Budget adds cost of ULIPS

The proposal in the Union Budget namely, that the fund management services on ULIPS also would attract service tax as on Mutual Funds, would add to the cost charged by life insurers as’ fund management charges’ which will increase the premium payable by investors. Though insurers say at present that they have to examine the impact of this, eventually investors may have to bear it in terms of increased premium. LIC’s MD Mr.D.K. Malhotra said on the subject “ We will need to take a call on this front.. So far, we are absorbing the impact of service tax on agency”. Kotak Life Insurance Chief Mr. Gaurang Shah said that there might not be negative impact due to this on insurance sector. Ms.Shika Sharma of ICICI Prudential says, “ We will also have to see what and how much we can offset this against. So it is difficult to say whether rates are going to increase or not”. Though the budget speech mentioned that only the fund management charges would attract service tax, the illustration in the finance bill suggested that all charges levied by insurance companies on ULIPS would attract service tax. Tata AIG’s CFO , Mr. Vivek Sood felt that it would be up to individual companies to decide in dealing with the impact. President & CEO of Birla Sun Life said, “ It needs more analysis to ensure that only relevant portion is taxed”. Aviva India CEO opined that this measure might have impact on long-term savings.

Bank of Baroda Insurance Alliance

The insurance joint venture among BOB, Andhra Bank and Legal & General Group, UK, which will be called as Baroda Legal& General Life Insurance is to “ begin operations between January and March 2009” as told by BOB CMD Mr. Anil Kumar Khandelwal. He further said that the companies would include them association of Andhra Bank. He further said that their USP would be to leverage the 4000 branches of the two banks, which together have a total of 40 million customers. The new company is likely to rely on the banc assurance model instead of agents. This new joint venture would also make the two bankers to suspend their bank assurance agreements with HDFC Standard Life and LIC The joint venture holding would be 44% with BOB, 30% with Andhra Bank and 26% with Legal & General.

IRDA

IRDA is expected to propose during the meeting for review and revamp of investment norms for insurance companies that custodian banks managing assets of insurer should not be part of the promoter groups. This meeting is scheduled for the last week of the month to look at measures to avoid conflict of interests among financial institutions. Major Life Insurers who may be affected by this are HDFC Standard Life and SBI Life Insurance. A custodian keeps in safe custody all securities and other such instruments belonging to a fund. Banks perform the job of custodians for financial institutions in India. The custodians manage banking transactions, settle accounts, provide market information and apprise the principals of policy changes in terms of investments.

ING VYSYA’s new product

While launching their new ULIP ING Golden Life, a retirement plan, Mr.L.Murli regional VP of ING Vysya said that the plan offers loyalty units and life stage investment program. The plan offers choice of vesting age from 45 to 75 years and also choice of premium payment either as single or spread during a term of 5 to 30 years. Age limit for the plan is 18 at the minimum and 65 at the maximum. The plan also provides for unlimited top – up options and needs no medical underwriting.

Max New York life – Health Plans

Max New York Life Insurance Company has launched health insurance plans in Orissa. The Plan provides three options which are Medicash providing daily fixed benefits for hospitalization, Wellness Plan providing covers for critical illnesses and Safetynet plan. Presently the company has 233 branches in 155 cities, and intends to serve more than 500 cities by 2011 according to Mr. Sibaranjan Patnaik their Zonal VP. It also plans to increase its agency force to 2 lakhs by 2011 from the present 30500. Mr. Patnaik further said that their focus would be on the under served rural markets for expansion and the company plans to launch micro insurance products at affordable cost for the 300 million households.

Kotak Life also plans health covers

Mr. Arun Patil, Sr.VP of Kotak Mahindra Old Mutual Life Insurance Ltd. said that the company is planning to launch a stand-alone health insurance scheme during before end of the year. So far the company offered health insurance only as riders to their life insurance schemes. Mr. Arun Patil told that the stand-alone scheme would cover as many diseases and eventualities as possible. The company plans to increase its offices to 140 from 110. by the end of this month and open 100 more offices in the next fiscal as informed by the Sr.VP. The occasion when he divulged their plans as above was the launch of their women specific plans – Kotak Endowment, Kotak Flexi and Kotak Smart Advantage Plans. The schemes are for 20 years and the minimum premium amount is Rs.12000 per annum. This amount would convert into Rs.551257 on maturity. The product is being launched initially in eastern region expecting to cover 100000 women.

Max New York Life plans high

Max New York Life Insurance Company is planning to achieve Rs.100000 crore business by the end of December 2008. As on December 2007 their total sum assured was Rs.62000 crore. Mr.APS Bhalla VP South Zone said “ To increase our business we are expanding our network by adding new insurance adviser and opening new branches across the country”. The company presently has 233 branches and 30000 advisers, which it is planning to increase to 570 branches and 55000 advisers by 2011. the company was launching the Lifeline health insurance products in Vishakapatnam. Their three products as mentioned elsewhere are: 1. Lifeline Medicash plans provide for daily fixed hospitalization expenses and a lump sum benefit against an unlimited number of surgeries; 2. Wellness plans for critical illness covers against 38 critical medical conditions covering a range’ offered by no other insurer in India under one plan so far’;3. Safety net pan which is a term plus health protection plan, offering protection from any loss arising from critical illness, accident, disability and death which is said to be the only plan of its kind in the Indian market place. Mr. Gary Bennet their CEO said, “ With a range of flexible products backed by best in class services we have emerged as a leader in setting quality benchmarks. Offering the most transparent documentation for our life insurance products and are one of the quickest in settling claims. Launching health insurance products is a natural progression in our journey to offer the consumer a complete choice of protection plans to suit their various needs.”

Life Insurance business increase

During the period April 2007 to January 2008, the private life insurers have posted an increase of 82% in first year premium income. The market grew by 18% during the period. But LIC posted a negative growth by 1.22% during the period. This dip caused a fall in the market share of LIC to 64% during the period against 77% during corresponding period in 06/07. The main reason for fall was inability to garner group insurance business. However the individual business income of LIC stood firm during the comparable periods. Private insurers achieved 34.2% rise in first year premium in group business. This perhaps is due to the customers trusting the private insurers for long-term savings also.

Reliance Life’s new Wealth + Health plan

Reliance Life Insurance has launched a Unit linked plan with health benefits under the name Reliance Wealth + Health Plan. This is a first of its kind product, it is claimed. Mr. Nandagopal CEO of Reliance Life while launching the product said “ the unique proposition of this plan is that it offers complete investment flexibility to grow wealth by investing in different plans and funds and also provides the financial support for managing health expenses. It is in line with our strategy to offer best in class products to our customers”. This product is expected to contribute 35-40% of the total sales of the Jan – Mar ’08 period, for the company according to their CEO, since there was no adequate choice of products for people in this segment so far.

Archives | Top