Source : Business Standard
22-Feb-2011
Life insurance companies will not be allowed to dilute more than 10 per cent stake through initial public offers (IPOs).
The Insurance Regulatory & Development Authority (Irda) is set to cap the stake dilution by life insurers in the first three years of listing. The market regulator, the Securities & Exchange Board of India (Sebi), mandates that 25 per cent shares of a listed company should be held by the public. Irda is in talks with Sebi to waive this rule.
Private life insurers such as Reliance Life, ICICI Prudential, HDFC Life and SBI Life have expressed interest in tapping the capital markets. The huge valuations of life insurance companies are said to be the main reason for the move, according to a source with direct knowledge of the matter.
“At present, the market value of all life insurance companies if they dilute 25 per cent stake is estimated around Rs 60,000 crore. It will be very hard for the market to absorb such a huge amount. So, there must be a cap on the extent of stake dilution,” said the source.
However, details regarding the extent of the dilution by joint venture partners could be left to the companies. “There are a lot of issues involved with shareholding agreements in joint ventures. Ideally, regulators would like to stay away from them. It is still being debated, but will vary on a case-to-case basis,” an Irda official told Business Standard on condition of anonymity. He added the regulator would, however, prefer domestic companies to hold the majority stake.
At present, most of the 22 private life insurers have foreign partners. The Insurance Act caps foreign direct investment at 26 per cent.
Irda is likely to release the IPO guidelines within the next 30-45 days.
According to Irda data, during the first nine months of the financial year, the new business premium income of life insurance companies stood at Rs 86,699 crore. The private life insurers accounted for around 29 per cent of this.
Irda may also allow companies operational for seven years to tap the capital market. The present norms mandate at least 10 years of operations.
Irda may also allow companies which have not registered profit for the past three consecutive years to float a public issue. “According to the disclosure norms, it will be mandatory for insurance companies to declare the profitability of individual products in balance sheets. This apart, they have to disclose their balance sheets, premiums, commission expenses, operating expenses, on annual, half-yearly and quarterly basis. This will help investors take informed decisions,” said the Irda official.
In addition, the guidelines are expected to follow the usual norms. Under these, individuals holding more than 10 per cent stake would be considered promoters and would have to maintain the 1.5 solvency ratio.
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Wednesday, February 23, 2011
Irda to unveil new norms on unit-linked pension products
| Source : The Economic Times |  |
Insurance regulator Irda plans to review a rule that mandates insurers to offer guaranteed maturity benefits on unit-linked pension plans to boost sales of these products. The regulator will unveil new guidelines on pension products offered by insurers in a fortnight and they will come into force from April 1 this year, said a senior Irda official.
"The 4.5% guaranteed return attached to the pension plan is something that deters insurers from launching pension products. Very few companies have launched pension products after the new norms came into force last year. We therefore plan to frame guidelines for pension products, keeping in view the differences in risk appetite for investors," said Irda member-actuary R Kannan.
Today, insurers are mandated to offer a 4.5% guaranteed return on pension products offered under the unit-linked platform. The regulator had reckoned that a guaranteed return would protect policyholders even when markets crash. The idea was to encourage long-term savings and help policyholders build a nest egg to cater to their needs as they grow old.
However, a review has been warranted after a spate of complaints from insurers saying they are not in a position to guarantee returns on unit-linked pension plans as it would hurt their profitability. In fact, the insurance regulator had earlier hinted that a 4.5% return was not sacrosanct and could come up for review, depending on the economic environment.
"A 4.5% guaranteed return was more reasonable compared with the 7.5% interest on government bonds and 4% interest on savings bank accounts. Insurance companies abroad mostly have only 70-100 bps profit margins in linked products. Compared to this, Indian insurance companies have a wider profit margin," said Mr Kannan.
He said the new guidelines for pension products will address the varying risk appetite of investors, but declined to elaborate. Mr Kannan also said Irda will unveil the guidelines for initial public offering of life insurance companies in a couple of weeks.
The regulator is likely to ask life insurance companies to follow all the Sebi disclosure norms for a share offer, along with some additional norms that are being finalised by it on profitability. The idea is to help investors take informed decisions.
Sebi had cleared the life insurance IPO guidelines in October last year. All life insurance companies that have completed 10 years of operations will be allowed to list on bourses. HDFC Life, ICICI Prudential & SBI Life are companies that can raise equity from the markets.
Health insurance firms end up paying Rs 7,456 crore under claims in 2009-10
Source : Insurance Information Bureau
19th Feb 2011
As per a recent report, the health insurance market in India is booming big time as more customers take up policies, thereby resulting in a hike of around 82 percent in the claims health insurance firms paid in all in the fiscal year 2009-2010, thereby amounting to Rs 7,456 crore.
This was in huge contrast from what these health insurance firms paid in the previous year, 2008-2009, a mere Rs 4,087 crore. Another statistics by the Insurance Information Bureau (IIB) shows the hike in number of policies registered across India from 45, 75,725 to a whopping 68, 84,687 this fiscal. A new service, health insurance portability is soon going to be launched in the market from July onwards, adding to the present competition in market.
The service would give access to its customers to anytime switch their insurance service providers without having compromising on any of the existing policy terms. The Insurance Regulatory and Development Authority (IRDA) have even rolled out the required guidelines for the same.
19th Feb 2011
As per a recent report, the health insurance market in India is booming big time as more customers take up policies, thereby resulting in a hike of around 82 percent in the claims health insurance firms paid in all in the fiscal year 2009-2010, thereby amounting to Rs 7,456 crore.
This was in huge contrast from what these health insurance firms paid in the previous year, 2008-2009, a mere Rs 4,087 crore. Another statistics by the Insurance Information Bureau (IIB) shows the hike in number of policies registered across India from 45, 75,725 to a whopping 68, 84,687 this fiscal. A new service, health insurance portability is soon going to be launched in the market from July onwards, adding to the present competition in market.
The service would give access to its customers to anytime switch their insurance service providers without having compromising on any of the existing policy terms. The Insurance Regulatory and Development Authority (IRDA) have even rolled out the required guidelines for the same.
Customers may gain from new Irda guidelines!
Source: Live Mint
19th Feb 2011
Effective from 1 July, the Insurance Regulatory and Development Authority (Irda) has made it mandatory for life as well as non-life insurance agents to attain a persistency rate of at least 50% by 2011-12. Persistency rate is the percentage of policy contracts that are still in force (at a specified point of time) after they have been issued.
The minimum persistency will increase to 75% effective April 2014. This rate will be calculated in terms of both premium and number of policies procured by agents. If an agent fails to achieve the mandated level, their licence may not be renewed.
For the customers
According to experts, a high persistency can only be attained by an agent through reduced mis-selling of insurance products and improved services. “In many cases, a policyholder decides to discontinue the policy as it does not serve the purpose for which it was bought. With the new guidelines, agents will be forced to suggest products according to the customers’ needs,” says Chirag Jain, chief operating officer, Canara HSBC Life Insurance Co. Ltd. “The quality of the post-sale services will also improve,” says P. Nandagopal, managing director and chief executive officer, IndiaFirst Life Insurance Co. Ltd, a joint venture insurance company.
For the agents
According to the new guidelines, the payment of deferred commission will also be subject to achieving the required persistency rate. Every insurance company will have to devise their own guidelines on deferment of payments to agents. “The days of part-timers are now over. Only those agents who are full timers and professional will be able to generate enough business so as to become eligible for deferred payments. This means customers will no longer encounter erratic agents,” says G.V. Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance Co. Ltd.
K.G. Krishnamoorthy Rao, managing director and chief executive, officer Future Generali India Insurance Co. Ltd, agrees. “Insurers will soon decide the minimum business an agent is required to achieve in a given year. The short cuts would not work any longer and only those agents who take their business seriously will be able to survive,” he says.
Customers stand to gain as higher persistency rate would mean more business for insurers, which in turn may pass on the benefit to the customers.
19th Feb 2011
Effective from 1 July, the Insurance Regulatory and Development Authority (Irda) has made it mandatory for life as well as non-life insurance agents to attain a persistency rate of at least 50% by 2011-12. Persistency rate is the percentage of policy contracts that are still in force (at a specified point of time) after they have been issued.
The minimum persistency will increase to 75% effective April 2014. This rate will be calculated in terms of both premium and number of policies procured by agents. If an agent fails to achieve the mandated level, their licence may not be renewed.
For the customers
According to experts, a high persistency can only be attained by an agent through reduced mis-selling of insurance products and improved services. “In many cases, a policyholder decides to discontinue the policy as it does not serve the purpose for which it was bought. With the new guidelines, agents will be forced to suggest products according to the customers’ needs,” says Chirag Jain, chief operating officer, Canara HSBC Life Insurance Co. Ltd. “The quality of the post-sale services will also improve,” says P. Nandagopal, managing director and chief executive officer, IndiaFirst Life Insurance Co. Ltd, a joint venture insurance company.
For the agents
According to the new guidelines, the payment of deferred commission will also be subject to achieving the required persistency rate. Every insurance company will have to devise their own guidelines on deferment of payments to agents. “The days of part-timers are now over. Only those agents who are full timers and professional will be able to generate enough business so as to become eligible for deferred payments. This means customers will no longer encounter erratic agents,” says G.V. Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance Co. Ltd.
K.G. Krishnamoorthy Rao, managing director and chief executive, officer Future Generali India Insurance Co. Ltd, agrees. “Insurers will soon decide the minimum business an agent is required to achieve in a given year. The short cuts would not work any longer and only those agents who take their business seriously will be able to survive,” he says.
Customers stand to gain as higher persistency rate would mean more business for insurers, which in turn may pass on the benefit to the customers.
Thursday, February 17, 2011
Saturday, February 12, 2011
IRDA okays Medi-claim Portability
Source: Economic Times
Holders of health insurance policies can now switch companies without fear of losing benefits of a ‘no claim’ track record or out of concerns that they may have to wait a while before certain health conditions are covered.
The insurance regulator has said on Thursday that insurers must allow policyholders to transfer the credit in terms of waiting period for pre-existing illness and bonus sum insured from one insurer to another. The Insurance Regulatory and Development Authority on Thursday issued guidelines on portability of health insurance which will be effective from July 1, 2011 and apply to life and general insurance companies.
The insurance regulator’s move to allow portability will hugely benefit disgruntled policyholders who have to put up with poor service from their insurance companies for fear of losing the track record they have built up over the years. For example, if under a previous policy, a medical condition is excluded from coverage for two years and at the end of the second year the policyholder decides to switch, he will not have to go through the same waiting period again.
If under the new plan the waiting period for the same condition is three years, the new health insurance policy can only exclude the condition from coverage for one extra year. The final guidelines are a departure from earlier proposals where a standard policy, similar to the standard motor insurance cover, was mooted which could have been renewed with any insurers . However, given the difference in terms of coverage , the regulator has stuck to the nub of the issue—policyholders losing the track record they have built.
According to insurers, policyholders who shift will have to find a cover similar to their existing policy or accept the new plans. “In a way, it will be similar to mobile portability. Just as a customer opting for a new provider will have to accept the terms of the new plan, the policyholder too will have to accept the terms and conditions of the new insurer,” said Sanjay Datta, head of health at ICICI Lombard General Insurance .
Claims such as those for bypass surgeries are invariably rejected if they occur in the first year of cover on the grounds that such medical conditions do not develop overnight. Insurers agree to pay these claims only if the insured has been continuously covered for a couple of years at least.
IRDA has said that the credit (in terms of waiting period ) would be limited to the sum assured (including bonus ) under the previous policy . The regulator has put the onus on the new insurer for continuing the cover. If the policy results lapses into discontinuance because of any delay by the insurer in accepting the proposal, the insurer shall be bound to continue coverage.
All insurers have been asked to inform policyholders that all health insurance policies are portable and that the policyholder who wants to shift should take action well before the renewal date. According to Datta, the industry will move to a shared database by which an insurance company can immediately figure out the track record of any person who approaches them for health insurance. IRDA has asked companies to share the claim details of the policies, where the policyholder has opted for portability, within seven working days of a request from the renewing insurer.
Easy Switch
IRDA’s move to allow portability will benefit disgruntled policyholders who have to put up with poor service from their insurance companies for fear of losing the track record they have built up over the years
Insurers say policyholders who shift will have to find a cover similar to their existing policy or accept the new plans. The industry will gradually have to move to a shared database.
Holders of health insurance policies can now switch companies without fear of losing benefits of a ‘no claim’ track record or out of concerns that they may have to wait a while before certain health conditions are covered.
The insurance regulator has said on Thursday that insurers must allow policyholders to transfer the credit in terms of waiting period for pre-existing illness and bonus sum insured from one insurer to another. The Insurance Regulatory and Development Authority on Thursday issued guidelines on portability of health insurance which will be effective from July 1, 2011 and apply to life and general insurance companies.
The insurance regulator’s move to allow portability will hugely benefit disgruntled policyholders who have to put up with poor service from their insurance companies for fear of losing the track record they have built up over the years. For example, if under a previous policy, a medical condition is excluded from coverage for two years and at the end of the second year the policyholder decides to switch, he will not have to go through the same waiting period again.
If under the new plan the waiting period for the same condition is three years, the new health insurance policy can only exclude the condition from coverage for one extra year. The final guidelines are a departure from earlier proposals where a standard policy, similar to the standard motor insurance cover, was mooted which could have been renewed with any insurers . However, given the difference in terms of coverage , the regulator has stuck to the nub of the issue—policyholders losing the track record they have built.
According to insurers, policyholders who shift will have to find a cover similar to their existing policy or accept the new plans. “In a way, it will be similar to mobile portability. Just as a customer opting for a new provider will have to accept the terms of the new plan, the policyholder too will have to accept the terms and conditions of the new insurer,” said Sanjay Datta, head of health at ICICI Lombard General Insurance .
Claims such as those for bypass surgeries are invariably rejected if they occur in the first year of cover on the grounds that such medical conditions do not develop overnight. Insurers agree to pay these claims only if the insured has been continuously covered for a couple of years at least.
IRDA has said that the credit (in terms of waiting period ) would be limited to the sum assured (including bonus ) under the previous policy . The regulator has put the onus on the new insurer for continuing the cover. If the policy results lapses into discontinuance because of any delay by the insurer in accepting the proposal, the insurer shall be bound to continue coverage.
All insurers have been asked to inform policyholders that all health insurance policies are portable and that the policyholder who wants to shift should take action well before the renewal date. According to Datta, the industry will move to a shared database by which an insurance company can immediately figure out the track record of any person who approaches them for health insurance. IRDA has asked companies to share the claim details of the policies, where the policyholder has opted for portability, within seven working days of a request from the renewing insurer.
Easy Switch
IRDA’s move to allow portability will benefit disgruntled policyholders who have to put up with poor service from their insurance companies for fear of losing the track record they have built up over the years
Insurers say policyholders who shift will have to find a cover similar to their existing policy or accept the new plans. The industry will gradually have to move to a shared database.
Tuesday, February 8, 2011
Kotak Life Insurance co told to pay full amount to widow!
Source: Times of India
7th Feb 2011
A consumer court imposed a fine of Rs 8,000 on an insurance company after it refused to pay the full insurance amount to a widow and her minor son. The court also asked the firm to pay the entire insurance money to two complainants.
The case is about Mukund Shah of Surat who had bought an insurance policy of Rs 1 crore from Kotak Mahindra Life Insurance Co Ltd in 2002. Later the insurance amount was increased to Rs 1.15 crore. While taking this policy, Shah informed the company that he had different policies of Life Insurance Corporation to the extent of Rs 21 lakh.
Shah passed away in 2005. When his widow Nitaben and minor son Saumin sought the amount of insurance, Kotak Mahindra paid them Rs 92 lakh instead of Rs 1.15 crore. The company said that it had held back Rs 23 lakh because Shah had not revealed that he had LIC policies worth Rs 41 lakh. Since he disclosed a cover of Rs 21 lakh only, and suppressed information, the amount was deducted from the payment of insurance to his heir.
This strange stand by the insurance company led the claimants to file a complaint with the state consumer disputes redressal commission in 2007 against the company through advocate Himanshu Thakker. They claimed the remaining amount of Rs 23 lakh and compensation because the insurance company’s gesture amounted to deficiency in service.
The consumer court heard the case and concluded that the deduction of any amount from insured money on the pretext of partial disclosure was against the policy.
7th Feb 2011
A consumer court imposed a fine of Rs 8,000 on an insurance company after it refused to pay the full insurance amount to a widow and her minor son. The court also asked the firm to pay the entire insurance money to two complainants.
The case is about Mukund Shah of Surat who had bought an insurance policy of Rs 1 crore from Kotak Mahindra Life Insurance Co Ltd in 2002. Later the insurance amount was increased to Rs 1.15 crore. While taking this policy, Shah informed the company that he had different policies of Life Insurance Corporation to the extent of Rs 21 lakh.
Shah passed away in 2005. When his widow Nitaben and minor son Saumin sought the amount of insurance, Kotak Mahindra paid them Rs 92 lakh instead of Rs 1.15 crore. The company said that it had held back Rs 23 lakh because Shah had not revealed that he had LIC policies worth Rs 41 lakh. Since he disclosed a cover of Rs 21 lakh only, and suppressed information, the amount was deducted from the payment of insurance to his heir.
This strange stand by the insurance company led the claimants to file a complaint with the state consumer disputes redressal commission in 2007 against the company through advocate Himanshu Thakker. They claimed the remaining amount of Rs 23 lakh and compensation because the insurance company’s gesture amounted to deficiency in service.
The consumer court heard the case and concluded that the deduction of any amount from insured money on the pretext of partial disclosure was against the policy.
Pranab Mukherjee distributes first batch of LIC-Aadhaar UID Cards in West Bengal
08-Feb-2011
Source : India Infoline News Service
Union Finance Minister Pranab Mukherjee launched the LIC-Aadhaar Project of Life Insurance Corporation of India (LIC) at Raghunathganj under Jangipur Sub Division of Murshidabad District West Bengal. LIC-Aadhaar Project is the implementation of UID Project of the Unique Identification Authority of India (UIDAI) wherein LIC is delivering Unique 12-digit Identity – “Aadhaar” Numbers to the Indian residents.
The LIC-Aadhaar Cards were distributed to the Residents of Jangipur by the Honorable Union Finance Minister Sri Pranab Mukherjee, in the presence of T S Vijayan, Chairman LIC, R S Sharma, Director General & Mission Director, UIDAI, , A. K. Dasgupta Managing Director LIC, Sri R R Dash Zonal Manager, LIC, Eastern Zone, Kolkata, and B Venugopal, Executive Director (IT/SD), LIC. The dignitaries included honorable Members of Parliament as well as Legislative Assembly. LIC is the first registrar of the UID Project to hand over these cards.
LIC of India became the first Institutional Partner of the Unique Identification Authority of India (UIDAI) by signing an MoU with UIDAI on 9th June, 2010.
Aadhaar is envisioned as a number that will make it possible for Indian residents to easily establish their identity in order to facilitate their interaction with the various public and private agencies across the country. The Aadhaar is based on Demographic and Biometric Data i.e. photograph, fingerprints (10), and iris scan, hence, no duplicates can creep into the system.
LIC, the largest life insurance institution in the world with more than 21 crore unique customers (holding more than 27 crore policies), had partnered with the UIDAI as a registrar for issuing a national identity to the Indian resident – Aadhaar. LIC has used its robust and efficient Information Technology infrastructure to ensure speedy dissemination of the UID cards.
This is seen as another mammoth step undertaken by LIC in its efforts to give back to society through its numerous Corporate Social Responsibility initiatives. LIC had entered into this partnership with the aim of providing greater value to its customers and to ensure that the benefits of insurance reach every Indian. This partnership guarantees the inclusion of all eligible sections for social welfare schemes.
LIC already has a Data Warehouse consisting of the complete details of all its customers. Using its own customer id generated from the Data Warehouse, LIC has implemented many customer Relationship Management initiatives over last 6 years. Using the strong foundation of the Aadhaar Number, and the Financial Inclusion infrastructure, LIC hopes to boost the administration of various Social Security Schemes it manages on behalf of the Government of India.
Source : India Infoline News Service
Union Finance Minister Pranab Mukherjee launched the LIC-Aadhaar Project of Life Insurance Corporation of India (LIC) at Raghunathganj under Jangipur Sub Division of Murshidabad District West Bengal. LIC-Aadhaar Project is the implementation of UID Project of the Unique Identification Authority of India (UIDAI) wherein LIC is delivering Unique 12-digit Identity – “Aadhaar” Numbers to the Indian residents.
The LIC-Aadhaar Cards were distributed to the Residents of Jangipur by the Honorable Union Finance Minister Sri Pranab Mukherjee, in the presence of T S Vijayan, Chairman LIC, R S Sharma, Director General & Mission Director, UIDAI, , A. K. Dasgupta Managing Director LIC, Sri R R Dash Zonal Manager, LIC, Eastern Zone, Kolkata, and B Venugopal, Executive Director (IT/SD), LIC. The dignitaries included honorable Members of Parliament as well as Legislative Assembly. LIC is the first registrar of the UID Project to hand over these cards.
LIC of India became the first Institutional Partner of the Unique Identification Authority of India (UIDAI) by signing an MoU with UIDAI on 9th June, 2010.
Aadhaar is envisioned as a number that will make it possible for Indian residents to easily establish their identity in order to facilitate their interaction with the various public and private agencies across the country. The Aadhaar is based on Demographic and Biometric Data i.e. photograph, fingerprints (10), and iris scan, hence, no duplicates can creep into the system.
LIC, the largest life insurance institution in the world with more than 21 crore unique customers (holding more than 27 crore policies), had partnered with the UIDAI as a registrar for issuing a national identity to the Indian resident – Aadhaar. LIC has used its robust and efficient Information Technology infrastructure to ensure speedy dissemination of the UID cards.
This is seen as another mammoth step undertaken by LIC in its efforts to give back to society through its numerous Corporate Social Responsibility initiatives. LIC had entered into this partnership with the aim of providing greater value to its customers and to ensure that the benefits of insurance reach every Indian. This partnership guarantees the inclusion of all eligible sections for social welfare schemes.
LIC already has a Data Warehouse consisting of the complete details of all its customers. Using its own customer id generated from the Data Warehouse, LIC has implemented many customer Relationship Management initiatives over last 6 years. Using the strong foundation of the Aadhaar Number, and the Financial Inclusion infrastructure, LIC hopes to boost the administration of various Social Security Schemes it manages on behalf of the Government of India.
LIC infra bond issue unlikely this fiscal: Chairman
| 08-Feb-2011 | |
| Source : PTI | |
| India’s largest insurer LIC recently stated that infrastructure bond issue is unlikely to hit markets this fiscal as it is still working out the modalities. "We are working on a plan to come out with infrastructure bonds... It is unlikely to happen in the current fiscal," LIC Chairman T S Vijayan said. While the size of the infrastructure bond is not yet known, sources say Life Insurance Corporation (LIC) could have issued bonds worth Rs 5,000 crore this fiscal. The government, in 2010, had allowed LIC and few other finance companies to issue tax-free infrastructure bonds. The bond issue, which is under Section 80CCF of the Income Tax Act, enables an investor to avail a deduction of up to Rs 20,000 in the taxable income for the current financial year. The Rs 20,000-deduction is over and above the Rs 1 lakh deduction, under Section 80CC of the Income Tax Act. Last year, insurance regulator Insurance Regulatory and Development Authority (Irda) had expressed concerns over insurance companies floating infra bonds over the quality of debt papers that these insurance companies would be investing in. "As a regulator, we have certain concerns with regard to insurance companies issuing infrastructure bonds... I think there should be certain curbs on such issues by insurance companies. We are yet to look into this issue," Irda Chairman J Hari Narayan had said. Besides, some companies have come out with such tax- saving long-term bond like Infrastructure Development Finance Company (IDFC) and Indian Infrastructure Finance Company (IIFCL). | |
Monday, February 7, 2011
Panel to frame rules for demat insurance policies!
| 05-Feb-2011 | |
| Source : Financial Express | |
| In a move that will usher in demat of insurance policies, insurance regulator IRDA on Thursday has set up a working committee to chart out the modalities for electronic issuance of insurance policies. India may be having low insurance penetration but has the largest number of insurance policies. The working group is expected to submit its recommendations to the Irda before March 4, 2011. Among other issues the panel will examine mechanics involved in issuance of electronic policies, examination of the legal implications and the required amendments, if any to the relevant regulations, guidelines and other circular issued by Irda, modus operandi of proposed electronic structure. The other issues like operational procedures to be in place for policy servicing , cost benefit analysis and any other issues connected to electronic policies will also be discussed by the panel. A Giridhar,member, Irda will head the panel. The other members of the panel are ICICI Prudentail Life Insurance MD & CEO Sandeep Bakshi, Birla Sun Life Insurance , CEOJayant Dua, Bajaj Allianz Life Insurance CEO V Philip, HDFC Std Life Insurance CEO Amitabh Choudhary, TATA AIG General CEO Gaurav D Garg, CDSL executive director PS Reddy and NSDL Database Management MD & CEO Manoj Vaish. Randip Singh Jagpal, DVS Ramesh and G Rajeshwar will represent Irda in the panel. Sources point out that Irda had already started discussion with two depositories NSDL and CDSL. The Indian life insurance industry has around 30 crore life insurance policies and every year around three crore policies are being added. The demat of the policies will help the industry to settle the claims faster. Insurers said massive depository support is required for dematerialising life policies. Getting life insurance policies into the demat form was an idea of APJ Abdul Kalam, who had floated the concept when he was the President of India. Kalam had asked the Life Insurance Corporation of India (LIC) to consider providing dematerialised policies to its policyholders. He had asked the Centre to consider necessary legal changes for enabling LIC to introduce dematerialised policies. | |
Wednesday, February 2, 2011
Irda to bring new pension norms in April
After unit-linked pension products disappeared from the market following an imposition of guaranteed returns of 4.5 per cent, the Insurance Regulatory and Development Authority (Irda) has decided to revise the pension norms in April. "Since companies are busy this season, we have decided to come out with new guidelines in the next financial year. We will issue the draft guidelines in April," said a senior Irda official. In the new guidelines too, the regulator will ensure the capital of policyholders was protected.
He said the existing guidelines were not liberal and the revised ones would give some flexibility to the insurers. It would look at protecting premium along with adding some returns. "Guarantee at this level is unattainable and is the main reason for drop in sales," the official added. New product offerings have declined following the introduction of new rules in September. While only the Life Insurance Corporation (LIC) of India launched a regular unit-linked pension product, others like ICICI Prudential Life launched unitlinked pension plans on a single-premium platform.
Most insurers say offering 4.5 per cent on one-time premium is feasible compared to long term. Also, a single-premium pension product does not provide long-term protection. Returns on pension products have been linked to the reverse repo rate and insurers have to offer an additional 50 basis points over the same. Given the recent rise in reverse repo rate, the returns on unit-linked pension plan are likely to be 5.5-6 per cent for 2010-11.
"We have not launched any pension product as we do not believe in offering a guarantee of 4.5 per cent. Capital guarantee would be a welcome option and would give us some flexibility," said a senior executive of a life insurance company. Last year, pension products constituted 20-25 per cent of the total premium collected by the industry. Around Rs. 65,000 crore came from the sale of pension products. Total premium rose 18 per cent to Rs. 2,61,025 crore. With only a few players selling the product, it has fallen significantly.
Tuesday, February 1, 2011
Govt may enhance I-T exemption limit in coming Budget
The government may advance by a year the roll out of some of the income tax measures proposed in the Direct Taxes Code (DTC) to provide relief to inflation-hit households.
These measures may form part of the forthcoming budget. "Some measures in the code could be advanced," a senior government official said on condition of anonymity. The DTC is expected to come into force from April 2012.
The thinking within the finance ministry is that some relief should be provided to common households in view of the high inflation by raising the personal income tax exemption limit, the official said.
Under the current rules, income up to 1.6 lakh is exempt from tax for individuals. For women and senior citizens, the limit is 1.9 lakh and 2.4 lakh, respectively. The DTC Bill was introduced in Parliament last year. It proposes an I-T exemption limit of 2 lakh.
The budget for the ongoing fiscal year had not raised the basic exemption limit and the one for the previous year had increased it only by 10,000.
The plan to advance some of the DTC proposals comes as the government battles mounting price pressures at home. India’s food inflation has remained in double-digits for most of the past year and has played a key role in pushing up the headline inflation. Food inflation for December stood at 15.5%. The wholesale price index rose an annual 8.43% in the month. The finance minister could also recast the income tax slabs.
The DTC Bill has proposed changes in the slabs.
At present, income over 8 lakh attracts the highest slab of 30%. The Bill has proposed the 30% rate for income in excess of 10 lakh.
However, since the budget for the current year had sharply widened the tax slabs, it is likely the government may just go for an increase in the basic exemption limit without rearranging the slabs, according to some experts. A slab rearrangement helps taxpayers already under the tax net.
"A rise in the basic exemption limit would help people at the lower strata of society while widening of existing tax slabs will help people in low income groups already covered under the tax net," said Vikas Vasal, executive director at KPMG. Since the tax slabs were recast last year only, it would make sense to go for an increase in the exemption limit.
But some experts are of the view that fiscal constraints may restrain the government from giving away too much in the current year.
The fiscal responsibility framework proposed by the government seeks to cut the fiscal deficit to 4.8% in 2011-12 as against 5.5% budgeted in the current year.
The government also needs to set aside more for its flagship schemes, such as the Mahatma Gandhi National Rural Employment Guarantee Act and the Food Security Act. Moreover, unlike the current year when the government had a 1 lakh crore bonanza from the sale of 3G and broadband spectrum, in the next fiscal it would have to rely mostly on borrowings and tax collections to fund its expenditure.
These measures may form part of the forthcoming budget. "Some measures in the code could be advanced," a senior government official said on condition of anonymity. The DTC is expected to come into force from April 2012.
The thinking within the finance ministry is that some relief should be provided to common households in view of the high inflation by raising the personal income tax exemption limit, the official said.
Under the current rules, income up to 1.6 lakh is exempt from tax for individuals. For women and senior citizens, the limit is 1.9 lakh and 2.4 lakh, respectively. The DTC Bill was introduced in Parliament last year. It proposes an I-T exemption limit of 2 lakh.
The budget for the ongoing fiscal year had not raised the basic exemption limit and the one for the previous year had increased it only by 10,000.
The plan to advance some of the DTC proposals comes as the government battles mounting price pressures at home. India’s food inflation has remained in double-digits for most of the past year and has played a key role in pushing up the headline inflation. Food inflation for December stood at 15.5%. The wholesale price index rose an annual 8.43% in the month. The finance minister could also recast the income tax slabs.
The DTC Bill has proposed changes in the slabs.
At present, income over 8 lakh attracts the highest slab of 30%. The Bill has proposed the 30% rate for income in excess of 10 lakh.
However, since the budget for the current year had sharply widened the tax slabs, it is likely the government may just go for an increase in the basic exemption limit without rearranging the slabs, according to some experts. A slab rearrangement helps taxpayers already under the tax net.
"A rise in the basic exemption limit would help people at the lower strata of society while widening of existing tax slabs will help people in low income groups already covered under the tax net," said Vikas Vasal, executive director at KPMG. Since the tax slabs were recast last year only, it would make sense to go for an increase in the exemption limit.
But some experts are of the view that fiscal constraints may restrain the government from giving away too much in the current year.
The fiscal responsibility framework proposed by the government seeks to cut the fiscal deficit to 4.8% in 2011-12 as against 5.5% budgeted in the current year.
The government also needs to set aside more for its flagship schemes, such as the Mahatma Gandhi National Rural Employment Guarantee Act and the Food Security Act. Moreover, unlike the current year when the government had a 1 lakh crore bonanza from the sale of 3G and broadband spectrum, in the next fiscal it would have to rely mostly on borrowings and tax collections to fund its expenditure.
New norms fail to dent insurance income growth
Source: Economic Times
Insurance regulator’s revised norms on unit-linked products did not have a major effect on the life insurance industry’s first premium income growth. At least, that’s what the data for new premium income during April-December 2010 period shows.
Data released by the regulator show that the life insurance industry registered a 28% growth in first premium income during April-December 2010, against an achieved growth of 29% during the previous corresponding period — a marginal 1% fall.
Average premium paid during the period per policy has, in fact, increased to Rs 2,825 from Rs 1,996 in the previous period — a 41% rise in average premium paid. For private players, the average premium per policy was Rs 3,139 during April-December 2010, against Rs 2,342 in the previous period — a 34% jump. LIC managed to increase its average premium per policy by almost 47%.
Premiums may have witnessed a marginal fall, but the number of policies sold has taken a beating. The industry as a whole sold 9% less policies during the period than in the previous period. LIC sold 4.76% less, while private companies saw a 20% decline in number of policies sold.
Interestingly, the private players — 22 of them — managed a higher growth at 7% against 2% in the previous period, but they cumulatively lost 6% market share to the Life Insurance Corporation of India (LIC), the only public sector insurer.
LIC now holds a 71% market share while the private players held 28% of the market share during the period. Private players managed to mop up a total first premium income of Rs 24,980 crore during April-December 2010 against Rs 23,379 crore in the previous period.
LIC, however, witnessed a more than 10-percentage point decline in growth rates to 40% during the period under review against 50% in the previous corresponding period. It registered a first premium income of Rs 61,718 crore during the period, against Rs 44,178 crore in the previous period. Insurers feared a drop in growth rates since they were forced to withdraw at least 208 unit-linked policies (Ulips) from the market during August.
Only about 42 new Ulips were launched from September. “Brokers and insurers felt the market will witness a rationalisation in terms of the number of Ulips and every insurer’s practice of launching a host of policies will be replaced with 3-5 Ulips per company.
Some felt the current situation is creating a dearth of investment options for investors as far as Ulips are concerned,” an insurance analyst said. Ravi Trivedi, executive director at KPMG, however, feels that the number of Ulips on offer will gradually rise, but may not match the number of products that were withdrawn.
“Insurers will focus on rationalisation and retention of clients. With all the new guidelines that cap commissions and surrender values, insurers now need more time to design their products,” he said. Bajaj Allianz, ING Vysya, Reliance Life, Birla Sun Life, Aviva Met Life were among those which saw a decline in premium income during the period.
Insurance regulator’s revised norms on unit-linked products did not have a major effect on the life insurance industry’s first premium income growth. At least, that’s what the data for new premium income during April-December 2010 period shows.
Data released by the regulator show that the life insurance industry registered a 28% growth in first premium income during April-December 2010, against an achieved growth of 29% during the previous corresponding period — a marginal 1% fall.
Average premium paid during the period per policy has, in fact, increased to Rs 2,825 from Rs 1,996 in the previous period — a 41% rise in average premium paid. For private players, the average premium per policy was Rs 3,139 during April-December 2010, against Rs 2,342 in the previous period — a 34% jump. LIC managed to increase its average premium per policy by almost 47%.
Premiums may have witnessed a marginal fall, but the number of policies sold has taken a beating. The industry as a whole sold 9% less policies during the period than in the previous period. LIC sold 4.76% less, while private companies saw a 20% decline in number of policies sold.
Interestingly, the private players — 22 of them — managed a higher growth at 7% against 2% in the previous period, but they cumulatively lost 6% market share to the Life Insurance Corporation of India (LIC), the only public sector insurer.
LIC now holds a 71% market share while the private players held 28% of the market share during the period. Private players managed to mop up a total first premium income of Rs 24,980 crore during April-December 2010 against Rs 23,379 crore in the previous period.
LIC, however, witnessed a more than 10-percentage point decline in growth rates to 40% during the period under review against 50% in the previous corresponding period. It registered a first premium income of Rs 61,718 crore during the period, against Rs 44,178 crore in the previous period. Insurers feared a drop in growth rates since they were forced to withdraw at least 208 unit-linked policies (Ulips) from the market during August.
Only about 42 new Ulips were launched from September. “Brokers and insurers felt the market will witness a rationalisation in terms of the number of Ulips and every insurer’s practice of launching a host of policies will be replaced with 3-5 Ulips per company.
Some felt the current situation is creating a dearth of investment options for investors as far as Ulips are concerned,” an insurance analyst said. Ravi Trivedi, executive director at KPMG, however, feels that the number of Ulips on offer will gradually rise, but may not match the number of products that were withdrawn.
“Insurers will focus on rationalisation and retention of clients. With all the new guidelines that cap commissions and surrender values, insurers now need more time to design their products,” he said. Bajaj Allianz, ING Vysya, Reliance Life, Birla Sun Life, Aviva Met Life were among those which saw a decline in premium income during the period.
LIC crosses 2.5 crores policies for the fiscal 2010-2011
Life Insurance Corporation yesterday said that it has crossed the landmark 2.5 crore policies in the current year as of January 29.
"LIC has completed 2,52,44,846 policies and received Rs 34,137.12 crore in First Premium Income in the current financial year," the country’s largest insurer said in a statement here.
The ULIP Plans under the new IRDA guidelines helped boost the figures substantially, it said adding that the new business under the new ULIP Plans as of January 29 stood at 1,098,663 policies generating a premium of Rs 5136.25 crore.
The Corporation’s Endowment Plus, launched on September 20, 2010, has garnered 1,017,560 policies with a First Premium Income of Rs 4,804.12 crore, in just over 4 months, it said.
Pension Plus, the only regular premium pension plan available in the market after introduction of new rules has brought in 81,103 policies with a First Premium of Rs 332.13 crore, it added.
"LIC has completed 2,52,44,846 policies and received Rs 34,137.12 crore in First Premium Income in the current financial year," the country’s largest insurer said in a statement here.
The ULIP Plans under the new IRDA guidelines helped boost the figures substantially, it said adding that the new business under the new ULIP Plans as of January 29 stood at 1,098,663 policies generating a premium of Rs 5136.25 crore.
The Corporation’s Endowment Plus, launched on September 20, 2010, has garnered 1,017,560 policies with a First Premium Income of Rs 4,804.12 crore, in just over 4 months, it said.
Pension Plus, the only regular premium pension plan available in the market after introduction of new rules has brought in 81,103 policies with a First Premium of Rs 332.13 crore, it added.
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