LIC’s insurance covers for their agents.

Life Insurance Corporation of India has offered a special group insurance cover for its agents who are confirmed, under the title ‘one year renewable group term assurance’ at lower premiums. This is the first time an insurance company is providing insurance cover to its agents at low premium. There are about nine lakh confirmed, that is, who have completed one year of service with LIC, agents who may stand to benefit by this plan. Premium for this cover would be deducted from the commission payable to them annually. It was reported that many agents who market insurance products are not covered by insurance. Premium amount payable and extent of the cover would depend on the number of years of service put in by the agent with LIC.

The premium rate and value of the cover are on the following lines.

For agents with 1 to 3 years of service premium is Rs.120 pa for Rs.50000/ cover
For agents with 3 to 5 years of service premium is Rs.240 pa for Rs.100000/ cover
For agents with 5 to 10 years of service premium is Rs.720 pa for Rs.300000/ cover
For agents with more than 10 years of service premium is Rs.1200 per annum for Rs.5 lakhs cover

Nearly 30% of agents would fall under the first category while it would be 25, 25 and 20 percent respectively for the remaining three categories. The policy term would be up to the time the agent remains duly licensed with LIC or up to the age of 65 years. The premium rates may be revised every year based on the claims ratio. If an existing agent declines to opt for the scheme now, he may not be admitted to the scheme at a later date.

Birla Sun Life’s new micro insurance products

Birla Sun Life Insurance Company has launched two micro insurance products for low and middle-income group customers.

The two products are Bima Suraksha Super and Bima Dhan Sanchay.

Both the plans offer 5,10 and 15-year policy tenure. The minimum sum assured is Rs.5000 and the maximum is Rs.50000.

Bima Suraksha Super is a term insurance plan. Bima Dhan Sanchay is a return of premium scheme provided no claim is made during the tenure.

Both plans cover accidental death where an amount in addition to the basic sum assured would be paid to the nominee.

The company plans to sell 60000 policies during the initial phase.

Short Term premium products are popular.

Insurance products which require payment of premium for short periods are found to be popular, as perhaps, people want to get out of the need to pay premium as early as possible. This may be the reason for the huge success of LIC’s Money-Plus scheme, which is since scrapped. In its LIC plans to introduce Fortune Plus which is similar to money plus with more flexibility on premium paying terms. The premium-paying period is 5 years with first year premium of Rs.20000/ and 25% of it for subsequent years, which will only be four more years without any further extension.

IRDA on Insurance policy document.

The IRDA has exempted submission of policy document along with file for product approvals with effect from 1st October2007. However, once the product is approved the insurers have to ensure that the policy documents contain all the claims and features of the product proposal approved by IRDA. Mr.R.Kannan Actuary Member said, “ The insurance regulator will inspect life insurance companies to check whether the policy document conforms to what has been cleared in the file and use application and sales literature”.

New Entry in Life Insurance Business.

Canara Bank and Oriental Bank of Commerce with strong presence in the south and north markets respctively are joining hands with HSBC Insurance (Asia-Pacific) Holdings, to leverage the versatile insurance products of the later, in forming a joint venture titled Canara HSBC Oriental Bank of Commerce Life to enter the life insurance business. The company may launch its first product by March 2008. Canara Bank will hold 51% share in the company while it will be 26% by HSBC and 23% by OBC. Mr. MBN Rao CMD Canara Bank said while announcing the venture that they want to be” financial supermarket where our customers get everything under the same roof.” Mr. TM Bhasin GM, OBC said that the consortium will have its head office at Bangalore or Hyderabad and will have 25 to 30 regional offices. The company has engaged Bangalore based Ray & Keshavan for creating a brand identity. Mr. Bhasin further added that the customer will have the liberty to choose products on line and that the traditional insurance agent facility will also be provided.

LIC increases bonus for 2007-08

Mr. T.S Vijayan, LIC Chairman said “ Since our valuation surplus rose by 22% in the last fiscal, we decided to hike the bonus to Rs.70/- per Rs.1000/- sum assured. The sum of Rs. 14370.85 crorers accounting for 95% of the total surplus has been allocated to LIC policy holders and the balance 5% amounting to Rs.756.36 crores has been given to the central government as its share”. He further said “ the insurance policies which have lapsed totaled 3.57% and the outstanding claims accounted for 0.07% of the LIC’s business during the last fiscal.”

Bank of India in insurance

BOI has formalized an agreement with Dai-ichi of Japan for setting up an Rs.250 crore life insurance firm in which it will hold 51% stake. Dai-ichi 26% and Union Bank of India 23% will be the other shareholders in the joint venture. Mr.KR Kamath ED of BOI announced this. He further said that the name of the company is likely to be “Star Union Dai-ichi” and the registration process is on.

SBI Life rated best

SBI Life Insurance Company has been awarded financial strength rating of AAA/Stable by Crisil. This indicates the highest degree of financial strength to meet policyholder obligations.

Quantum jump in Life Insurance

McKinsey, a global management consultancy company, has forecast that there would be 100% growth in life insurance sector in the next five years, from the present 40 million dollars to 100 million dollars. This growth in turn will enhance insurance penetration from the present 4.1% of GDP to 6.2% of GDP by 2012. Wealthier and ageing individuals will contribute to this growth, the report further states.

Bajaj makes million policies.

Bajaj Allianz Life Insurance Company has under written ten lakh individual policies during the financial year 2007-08 till now with over 1500 crore rupees of new business premium. So far the company has issued more than 45 lakhs of individual policies from the time it entered insurance business in October 2001 receiving premium to the tune of 10000 crores.

Life Insurance Council releases data on insurance

The Life Insurance Council the governing body of life insurance companies of India has released set of data for the sector for the year 2006-07. This is the first time such comprehensive data is released. The release shows 20.5% increase in renewal premiums. It also shows an increase of 15% in the total number of policies in force. The growth in terms of new premiums is 100%. It further states that among single premium products the unit linked plans garner 92% share. As per the data, the total number of policies in force at the end of 2006-07 is 22.14 crores. It is an increase of 15% from 2005-06 when it was 19.24 crores. But the growth of group policies is only 3% from 1.06 lakhs to 1.10 lakhs. At the same time the number of lives covered by group has increased by 16%. Mr.S.V. Mony, secretary general of Life Insurance Council said “ the sector is poised for growth and the growth in new business premium will settle down to around 44% in another five years”. The release further shows that the growth of life insurance premium both, renewal and new, has jumped 54% from Rs.99360 crores to Rs.153000crores.

During the occasion, Mr. Bert Patterson MD of Aviva Life Insurance said that there is a growing realization that one can no longer rely on government for social security and this is going to drive the growth of the sector. Mr. Deepak Satwalekar, MD & CEO of HDFC Standard Life said that his company is targeting 100% growth this year and for this they have also increased their agents’ strength from 73000 to 89000. Ms. Shikha Sharma MD of ICICI Prudential Life felt that the sharp growth achieved last year might not be sustained easily. She said, “ We are in the early part of J curve and the steep growth may have been an aberration”.

The report further indicates that there is high growth in pension products. The report shows a 159% growth for 2006-07 from 2005-06.

Birla offers options in Ulips.

Birla Sun Life Insurance Company announced a fund option “Maxi miser” in their Unit linked products, namely, Classic Life premier, Supreme Life, Prime Life and Prime Life premier. Maxi miser is an investment fund with 100% equity exposure, giving the policyholder an opportunity to avail of the benefit of equity investment. Maximiser fund option attempts to offer long-term capital appreciation by managing a well-diversified portfolio of blue chip companies at the same time providing cushion against market volatility. Mr. Vkram Mehmi, president CEO of Birla Sun Life said, “ there is a noticeable trend among our policy holders to select funds with higher equity component. Out of our total assets under management of Rs.4860 crores as on Aug.31’07, about 43% is under equity and this is increasing”.

Insurance valuations

International Insurance analysts have valued the two top Indian private insurers SBI Life and ICICI Prudential Life at $5-6 billions and $10 billions respectively. Valuations are arrived at by taking into account various assumptions like investment yield, expense margin and product margins and growth of a company, its market share, sensitivity of its products to the market new business multiples and profit margin. These valuations would make their products more attractive as safe investments for the customers and also for the companies to seek and obtain funds for additional capital infusion.

Many.aspxirants for life insurance business.

Brij Mohan Munjal’s family of Hero Honda have finalized proposal for entering life insurance business in India through a joint venture with Ergo German Life Insurers. Many multinational companies are eager to enter the life insurance business in India attracted by the huge growth in recent years and larger opportunities. Many Indian promoters are also itching to join the race attracted by the high valuations of the top private insurers.

Future Generali India Life Insurance was the 15th player to be licensed by IRDA. This is a joint venture between Ramesh Biyani’s Future group and Italian Insurer Generali. It is reported that more than half a dozen partnerships are waiting for license. However the entry cost for the new entrants could be very high especially in setting up distribution networks as all available channels are already almost taken by existing players.

As per IRDA’s directive CEOs, MDs and whole time Directors have to obtain prior consent from IRDA before quitting their jobs from both private and public sector insurance companies. Similarly companies have to report proposals for appointment of new whole time directors, CEOs and MDs at least 30 days prior to commencement of appointment. Mr.CS Rao Chairman IRDA told that this directive is issued to enable the Authority to examine and ensure that only able persons are appointed to run the insurance companies, and to know as to why a senior executive leaves an insurance company

FM calls Insurers to cover poor

While inaugurating a zonal office of LIC in Patna, Finance Minister Mr.Chidambaram urged the Insurance companies to provide insurance cover to poor people of the country. He said “ there are 80% people, without any insurance cover in the country. The reach of the insurance is still confined to better-off people of the middle and lower middle classes. India is one of the most under-insured counties in the world as most of the poor are without any insurance cover”. Addressing LIC officials he asked them to reach out and take insurance to the poor, as they are the people who need life insurance, health insurance and accident insurance more than the rich and better-off people. To that end, he further said “ the government is introducing a new scheme ‘Aam Admi Bima Yojana’ from October 2nd, 2007.” It would provide death, accident and disability insurance to rural landless families. The central government would bear 50% of the premium of Rs.200 per year per person and the state government the remaining amount. This project will cover initially 10 million poor families and later will be extended to all poor people. This project is entrusted to LIC.

Insurers investing in equities

Insurance companies are expected to invest about $10 billion in equities during the financial year. Already they hold major share in the Rs.13400 crores investment in equities by domestic institutional investors during the year so far.

Irda to study intermediaries.

IRDA has constituted a committee consisting of 10 members, many of them from major insurance companies, to study the issues concerning the structure of intermediaries who are the vital link between insured and the insurers. Till recent years the insurance agents were the only intermediaries. But IRDA has enlarged the component of the structure to include micro agent, banc assurance mode and referral system and of late even e-selling. The committee will be headed by former chairman of LIC and will submit its report by 31.12.2007. The committee will study the practices in terms of remunerations and whether they are in conformity with the Insurance Act and their impact.

Max New York Life expects 100% raise

Mr.Rajendar Sud, sr. vice president agency, of Max New York Life Insurance company, said that the company had earned a new business premium of Rs.823 crores during the last year which was 100% more than the previous year and that they are expecting to maintain the level of growth in future. The company has recently launched SMART Steps Range of Unit linked Children’s’ plans, that would ensure the child’s recurring needs by way of extra annual payouts on the death of the insured parent for the rest of the policy term.

Bharti Axa Life increases branches.

Mr.Nitin Chopra CEO of Bharti Axa Life Insurance said while inaugurating first branch in Kerala that they are aiming to open 77 more branches mainly in southern towns to become one of the top five private insurers in the country by 2012. They are already having a unique marketing arrangement through Airtel Relationship Centres, which would have dedicated financial advisers supported with relevant branding which would be increased to 5000 life advisers.

Birla Sun Life increases Capital.

Birla Sun Life has infused additional capital to the tune of Rs.105.5.crores to expand the company’s network to 232 branches by September and to meet the solvency norms.

Archives | Top