Insurance companies going Public

Many private insurance companies are making heavy investments inspite of being in the red hoping to break-even in due course attracted by the vast insurance market which is yet to open fully. The investments are needed to increase their distribution network and as required by regulatory norms. So investing public has to be watchful about the company before going for fresh insurance investments. The only private insurer generating profit is SBI Life Insurance. They are already planning to go public. Other insurance companies which are attempting to go public to meet their investment needs are ICICI Prudential and Bajaj Allianz. Most of the companies are going in for valuation of their business, though being in the red, to go public to raise capital.

SBI Life launching two new products

Mr.U.S.Roy, MD and CEO of SBI Life said during a press meet that they are planning to bring two new products shortly, one in micro insurance and other in health insurance. He further said that the company is working on some model for micro insurance. He informed that the SBI Life has recorded a net profit of Rs 3.83 crores in 2006/07 which is 88% more than their performance during last year. Their total premium collection during 06/06 was Rs. 2928.49 crores.

Bharti AXA Life’s new endowment product.

Bharti AXA Life has launched their second insurance product after their maiden product SecureConfident , which was a traditional term insurance product. This second is an endowment product from them and is called SaveConfident. During the launch CEO of Bharti AXA Life, Mr. Nitin Chopra said “the annual payout feature of this money back insurance product is an innovation offering benefit of liquidity, in addition to long term savings and protection. SaveConfident offers guaranteed annual payments for 10 years from the sixth policy year which is unique. Though this policy’s benefit period is 15 years, the premium payment term is only 12 years. This policy also assures an annual reversionary bonus from the first year besides terminal bonus. In case of death due to accident the policy offers added double benefit. Thus the product with premiums as low as Rs.6000/ per annum is an ideal product for the mass market as it extends triple benefits of insurance, savings and liquidity.”

Nomination and assignment in life insurance.

The life insurance policies are long term contracts and the benefits are dependent on happening or not happening of some pre-defined insured events. Therefore it is very important to clearly define the beneficiaries. Nomination and assignment are two tools to manage the benefits accruing under a policy. Nomination is a right given to the insured policy holder to appoint a person or persons to receive the benefit under the policy. The person in whose favor the nomination is effected is the nominee. Nomination ensures smooth transfer of policy proceeds when the life assured is not around. The policy holder can change nomination as many times as he wants. But the nominee cannot influence the policy.

Assignment is a transfer of rights to a person or persons. Assignments can be conditional or absolute. The assignment once effected cannot be cancelled. The assignee acquires the complete title of the policy to assign it or can surrender it. Usually assignment is made for money considerations and it should be intimated to the insurers separately.

Aviva looks to banks for micro insurance

Aviva Life Insurance has aligned with many banks to take its micro insurance concepts and products to rural areas. Presently it has aligned with Canara Bank, Lakshmivilas Bank, Punjab and Sind Bank and 23 cooperative and regional rural banks. It has offers both individual and group schemes and other products like Jana Suraksha, Amar Suraksha and Anmol Suraksha with low premiums. The insurers have so far covered more than seven lakh lives. The IRDA policy directive to private insurers to have fixed percentage of business in the rural and social sectors has helped penetration of micro insurance. It is informed by the spokesperson of Aviva. He further said that the IRDA is in the process of developing regulations for micro insurance.

LIC on to healthcare.

LIC is planning to enter the pure health insurance products business, known as ‘benefit products’. A comprehensive single health insurance product backed by reinsurance is expected to be launched by LIC in two months time. Earlier entrants in this field are ICICI Prudential and Tata AIG. The health care market is estimated to be Rs.60000 crores. But one percent of it only is covered by insurance. Mr. G M Agarwal, Chief Actuary of LIC said that the product “will be unique which will be moderately priced, and we will try to remove the deficiencies of a standard mediclaim policy with provision of benefits if the policy holder does not claim a certain amount. Moreover it will be different from the products of other life insurance companies in the market at present.”

Stock Market fancy for insurance companies.

The stock markets have suddenly taken fancy to companies in the insurance business. The companies that are fancied happen to be the holding companies of ICICI Prudential , Reliance and Bajaj. While the first two are on the basis of positive performance, the last one because of the de-merger plans. This indirect route taken by the market is said to be because the insurance companies are not allowed to list on stock exchanges. For the insurance companies to be listed, the Insurance Act has to be amended.

LIC South Zone leaps in premium

Life Insurance Corporation of India – South Zone is anticipating huge growth in premium growth during the year. Actually it is looking at a growth of 36% to Rs. 8,020 crores in the coming year on an expected sale of 53 lakh policies this year. LIC introduced a new plan named Jeevan Amrit an endowment type plan targeting younger generation. This plan is a policy for 10 to 30 years with premium payment term of three to five years and provides reversionary bonus on paid up premium. Other than this LIC have plans to introduce three more plans during the year. Shri B.Manivannan Zonal Manager said that “they plan to initiate enterprise data management scheme which can help in dematerializing policy documents.” For the year ending 31.3.07 LIC completed 3.82 crore policies for a total premium income of Rs.39541 crores. Mr.Manivannan further told that their ULIP had been’ the major growth driver’. Their market is 74% during the year. LIC expects to reach a market share of 75% during the current year.

ULIPs the joy of insurance sector

Increasing popularity of ULIPs will play a major role in growth of life insurance industry in the coming years, as reported by India Insurance Eye. The report further estimates a 44% compounded annual growth rate up to year 2011 for new businesses. Life insurance premium may constitute about 6% of GDP. Insurance being sold to young people as part of financial planning would be the major driver and this is likely to grow by 1.35% every year. Private insurance companies will be playing important role in this direction due to deepening penetration and innovative products. The report has also predicted that a lot of new entrants into the sector in the next couple of years. The report assures that the bear tendency of stock market in which major portion of ULIPs are invested, would not affect the performance of these products because the country is expected to post 8.5% growth of GDP annually.

ICICI Prudential Life’s new promotion technique

ICICI Prudential Life insurance in association with Mc Donald’s is promoting animation film Shrek-3 calling the scheme as “Say Cheese with Shrek”. Speaking about the promotion Mr. Sujit Ganguli, Senior VP, ICICI Prudential said “ We decided to use a unique, non-intrusive platform to reach out to parents and help increase their awareness about life insurance and child plans. The Shrek-3 activity provides us with a fantastic platform to reach out to customers and inform parents about our policies like Smart Kid Education insurance to plan and secure the child’s future.”

India Bulls entering life insurance

With life insurance business on the verge of huge growth, India Bulls, financial services major, plans to enter the fray. Four major global insurance companies and financial services are running for tie-up with India Bulls. The global majors are ERGO of Germany, Societe Generale of France, Friends Provident of UK and Mass Mutual of USA. India Bulls is planning to invest Rs.1000 crore in its venture. They are expected to leverage their well distributed broking business for insurance venture. Shri A K Shukla, ex-chairman of LIC may lead the venture.

HDFC raising capital from Citi and Carlyle

HDFC is reported to be raising Rs.3144 crores from the Carlyle Group, a private equity player and Citi group for meeting growth needs in its life insurance business. It informed stock exchanges that about 1.53 crore shares will be issued to Carlyle group at Rs.1730 per share and about 27.5 lakh shares to Citi group. Mr.Keki Misty, MD, HDFC said that they are raising this fund to meet their capital requirement in the fast growing insurance venture, HDFC Standard Life

Standard Life of UK, which is JV partner of HDFC in life insurance, is seeking permission for entering pension fund management in India and would prefer to tie up with HDFC in this venture also.

PSU Banks in life insurance

Though Bancassurance model for life insurance promotion was attractive to PSU Banks earlier, many Banks have decided to enter the life insurance field directly and formed Joint Ventures among them and with foreign Insurers. However they are likely to face difficulties in establishing their brands due to the recall deficiency of many banks forming a single joint venture. Further enhancing funds for insurance business will also be limited due to the capital adequacy norms with reference to Basel II have to be looked after.

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