27-May-2011
Source : Max Newyork Life
Recently I attended a function commemorating the 10th Anniversary of the Kargil War. Every speaker talked eloquently about the need to celebrate such occasions - to reaffirm our faith in the Indian Army and to acknowledge the contribution and difference they have made to our lives.
Anniversary – it triggered a thought in my mind – When I started thinking and spoke with people about the various anniversaries one celebrates the first one I heard was Marriage Anniversary to reaffirm our vows for each other, Birthdays to reaffirm our faith in life, and so on. But strangely enough none ever mentioned insurance anniversary, the date on which we should reaffirm our love and care for our families by paying renewal premiums and ensuring protection for our loved ones.
So, why is it that we remember all the other so called important dates but fail to remember a single date which may cost us so dearly. Is it because we do not perceive it to be as important as other anniversaries or do we perhaps not realize the degree of importance of this anniversary?
An eventual thought provoking session with myself helped me pen down a couple of questions and may be their answers:
What is the real importance of life insurance anniversary or the renewal premium payment date? Well, lets us approach it this way – Half hearted love. I may be a little cynical here but I guess I like to take the bull by its horns. If you do not pay your renewal premiums, you are saying to your loved ones that you love them today but not enough for years to come. And that is because you have left their dreams unprotected because you are not serious about those goals for which you had bought the policy in the first place. Be it your son’s deram of becoming a doctor or your daughter’s to be an investment manager or your wife to walk with you happily into twilight of your life, we must realize that it requires time, effort and most importantly planning.Let us now look at the more financial or monetary aspect of things.
By not renewing our policies we invite financial losses. The next new policy, which you may end up buying, will come at cost, which is higher than the one you are holding currently. This is because we are trying to reinvent the wheel when we do not have age on our side. We all grow old with the passage of time our health may not also remain as great as earlier and therefore it is only obvious that we would pay a heftier sum for the same amount of protection. Seldom do we realize that the risks we so wisely passed on to our life insurer has now fallen right back into our lap, just because we did not find it important to pay our renewal premium?
As a matter of fact, any discontinuation in regular savings plans has its cost. We may not realize, but every discontinuation may pull us back several years and failing to take advantage of the most powerful financial application of compounding. This mistake may just be the reason ones wife handing over the lunch box every morning instead of an early morning walk together.
I have decided from now,the day I pay my renewal premiums , I will celebrate the occasion as my marriage anniversary because if marriage was the start of a happy family, life insurance policy anniversary is the start of a commitment, which ensures that my family remains happy with or without me.
Our Mission is to enrich the lives of the people we touch upon; by providing them an ethical advice on the highest quality of financial products that helps them fulfill their responsibilities & build better tomorrows.
Tuesday, May 31, 2011
REC to borrow Rs 15 bn from LIC
27-May-2011
Source : Capitalmarket.com
Rural Electrification Corporation Limited (REC), a state owned lender to Indian power projects is in talks with Life Insurance Corporation of India (LIC) to borrow Rs 15 billion, as it is likely to lend Rs 300 billion in India this year.
REC may increase disbursals to Rs 300 billion ($6.6 billion) in the year and is planning to rise $1.5 billion, or 23 % of the funds it needs this financial year, from overseas bonds and loans. The company will raise the remaining money from rupee loans domestically.
So as a part of this, the lender is in talks with state-owned LIC to borrow 15 billion rupees at 9.35% over 10 years. The company is also raising $750 million in yen, Swiss franc and dollar bonds and will arrange an additional $750 million after getting the central bank approval.
Source : Capitalmarket.com
Rural Electrification Corporation Limited (REC), a state owned lender to Indian power projects is in talks with Life Insurance Corporation of India (LIC) to borrow Rs 15 billion, as it is likely to lend Rs 300 billion in India this year.
REC may increase disbursals to Rs 300 billion ($6.6 billion) in the year and is planning to rise $1.5 billion, or 23 % of the funds it needs this financial year, from overseas bonds and loans. The company will raise the remaining money from rupee loans domestically.
So as a part of this, the lender is in talks with state-owned LIC to borrow 15 billion rupees at 9.35% over 10 years. The company is also raising $750 million in yen, Swiss franc and dollar bonds and will arrange an additional $750 million after getting the central bank approval.
LIC wants to open Singapore arm, to apply for license
29-May-2011
Source : The Economic Times
State-run Life Insurance Corporation of India (LIC) will seek licence from the Singapore government to set up a subsidiary to sell policies.
In 2009, LIC had sought the approval from the Singapore government to set up office which was turned down as the insurer did not have a rating in place.
The corporation has got the rating done from the international credit rating agency Moody’s Investors Service.
Rating agency S&P has assigned ’BBB-’ long-term and ’A-3’ short-term.
Moody’s has upgraded the government’s sovereign rating ’BA1’ for the financial year ended March 31, 2011.
The rating, which looks at a country’s financial and political climate, suggests its ability to repay loans.
LIC’s rating, like any public sector unit, is based on standard parameters. The entity is unique in terms of functioning with nominal capital. Its paid-up capital is only 5 crore and it had been assigned the sovereign credit rating on India.
"We have our representative office in Singapore. Now that we have a rating in place, we will apply for the licence to set up the subsidiary," LIC managing director AK Dasgupta said.
LIC is reserved under law to re-invest profits as the entire surplus is distributed between the government and policyholders.
It’s financial strength is derived from the government guarantee for every policy issued by the corporation.
The insurer plans to expand in east African countries as well. Mr Dasgupta said LIC gets around a marginal 0.5% business from its overseas expansion.
"Overseas business is more profitable compared to the domestic one," he said. As LIC does not have any capital of its own, international operations are funded through budgetary allocation whenever required.
Source : The Economic Times
State-run Life Insurance Corporation of India (LIC) will seek licence from the Singapore government to set up a subsidiary to sell policies.
In 2009, LIC had sought the approval from the Singapore government to set up office which was turned down as the insurer did not have a rating in place.
The corporation has got the rating done from the international credit rating agency Moody’s Investors Service.
Rating agency S&P has assigned ’BBB-’ long-term and ’A-3’ short-term.
Moody’s has upgraded the government’s sovereign rating ’BA1’ for the financial year ended March 31, 2011.
The rating, which looks at a country’s financial and political climate, suggests its ability to repay loans.
LIC’s rating, like any public sector unit, is based on standard parameters. The entity is unique in terms of functioning with nominal capital. Its paid-up capital is only 5 crore and it had been assigned the sovereign credit rating on India.
"We have our representative office in Singapore. Now that we have a rating in place, we will apply for the licence to set up the subsidiary," LIC managing director AK Dasgupta said.
LIC is reserved under law to re-invest profits as the entire surplus is distributed between the government and policyholders.
It’s financial strength is derived from the government guarantee for every policy issued by the corporation.
The insurer plans to expand in east African countries as well. Mr Dasgupta said LIC gets around a marginal 0.5% business from its overseas expansion.
"Overseas business is more profitable compared to the domestic one," he said. As LIC does not have any capital of its own, international operations are funded through budgetary allocation whenever required.
Tuesday, May 24, 2011
Can private insurance firms be trusted?
21-May-2011
Source : Livemint
By Deepti Bhaskaran.
Among the many questions put forth to Mint Money, the two most persistent are: Will the private sector insurance company pay my claim? Will they be around and what is their payment history? It is fairly easy to answer the first question: the regulatory rules make it difficult for any insurance company to run away with people’s money. The second question, however, has no black and white answer and there are nuances that you will have to understand. To give you a cogent reply, we looked at the claims record (for the year 2009-10) of all 23 insurers and examined them on three parameters: claims settled, claims repudiated and claims pending. The final takeaway is this: a poor ratio does not imply a company with poor customer service standards. Read carefully to understand how these three ratios are to be used to evaluate your insurer.
Claim settlement ratio :On the face of it, a lower claims settlement ratio (30% would mean that three out of 10 claims are settled and the rest are refused) would point to a company that does not pay its customers when claims are made. While Life Insurance Corp. of India (LIC) has a claim settlement ratio (CSR) of 97%, more than half of the companies in India have a CSR of more than 78% with that of six insurers being above 88%. Most insurers that didn’t settle even half the claims, started operation in 2007-2008 with Shriram Life Insurance Co. Ltd being the sole exception. Shriram Life launched operation in the year 2005 yet its claim settlement for the year 2009-10 has been only 40%. We expanded the net wider and one of the first private companies to set shop in India came under the net of top 10 companies that have poor claim settlement performance. Max New York Life Insurance Co. Ltd, launched in 2000, has settled only 66% of the claims. “(The) 2010 fiscal was an aberration for us since we decided to change our claims management processes,” said a company official. “We got a lot of claims in the previous year that prompted us to analyse our underwriting and claims settlement processes.”
What it means: Older insurance firms will have a better CSR than the new ones. Kamalji Sahay, managing director and chief executive officer, Star Union Dai-ichi Life Insurance Co. Ltd explains: “Young insurers have claims which are typically in the initial stage of the policy tenure. Early claims need extra investigation and hence usually they take more time in settlement. However, other indicators like claims repudiation and claims pending records will shed light on claims settlement practice of companies.” Sahay refers to a provision of the life insurance industry where insurers can rigorously investigate claims that are made within three years of buying a policy and the process can take as long as six months. Policies older than three years must be settled in a month’s time. And since insurers who set shop in 2007 or later will have all their claims that are made within three years of buying the policy, they have a poor CSR.
How to use this: If you see a company set up before 2007 with a CSR of below 78%, consider it a red flag.
Claim repudiation ratio :A claim repudiation ratio (CRR) of 40% means that four out of 10 claims made get rejected by the insurance company. Aegon Religare Life Insurance Co. Ltd, which incidentally was also the first insurer to launch term plans online, has the highest percentage of claim repudiation. Of a total claim of 50, Aegon Religare rejected 22 claims: a 44% claims repudiation record. LIC has the lowest percentage of claims repudiation at 1%, however, even that one percentage point means 8,227 policies in the case of LIC.
What it means for you: The CRR is as much a reflection on the underwriting standards of the insurer as a reflection on the policyholder who gives incorrect or shoddy information at the time of buying the policy. Says Samir Bali, leader-insurance, Ernst and Young: “A high percentage of claims repudiation may mean that the company has poor standards of underwriting. Lack of medical check ups, wrong information in the proposal form may lead to claims repudiation.” A high CRR also reflects poor training of agents who encourage their customers to fill up wrong information so that the policies are accepted by the insurer.
There is a third factor that influences the CRR—the products sold will also lead to low or high CRR numbers. Says Chirag Jain, chief operating officer, Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd: “The percentage of claims repudiation will also depend on the portfolio of the insurer. So a insurer having a large chunk in pension plans will have a favourable percentage of claims repudiation while an insurer dealing largely with term plans will have a relatively adverse percentage of claims repudiation.” This means that a company with a higher term insurance portfolio will have a worse CRR than a company focused mainly on money-back or endowment plans since in the latter the fund value builds up to make the payment at claim, while in a term policy it is a pure risk cover.
How to use this data: A company older than four years and with a high claims rejection ratio typically means poor underwriting standards.
Claims pending ratio: A claims pending ratio (CPR) of 50% means five out of 10 claims registered were pending at the end of 2010 fiscal. While most insurers have their claims pending for less than three months, insurers also have policies for more than a year pending with them. Says Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance Co. Ltd: “Sometimes the beneficiary doesn’t give sufficient documents or just sits on the claims. We can’t settle the claim unless we get all the required information and hence the delay.”
What it means for you: A high CPR need not mean a bad company. For example, the 50% CPR of DLF Pramerica Life Insurance Co. Ltd looks bad, but only till we see that it is five out of 10 companies we are looking at. Again younger companies will tend to have more pending claims since they take more time to investigate and cases of fraudulent practices are highest during early claims. “Typically we find that policyholders who make early claims take a policy with the knowledge that they would be invoking the policy soon,” said Jain. “Hence we find that medical information is not accurate which leads to further investigation. Hence early claims call for investigation and hence claims are usually pending in case of young insurers.”
In other cases, claims could also be pending because of lack of documentary evidences. The regulator mandates the insurer to settle the claim within 30 days of receiving all required documents. However, the claims remain pending till such time insurers receive all the documents.
How to use this data: For a company that’s more than four years old, a high pending claims ratio means poor claims settlement standards.
Source : Livemint
By Deepti Bhaskaran.
Among the many questions put forth to Mint Money, the two most persistent are: Will the private sector insurance company pay my claim? Will they be around and what is their payment history? It is fairly easy to answer the first question: the regulatory rules make it difficult for any insurance company to run away with people’s money. The second question, however, has no black and white answer and there are nuances that you will have to understand. To give you a cogent reply, we looked at the claims record (for the year 2009-10) of all 23 insurers and examined them on three parameters: claims settled, claims repudiated and claims pending. The final takeaway is this: a poor ratio does not imply a company with poor customer service standards. Read carefully to understand how these three ratios are to be used to evaluate your insurer.
Claim settlement ratio :On the face of it, a lower claims settlement ratio (30% would mean that three out of 10 claims are settled and the rest are refused) would point to a company that does not pay its customers when claims are made. While Life Insurance Corp. of India (LIC) has a claim settlement ratio (CSR) of 97%, more than half of the companies in India have a CSR of more than 78% with that of six insurers being above 88%. Most insurers that didn’t settle even half the claims, started operation in 2007-2008 with Shriram Life Insurance Co. Ltd being the sole exception. Shriram Life launched operation in the year 2005 yet its claim settlement for the year 2009-10 has been only 40%. We expanded the net wider and one of the first private companies to set shop in India came under the net of top 10 companies that have poor claim settlement performance. Max New York Life Insurance Co. Ltd, launched in 2000, has settled only 66% of the claims. “(The) 2010 fiscal was an aberration for us since we decided to change our claims management processes,” said a company official. “We got a lot of claims in the previous year that prompted us to analyse our underwriting and claims settlement processes.”
What it means: Older insurance firms will have a better CSR than the new ones. Kamalji Sahay, managing director and chief executive officer, Star Union Dai-ichi Life Insurance Co. Ltd explains: “Young insurers have claims which are typically in the initial stage of the policy tenure. Early claims need extra investigation and hence usually they take more time in settlement. However, other indicators like claims repudiation and claims pending records will shed light on claims settlement practice of companies.” Sahay refers to a provision of the life insurance industry where insurers can rigorously investigate claims that are made within three years of buying a policy and the process can take as long as six months. Policies older than three years must be settled in a month’s time. And since insurers who set shop in 2007 or later will have all their claims that are made within three years of buying the policy, they have a poor CSR.
How to use this: If you see a company set up before 2007 with a CSR of below 78%, consider it a red flag.
Claim repudiation ratio :A claim repudiation ratio (CRR) of 40% means that four out of 10 claims made get rejected by the insurance company. Aegon Religare Life Insurance Co. Ltd, which incidentally was also the first insurer to launch term plans online, has the highest percentage of claim repudiation. Of a total claim of 50, Aegon Religare rejected 22 claims: a 44% claims repudiation record. LIC has the lowest percentage of claims repudiation at 1%, however, even that one percentage point means 8,227 policies in the case of LIC.
What it means for you: The CRR is as much a reflection on the underwriting standards of the insurer as a reflection on the policyholder who gives incorrect or shoddy information at the time of buying the policy. Says Samir Bali, leader-insurance, Ernst and Young: “A high percentage of claims repudiation may mean that the company has poor standards of underwriting. Lack of medical check ups, wrong information in the proposal form may lead to claims repudiation.” A high CRR also reflects poor training of agents who encourage their customers to fill up wrong information so that the policies are accepted by the insurer.
There is a third factor that influences the CRR—the products sold will also lead to low or high CRR numbers. Says Chirag Jain, chief operating officer, Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd: “The percentage of claims repudiation will also depend on the portfolio of the insurer. So a insurer having a large chunk in pension plans will have a favourable percentage of claims repudiation while an insurer dealing largely with term plans will have a relatively adverse percentage of claims repudiation.” This means that a company with a higher term insurance portfolio will have a worse CRR than a company focused mainly on money-back or endowment plans since in the latter the fund value builds up to make the payment at claim, while in a term policy it is a pure risk cover.
How to use this data: A company older than four years and with a high claims rejection ratio typically means poor underwriting standards.
Claims pending ratio: A claims pending ratio (CPR) of 50% means five out of 10 claims registered were pending at the end of 2010 fiscal. While most insurers have their claims pending for less than three months, insurers also have policies for more than a year pending with them. Says Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance Co. Ltd: “Sometimes the beneficiary doesn’t give sufficient documents or just sits on the claims. We can’t settle the claim unless we get all the required information and hence the delay.”
What it means for you: A high CPR need not mean a bad company. For example, the 50% CPR of DLF Pramerica Life Insurance Co. Ltd looks bad, but only till we see that it is five out of 10 companies we are looking at. Again younger companies will tend to have more pending claims since they take more time to investigate and cases of fraudulent practices are highest during early claims. “Typically we find that policyholders who make early claims take a policy with the knowledge that they would be invoking the policy soon,” said Jain. “Hence we find that medical information is not accurate which leads to further investigation. Hence early claims call for investigation and hence claims are usually pending in case of young insurers.”
In other cases, claims could also be pending because of lack of documentary evidences. The regulator mandates the insurer to settle the claim within 30 days of receiving all required documents. However, the claims remain pending till such time insurers receive all the documents.
How to use this data: For a company that’s more than four years old, a high pending claims ratio means poor claims settlement standards.
Saturday, May 14, 2011
Proposal form for life insurance
11-May-2011
Source : The Economic Times
A life insurance company offers a policy on the basis of a proposal form. The form is the most basic requirement for the functioning of the life insurance contract between you and the life insurance company. It needs to be completed by the proposer, who may seek the assistance of a life insurance advisor to fill it up.
A proposal form seeks basic information of the proposer and the life assured. This includes the name, age, address, education and employment details of the proposer. The proposal form also gathers information on the medical history of the life to be assured. There are questions pertaining to the health status of family members of the life to be assured. The proposer and the life to be assured have to mention their incomes in the proposal form to satisfy the insurer about their ability to pay for the insurance and the need for insurance, respectively.
The proposal form also has questions pertaining to the insurance bought on the life of both the proposer and the life assured from other life insurance companies and details of those policies. Life assured has to disclose his/ her habits pertaining to consumption of alcohol and tobacco. After filling up the form and answering all the questions in it, the proposer has to sign the form. For overwriting or cancellations on the proposal form, the proposer has to sign to validate such changes.
The proposer can choose to attach a sheet of paper to the proposal form if he wants to share with the insurance company any information not sought in the form, which he thinks will help the company take an informed decision. It is in the proposer’s interest to share true information to the life insurance company, which, in turn, helps the insurance company to take a fair call.
The information is used by the insurance company to ascertain if a policy can be issued. Life insurance underwriters use the information regarding the health and family history of the life to be assured to arrive at the premium to be charged. The company gives a photocopy of the proposal form to the insured, along with the life insurance policy document. You should read the entire policy document thoroughly and also the photocopy of the life insurance proposal form. Any discrepancy in the photocopy should be brought to the notice of the insurance company to avoid any fraud.
Source : The Economic Times
A life insurance company offers a policy on the basis of a proposal form. The form is the most basic requirement for the functioning of the life insurance contract between you and the life insurance company. It needs to be completed by the proposer, who may seek the assistance of a life insurance advisor to fill it up.
A proposal form seeks basic information of the proposer and the life assured. This includes the name, age, address, education and employment details of the proposer. The proposal form also gathers information on the medical history of the life to be assured. There are questions pertaining to the health status of family members of the life to be assured. The proposer and the life to be assured have to mention their incomes in the proposal form to satisfy the insurer about their ability to pay for the insurance and the need for insurance, respectively.
The proposal form also has questions pertaining to the insurance bought on the life of both the proposer and the life assured from other life insurance companies and details of those policies. Life assured has to disclose his/ her habits pertaining to consumption of alcohol and tobacco. After filling up the form and answering all the questions in it, the proposer has to sign the form. For overwriting or cancellations on the proposal form, the proposer has to sign to validate such changes.
The proposer can choose to attach a sheet of paper to the proposal form if he wants to share with the insurance company any information not sought in the form, which he thinks will help the company take an informed decision. It is in the proposer’s interest to share true information to the life insurance company, which, in turn, helps the insurance company to take a fair call.
The information is used by the insurance company to ascertain if a policy can be issued. Life insurance underwriters use the information regarding the health and family history of the life to be assured to arrive at the premium to be charged. The company gives a photocopy of the proposal form to the insured, along with the life insurance policy document. You should read the entire policy document thoroughly and also the photocopy of the life insurance proposal form. Any discrepancy in the photocopy should be brought to the notice of the insurance company to avoid any fraud.
LIC eyes Rs 60,000-cr equity investments in 2011-12
13-May-2011
Source : Business Standard
Life Insurance Corporation of India (LIC), the largest institutional investor in the country, plans to invest Rs 60,000 crore in equities during the current financial year.
The company’s equity investment had declined by 30 per cent to Rs 43,000 crore in 2010-11. Equity investments in the previous financial year stood at Rs 61,500 crore. New regulations by the Insurance Regulatory and Development Authority, which hit the sales of unit-linked policies across the industry, led to the decline.
In unit-linked insurance plans, 90-95 per cent of the funds are deployed in equity. LIC’s total investment in debt and equities during 2011-12 is expected to stand at Rs 2,00,000 crore. The figure stood at Rs 1,96,000 crore in the last financial year. During 2009-10, LIC’s total investments stood at Rs 1,92,000 crore.
“Based on our internal assessment, we are looking to invest Rs 2,00,000 crore across the asset class in the current financial year and 30 per cent of this would be in equities,” said a senior LIC official, on the condition of anonymity. “Apart from the new regulations, the equity market remained volatile, particularly during the second half of the financial year. This resulted in lower investments in equity in the last financial year,” the official said. The corporation, however, nearly doubled its profit through the sale of equity investments in the last financial year to Rs 17,000 crore, against Rs 9,000 crore reported in the corresponding period a year ago.
“After the new regulations were introduced in September, the sales of traditional products picked up. We were one of the few companies who introduced guaranteed pension plans based on the new pension guidelines. These factors resulted in higher investment in debt,” the official said.
Returns on pension products have been linked to the reverse repo rate and insurers have to offer a rate that is 50 basis points more than the reverse repo rate. Insurers have argued that in case of guaranteed annualised returns, they are forced to invest only in debt instruments.
“With the interest rate seen rising over the next few months, people generally tend to shift more to non unit-linked products. Hence, going ahead, equity investments would depend on this factor, apart from the normal market conditions,” the official said.
Currently, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size, in a corporate entity — whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds. LIC collected Rs 86,444.72 crore by selling new policies during 2010-11. This was a rise of 22 per cent compared with Rs 70,891.5 crore in the corresponding period last year.
Source : Business Standard
Life Insurance Corporation of India (LIC), the largest institutional investor in the country, plans to invest Rs 60,000 crore in equities during the current financial year.
The company’s equity investment had declined by 30 per cent to Rs 43,000 crore in 2010-11. Equity investments in the previous financial year stood at Rs 61,500 crore. New regulations by the Insurance Regulatory and Development Authority, which hit the sales of unit-linked policies across the industry, led to the decline.
In unit-linked insurance plans, 90-95 per cent of the funds are deployed in equity. LIC’s total investment in debt and equities during 2011-12 is expected to stand at Rs 2,00,000 crore. The figure stood at Rs 1,96,000 crore in the last financial year. During 2009-10, LIC’s total investments stood at Rs 1,92,000 crore.
“Based on our internal assessment, we are looking to invest Rs 2,00,000 crore across the asset class in the current financial year and 30 per cent of this would be in equities,” said a senior LIC official, on the condition of anonymity. “Apart from the new regulations, the equity market remained volatile, particularly during the second half of the financial year. This resulted in lower investments in equity in the last financial year,” the official said. The corporation, however, nearly doubled its profit through the sale of equity investments in the last financial year to Rs 17,000 crore, against Rs 9,000 crore reported in the corresponding period a year ago.
“After the new regulations were introduced in September, the sales of traditional products picked up. We were one of the few companies who introduced guaranteed pension plans based on the new pension guidelines. These factors resulted in higher investment in debt,” the official said.
Returns on pension products have been linked to the reverse repo rate and insurers have to offer a rate that is 50 basis points more than the reverse repo rate. Insurers have argued that in case of guaranteed annualised returns, they are forced to invest only in debt instruments.
“With the interest rate seen rising over the next few months, people generally tend to shift more to non unit-linked products. Hence, going ahead, equity investments would depend on this factor, apart from the normal market conditions,” the official said.
Currently, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size, in a corporate entity — whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds. LIC collected Rs 86,444.72 crore by selling new policies during 2010-11. This was a rise of 22 per cent compared with Rs 70,891.5 crore in the corresponding period last year.
Thursday, May 5, 2011
House panel defers report on insurance Bill
05-May-2011
Source : Business Standard
In what could be a serious blow to the United Progressive Alliance (UPA) government, Parliament’s Standing Committee on Finance, headed by Yashwant Sinha of the Bharatiya Janata Party (BJP), has indefinitely deferred finalisation of its report on the long-pending Insurance Laws (Amendment) Bill.
This decision comes less than a week after the fiasco at the April 28 meeting of the Public Accounts Committee (PAC), where UPA members rejected a draft report on the 2G spectrum allocation. According to some Opposition leaders, a new phase of arm-twisting between the UPA and an irked Opposition has set in, which could lead to stalling of legislative sanction to key economic reforms.
Opposition camp sources told Business Standard a meeting had been called on Friday to specifically discuss and clear the standing committee’s report on the Insurance Bill, an issue pending before the committee since 2009. But now the committee has Demand for grants for the Ministry of Corporate Affair’s as the sole item on the agenda.
The change in the agenda assumes significance as the UPA brass, especially Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee, was keen to roll out the proposed legislation. Apart from mentioning the Bill as a part of the government’s key reforms agenda in his last Budget speech, Mukherjee had appealed to the standing committee to clear its report as early as possible.
According to Parliament rules, the government can’t go ahead with a Bill if it is pending before a standing committee. The Union cabinet, however, has the right to reject the committee’s recommendations.
“I can’t reveal what the earlier agenda was. All that I know is we are going to discuss the demand for grants for the corporate affairs ministry on Friday,” said CPI(M) leader Mainul Hassan, a member of the committee.
Sources also disclosed that the committee’s draft report on the contentious Bill was ready but had not been circulated among the members — an exercise before approving any report — till today.
“As of now, no date has been fixed for discussing the Bill in the committee,” said BJD MP Bhartruhari Mahtab, a member of both the PAC and the Standing Committee on Finance.
The finance panel is currently in possession of six key reform Bills, including the Direct Taxes Code and the Goods and Services Tax Bill.
Even if the committee finalises and gives its report, the government will have to depend on the BJP to pass some of the Bills in Parliament. To pass the Goods and Services Tax legislation — a constitutional amendment Bill — the government needs a two-third majority in both Houses.
Source : Business Standard
In what could be a serious blow to the United Progressive Alliance (UPA) government, Parliament’s Standing Committee on Finance, headed by Yashwant Sinha of the Bharatiya Janata Party (BJP), has indefinitely deferred finalisation of its report on the long-pending Insurance Laws (Amendment) Bill.
This decision comes less than a week after the fiasco at the April 28 meeting of the Public Accounts Committee (PAC), where UPA members rejected a draft report on the 2G spectrum allocation. According to some Opposition leaders, a new phase of arm-twisting between the UPA and an irked Opposition has set in, which could lead to stalling of legislative sanction to key economic reforms.
Opposition camp sources told Business Standard a meeting had been called on Friday to specifically discuss and clear the standing committee’s report on the Insurance Bill, an issue pending before the committee since 2009. But now the committee has Demand for grants for the Ministry of Corporate Affair’s as the sole item on the agenda.
The change in the agenda assumes significance as the UPA brass, especially Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee, was keen to roll out the proposed legislation. Apart from mentioning the Bill as a part of the government’s key reforms agenda in his last Budget speech, Mukherjee had appealed to the standing committee to clear its report as early as possible.
According to Parliament rules, the government can’t go ahead with a Bill if it is pending before a standing committee. The Union cabinet, however, has the right to reject the committee’s recommendations.
“I can’t reveal what the earlier agenda was. All that I know is we are going to discuss the demand for grants for the corporate affairs ministry on Friday,” said CPI(M) leader Mainul Hassan, a member of the committee.
Sources also disclosed that the committee’s draft report on the contentious Bill was ready but had not been circulated among the members — an exercise before approving any report — till today.
“As of now, no date has been fixed for discussing the Bill in the committee,” said BJD MP Bhartruhari Mahtab, a member of both the PAC and the Standing Committee on Finance.
The finance panel is currently in possession of six key reform Bills, including the Direct Taxes Code and the Goods and Services Tax Bill.
Even if the committee finalises and gives its report, the government will have to depend on the BJP to pass some of the Bills in Parliament. To pass the Goods and Services Tax legislation — a constitutional amendment Bill — the government needs a two-third majority in both Houses.
Wednesday, May 4, 2011
E-insurance policies
03-May-2011
Source : Magicgyan Team
On 29th April IRDA had issued guidelines to form an insurance repository on the lines of National Securities Depository (NSDL) and Central Securities Depository (CSDL). The repository will be licensed by Irda and will be connected to all insurance companies.
This was done with an objective to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy.
How will it benefit the customers?
Source : Magicgyan Team
On 29th April IRDA had issued guidelines to form an insurance repository on the lines of National Securities Depository (NSDL) and Central Securities Depository (CSDL). The repository will be licensed by Irda and will be connected to all insurance companies.
This was done with an objective to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy.
How will it benefit the customers?
- Customers need not worry about losing the policies.
- All individual life insurance polices, health and pension policies and group policies issued by insurance companies can be held in the demat format.
- No extra costs or charges involved.
- Reduced transaction costs
- Physical printing and dispatch of policies can be done away with.
- No chance of policies getting lost in transit.
IRDA issues guidelines for e-insurance policies
30-Apr-2011
Source : PTI
In order to reduce transaction costs and ensure swift modifications in insurance policies, the sectoral regulator Irda yesterday unveiled guidelines for issuing them electronically.
It also laid down the guidelines for repositories, which compile and store data about policyholders on behalf of insurance companies.
"The objective of creating an insurance repository is to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy," Insurance Regulatory and Development Authority (Irda) said.
Now, insurance companies can sell all the policies, be it life, pension and non-life, in the electronic form.
Irda said that making available e-insurance policies would bring about efficiency, transparency and cost reduction in issuing and maintaining them.
The guidelines state that an insurer issuing ’e-insurance policies,’ shall have to take services of a registered repository.
"All such insurance policies in electronic form shall be treated as valid insurance contracts," Irda said.
A certified insurance repository has to have a networth of at least Rs 25 crore, without any foreign investment, and wherein no insurance company can hold over 10 per cent or hold any managerial position.
"The insurance repository before commencing the operations shall put in place measures to safeguard the privacy of the data maintained and adequate systems to prevent manipulation of records and transactions," Irda said.
Further, the guidelines said that an insurer can enter into an agreement with one or more insurance repositories for maintaining the electronic insurance policies.
Source : PTI
In order to reduce transaction costs and ensure swift modifications in insurance policies, the sectoral regulator Irda yesterday unveiled guidelines for issuing them electronically.
It also laid down the guidelines for repositories, which compile and store data about policyholders on behalf of insurance companies.
"The objective of creating an insurance repository is to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy," Insurance Regulatory and Development Authority (Irda) said.
Now, insurance companies can sell all the policies, be it life, pension and non-life, in the electronic form.
Irda said that making available e-insurance policies would bring about efficiency, transparency and cost reduction in issuing and maintaining them.
The guidelines state that an insurer issuing ’e-insurance policies,’ shall have to take services of a registered repository.
"All such insurance policies in electronic form shall be treated as valid insurance contracts," Irda said.
A certified insurance repository has to have a networth of at least Rs 25 crore, without any foreign investment, and wherein no insurance company can hold over 10 per cent or hold any managerial position.
"The insurance repository before commencing the operations shall put in place measures to safeguard the privacy of the data maintained and adequate systems to prevent manipulation of records and transactions," Irda said.
Further, the guidelines said that an insurer can enter into an agreement with one or more insurance repositories for maintaining the electronic insurance policies.
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