Company plans to leverage existing customer base and distribution network of Bharti Airtel, the mobile services provider.
Mr.Nitin Chopra, CEO of Bharti AXA Life Insurance told,” Bharti Airtel has about 4 million customers across Uttar Pradesh, which we will try to bring under our life insurance services in the initial phase.

The company would extend presence in the city through AirTel Relationship Centres, where Bharti Airtel customers will have access to our range of life insurance services and quality advice on financial protection.”

The company opened its first branch office in Lucknow and has plans to establish its presence in 9 more cities of the state. Mr.Chopra said, during the occasion, “About 200 customers walk daily into each of our Airtel Relationship Centre. This adds to about 200000 customers daily as we have a total of 1000 ARC’s across the country. In Lucknow, we hope to have presence in 9 ARCs by August and aim to expand to all the ARCs in the city by the end of the year.” Their branch sales manger Mr. Sudhakar Saxena informed that they have done policies worth approximately rupees seventy million from Lucknow.

Bajaj Allianz performance

Bajaj Allianz Life Insurance Company have, in the 3 months period from April 07 to June 07 during the year, earned a net profit of Rs.30 crores, compared to Rs.63 crores for the last whole year as reported by the company. Their total new business premium collection for the quarter is Rs.729 crores. They have issued 536703 policies during the period. The company has reported an anuualised premium of Rs.658 crore for the quarter.

ICICI Prudential Life cares for health

ICICI Prudential Life Insurance Company has brought out insurance products to cover over 1000 surgeries to tap healthcare sector. With this launch the company has set its sights on areas beyond providing policies covering illnesses such as cancer and organ ailments

Reporting norms for Insurers

In order to track use of unaccounted money for buying insurance policies, the reporting norms stipulated for insurers was reviewed. At present transactions, even integrally combined individual transactions going beyond Rs.10 lakhs per month should be reported to Financial Intelligence unit India. In addition the insurers are also required to identify the sources and report suspicious transactions. Insurers on their part wanted permission for raising cash limit to Rs.50000/ as rural folks have lesser access to banking. The IRDA Chief said that any change in rules must have finance ministry’s approval.

The Insurance Angle

An editorial in Economic Times states, “Most wage earners in India are under-insured and the penetration of medical insurance is abysmal. This is largely because insurance is sold more as an investment than risk cover. The selling point is invariably what the policy would yield and not how much protection the family has in an unfortunate event. If the wage earners are appropriately covered through low-premium pure risk policies and health contingencies are taken care of through affordable medical insurance or quality health care services, the need to invest in liquid or safe assets would go down. In that case even at their current surpluses, investors would be able to obtain a better asset allocation and thereby, earn better returns.”

Tata AIG’s new ULIP

Tata AIG Life Insurance has brought forth its’ Investassure Gold’ Unit linked policy that offers full life cover till the age of 100 years. Persons up to the age of 70 years can seek the policy and obtain cover for their entire life, the maximum age being 100 years.

“Old now gold for insurance”

Till recently getting insurance cover for people at 60 years of age was almost impossible. But now the times have apparently changed. Till recently it was thought that claims would be high for sixty year olds. But a recent study has proven that visit to hospitals are much more in the case of 45-60 year old persons than people above 60. As a point to note the frequency of hospital visit by 60 year and above have dwindled drastically. However the cost of policies for older people are still higher. The insurance companies are looking to find ways and means to lure them for the cover and provide exemptions for many pre existing diseases. Further the mortality rate world over has under gone drastic change as a result advancement in medical facilities. Insurance premium for senior citizens have also fallen as a result. Indian insurers also want to tap this market and are looking at reduction in premium for senior citizens.

Which insurance policy to go for?

There are two options Term plan and Endowment plan First we have to decide on how much risk cover and how much on investment. Better not to combine both though it might look attractive. The term policy is purely risk covering. Premium on it is almost 10 times lower than an endowment plan. But being risk cover it does not offer any increase in investment on maturity. Endowment plan comes with bonus accruals on maturity. But they are costly for providing the same amount of risk cover that a term policy can provide. SO do not combine risk and investment. The best option would be to segregate insurance and investments. by investing part on purely risk cover and rest for generating better returns.

Insurers to invest in derivatives.

The IRDA, it is reported, would be allowing insurance companies to invest in more financial instruments including derivatives. The proposal would increase returns for policyholders.

ICICI Prudential looks north East.

ICICI Prudential Life Insurance plans to market its products aggressively in the northeast part of the country before the end of the year. They are planning to open four more branches in the region. Mr.Vineet Arora sr.VP of ICICI Prudential said that north east is an important and emerging market for all the insurance companies and hence the competition is also expected to be high. As a part of their plan they would double their adviser strength from 5000 to 10000 by the yearend to promote their products tailor made for the region. They also plan to tap the health insurance space in the region.

Pay by SMS your insurance premium.

ING Vysya Life Insurance has tied up with Paymate India to provide premium payment service through a mobile SMS. This new mode of payment could help them reach more customers opines the company. Rahul Agarwal VP Customer services,ING-Vysya said that” Now you can pay insurance premium via SMS. The entire base of mobile customers is very high in India and is growing rapidly. This will make it easier for customers to pay premium”. However this service is currently available for those who have an account with Citibank or Corporation Bank. The company is also arranging with another 3-4 banks in this quarter, he further said.

ICICI Prudential’s capital infusion

ICICI Prudential Life Insurance has its capital base increased to Rs.2372 crore by the fresh infusion of Rs.300 crores by its promoters ICICI Bank and Prudential plc
The additional capital would help meet the solvency norms stipulated by IRDA and to fund the up-front expenses, which is very high for life insurers. This would also help to beef up their aggressive expansion plans for the next year.

ICICI Prudential’s new business premium in first quarter this year was Rs.987crores.Their renewal premium collection, which indicates sustainability of the life insurer, was at 98% during the period. The insurer under wrote over 4,50,000 policies during the period. ICICI Prudential Life has 683 branches employing over 20000 people with additional advisor base of 235000.

Ms.Shikha Sharma CEO and MD of ICICI Prudential Life said,” our success is founded on our ability to understand and adapt to customers’ needs as well as our expansion strategy that drives us to deliver our products and services to customers across the country. The past quarter has yet again seen us deliver on both parameter, thereby further strengthening both our leadership position in the market as well as in the minds of our customers.”

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