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.
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.
Saturday, May 14, 2011
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.
Friday, April 29, 2011
Insuring Brand Value
27-Apr-2011
Source : Business Standard
By Niladri Bhattacharya & Viveat Susan Pinto.
Brand LIC got a 100% recall in a recent nationwide study by a market research agency.
When a leading private insurance company recently commissioned a market research agency to do a survey on India’s most famous brands, the findings didn’t come as a surprise.
There was a cent per cent recall (which means 100 out of 100 Indian consumers know it) for only one Indian brand:LIC. And 93 per cent of those surveyed said if they buy insurance, it has to be from LIC. So much for private sector competition.
Numbers justify this mega presence. LIC still accounts for nearly 70 per cent of the life insurance market and is also the largest domestic institutional investor in the country.
So what makes brand LIC tick? Why is it that the private sector peers have not been able to come anywhere near this public sector behemoth despite spending huge amounts of money on promotions?
A combination of factors, say ad agency heads. Jude Fernandes, executive director, Mudra Group and chief executive officer, Mudra India, says the stature of the organisation is what counts. "When you think LIC, you think insurance. It defines the category in India. And when you come from that position, there is a certain tone and style in which you present the brand,&" he says.
It helps that the insurance giant spends as much as Rs 300 crore annually on ad spends. Geeta Prabhakaran, an officer at LIC associated with brand development, says "we are present everywhere across gender, class and demographies -- be it a village fair or puppet shows, or a cultural evening in a posh Bandra locality. We have no problem in talking about our products anywhere – whether it’s a festival in IIMs or a small town district college&". LIC even shows short movies in rural theatres to create awareness about insurance.
LIC is present through television commercials in 12 different languages and is getting its act together in the digital space as well through promotions in four social networking sites.
Mudra has the honour of coining LIC’s famous baseline - Zindagi Ke Saath bhi, Zindagi Ke Baad bhi, over a decade ago. Fernandes says, "The baseline stands to this day. LIC has felt no need to change it because it epitomises what it is all about - With you during Life. With you after Life.&"
The challenge, says Fernandes, when working on the LIC business is to keep in mind both the urban and rural clientele of the insurance giant. "Its customer cuts across segments, which is why one has to keep in mind both the India and Bharat when devising ads for LIC.&"
The point is endorsed by Nitin Karkare, chief operating officer, DraftFCB Ulka, Mumbai, "The two important factors about LIC is trust and scale. If the trust wasn’t there, the insurer wouldn’t be able to scale up its business. Both go hand in hand, but trust matters the most,&" he says.
"Ultimately it boils down to trust,&" says Vipin Anand, Chief, Corporate Communications, LIC, adding, "We are still servicing some of the polices given by the erstwhile insurers and our rejection ratio is by far the lowest in the industry.&"
According to data provided by the Insurance Regulatory Development Authority (Irda), the number of claims rejected in case of claims for LIC is just above 1 per cent — much lower than its peers.
These are the things which are carefully injected into the process when it comes to marketing the product. "The tone of LIC’s ads is sincere,&" Karkare says.
To make sure that its agencies have understood what it wants, LIC has devised an elaborate procedure for its advertising. It briefs at least two or three of its roster agencies. This includes RK Swamy/BBDO, DraftFCB Ulka, JWT and Mudra. The agencies then have the task of presenting the creatives based on the brief given. The best one is eventually selected.
"This encourages the empanelled agencies to come up with the best creative,&" says Fernandes. "The beneficiary eventually is LIC.
Source : Business Standard
By Niladri Bhattacharya & Viveat Susan Pinto.
Brand LIC got a 100% recall in a recent nationwide study by a market research agency.
When a leading private insurance company recently commissioned a market research agency to do a survey on India’s most famous brands, the findings didn’t come as a surprise.
There was a cent per cent recall (which means 100 out of 100 Indian consumers know it) for only one Indian brand:LIC. And 93 per cent of those surveyed said if they buy insurance, it has to be from LIC. So much for private sector competition.
Numbers justify this mega presence. LIC still accounts for nearly 70 per cent of the life insurance market and is also the largest domestic institutional investor in the country.
So what makes brand LIC tick? Why is it that the private sector peers have not been able to come anywhere near this public sector behemoth despite spending huge amounts of money on promotions?
A combination of factors, say ad agency heads. Jude Fernandes, executive director, Mudra Group and chief executive officer, Mudra India, says the stature of the organisation is what counts. "When you think LIC, you think insurance. It defines the category in India. And when you come from that position, there is a certain tone and style in which you present the brand,&" he says.
It helps that the insurance giant spends as much as Rs 300 crore annually on ad spends. Geeta Prabhakaran, an officer at LIC associated with brand development, says "we are present everywhere across gender, class and demographies -- be it a village fair or puppet shows, or a cultural evening in a posh Bandra locality. We have no problem in talking about our products anywhere – whether it’s a festival in IIMs or a small town district college&". LIC even shows short movies in rural theatres to create awareness about insurance.
LIC is present through television commercials in 12 different languages and is getting its act together in the digital space as well through promotions in four social networking sites.
Mudra has the honour of coining LIC’s famous baseline - Zindagi Ke Saath bhi, Zindagi Ke Baad bhi, over a decade ago. Fernandes says, "The baseline stands to this day. LIC has felt no need to change it because it epitomises what it is all about - With you during Life. With you after Life.&"
The challenge, says Fernandes, when working on the LIC business is to keep in mind both the urban and rural clientele of the insurance giant. "Its customer cuts across segments, which is why one has to keep in mind both the India and Bharat when devising ads for LIC.&"
The point is endorsed by Nitin Karkare, chief operating officer, DraftFCB Ulka, Mumbai, "The two important factors about LIC is trust and scale. If the trust wasn’t there, the insurer wouldn’t be able to scale up its business. Both go hand in hand, but trust matters the most,&" he says.
"Ultimately it boils down to trust,&" says Vipin Anand, Chief, Corporate Communications, LIC, adding, "We are still servicing some of the polices given by the erstwhile insurers and our rejection ratio is by far the lowest in the industry.&"
According to data provided by the Insurance Regulatory Development Authority (Irda), the number of claims rejected in case of claims for LIC is just above 1 per cent — much lower than its peers.
These are the things which are carefully injected into the process when it comes to marketing the product. "The tone of LIC’s ads is sincere,&" Karkare says.
To make sure that its agencies have understood what it wants, LIC has devised an elaborate procedure for its advertising. It briefs at least two or three of its roster agencies. This includes RK Swamy/BBDO, DraftFCB Ulka, JWT and Mudra. The agencies then have the task of presenting the creatives based on the brief given. The best one is eventually selected.
"This encourages the empanelled agencies to come up with the best creative,&" says Fernandes. "The beneficiary eventually is LIC.
Thursday, April 28, 2011
Balanced portfolio helps LIC dominate new business growth
28-Apr-2011
Source : Financial Chronicle
First year premium data, which indicates the growth in insurance sector, clearly signals that the individual policyholders have maintained distance from the sector.
While the industry was growing at 25.47 per cent in FY10, the growth has dropped to 15.13 per cent in FY11. Although the government-run Life Insurance Corporation of India, managed a growth of 21.94 per cent, the private insurers grew at only 2.56 per cent.
The 22 private life insurers has contributed only 31.3 per cent or Rs 39,381.30 crore of the total first year premium of Rs 1,25,826.03 crore compared to Rs 86,444.72 crore by LIC of India, almost 69 per cent.
The premium collected by private insurers at the end of financial year 2008-09 was Rs 34,153.71 crore, approximately 40 per cent of total premium of Rs 87,107.62 crore and by the end of year 2009-10, although premium had increased to Rs 38,399.33 it accounted for 35.14 per cent of total industry premium of Rs 1,09,290.37.
“LIC having balanced portfolio of traditional and Ulip plans was able to increase its market share this year after the change in Ulip norms, however, we hope that private players by introducing right mix of Ulips and traditional plans will get back their due share,” said Vinay Taluja, principal officer, Bajaj Capital.
The new Ulip norms have forced insurers to restructure their product portfolio, which hurt individual regular premium policies. The total collection from individual regular premium policies is Rs 46,781.08 crore this year, showing a fall of 10.13 per cent, as 15 out of 23 insurers saw negative growth. In FY10, the segment was, however, growing at 16.49 per cent with total premium of Rs 52,056 crore.
“At present, the shift is towards traditional and single premium policies, however, the insurers have now factored in the change and are coming out with regular premium products,” said MN Rao, MD and CEO, SBI Life Insurance Company.
“The guideline has made Ulips a very viable option for policyholders and once they understand the product and cost structure the sale will rise,” said Joseph Thomas, head of investment advisory and financial planning at Aditya Birla Money.
Source : Financial Chronicle
First year premium data, which indicates the growth in insurance sector, clearly signals that the individual policyholders have maintained distance from the sector.
While the industry was growing at 25.47 per cent in FY10, the growth has dropped to 15.13 per cent in FY11. Although the government-run Life Insurance Corporation of India, managed a growth of 21.94 per cent, the private insurers grew at only 2.56 per cent.
The 22 private life insurers has contributed only 31.3 per cent or Rs 39,381.30 crore of the total first year premium of Rs 1,25,826.03 crore compared to Rs 86,444.72 crore by LIC of India, almost 69 per cent.
The premium collected by private insurers at the end of financial year 2008-09 was Rs 34,153.71 crore, approximately 40 per cent of total premium of Rs 87,107.62 crore and by the end of year 2009-10, although premium had increased to Rs 38,399.33 it accounted for 35.14 per cent of total industry premium of Rs 1,09,290.37.
“LIC having balanced portfolio of traditional and Ulip plans was able to increase its market share this year after the change in Ulip norms, however, we hope that private players by introducing right mix of Ulips and traditional plans will get back their due share,” said Vinay Taluja, principal officer, Bajaj Capital.
The new Ulip norms have forced insurers to restructure their product portfolio, which hurt individual regular premium policies. The total collection from individual regular premium policies is Rs 46,781.08 crore this year, showing a fall of 10.13 per cent, as 15 out of 23 insurers saw negative growth. In FY10, the segment was, however, growing at 16.49 per cent with total premium of Rs 52,056 crore.
“At present, the shift is towards traditional and single premium policies, however, the insurers have now factored in the change and are coming out with regular premium products,” said MN Rao, MD and CEO, SBI Life Insurance Company.
“The guideline has made Ulips a very viable option for policyholders and once they understand the product and cost structure the sale will rise,” said Joseph Thomas, head of investment advisory and financial planning at Aditya Birla Money.
Subscribe to:
Posts (Atom)