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Volume 10, Issue 9, September 2014
 


Bharti Axa launches Life Elite Advantage
Bharti AXA Life Insurance has launched Life Elite Advantage, which is a traditional non-participating plan.

Under this plan, the policyholders get guaranteed regular income and they also have the option of choosing the premium payout period, which is 5 years, 7 years or 12 years.

Apart from the regular pay outs, the policyholders also receive a guaranteed lump sum amount at maturity. At the end of the 20th year, 100% sum assured will be paid to the policyholder.

LIC Eases Claim Settlement Rules on J&K Flood Claims
Life Insurance Corporation (LIC) has relaxed claim settlement procedure for those affected in the Jammu and Kashmir floods and a special Help Desk has been set up for expeditious claim processing.

LIC has extended concessions and relaxations to claimants with respect to settlement of death and disability benefit claims, the largest insurance company said in a statement.

In addition, for policyholders residing in the flood affected areas, LIC has also extended waiver of interest on the overdue premium, it said. Special Help Desk has been set up in Srinagar Divisional Office and Northern Zonal Office at New Delhi for expeditious settlement of claims.

Investment in Equity Market to Cross Rs. 55000 crore in FY 2015
Mr. S K Roy, Chairman, LIC, while speaking to the PTI told that LIC will invest a total of Rs. 55000 crore in the equity market during 2014-15 and a part of this will be used for picking up stakes in PSUs during the disinvestment process.

He also declared that the investment would include all types of investments.

It should be noted that LIC had invested in stocks worth Rs. 51,000 crores during last fiscal year. Mr Roy also informed LIC investment in the bond market may touch Rs. 2.5 lakh crore in the fiscal ending March 2015. In FY15, the life insurer has raised its stakes in many public sector banks including United Bank of India, Central Bank of India and Bank of Maharashtra by picking up preferential shares.

LIC had picked up stocks worth Rs. 51,000 crore last fiscal year and investments were made across sectors.

During the first quarter ended June, LIC earned a total premium of Rs. 14,016 crore, lower than Rs. 14,295 crore in the corresponding period a year ago.

Reliance Life Insurance launches endowment plan with fixed returns 
Reliance Life Insurance has launched Reliance Fixed Savings which is a non-linked, non-participating and non-variable endowment insurance plan that helps a policyholder create a corpus for securing future goals through systematic savings over a period of time.

The plan is available for customers in the age group 8-60 years with a minimum annualised premium of Rs 25,000.  The new insurance plan offers guaranteed benefits, including fixed regular additions that accrue every year, it said. 

The plan also offers an additional lump-sum at maturity along with a life cover to protect the family of the insured. The policyholders will be rewarded with fixed regular additions at 8 per cent of the annualised premium in the first year, at 9 per cent in the second year and at 10 per cent from third year onwards.

We have a vision to provide cover to all Indians by 2020: Surya Kumar Roy, LIC chairman

Surya Kumar Roy started his career in 1981 in LIC as a direct recruit officer, and has climbed the ladder to become its chairman in June last year. In a wide-ranging interview with ET, Roy touches upon a variety of issues ranging from LIC's concern on repository, competition from private insurers, to its vision to cover every Indian by March 2020. He even dwells on prickly subjects like whether the State Bank of India should be allowed to do life insurance business, and much more. Edited excerpts:

How does the insurance industry look like?
The micro and macro pictures may give very different perspectives. The macro picture looks good. The life insurance industry is growing. Also, claim settlements have improved, showing 10% rise against 5-6% earlier. So, if you take these two as parameters, both on new sales and servicing, there have been major achievements — that's the macro picture. But the micro picture is that a large number of companies are still not in a position to make profits. The break-even, which was supposed to take 7 to 10 years, has already doubled. But that's something for them to explain.

If there's a rebound in the economy in the coming years, what will drive growth over the next few years?
The market is not a driver of growth because it is hugely un-penetrated. We can't say that the market has expanded. One constraint of the recent past is likely to change now — disposable income may be increasing. If that happens, then everybody in the financial sector will have to be more active to get their share of the pie. That disposable income is likely to see an upward movement. The second thing which will drive growth is the type of products that are available on sale. A big challenge for life insurance companies is how do they come up with products that are compliant and yet attractive.

Would that mean that people are looking for assured return products or pure term life products?
The pure term product is a guaranteed product because in case of an unfortunate death, we know that this is the amount that's going to be paid. The only uncertain element is ULIP where we are not present at this moment. We are very clear that we want to be in the ULIP market, but we aren't sure what's the right time to enter. The product will have new fea

LIC is slow in joining the repository. What are your concerns?
I would like to correct the notion that we are slow. Actually, we are far ahead of others in the industry because, in a manner of speaking, we are already running a surrogate repository. So, all 30 crore records of LIC customers are already hosted in electronic form. Since we are ahead of the system, we have to come back. And coming back in reverse gear to align ourselves with five repositories is a time-consuming process because I have legacy issues.We started this project in 2006 and it is implemented. So, I have gone far ahead and have to come back and join others in this exercise - that's the problem. We are a very compliant institution and would like to implement anything that the IRDA wants. But this is an operational nightmare for us. The industry raised two sets of concerns on repository: technology and safety issues, and IRDA set up two sub-committees which submitted their recommendations by May. I am sure IRDA has considered them. The ball is now in IRDA's court.

As Published in the Economic Times

Claim Amount reaches Rs. 900 Crores for Jammu and Kashmir Flood Claims
All insurance companies, both life insurance and general insurance have to pay a claim of around Rs. 800 to Rs. 900 crores for the Jammu and Kashmir victims for loss of life and assets in the Jammu and Kashmir floods which has hit the state very badly and crippled the economy as a whole.

While this is just an initial estimate, insurers are trying to assess the losses in the state where incessant rains have claimed 200 lives in the valley. All the public sector general insurance companies, Oriental Insurance, New India Assurance, National Insurance and United India have scheduled a meeting on Wednesday to chart out a plan to assess the losses.

Life Insurance Corporation of India alone has provided a cover to 12.7 lakh people in the state for a total sum assured of Rs 16,543 crore. Till September 13, the corporation had not received any intimation for a claim. The Insurance Regulatory and Development Authority has asked life insurance companies to settle claims quickly.

New Disclosure Norms Reveals Lower Persistency Ratio of Insurance Companies
The persistency ratio broadly measures the quantum of the customer retention by the life insurance companies, while determining the percentage of policyholders paying renewal premiums at the end of one year, or more years depending on the tenure of the policy.

However, this has been one of the most abused financial metric by many insurers, who tend to disclose their best possible persistency ratios without following any standard formula or any specific time period.

To remove such ambiguities, IRDA has issued a new standardised disclosure norm for insurance sector which has led to disclosure of low persistency ratios as against the previous years.

Excepting the private life insurers such as ICICI Pru, Reliance Life and Kotak Life, other companies have disclosed lower persistency ratios for the first quarter of the current financial year as also for the full financial year ended March 31, 2015.

Amongst the top insurers, many have registered a decline, while persistency ratios for some have remained flat and very few have shown any significant increase.

For ICICI Prudential, the 13-month persistency ratio remained nearly flat at over 71 per cent during the full fiscal ended March 31, 2014, while the ratio for the first quarter ended June 30 rose to 69 per cent (from 65.2 per cent a year ago). On the other hand, HDFC Life and Birla Sun Life registered sharp decline in their persistency ratios for the year, while that of Kotak Life, PNB MetLife and Reliance Life improved significantly.

For the quarter ended June 30, 2014 also, Birla Sun Life has shown a decline, while similar has been the case for many other including state-run LIC, PNB MetLife and HDFC Life.

Reliance Life and Kotak Life maintained their upward trend in the first quarter.The ratios have remained broadly unchanged for SBI Life, Max Life, Bajaj Life and Exide Life.

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