09-Feb-2012
Source : Business Line
‘The IRDA has faced a lot of criticism from insurance companies on the changes in regulations governing unit-linked pension products. Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority, offers a ringing defence of why there were changes.
While conceding that the circular on those provisions concerning guarantees could have been more ‘happily worded’, he was scathing in his comments on the ‘market’ practices of insurance companies.
He says what the insurance companies claim to sell as pension products are not pensions at all. He says, these companies shift the responsibility to LIC when it comes to commencing the payment part, slyly directing the consumer to LIC for annuities.
Look at that closely - it is a damning indictment of the private life insurance industry and its practices.
Clearly, there is a lot that the insurance industry needs to do to regain trust. Mr Hari Narayan expressed confidence that the industry would fall in line. Somehow, the tone with which he said that gave one the impression that the industry will do just that.
Excerpts:
There is criticism about your guidelines on pension products. There have been frequent revisions. Also, the requirement that there should be a guarantee even for surrendered products, experts say, will throw pricing out of the window. What is your response?
They may have a point there. What we were trying to say is this: If you are selling any product, we want you to say upfront that this is what you will get if you surrender the product, say, in the first year, the second year, or the third year, and so on. You can’t say, I’ll figure it out at that time, or leave it vague. You better specify what you are going to do when the guy signs up the contract.
The circular was not happily worded. The intention was that whatever was the surrender value that you may impose, that should be clear.
The function of surrender involves two things. One, there should be a disincentive to surrender. At the same time, it cannot be a situation where the insurance company makes a hell of a lot of money through surrender income. Then they will encourage products which they know will be surrendered. It can’t be a ‘surrender income’ based industry. Then you are cheating the consumer.
There is a fine line. At the same time, you can’t be incentivising the customer to surrender. So, how exactly I am going to word that balance is the issue. Yes, there was a problem with the wording.
Some companies have stopped selling pension products because of the change in regulations…
That was not the main issue. That’s only an excuse. They stopped because I made one change in the regulation.
What was that?
Wait. Tell me what do you understand by a pension?
Something that is going to provide me an income at a later stage in life. Why do you ask?
That’s what you think. These guys are selling something which they call a pension product - but which doesn’t promise anything like that.
In a pension product, in the first phase, you pay me money. Then you stop, I start paying you money. There is the inflow and, after sometime, there is the outflow. The point when it switches is called the vesting date.
Now, what these insurance companies do is this — when the vesting date comes, they turnaround and say, “we’ll give you only 3 per cent return. You go to LIC because they are giving you a 6-7 per cent return!”
So, as long as the money was coming in, you are happy to call it a pension product. The minute the money starts going out, you create a system whereby the money goes to LIC. So today, almost 99 per cent of all pensions are with LIC. Look at it from the country’s perspective. Can we afford such a high concentration of risk on LIC? Is it wise? Therefore, I said you cannot do this.
If you are selling a product that you call pension, then you jolly well provide the pension at the appropriate time. You can’t hive off your responsibility. You can’t say, “Sorry. Go to LIC.”
I am not saying how much you should pay — because that depends on interest rates and other factors. But you have the responsibility to do it. Otherwise don’t sell such products. Or don’t call it a pension product. Call it by some other name and file your product. I’ll have a look at it.
The only player who is now selling pension products with a conscious knowledge that it is going to pay pensions is LIC. That is one thing in its favour.
There is another important reason we need to look at this carefully. The country has moved away from ‘pay-as-you-go’ to a defined contribution scheme. We have come up with a new pension scheme. Sooner or later, the NPS will come to fruition. At that point of time, what is the competition in the market? There is only one player offering you an annuity. That is Mr LIC. Where is the choice for the customer? So we have to enable other companies also to get into this, so that the customer has a proper choice.
For that to happen, we need a robust derivatives market in India. The two are linked. When the insurance companies tell you that they are not selling pension products, they are telling you only part of the story. They are really not giving any pension. Nor do they have any intention to.
We should develop healthy practices — not only apparently, but really. Those things will separate the serious players from the not-so-serious players. As long as they understand that this is indeed the intention of the regulator, they will fall in line. They will figure it out.
We need to do our stuff. We have taken some steps in that direction — not fully, or adequately, but we are moving in that direction.
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.
Showing posts with label IRDA. Show all posts
Showing posts with label IRDA. Show all posts
Monday, February 20, 2012
Wednesday, January 18, 2012
Age barrier for health policies may go
12-Jan-2012
Source : Business Standard
Regulator as well as insurers keen on such policies, but pricing may be a trouble.
The Insurance Regulatory and Development Authority (Irda) is looking to do away with the age limit for purchasing insurance policies. Even as the proposal is still at a nascent stage, the regulator is in the process of clearing products targeted at senior citizens.
By allowing policyholders to renew policies at any age, Irda has already taken the first step to make health policies ‘age free’. It had recently made it mandatory for policies to have a “life long” renewal clause. This means once a health insurance policy is issued, insurers would be obliged to continue renewing such policies during the policyholder’s lifetime. However, the entry age barrier remains.
Meanwhile, some general insurance companies have already started applying for an ‘age-free’ policy. For instance, Apollo Munich Insurance applied for such a policy a few months back and is awaiting approval.
L&T Insurance, on the other hand, has an interesting variant which permits lifetime renewal but mandates a co-payer after the age of 70. Even ICICI Lombard is looking at a lifetime renewal policy. “We will be coming out with a plan where policies issued once could be renewed throughout the lifetime of the policyholder. However, the final entry age for our health policies is 65 years,” said a senior official at ICICI Lombard GIC.
Other insurance companies are expected to follow suit or add necessary clauses in their existing portfolio of products. At present, the entry age for most existing health insurance plans is capped at 65 years.
When contacted, Irda chairman J Hari Narayan said there had been discussions about removing the entry age gap. “However, there are no concrete plans as of now,” he said.
But, the regulator is looking into these products carefully. Senior officials at Apollo Munich said though the first application was made a while back, Irda sent it back with queries. They have reapplied for the product and are awaiting a response.
For most insurers, pricing remains the main issue with policies. For a Rs 5-lakh cover for someone aged 75-80 years, the premium should not be more than 15 per cent of the cover. “But, since the loss ratio beyond 80 years is high and most people of that age suffer from some illness, the real challenge is underwriting such a product,” said a senior official at Apollo Munich Health Insurance.
As a result, the pricing for a Rs 5-lakh policy (for persons over 70 years) is expected to be around Rs 60,000-80,000 annually. In addition, there would be certain conditions, subject to the health of the individual. “For example, some existing chronic diseases might be excluded from the cover,” the official added. Another official of a standalone health insurance company said they would be filing a product without any entry age cap with the regulator soon, even as the premiums would be slightly higher.
According to industry estimates, the health insurance business constitutes more than 25 per cent of the general insurance industry. Over the last one year, premiums have risen 25 per cent. During April-September this financial year, the health insurance premium collection rose 21.3 per cent to Rs 6,721.53 crore from Rs 5,540.34 crore.
Source : Business Standard
Regulator as well as insurers keen on such policies, but pricing may be a trouble.
The Insurance Regulatory and Development Authority (Irda) is looking to do away with the age limit for purchasing insurance policies. Even as the proposal is still at a nascent stage, the regulator is in the process of clearing products targeted at senior citizens.
By allowing policyholders to renew policies at any age, Irda has already taken the first step to make health policies ‘age free’. It had recently made it mandatory for policies to have a “life long” renewal clause. This means once a health insurance policy is issued, insurers would be obliged to continue renewing such policies during the policyholder’s lifetime. However, the entry age barrier remains.
Meanwhile, some general insurance companies have already started applying for an ‘age-free’ policy. For instance, Apollo Munich Insurance applied for such a policy a few months back and is awaiting approval.
L&T Insurance, on the other hand, has an interesting variant which permits lifetime renewal but mandates a co-payer after the age of 70. Even ICICI Lombard is looking at a lifetime renewal policy. “We will be coming out with a plan where policies issued once could be renewed throughout the lifetime of the policyholder. However, the final entry age for our health policies is 65 years,” said a senior official at ICICI Lombard GIC.
Other insurance companies are expected to follow suit or add necessary clauses in their existing portfolio of products. At present, the entry age for most existing health insurance plans is capped at 65 years.
When contacted, Irda chairman J Hari Narayan said there had been discussions about removing the entry age gap. “However, there are no concrete plans as of now,” he said.
But, the regulator is looking into these products carefully. Senior officials at Apollo Munich said though the first application was made a while back, Irda sent it back with queries. They have reapplied for the product and are awaiting a response.
For most insurers, pricing remains the main issue with policies. For a Rs 5-lakh cover for someone aged 75-80 years, the premium should not be more than 15 per cent of the cover. “But, since the loss ratio beyond 80 years is high and most people of that age suffer from some illness, the real challenge is underwriting such a product,” said a senior official at Apollo Munich Health Insurance.
As a result, the pricing for a Rs 5-lakh policy (for persons over 70 years) is expected to be around Rs 60,000-80,000 annually. In addition, there would be certain conditions, subject to the health of the individual. “For example, some existing chronic diseases might be excluded from the cover,” the official added. Another official of a standalone health insurance company said they would be filing a product without any entry age cap with the regulator soon, even as the premiums would be slightly higher.
According to industry estimates, the health insurance business constitutes more than 25 per cent of the general insurance industry. Over the last one year, premiums have risen 25 per cent. During April-September this financial year, the health insurance premium collection rose 21.3 per cent to Rs 6,721.53 crore from Rs 5,540.34 crore.
Tuesday, December 20, 2011
IRDA working to put life policies in electronic form
16-Dec-2011
Source : Zee News
Insurance Regulatory Development Authority (IRDA) has been working on the idea to put life insurance policies in electronic format by April 2012, a top official of insurance brokers’ association said on Friday.
"Stock Holding Corporation, Central Depository Services Ltd, NSDL, Karvy Computers and Computer Age Management Services are already working with the insures and the regulator to put in place the procedure," Insurance Brokers Association of India President Sohanlal Kadel said.
He said such system for general insurance policies will also be introduced later where motor policies are likely to be taken up first followed by health.
Insurance in electronics format will allow policies in electronic form and an e-insurance account will reduce hassles for buyers for the need for multiple numbers of proofs like age and address every time a policy is bought.
It will also save insurers money used to print and dispatch policies.
Source : Zee News
Insurance Regulatory Development Authority (IRDA) has been working on the idea to put life insurance policies in electronic format by April 2012, a top official of insurance brokers’ association said on Friday.
"Stock Holding Corporation, Central Depository Services Ltd, NSDL, Karvy Computers and Computer Age Management Services are already working with the insures and the regulator to put in place the procedure," Insurance Brokers Association of India President Sohanlal Kadel said.
He said such system for general insurance policies will also be introduced later where motor policies are likely to be taken up first followed by health.
Insurance in electronics format will allow policies in electronic form and an e-insurance account will reduce hassles for buyers for the need for multiple numbers of proofs like age and address every time a policy is bought.
It will also save insurers money used to print and dispatch policies.
Thursday, December 8, 2011
Can Irda’s new rules prevent mis-selling?
05-Dec-2011
Source : Economic Times
If you belong to the growing tribe of Indians that is buying insurance online, there is some bad news for you. The Insurance Regulatory and Development Authority (Irda) has proposed stiff guidelines for Web aggregators, which help buyers compare policies. Aggregators say the guidelines are so restrictive that they will have to shut shop or change their business models.
The regulator believes that these portals influence buyers’ choices and push products for which they are paid by insurance companies. It has, therefore, proposed caps on the remuneration that these Websites can receive from insurers and banned them from rating or reviewing policies. Web aggregator portals rake in big money from advertisements and by recommending policies.
Policybazaar.com, for instance, earns Rs 1 lakh a month for every policy it recommends. Under the new guidelines, which come into effect from 1 February 2012, it will only receive Rs 1 lakh a year per product it lists on its Website. "The guidelines restrict free flow of information to the consumer and are designed to stamp out insurance comparison on the Web as an option," says Deepak Yohannan, founder of myinsuranceclub.com.
What aggregators find particularly galling is the Rs 10 cap on income per lead given by them to insurance companies. When you visit an insurance aggregator site in search of a policy and give your contact details, the information is passed on to companies for amounts ranging from Rs 90 to Rs 150. Irda says the portals cannot receive more than Rs 10 per lead from insurers. "These guidelines are senseless. Nobody will stay in business," bristles Gurtej Singh, CEO of Delhi-based Big Insurance, which attracts the Internet traffic through ads on Google. His company pays Rs 30-35 per click to Google and then passes on the contact details to insurance companies for Rs 80-90 per lead.
The restrictions don’t end here. If a lead generated by a Web aggregator converts to a sale, the portal will be paid only 25% of the commission otherwise payable to an agent. Aggregators are also not allowed to display ads. To prevent companies from circumventing these rules, Irda has explicitly mentioned that an insurer cannot pay an aggregator in any other way than this. "The new guidelines from Irda are slightly myopic," says Akshay Mehrotra, chief marketing officer of Policybazaar.com. "If aggregators shut shop, it will have an impact on the industry as well," he adds. Mehrotra points out that Policybazaar accounts for almost 70% of all term insurance plans sold online.
Insurers’ stance
While insurance aggregators see these new rules as the beginning of the end, insurance companies are not overly worried by the development. "Aggregators may say that this is not feasible, but the fact remains that Irda has given them an opportunity to earn a flat fee of Rs 1 lakh a year for every product they list," says Suresh Agarwal, executive vice-president and head of strategic initiatives at Kotak Life Insurance. He says it is a reasonable move, which will ensure that the aggregation and selling functions are kept at an arm’s length.
Source : Economic Times
If you belong to the growing tribe of Indians that is buying insurance online, there is some bad news for you. The Insurance Regulatory and Development Authority (Irda) has proposed stiff guidelines for Web aggregators, which help buyers compare policies. Aggregators say the guidelines are so restrictive that they will have to shut shop or change their business models.
The regulator believes that these portals influence buyers’ choices and push products for which they are paid by insurance companies. It has, therefore, proposed caps on the remuneration that these Websites can receive from insurers and banned them from rating or reviewing policies. Web aggregator portals rake in big money from advertisements and by recommending policies.
Policybazaar.com, for instance, earns Rs 1 lakh a month for every policy it recommends. Under the new guidelines, which come into effect from 1 February 2012, it will only receive Rs 1 lakh a year per product it lists on its Website. "The guidelines restrict free flow of information to the consumer and are designed to stamp out insurance comparison on the Web as an option," says Deepak Yohannan, founder of myinsuranceclub.com.
What aggregators find particularly galling is the Rs 10 cap on income per lead given by them to insurance companies. When you visit an insurance aggregator site in search of a policy and give your contact details, the information is passed on to companies for amounts ranging from Rs 90 to Rs 150. Irda says the portals cannot receive more than Rs 10 per lead from insurers. "These guidelines are senseless. Nobody will stay in business," bristles Gurtej Singh, CEO of Delhi-based Big Insurance, which attracts the Internet traffic through ads on Google. His company pays Rs 30-35 per click to Google and then passes on the contact details to insurance companies for Rs 80-90 per lead.
The restrictions don’t end here. If a lead generated by a Web aggregator converts to a sale, the portal will be paid only 25% of the commission otherwise payable to an agent. Aggregators are also not allowed to display ads. To prevent companies from circumventing these rules, Irda has explicitly mentioned that an insurer cannot pay an aggregator in any other way than this. "The new guidelines from Irda are slightly myopic," says Akshay Mehrotra, chief marketing officer of Policybazaar.com. "If aggregators shut shop, it will have an impact on the industry as well," he adds. Mehrotra points out that Policybazaar accounts for almost 70% of all term insurance plans sold online.
Insurers’ stance
While insurance aggregators see these new rules as the beginning of the end, insurance companies are not overly worried by the development. "Aggregators may say that this is not feasible, but the fact remains that Irda has given them an opportunity to earn a flat fee of Rs 1 lakh a year for every product they list," says Suresh Agarwal, executive vice-president and head of strategic initiatives at Kotak Life Insurance. He says it is a reasonable move, which will ensure that the aggregation and selling functions are kept at an arm’s length.
Wednesday, July 27, 2011
IRDA for more companies to participate in pension market
23-Jul-2011
Source : PTI
Insurance regulator IRDA on Friday said that domination of one company in the pension market could be risky and it was important for other insurance companies to participate actively.
"There is a structural problem that will unwind for the regulator and the industry as a whole, and will affect the country. More than 90 per cent of all the pensions are actually in the LIC . There is such a huge concentration in one institution. I think that is a recipe for high risk," IRDA Chairman, J Hari Narayan , said at an insurance summit.
"I think it is too much of a risk to be allowed to continue. Therefore, we must build up mechanisms which allow other companies also to participate actively in the pension market," he added.
Narayan further said that pension funds should offer life annuity and companies that sell pension products should have a guaranteed capital.
"I think at the very minimum that every product that is sold as a pension product should have a capital guarantee so that the principal is safe," he said.
Pension plans are estimated to account for about 30 per cent of the life insurance industry’s business.
Meanwhile, Narayan said that the regulatory body was working towards creating an exchange for re-insurance, but did not divulge when the mechanism would be in place.
"We have tried to create a platform on re-insurance, which is more transparent and more like a re-insurance exchange. Initial work is going on. What we visualise is that all matters on re-insurance will be routed only through the exchange. The advantage will be that transactions are clear and there cannot be any glitches in terms of the fine print of the policy," he said.
Source : PTI
Insurance regulator IRDA on Friday said that domination of one company in the pension market could be risky and it was important for other insurance companies to participate actively.
"There is a structural problem that will unwind for the regulator and the industry as a whole, and will affect the country. More than 90 per cent of all the pensions are actually in the LIC . There is such a huge concentration in one institution. I think that is a recipe for high risk," IRDA Chairman, J Hari Narayan , said at an insurance summit.
"I think it is too much of a risk to be allowed to continue. Therefore, we must build up mechanisms which allow other companies also to participate actively in the pension market," he added.
Narayan further said that pension funds should offer life annuity and companies that sell pension products should have a guaranteed capital.
"I think at the very minimum that every product that is sold as a pension product should have a capital guarantee so that the principal is safe," he said.
Pension plans are estimated to account for about 30 per cent of the life insurance industry’s business.
Meanwhile, Narayan said that the regulatory body was working towards creating an exchange for re-insurance, but did not divulge when the mechanism would be in place.
"We have tried to create a platform on re-insurance, which is more transparent and more like a re-insurance exchange. Initial work is going on. What we visualise is that all matters on re-insurance will be routed only through the exchange. The advantage will be that transactions are clear and there cannot be any glitches in terms of the fine print of the policy," he said.
IRDA mulls making listing of life insurance companies mandatory
24-Jul-2011
Source : The Economic Times
Insurance regulator Irda on Friday said it is mulling over making it mandatory for insurance companies to go public, even though the final IPO norms are still awaited and most players are not keen to hit the market.
"The (Insurance) Act doesn’t stipulate companies to go public, but the regulator might," Insurance Regulatory and Development Authority (Irda) J Hari Narayan told reporters on the sidelines of an industry summit here.
He said the industry is competing with other sectors for capital and the IPO would help them to raise some. "The capital has to grow. We need capital," Narayan said.
He added that the final IPO guidelines for the life insurance industry will be ready by the end of the month.
However, none of the existing laws, be they the Companies Act or the Sebi or Irda Acts, make it mandatory for any company in any sector to get listed. If the Irda wants to have its way, then all these Acts mentioned above will have to be amended, besides the LIC Act.
LIC, despite being the nation’s largest financial entity, is fully owned by the government and is not a company under the Companies Act but is governed by the LIC Act.
Interestingly, among the 22 private life players only a few like HDFC Standard Life and Reliance Life, are keen to tap the primary markets to mop up funds. Most of the players says that they are not looking to raise capital.
Last month, Irda had released a set of draft guidelines for insurance companies to raise funds through public offers.
As per the draft norms, only those with 10 years of operations and strong financials would be allowed to access the capital markets.
Insurance firms planning public offers have to seek ’formal approval’ from Irda and then approach the Sebi for final approval, the draft norms had said. As part of the eligibility criteria, the insurers should have maintained the prescribed regulatory solvency margin during the preceding six quarters, it said.
Source : The Economic Times
Insurance regulator Irda on Friday said it is mulling over making it mandatory for insurance companies to go public, even though the final IPO norms are still awaited and most players are not keen to hit the market.
"The (Insurance) Act doesn’t stipulate companies to go public, but the regulator might," Insurance Regulatory and Development Authority (Irda) J Hari Narayan told reporters on the sidelines of an industry summit here.
He said the industry is competing with other sectors for capital and the IPO would help them to raise some. "The capital has to grow. We need capital," Narayan said.
He added that the final IPO guidelines for the life insurance industry will be ready by the end of the month.
However, none of the existing laws, be they the Companies Act or the Sebi or Irda Acts, make it mandatory for any company in any sector to get listed. If the Irda wants to have its way, then all these Acts mentioned above will have to be amended, besides the LIC Act.
LIC, despite being the nation’s largest financial entity, is fully owned by the government and is not a company under the Companies Act but is governed by the LIC Act.
Interestingly, among the 22 private life players only a few like HDFC Standard Life and Reliance Life, are keen to tap the primary markets to mop up funds. Most of the players says that they are not looking to raise capital.
Last month, Irda had released a set of draft guidelines for insurance companies to raise funds through public offers.
As per the draft norms, only those with 10 years of operations and strong financials would be allowed to access the capital markets.
Insurance firms planning public offers have to seek ’formal approval’ from Irda and then approach the Sebi for final approval, the draft norms had said. As part of the eligibility criteria, the insurers should have maintained the prescribed regulatory solvency margin during the preceding six quarters, it said.
Friday, July 15, 2011
Everything about IGMS
14-Jul-2011
Source : Magicgyan Team
What is IGMS?IRDA has launched a website, igms.irda.gov.in for Integrated Grievance Management System (IGMS) earlier this month. Customers can register their complaints as well as check its status later. IGMS is linked to IRDA grievance call centre. Customers can also avail of further assistance on toll-free number 155255.
How does it work?
If the customer has a grievance he needs to approach the insurance company’s grievance cell first and lodge a complaint. The contact details of insurance company’s grievance cell is mostly available in the policy document as well as the insurance company’s website. Approaching IGMS is the next step
Registration process to be followed by customers
For registration personal details such as name, date of birth, gender, contact number and address as well as PAN/ voter ID number/ passport number are required.
After registration customer has choose the relevant branch code from the list provided on the website and provide your policy details. Customers also need to select the appropriate options for type of policy, type of complaint and description of the complaint.
An IRDA token number and a reference number will be generated at the time of registration of the complaint. Based on the complaint registration date, the system will calculate the age of each complaint and show the IRDA token number and a column for turnaround time (TAT) tolerance that displays the tolerance of a particular complaint against the number of days it stays pending. Based on the complaint registration date and TAT, the screen also shows the expected disposal date.
Source : Magicgyan Team
What is IGMS?IRDA has launched a website, igms.irda.gov.in for Integrated Grievance Management System (IGMS) earlier this month. Customers can register their complaints as well as check its status later. IGMS is linked to IRDA grievance call centre. Customers can also avail of further assistance on toll-free number 155255.
How does it work?
If the customer has a grievance he needs to approach the insurance company’s grievance cell first and lodge a complaint. The contact details of insurance company’s grievance cell is mostly available in the policy document as well as the insurance company’s website. Approaching IGMS is the next step
Registration process to be followed by customers
For registration personal details such as name, date of birth, gender, contact number and address as well as PAN/ voter ID number/ passport number are required.
After registration customer has choose the relevant branch code from the list provided on the website and provide your policy details. Customers also need to select the appropriate options for type of policy, type of complaint and description of the complaint.
An IRDA token number and a reference number will be generated at the time of registration of the complaint. Based on the complaint registration date, the system will calculate the age of each complaint and show the IRDA token number and a column for turnaround time (TAT) tolerance that displays the tolerance of a particular complaint against the number of days it stays pending. Based on the complaint registration date and TAT, the screen also shows the expected disposal date.
Tuesday, July 12, 2011
IRDA slaps Rs 70 lakh fine on SBI Life
09-Jul-2011
Source : Economic Times
Insurance regulator Irda on Friday imposed a fine of Rs 70 lakh on SBI Life Insurance for paying excess commission to the agents in violation of the group insurance guidelines.
"Considering the gross and continued nature of the violations, the Authority has come to the conclusion that it is just and proper to impose a penalty of Rs 5 lakh each for such payments made in 14 instances to Corporate Agents and Master Policy Holders totalling Rs 70 lakh," Irda said in an order.
The Insurance regulatory and development Authority (Irda) said that as per the guidelines, SBI Life was required to pay group administration expenses to Master Policyholders.
Under the guidelines, insurers can pay commission only to agents or corporate agents within the limits prescribed by the Authority.
SBI Life, Irda added, has paid commission to 14 master policyholders in violation of the guidelines.
"The insurer has failed to adhere to the guideline every time such payment is made," added the order, issued by Irda Chairman J Hari Narayan.
SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif. SBI owns 74 per cent of the total capital and BNP the remaining 26 per cent.
Source : Economic Times
Insurance regulator Irda on Friday imposed a fine of Rs 70 lakh on SBI Life Insurance for paying excess commission to the agents in violation of the group insurance guidelines.
"Considering the gross and continued nature of the violations, the Authority has come to the conclusion that it is just and proper to impose a penalty of Rs 5 lakh each for such payments made in 14 instances to Corporate Agents and Master Policy Holders totalling Rs 70 lakh," Irda said in an order.
The Insurance regulatory and development Authority (Irda) said that as per the guidelines, SBI Life was required to pay group administration expenses to Master Policyholders.
Under the guidelines, insurers can pay commission only to agents or corporate agents within the limits prescribed by the Authority.
SBI Life, Irda added, has paid commission to 14 master policyholders in violation of the guidelines.
"The insurer has failed to adhere to the guideline every time such payment is made," added the order, issued by Irda Chairman J Hari Narayan.
SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif. SBI owns 74 per cent of the total capital and BNP the remaining 26 per cent.
Tuesday, June 28, 2011
IRDA Postpones Introduction Of Health Insurance Portability To Oct 1
25-Jun-2011
Source : News Tonight
IRDA has delayed execution of portability of health insurance plans crosswise non-life insurers to October 1.
Previously, insurance watchdog had declared that it would implement health insurance portability that permits a client to shift from one insurance company to the other while keeping on the policy, from July 1.
IRDA has embarked upon offering up a web-based trait for the insurance companies to feed in all appropriate details on health insurance plans issued by them to people, which will be accessed by the novel company to which a customer wants to port his insurance plan.
Such a system will permit the novel insurance company to get efficiently information on record of health insurance of the client wishing to port.
Such a trait is required to facilitate the smooth running of the system.
In a release, IRDA stated, "The web-enabled facility is being established by IRDA and the Authority will implement portability of health insurance policies across non-life insurers in the country not later than 1st October 2011."
IRDA stated that the modes of portability to be effective and customer friendliness have been discuss with the non life insurance companies in India.
Source : News Tonight
IRDA has delayed execution of portability of health insurance plans crosswise non-life insurers to October 1.
Previously, insurance watchdog had declared that it would implement health insurance portability that permits a client to shift from one insurance company to the other while keeping on the policy, from July 1.
IRDA has embarked upon offering up a web-based trait for the insurance companies to feed in all appropriate details on health insurance plans issued by them to people, which will be accessed by the novel company to which a customer wants to port his insurance plan.
Such a system will permit the novel insurance company to get efficiently information on record of health insurance of the client wishing to port.
Such a trait is required to facilitate the smooth running of the system.
In a release, IRDA stated, "The web-enabled facility is being established by IRDA and the Authority will implement portability of health insurance policies across non-life insurers in the country not later than 1st October 2011."
IRDA stated that the modes of portability to be effective and customer friendliness have been discuss with the non life insurance companies in India.
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.
Friday, March 11, 2011
Insurers may get to trade in equity futures and options
09-Mar-2011
Source : The Economic Times
Insurance Regulatory and Development Authority, or Irda, plans to permit insurers to trade in equity futures and options contracts , which will help the companies protect returns from equity-linked products against sharp stock market declines.
"The rules will be shaped to allow insurers to use equity derivatives for hedging risks only and not for speculating," a senior Irda official told ET on condition of anonymity. The proposal, currently being vetted, will be evaluated by Irda’s internal committee on investments soon, the official said. Initially, only unit-linked insurance products, or Ulips, which form over 60% of the local insurance industry’s total assets under management of 14.7 lakh crore, will be allowed to trade in equity futures and options, he said. The entire corpus of Ulips can be invested in stocks depending on the mandate.
"Since we manage a large portfolio, equity hedging will help reduce the risk when there is a downside," said Sashi Krishnan, chief investment officer, Bajaj Allianz Life Insurance .
To start with, Irda may cap trading in futures and options by insurance companies at 5% of their assets, said a top official at a state bank-owned insurance company, who did not want to be named. The regulator would raise the limit and give insurers more flexibility to trade once companies are familiar with equity derivative instruments, the official said. Insurers are allowed to use interest rate futures to hedge risks.
Mr Krishnan said several issues, including those related to accounting, need to be addressed before allowing insurers to trade in equity derivatives.
Insurance industry officials expect Irda to follow a roadmap similar to that set out by the Securities and Exchange Board of India, or Sebi, for mutual funds to trade in equity futures and options. In 2002, the securities market regulator permitted mutual funds to use derivatives only to hedge. Three years later, Sebi allowed participation by mutual funds in derivatives on par with foreign investors. The regulator, however, barred mutual funds from selling options last year. Mutual funds have assets worth 6 lakh crore under management.
The move to allow insurance companies to trade in futures and options will boost trading volumes in the equity derivatives market, but only gradually.
"If insurers are allowed to use derivatives, it would only be for prospective schemes. So, insurers would start contributing to the volumes only over a period of time," said Rajesh Baheti, managing director of Mumbai-based Crosseas Capital.
Average daily turnover on the National Stock Exchange’s derivatives segment is roughly 1.13 lakh crore in 2010-11, as against 72,000 crore in 2009-10.
Leading brokers, whose derivatives business have been impacted after Sebi barred mutual funds from selling options, have been nudging insurance companies to push Irda to allow them to participate in the equity derivatives market.
Source : The Economic Times
Insurance Regulatory and Development Authority, or Irda, plans to permit insurers to trade in equity futures and options contracts , which will help the companies protect returns from equity-linked products against sharp stock market declines.
"The rules will be shaped to allow insurers to use equity derivatives for hedging risks only and not for speculating," a senior Irda official told ET on condition of anonymity. The proposal, currently being vetted, will be evaluated by Irda’s internal committee on investments soon, the official said. Initially, only unit-linked insurance products, or Ulips, which form over 60% of the local insurance industry’s total assets under management of 14.7 lakh crore, will be allowed to trade in equity futures and options, he said. The entire corpus of Ulips can be invested in stocks depending on the mandate.
"Since we manage a large portfolio, equity hedging will help reduce the risk when there is a downside," said Sashi Krishnan, chief investment officer, Bajaj Allianz Life Insurance .
To start with, Irda may cap trading in futures and options by insurance companies at 5% of their assets, said a top official at a state bank-owned insurance company, who did not want to be named. The regulator would raise the limit and give insurers more flexibility to trade once companies are familiar with equity derivative instruments, the official said. Insurers are allowed to use interest rate futures to hedge risks.
Mr Krishnan said several issues, including those related to accounting, need to be addressed before allowing insurers to trade in equity derivatives.
Insurance industry officials expect Irda to follow a roadmap similar to that set out by the Securities and Exchange Board of India, or Sebi, for mutual funds to trade in equity futures and options. In 2002, the securities market regulator permitted mutual funds to use derivatives only to hedge. Three years later, Sebi allowed participation by mutual funds in derivatives on par with foreign investors. The regulator, however, barred mutual funds from selling options last year. Mutual funds have assets worth 6 lakh crore under management.
The move to allow insurance companies to trade in futures and options will boost trading volumes in the equity derivatives market, but only gradually.
"If insurers are allowed to use derivatives, it would only be for prospective schemes. So, insurers would start contributing to the volumes only over a period of time," said Rajesh Baheti, managing director of Mumbai-based Crosseas Capital.
Average daily turnover on the National Stock Exchange’s derivatives segment is roughly 1.13 lakh crore in 2010-11, as against 72,000 crore in 2009-10.
Leading brokers, whose derivatives business have been impacted after Sebi barred mutual funds from selling options, have been nudging insurance companies to push Irda to allow them to participate in the equity derivatives market.
Wednesday, February 23, 2011
Irda wants life insurers to face 10% stake sale cap
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.
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.
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.
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.
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
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.
Friday, January 14, 2011
Insurance regulator to meet, brief life insurers on flaws!
| Source : Sify Finance |  |
| The Indian insurance regulator is planning to start the new year with a path-breaking initiative of calling promoters of private life insurers and having a frank discussion with them on the issues facing their companies. Speaking to IANS on the condition of anonymity, a senior Insurance Regulatory and Development Authority (IRDA) official said: "We are planning to meet the promoters of private life insurers and apprise them about the status and issues faced by their companies. We will also set a deadline for the promoters to take corrective action wherever needed." Prior to such meetings, the IRDA would do a detailed study about the companies individually, broadly under three areas - accounting, actuarial and market conduct - which would cover the entire gamut of operations of a life insurer. Attempts to reach IRDA Chairman J. Hari Narayan were not successful. Officials of life insurance companies told IANS that overseas insurance regulators meet the promoters or CEOs every year and take stock of their operations and set deadlines to correct deviations. Shape-up-or-ship-out warnings were given to the CEOs or shareholders by overseas regulators. They said the Life Insurance Council, supposed to be a self-regulatory body, is largely a lobby forum and has not performed its primary role effectively which, in turn, resulted in the IRDA overhauling the regulations governing the unit-linked insurance policy (ULIP) last year. Welcoming the IRDA’s initiative, secretary general of the Life Insurance Council S.B. Mathur told IANS: "It is a welcome move. There can be one-to-one discussions between the regulators and the promoters of life insurance companies. It is a good practice that the regulator would set in motion." According to industry officials, there were companies with large capital and expense ratios but without commensurate premium income. Regular meetings between the regulator and promoters would be helpful in setting the sector on the right path. Industry sources told IANS that companies that have declared profits last year have huge accumulated losses which nobody knows when they would be able to wipe out. | |
Saturday, December 18, 2010
IRDA Annual Report ...
The much awaited IRDA annual report for 2009-2010 has been released on 15th December 2010. The following are the key find-outs from the report:
- The cumulative losses of private insurance companies stood @ 20,143 crores
- LIC has shown an increase of 10.8% in profits
- None of the private players have given dividends to their share-holders yet (only if something is there, they can give!)
- LIC has paid a dividend of a whopping 1,031 crores to Government of INDIA. For your information, Govt has just invested on LIC a 5 crores rupees in 1956 & look @ the dividend it received in just one single year!
- Private companies have shut their offices owing to cost cutting measures - the number of offices stood @ 8768 from 8785 in 2008-2009.
- LIC has opened 220 new offices suggesting a strong growth
- Operating expense ratio of LIC stood @ a mere 6.58%
- Operating expenses of Private insurers stood @ 20.86%
- Private insurers have settled just 84.88% of the claims - 7.60% have been rejected & 7.48% are pending still.
- LIC has settled 96.54% of claims - 1.21% of the claims were only rejected & 1.41% is still pending.
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