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Volume 1, Issue 4, October 2005  


SBI Life to launch two new products

SBI Life will be launching two new products for this festival season named Dhanvriddhi & SBI Life Unit Plus. These policies are an attempt to mop up Rs 1000 crore of premium in the current fiscal. SBI Life manages a portfolio of more than 30 lakh lives. It has set an ambitious target to reach Rs 1000 crore, of which it has already attained around Rs 240 crore till September

Reliance gets IRDA nod for AMP takeover

Anil Ambani controlled Reliance Capital Ltd on Friday said that it has received Insurance Regulatory and Development Authority's approval for acquisition of Chennai-based life insurance company AMP Sanmar.

RCL is believed to have shelled out about Rs 100 crore for a direct entry into life insurance business through acquisition of AMP Sanmar, which has a ready-made customer base and a cash reserve of Rs 80 crore.

AMP Sanmar, which has a capital base of Rs 217.5 crore, cash balance of Rs 80 crore according to books of accounts. It has about 9,000 agents and about 900 employees besides 90 offices across the country.

Trained manpower is the challenge to address in Insurance industry.

CMD, New India Assurance and President, Insurance Institute of India says finding trained manpower could be a major challenge for the insurance industry in the coming days. The institute would have to address, in the next ten years, the problem of declining standards of ethics and technical knowledge of people employed in the insurance sector.

The sources said that despite the induction of bright, young graduates in the institute, there is diminished loyalty to the profession and industry. The Insurance Institute of India has 91 associated institutes in the country that are managed by insurance employees in an honorary capacity. In the past five years, the institute has handled two million examinees

No reduction in minimum capital base, says IRDA

The Insurance Regulatory and Development Authority (IRDA) has indicated that the minimum capital base for insurance companies would not be reduced below Rs 100 crore. However, for health insurance companies it can be fixed at Rs 50 crore.

Bajaj Allianz Life registers impressive growth in August

As per the figures released by the Insurance Regulatory and Development Authority of India (IRDA), Bajaj Allianz's premium income grew by an impressive 198% in the first five months of the current fiscal year to Rs4.29bn from Rs1.44bn in the same period last year. In addition, Bajaj Allianz was the only insurance company among the private sector to have gained market share (25.5 %) during August over the previous month (19.8%).

The Life Insurance Agents Federation of India, demands a pension welfare fund for it's agents.

H. M. Jain, President, Life Insurance Federation of India and member of the advisory board of the Insurance Regulatory and Development Authority (IRDA), said the commissions of terminated agents would run into hundreds of crores of rupees.

"In its 50 years of existence, LIC has terminated over 30 lakh agents and their forfeited commission may be running into hundreds of crores. This commission, as of now, goes to the LIC fund, though it is the hard-earned money of the agents," Jain said. This fund is now eyed by some 10 lakh agents of the LIC to secure by way of post-retirement benefits.

The Life Insurance Agents Federation of India, the apex body of LIC agents, is demanding a pension welfare fund. The federation will forward this demand to the LIC Chairman as well as the Ministry of Finance.

Jain said this money should be used to create an independent professional body to look after the welfare of the profession on the lines of other recognised professions such as chartered accountants.

LIC scam unearthed

The Central Bureau of Investigation has unearthed a scam allegedly involving officials and agents of the Life Insurance Corporation of India. The CBI carried out raids at 10 locations, including the LIC office at Khan Market in New Delhi, and recovered several incriminating documents. Insurance premium paid by employees of the Municipal Corporation of Delhi (MCD) was allegedly being diverted towards the premium of fresh policyholders.

The MCD made a complaint that the insurance remittances of their employees sent under the salary saving scheme through LIC agents was not being deposited in the policy accounts. Investigations by the CBI revealed that the accused agents and officials diverted these remittances to the accounts of fresh policyholders. A CBI official explained that agents deposited one instalment of the first year's premium of a new policy as an incentive to the policyholder; this instalment was being made by diverting the MCD employees' remittances.

A case of criminal conspiracy and cheating under the Indian Penal Code and the Prevention of Corruption Act have been registered against some agents and officers.

Bajaj opens a satellite branch at Islambad

Bajaj Allianz Life Insurance Company has opened a satellite branch at Islambad. The branch is the seventh in the state. The insurance giant has 450 branches all over the country.

Daljit Singh Rakhra, chief manager (North) on the inauguration of the branch said: “It is the constant and sincere efforts of all the branches, which have contributed to the rapid growth of our company.”

Maintaining that the northern market is a key contributor to over 9 per cent revenues, Rakhra said the company has a network of 56 offices in northern region spreading over the states of Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir and Chandigarh.
Giving a profile of the company Rakhra said the company which has opened its 450th branch at Islamabad, is expanding rapidly its network of branches.

The company, which had just 60 offices at the start of 2004, has opened up 400 additional offices during the last one year, which is almost one office per day.

Insurance companies are high spenders on IT

In the past two years, insurance companies have become high spenders on information technology.

The IT business of the insurance sector in the country, which is considered less automated in comparison to banking, is estimated at Rs 80-100 crore per annum.

The insurance sector witnessed a 58-per cent growth in IT spending in 2004-05. According to a survey, IT spend in the insurance vertical in 2004-05 stood at Rs 84 crore, compared to Rs 53 crore in 03-04," he said.

IT investment is made in the area of underwriting, policy administration, claims processing, document management and centralisation of all processes.

Mr David Piesse, Business Development Director Insurance, Sun Micro Systems, who was in talks with twelve insurance companies in India, said Indian insurance companies need to implement core solutions to improve profitability. Companies should go in for data warehousing, portals for claim settlement as well as solutions that work on financial agreements, capital change and merger and acquisitions.

Shriram gets licence to sell insurance

The Chennai based Shriram group, gets nod from IRDA for selling life insurance products. Shriram Life Insurance Co Ltd has entered into a joint venture agreement with Sanlam of South Africa to make its foray into the Indian Life Insurance sector. It is expected that Shriram will start operation by end of October 2005.

Aviva gives its customers a Grand Slam opportunity

Life insurance company Aviva has announced that it will give six Indian youngsters in the age group of 12-15 years the opportunity to be a part of the year's first tennis Grand Slam, The Australian Open, in early 2006.

The lucky six will be selected from around 100 children of Aviva policy holders, who will participate in the trial to be held in New Delhi in November

Aviva states that it is the first corporate ever to sponsor ball-kids at the Grand Slam tennis tournament and has a four-year deal from 2005 to 2008 with the Australian Open.

LIC plans ID numbers for policy holders

More than six crore policy holders of the LIC of India will get “ID numbers” using which the policy details will be updated, from anywhere in the country, its chairman A K Shukla said.

The ID number would be given after the completion of the 'Data Warehousing Project' being undertaken now. He said reminders would be sent to the policy holders as and when required. "The exact number of policy holders also would be known once the ID number is given."

He said there was good potential for the growth of the Insurance sector as only two per cent of the GDP was invested on insurance in the country as against six per cent in the Asian region. The growth of LIC would touch 50 per cent this year against last year's 42 per cent.

ULIPs to have lock in period

Mr S.V. Mony, Secretary-General of the Life Insurance Council says that investment in the unit linked insurance plans (ULIPs) will have a lock in period in future to give a long term character to the products. The new IRDA guidelines are expected to be issued shortly in this regard.

The Life Insurance Council, a self-regulatory body of life insurance companies, has recommended that the sum assured should be five times the annualised premium, in the case of regular premium contracts, and 110 per cent of the cover, in the case of single premium plans. The Council has recommended a minimum lock in period of five years.

ULIPs have enjoyed popularity illustrated by the fact that the bulk of the business of the private insurers comes from this segment. The boom in the stock market has only added to the appeal.

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