Launch 'Jan Bima Yojna', widen insurance base: Irda to govt

Nov 29, 2014


To increase awareness and deepen insurance penetration, the government should launch a “Jan Bima Yojana” on the lines of a similar programme launched for banking, Insurance Regulatory and Development Authority (Irda) Chairman T S Vijayan said on Monday.

“The Prime Minister should launch a “Jan Bima Yojana” in line with the Jan Dhan Yojana to increase the level of awareness among people on the importance of insurance. There is a need for concentrated efforts to make people aware about insurance,” Vijayan told reporters here at the 16th FicciAnnual Insurance Conference.

It may be recalled that just like banking, the country is also under-covered from an insurance point of view. The Jan Dhan Yojana also has an insurance component wherein the account holders are being given personal accident cover. On foreign holding caps in the insurance sector, Vijayan said allowing 26 per cent FDI in the life and non-life companies has upped the industry's growth to 3.9 per cent from the earlier 1.7 per cent. However, he said that this growth rate of 3.9 per cent is not enough and there is a vast potential in the country as annually for the next 20 years about 25 million people will be entering the job market. On the non-life front, the potential is huge as the vehicle ownership is growing by over a million every year, he pointed out. “The 26 per cent FDI has been a success story. So many companies have come, collaboration has come and technology has come. For any investment we should look at if our legal and regulatory system can control it. We are quite capable of doing that. We should ensure that the deployment of money is as per regulations only, and any policy holder liquidity should be invested in India only,” he added.

Replying to demands from the industry to increase the FDI cap to 49 per cent, Vijayan said, "will 49 per cent FDI double the insurance penetration from 3.9 per cent to 7.2 per cent the industry has to reply.

  New India Assurances advises AP government to take disaster cover

Nov 01, 2014

Courtesy economictimes.

MUMBAI: General insurance company,New India Assurance has advised the Andhra Pradesh government to take disaster cover for losses arising from the severe catastrophe as it located in coastal region.

Disclosing this, G Srinivasan, CMD of New India Assurance said, "We have proposed the state government to cover for loss of life and personal property."

The states bordering the coastal area are usually victims of cyclones and floods and state insurance companies are often forced to speed up the settlement by government with minimum documentations. The suggestion is made to ensure that even those who have not taken insurance would be covered if the state government takes a universal cover. The move may also be triggered by the Jammu & Kashmir High Court ruling that said that insurers should settle claims immediately before conducting surveys in J &K floods.

Srinivasan said that insurers expect claims to be in the range of Rs 3000 crore for floods in Jammu & Kashmir and Hudhud Cyclone in Vizag. He added that they may not be many claims on account of Cyclone Nilofer which hit Gujarat since it is not too severe.

"We have received 2800 claims valuing Rs 200 crore for floods and Rs 800 claims valuing Rs 300 crore for the cyclone," said CMD. New India Assurance will suffer a loss of Rs 50 crore each due to cyclone in Vizag and floods in J &K. "Almost 80 per cent of the claims in J & K have been paid and nearly 50 per cent of the claims in Vizag have been paid in insurer," he said declaring half yearly results. New India has reported a 40 per cent growth in net profit to Rs 899 crore for the first half year ending September 2014. The global premium rose 12 per cent to Rs 7728 crore and its market share improved to 16.5 per cent. The underwriting losses stood at Rs 1060 crore against Rs 915 core a year ago. "The company is aiming at 15 per cent growth this year. As of now retail is driving the growth but we do expect growth in engineering as we see lot of confidence coming back in the economy," Srinivasan said.

  Tata AIA Life appoints Naveen Tahilyani as CEO and MD

Oct 31, 2014

Courtesy Economictimes.

MUMBAI: Tata AIA Life Insurance Company (Tata AIA Life) today announced the appointment of Naveen Tahilyani as itsChief Executive Officer and Managing Director.

Tahilyani, a graduate from the Indian Institute of Technology (IIT), Chennai and Indian Institute of Management (IIM), Ahmedabad, is currently a Senior Partner at McKinsey & Co and leads its South East Asian Insurance and Banking Practice, the private insurer said in a release issued here

He will assume office at Tata AIA Life from January 2015. "I am confident that under the leadership of Naveen and his Executive team, the Tata AIA Life business in India will achieve new levels of growth and success," Gordon Watson, Regional Chief Executive ofAIA Group and a Director of Tata AIA Life Board, said.

Tata AIA Life is a joint venture between Tata Sons and AIA Group.

  Irda panel favours 49 per cent FDI in insurance intermediaries

Oct 17, 2014

Courtesy Economictimes.

MUMBAI: An internal committee of the insurance sector regulator Irda has recommended hiking FDI in all insurance sector intermediaries like brokers, surveyors, third-party administrators (TPAs) and web aggregators to 49 per cent from the present 26 per cent.

According to reliable industry sources, the panel, headed by joint director Suresh Mathur, has submitted the report to Insurance Regulatory and Development Authority (Irda) chairman last week.

"FDI cap can be increased to 49 per cent for the intermediaries to begin with," an industry source said. The report has also charted a three-year roadmap to see how FDI can be raised to 100 per cent for intermediaries. Mathur was not available for comments. The report comes at a time when the Insurance Amendment Bill, that seeks to increase FDI to 49 per cent from 26 per cent, is pending with the House select committee headed by BJP MP Chandan Mitra. The committee is likely to submit its report next month.

The 10-member sub-committee was formed by chairman T S Vijayan in Janaury to find out if the hike in FDI be permitted for the sectoral intermediaries to 100 per cent from the present 26 per cent.

At present, a foreign company cannot hold more than 26 per cent shares in an insurance company. But, in case of insurance intermediaries there is no such restriction.

There was also a consistent demand for increasing the foreign shareholding in insurance brokers from the existing limit of 26 per cent to 100 per cent. The aforesaid proposed change would not require any modification in the Insurance Act. But, in case of increasing foreign shareholding in an insurance intermediary like TPAs, the law has to be amended.

  Irda to align corporate governance, disclosure norms

Oct 16, 2014

Courtesy Businesstoday.

Insurance Regulatory and Development Authority (Irda) will align its corporate governance and disclosure norms in accordance with the new Companies Act, 2013.

For this, Irda has set up a 12-member committee under its member R K Nair.

"In order to bring harmony between the corporate governance and disclosure requirements of the Authority and the Companies Act, 2013, the Authority has decided to constitute a working group harmonising Irda Corporate Governance Guidelines and Disclosures with Companies Act, 2013,"Irda said in a circular.

The terms of reference of the working group include recommending any changes that need to be made to insurance regulations specifically on corporate social responsibility, related party transactions or financial statements. It will also undertake a comprehensive view of the extant guidelines on corporate governance related with composition of board and its committees, provisions relating to independent directors, provisions related to remunerations of CEO, managing director or whole time directors.

The working group is expected to complete its task within four months. The new Companies Act, 2013 was notified on August 30, 2013. The new act has brought in significant changes in several aspects of corporate organisation such as appointment of directors and key management persons, appointment of auditors, corporate governance and financial reporting requirements.

  Insurance brokers oppose 100% FDI proposal

Oct 10, 2014

Courtesy The Times Of India.

MUMBAI: The insurance broking industry is staunchly opposed to any move to gradually increase FDI in the intermediary segments to 100 per cent even as regulator IRDA is examining a top panel's recommendation in this regard. An IRDA panel known as the Suresh Mathur Committee has recommended hiking FDI in all insurance sector intermediaries like brokers, surveyors, third-party administrators and web aggregators to 49 per cent, from the present 26 per cent immediately and then 100 per cent over the next three years.

According to industry sources, the panel headed by IRDA Joint Director Suresh Mathur had recently submitted its report. "We will oppose the move to increase FDI cap to 100 per cent and we will do whatever we can do to resist that. We will approach the government on the issue once the report comes to us," Insurance Brokers' Association of India (IBAI) President Sohanlal Kadel told PTI. Members of the IBAI collect close to Rs 20,000 crore premium per annum. The Suresh Mathur Committee was formed in January 2014 on the basis of the report submitted by the Financial Sector Legislative Reforms Commission (FSLRC), headed by retired judge N Srikrishna .

The Srikishna panel (FSLRC) was essentially formed to give a push to sluggish financial sector reforms, and it had recommended that wherever the government could raise FDI without parliamentary approval, it should do so without delay. Observing that there ought to be a level-playing field between insurance companies and their brokers, Kadel, who himself was an IRDA panel member said, "We will welcome FDI up to 49 per cent from the existing 26 per cent, but we are not in favour of 100 per cent FDI in our segment."

Currently, there are 350 brokers in the country and one needs only Rs 50 lakh as capital investment to open an insurance broking firm in the country. Out of these 350 brokers, there are only four broking firms namely Aon, Marsh, Jardine and Howden, which have foreign partners. Earlier the England-based Willis was present in the country but lost its licence and is waiting to re-enter now. There is only one foreign insurance surveyor called Cunningham Lindsey, which is present in the country at the moment. Unlike the insurance industry, the insurance broking sector is a non-capital intensive one and hence there is no need to increase FDI to 100 per cent, said a broker with broking firm that has a joint venture with a foreign partner. He said that if higher foreign holding is allowed, it would put domestic players in trouble. Hardly 20 per cent of the Rs 70,000-crore general insurance business is routed through brokers in the country, while in the USA, it is around 80 per cent, a prominent insurance broker said.

  TNEB man hit by bike wins Rs 4 lakh as

Sep 17, 2014

Courtesy The Times Of India.

CHENNAI: Motor Accident Claims Tribunal has awarded a compensation of 4 lakh to a 26-year-old TNEB employee who was injured after being hit by a motorcycle.

In his submissions to the tribunal, B Sathish said on June 6, 2011, he was walking along Ambattur Estate Road when a motorcycle "being driven in a rash manner at great speed" hit him and he fractured his left thigh bone. The vehicle owner and the insurer were "statutorily and vicariously liable" to pay compensation, he said.

Denying the arguments, ICICI Lombard General Insurance Co Ltd said the vehicle owner did not report the accident to it.

The accident had occurred because of negligence of Sathish who "suddenly darted across the busy road, endangering traffic, and posing a grave threat to motorists." Also, the injuries were "simple and superficial in nature."

Sub judge J Chandran said the Thirumangalam traffic investigation wing police registered a case of rash and negligent driving against the rider who could have averted the accident had he been cautious. As the vehicle had valid registration, "the owner and the insurer were jointly liable to pay compensation."

It then awarded the compensation for losses and expenditure, including partial and permanent disability, pain and sufferings, loss of income for two months and medical expenses.

  Jan Dhan Yojana: Clarity awaited on insurance'

Sep 3, 2014

Courtesy The Economic Times.

It might take time to offer life and accident insurance covers under the Pradhan Mantri Jan Dhan Yojana to those opening bank accounts under the scheme, as various issues in this regard are yet to be resolved.

Under the scheme, which seeks to open 75 million accounts by January 26, 2015, an accident insurance cover of Rs 1 lakh is provided with every RuPay debit card offered by theNational Payments Corporation of India (NPCI).

NPCI officials said HDFC Ergo General Insurance would provide the accident cover under the scheme. This will cover accidental deaths, provided the debit card is swiped within 45 days of its issuance and is in an active state.

HDFC Ergo did not respond to a mail seeking details of the cover.

There is also a proposal for an additional accident cover of Rs 1 lakh for opening bank accounts within a stipulated period. While general insurance executives said state-owned general insurers would provide this, no official announcement or communication has been sent by the finance ministry to the companies concerned.

“Though this proposal was discussed in meetings with the finance ministry, it hasn’t issued any letter on when it would be launched and whether it would be completely free for customers,” said a senior insurance executive. Sources said the general insurers selected for these covers were yet to receive any official communication from the ministry saying they had been selected for this and would have to make payments during receipt of claims. While debit cards and insurance covers (at least a Rs 1-lakh accident cover) will be provided to all accountholders under this scheme, insurance officials say this might not be done immediately. An official said as the volumes were huge, they would be provided the complete kit within the next few weeks. Further, the life insurance cover of Rs 30,000 is still being worked out, in terms of the premium collection, amount and the mode of payment. Life Insurance Corporation of India (LIC), which will offer the cover to all individuals who open bank accounts under the financial inclusion scheme by January 26, 2015, has held a series of meetings with finance ministry officials on the collection of premia and administration of the scheme. A decision on the premium amount and the mechanism to pay claims is still awaited; a clarification is expected in the next three days. So far, more than 25 million bank accounts have been opened under the Jan Dhan Yojana and all these individuals will be eligible for life covers of Rs 30,000 by LIC. There have been talks of a minimal payment for this scheme by individuals. Also, the claim settlements could be through the Aam Aadmi Bima Yojana (AAMY), a social security scheme administered by LIC. A life insurance cover wasn’t part of the Jan Dhan Yojana announced in Prime Minister Narendra Modi’s Independence Day address; it was announced on August 28, when the scheme was officially launched. The scheme is expected to boost insurance penetration in India. Insurance penetration (premia, as percentage of gross domestic product, fell to 3.9 per cent in 2013-14, compared with four per cent in 2012-13, according to a Swiss Re sigma study). On the life insurance front, insurance penetration in India was 3.1 per cent; for non-life insurance, it was 0.8 per cent.

  Don't let your insurance policy lapse

Sep 03, 2014

Your agent may not remind you about renewal; set alerts & pay premia on time Priya Nair | Mumbai September 3, 2014 Last Updated at 22:26 IST

Consider yourself lucky if you miss due date for payment of your life insurance premium and your agent reminds you, especially if your policy is more than a couple of years old. Many agents do not bother to follow up for renewals after the first few years. They get a major share of their commission from the first year’s premium, so they are willing to forgo commissions from premia for subsequent years.

Until the end of June, insurance agents had to have an average 50 per cent persistency rate to renew their licenses. This meant at least half the policies they sold had to be renewed till maturity. But from July 1, the regulator allowed insurance firms to have their own company-specific criteria for renewing agency. Will this encourage insurance agents to become more vigilant about policy renewals by their existing customers? Or will they continue to chase new ones?

According to a senior official from a private-sector life insurance company, persistency is an issue for the entire industry. The move towards self regulation of persistency is a good one. Now insurance companies will train agents not only to get new business but retain existing customers. However, Gaurav Roy, co-founder & COO of, points out that persistency for policies sold by agents will continue in part to be influenced by the economics of commission payouts for new business versus renewal premiums. “In the absence of a minimum persistency rate prescribed by the regulator, ideally, companies should voluntarily choose norms that strike the right balance. Diluting the norms significantly risks a drop in agent quality,” he says.

One of the biggest reasons for traditional policies, such as endowment or money-back ones getting discontinued, is that agents, at the time of selling these policies, do not check if a buyer will be able to pay the premia over the entire life of the policy. “Often, agents sell the product on the basis of current cash flow of buyers. But if the buyer loses his job or has some other financial problem, the policy gets discontinued,” says Sridharan S, head of financial planning at

So, before you buy a policy, ensure you can afford to pay premia over the entire term of the policy. If your annual premium is, say, Rs 30,000, it can put pressure on your cash flow for that month. You can start a systematic investment plan (SIP) in a liquid fund of, say, Rs 3,000 a month. This way, you can ensure you have funds to pay your premia, Sridharan says.

Online policies typically have better persistency because these are bought, and not sold. A buyer does the necessary research and knows what he or she is getting. But in offline policies, there often is a difference between what an agent or seller or intermediary tells a buyer and what the buyer understands in terms of product features. In such cases, the buyer might later feel the policy is not the right one and decide not to renew it, says Roy.

To avoid missing your renewal premium, use direct debit mandates to bank accounts or credit cards. Those uncomfortable with such modes of payment could set up reminders on their phones or calendars to remind about policy payment dates. “Unless you get a cheaper and better product, it usually makes sense to persist with your old policy, as you would typically have incurred all the upfront costs on it in earlier years,” says Roy.

Courtesy business-standard.

  Bajaj Finserv ready to sell stakes in insurance business

Aug 14, 2014

MUMBAI: Bajaj Finserv will sell part of its stake in its life and non-life insurance joint ventures to its foreign partner Allianz once the insurance Act is amended. The company has said that amendments to the Act would be a positive for the company's shareholders. Sanjeev Bajaj, MD, Bajaj Finserv, said, that both the life insurance business and the non-life insurance business were generating funds to sustain themselves and no further capital infusion was required.

Birla Sun Life Insurance is a joint venture between the Aditya Birla Group and Sun Life Financial Inc, one of the leading international financial services organisations in Canada.

Vision LifeSecure Plan offers maturity and death benefits, including regular accrued bonuses and terminal bonus, if any, besides providing the flexibility to choose the sum assured and the policy term, at inception.

In the event the insured person survives until the end of the policy term, a maturity benefit is payable to the policyholder.

The cover will continue till the insured person attains 100 years of age.

In case of death during this period, or survival until 100 years (whichever is first), a guaranteed death benefit is payable.

The policy also offers a simple revisionary bonus at the end of each financial year during the policy term, which would be added to the policy on its anniversary.

The company may also pay a terminal bonus on maturity or death, if earlier, based on actual experience and prevailing economic conditions.

Courtesy Times of India

  ICICI Lombard, Bajaj Allianz General, Tata AIG General Insurance offer insurance plans for students studying abroad

Aug 14, 2014

MUMBAI: Parents worried about inadequate insurance cover for their children studying abroad, or the cost of buying a comprehensive policy from a foreign provider, have more options now. Indian insurers such as ICICI Lombard, Bajaj Allianz General and Tata AIG General Insuranceoffer plans that cover unexpected expenses on almost anything that a student could face abroad — bail bonds and drug and alcohol rehabilitation to abortion, suicide attempt and even an emergency visit by a parent to take care of an unwell child. Until few years ago, Indian companies provided bare-bone medical and travel insurance. Universities abroad demand much more, and students often had to buy insurance plans from foreign insurers who have partnered with their institutes. Premiums were usually high. Student travel insurance isn't yet a big business for local companies, but it is growing fast and they didn't want to lose on that. They launched policies that are comprehensive to meet the demands of foreign institutes. For parents, costs were as low as half the premiums paid to foreign companies. From 2011 to 2014, the number of students opting for local insurers increased from 30% of the total to 60% because of the expanded plans and lower cost, say industry executives.Hemant Ashar of Mumbai, whose 18-year-old son studies in the US, wants to shift his insurance cover from a US based insurer to an Indian company.

They have the option of approaching one of the insurance companies and claim the entire amount.

Earlier, those with multiple policies were required to approach both (or all) insurers and the companies used to settle claim in the ratio of the sum assured.

But, the new health insurance regulations, effective from October, and the abolition of contribution clause that dealt with claims under multiple policies, have made life simpler for health insurance customers.

Policyholders will benefit from fewer delays in claim settlement and less paperwork.

Moreover, one also gets to retain the no-claim bonus on a policy that is not used, which enhances the health cover at no extra cost.

"As per the new guidelines, the customer can avail of the entire claim in any of the policies till the sum insured is exhausted and the remaining claim can be settled with other insurer or insurers," says Sanjay Datta, chief of underwriting and claims at ICICI Lombard.

That means insurers cannot insist that the claim burden be divided as long as the amount does not exceed the sum insured.

"Even if the claim amount is higher than the cover under one policy, the policyholder has the right to exhaust the limit and make a claim for the balance from the other insurer.

Courtesy Times of India

  Insurers welcome move to introduce three-year insurance policy for motorcycles

Aug 14, 2014

CHENNAI: General insurers have welcomed the move by the Insurance Regulatory and Development Authority (IRDA) to introduce third party motorcycle insurance policy for a period of three years. However, the policy has to be renewed every year in case of own damage cover for such vehicles. "It will lead to a promotion of a stronger insurance culture. The costs of issuance of policies, administering and follow ups for renewals are set to reduce. Renewals in rural and semi urban areas will be plugged leading to improved revenue flow and better insurance penetration," Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance, said.

IRDA estimates the insurance business in India to touch Rs 4 lakh crore in the current fiscal.

"October seems to be business is good for all companies, both life and non-life. Whole year there should be a good growth compared to last year. Last year industry has collected Rs 3.75 lakh crore," Vijayan said on the sidelines of a programme.

IRDA Chairman T S Vijayan also said the regulator is mulling to bring out norms for sub-brokers of insurance products. He, however, did not put any timeframe for bringing out guidelines.

"..... .... we are very keen that distribution channel should contribute to the development of the industry where agents or brokers which are the traditional models. We also brought out regulation for CSC (customer service centers) seriously looking at the sub-broker level," Vijayan said.

Later talking to reporters he said: "It (regulation for sub-brokers) is still under discussion. There is no timeframe for that".

He said the regulator is working to see that both the insurance distribution and products come to a stage where they can contribute and address the real need of the customers propelling the industry to the next level of growth.

According to him the regulator approves products in such way that there is little or no scope for mis-selling the product.

Courtesy Times of India

  Insurance Bill may be cleared by year-end

Aug 27, 2014

The much-delayed Insurance Bill seeks to raise the foreign investment cap in the sector from 26 per cent to 49 per cent Union Finance Minister Arun Jaitley has expressed hope that Parliament will pass the Insurance Bill for raising the foreign direct investment (FDI) limit to 49 per cent by the end of this year, the first major economic reform proposed by the Narendra Modi Government. “Hopefully by the end of the year the amendments to the Insurance Act will get approved by Parliament and then notified,” Mr. Jaitley said at a function for the release of the Pension Fund Regulatory and Development Authority (PFRDA) annual report and website launch in New Delhi on Tuesday. “There is an intrinsic link between insurance and the pension sector. The FDI limits in the Insurance Act automatically applies to the pension sector.” The UPA Government had originally proposed raising the FDI cap back in 2008 when it introduced the Insurance Laws (Amendment) Bill. However, opposition from political parties, including the BJP, did not allow the Bill to be taken up in the Rajya Sabha. The Modi Government introduced a fresh Insurance Laws (Amendment) Bill in Parliament earlier this month. It proposes a rider that management control rests in the hands of an Indian promoter alongside the eased FDI cap. After the introduction of the Bill, the government moved 97 amendments because of which it could not be passed. Keywords: Arun Jaitley, Insurance Bill, NDA government

Courtesy The Hindu

  HDFC Ergo to offer insurance cover to RuPay cardholders for 3 years

Aug 27, 2014

MUMBAI: General insurance company HDFC Ergo has won the mandate to provide insurance cover to all RuPay cardholders, a move which will benefit the insurance company with the government ready to implement the financial inclusion agenda. The Reserve Bank of India-promoted National Payments Corporation of India (NPCI), a company which provides the technology backbone for most payments in India as well as offers the RuPay card, has given the contract to HDFC Ergo for a period of three years. . According to the terms, HDFC Ergo would provide an insurance cover of Rs 1 lakh to all RuPay cardholders which can be claimed in case of death or permanent disability. AP Hota, CEO and MD of NPCI, confirmed that the company has tied up with HDFC Ergo for the Rs 1 lakh insurance cover. However, in an email response to ET, a spokesperson for HDFC Ergo, said, "We won't be participating for this story." The company has issued 2.3 crore cards, and it is estimated that 15 crore new bank accounts would be opened and as many new cards would be issued in the unbanked areas by March 2016, and the premium will be paid by NPCI, and not the cardholder. Bank officials, who did not wish to be identified, said that NPCI would be paying a premium of Rs 1 per card. "We are in the process of simplifying the claims procedure and also making customers more aware of their procedure to make claims," said Hota. However, the insurance company will consider the claim only if the card is active. A card would be considered active if the cardholder has swiped it within 45 days of making a claim. NPCI is in talks with HDFC Ergo to improvise a scheme wherein the claim could be made if it had been swiped 90 days before. The Narendra Modi-led government had announced on August 15 a massive financial inclusion plan of opening bank accounts and providing insurance cover. On Thursday, the financial inclusion programme called Jan Dhan Yojana will be launched in 75 centres, covering 600 districts and 60,000 villages. It is estimated that 60% of country's population does not have access to formal banking services. The Jan Dhan Yojana aims to provide one bank account for every household in a year. Since each new account-holder will also be given the RuPay card, this will increase the customer base of HDFC Ergo

The Economic Times