Client Identity for Insurance

IRDA has turned down the appeal by insurers for easing clients’ identity norms, which became mandatory from 1.7.06 under Prevention of Money Laundering Act. Under this Act the insurers have been instructed to maintain thoroughly verified record of transactions of Rs.10 lakhs and above. Under these, verified identity records of the investors are also must, as per stipulations. Insurers represented to IRDA to relax norms on identity of investors which was, after being taken up Financial Intelligence Unit – India, turned down.

LIC covers BPL people

In association with the state government of Rajasthan, LIC had provided insurance cover to all the poor in the state last month. This month LIC have settled 350 death claims caused by floods there. Noticing the new Universal cover of LIC, Maharashtra government has also sought a policy for covering six lakh labourers in unorganized sectors, under LIC’s Janashree Bima Yojana. Similarly the govt. of Goa has taken insurance cover for 30000 persons under the scheme.

ING Vysya planning increase of operations

ING Group, the foreign associate of ING Vysya Life, have drawn up plans to increase their employee strength to 5000, i.e. an increase of 66%, by Dec 2007, while adding 86 more branches to their existing 110 branches in India. ING Vysya bank has 490 branches. Their group chairman and CEO Mr. Michael Tilmant told reporters that Asia has the fastest growing middle class and as India tops it, they wanted to increase their share of the growing Insurance business here. They are also looking at the possibility of alliance with India Post for entering the micro insurance business for which the company is planning to launch new products.

Kotak Mahindra with co-operative bank

Kotak Mahindra Old Mutual Life Insurance, have entered into bancassurance partnership with Murshidabad District Cooperative Bank. This arrangement while enabling the Insurers to tap the vast clientele of the bank, will also help the bank to bundle their offering with the insurance products.

Steadily private insurers are turning their attention to untapped rural market which till recently was the preserve of the LIC.

UTI Bank and MetLife India have signed an agreement for the former to distribute the products of the latter through their network of branches. Though many big insurers were courting UTI Bank for distributorship, it is a surprise that UTI Bank have chosen to associate with the smallest of the insurers.

Investment in SEZ

Mr.C.S Rao, chairman of IRDA, told that insurer’s investments in the infrastructure of SEZs would be treated only as normal investments in infrastructure. Investment by insurers under this is normally 15 % of their total investments

Oct. 11, 06

Policy holders’ protection fund

In order to ensure security of policy holders’ money, in the ensuing detarrif regime from 1st Jan.07 which may cause vicious churn due to competition, IRDA have put in place a fund to be managed and maintained by Life Insurance Council or General Insurance Council, as the case may be , with contributions from private insurance companies . While announcing this among other measures such as close monitoring of solvency of the companies every month, Mr.C.S.Rao IRDA Chief advised that insurers should provide long term covers of 15-20 years and also price their products suitably so that reinsurance companies may also find it easier.

Client Satisfaction

During a survey sponsored by the ministry of consumer affairs following interesting observations are revealed.

Private insurers are preferred for life, health, home and motor insurances than the state owned insurers.

However LIC stands at top as the most reliable.

If other indicators such as claims record, responsiveness and empathy are considered, it slips down to fourth place behind Tata AIG, Aviva Life and ICICI Prudential.

The most dissatisfaction reported by customers was regarding health insurance.

Customers of LIC sigh in relief.

The government has declined the suggestion of IRDA to withdraw its sovereign cover to LIC. Earlier the govt was requested to consider withdrawing its guarantee to LIC policy holders in order to ensure level playing field, by IRDA. in the detariff regime. It should also be mentioned that there was no occasion for invoking Govt’s guarantee so far in the last fifty years. However increasing LIC’s share capital to Rs.100 crores from Rs.5 crores, and providing for a separate solvency fund are under the active consideration of the Govt.

Oct. 16, 06

LIC on level playing field

The government is planning to amend the LIC Act in order to level the field of insurance business. This may mean that LIC will be answerable to IRDA for its decisions. It is also intended to make LIC to seek approval of IRDA to open satellite offices just like private insurance companies, which have to obtain permission from IRDA for opening new offices and that also to be done within a year of approval failing which they have to seek fresh approval.

Kotak’s outstanding performance

Kotak Life with increased sales management was able to show a outstanding growth of APE (adjusted premium equivalent) which is 10% of single premium income, from Rs.73.83 crores in half-year 2005-06 to Rs.163.78 crores in half-year 2006-07. The company according to its MD is targeting an overall premium collection of Rs.1000 crores during the fiscal year. He further informed that they have established a centralized processing center to enhance customer services with its automated workflow system from new business to claims.

Cap on LIC’s equity exposure

IRDA has urged the govt. to restrict LIC from taking more than 10% equity in the paid up capital of any company under any circumstances. Against the stipulated norm of 10% , the LIC is permitted by the govt., by a standing order, to take up to 30% equity under special circumstances. Presently LIC has 19 crore policies with total sum assured running to Rs.4.7 lakh crores, which IRDA feels is a huge obligation and therefore LIC should not increase its risk exposure.

Kotak associates Ratnakar Bank, Kolhapur

Kotak Life Insurance is associating with Kolhapur based The Ratnakar Bank Ltd. which will mutually beneficial accessing strong customer base of RBL to Kotak and new non-banking business to RBL. Mr. Gaurang Shah, MD of KLI said that the association would enhance the growth of the company. According to Mr. Subash Kutte, RBL’s CMD, the Bank with its 77 branches and 63 years of experience will enable the Bank to reach all segments of society and offer life covers.

LIC regains its market share

Life Insurance Corporation which has lost about 6% of its market share in six months, has regained more than 5% in first premium income in the first half of 2006-07, by concerted marketing efforts. LIC holds almost 90% market share of individual single premium products. Its share of endowment and non- single premium market is about 67%. This is the first occasion when LIC could regain its lost market share.

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