December « 2011 « Archives of Policy Mantra Blog
Monthly Archives: December 2011

Add life insurance to your New Year’s Resolution

Posted on December 31, 2011 by
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Happy New Year Policy MantraWe all make New Year’s resolution every year for all aspects of life. But this year make New Year resolution to be adequately covered by life insurance. It is very essential to be adequately covered because it helps to protect your family financially when you are not there.

 

If you do not have any insurance then you should make resolution this year to buy it to provide protection to your family. If you are already covered then you should assess your current insurance whether you are adequately covered or not. And if you are not adequately covered then increase your coverage.

 

Things that you need to remember:-

Both partners should be covered by life insurance: Life insurance should cover both of you. You might think that house wife does not contribute much financially to the family. But you will need to give it a second thought when you will be forced to pay for child care, clean house on your own and do other things that a house wife does.

 

Cover your debts: If you have taken any fresh home loans for long term then do not forget to cover it in your insurance. As it will take care of your debt if something happens to you.

 

Add living expenses of some extra months: Add living expenses of some months in your insurance for emergencies so that calculation does not go wrong.

 

Your children’s education: If you are concern about your children’s education expenses; then you can add it in your insurance coverage.

 

Live Happily!!!

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IndiaFirst tied-up with Vidharbha Kshetriya Gramin bank

Posted on December 30, 2011 by
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India FirstPrivate insurer India First life insurance has tied up with Vidharbha Kshetriya Gramin bank sponsored by Central Bank of India. With this tie-up company will reach out to rural areas of Maharashtra in better and effective manner through 100 branches of the bank. Vidharbha Kshetriya Gramin bank will offer protection in  five districts i. e. Akola, Amaravati, Wasim, Buldana and Yavatmal through its saving and loan accounts.

 

As per the company the insurable population of the functional area of Maharashtra is about one crore of which company is expecting to cover one lakh accounts in next three years.

 

Company is already present in Maharashtra through 455 branches of Bank of Baroda and Andhra Bank. Company’s 12% business comes from Maharashtra.

 

Vidharbha Kshetriya Gramin bank launched a group term 0plan that provide a life cover of Rs 1 lakh for just Rs 264 per year and group credit life insurance that cover home loan, personal loan and education loan for both existing and new loan customers.

 

IndiaFirst life is a joint venture between Bank of Baroda holding 44% stake, Andhra bank holding 30% stake and U. K. based Legal and General holding 26% stake.

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High termination rate of agents impacting new business of insurers

Posted on December 30, 2011 by
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Insurance AgentsIn current scenario it seems that being an insurance agent has not remained an attractive carrier option. In this business only few can make out of it. Most of the people take it as part time business.

 

As per Insurance Regulatory and Development Authority’s (IRDA) report during FY’11 insurance companies recruited 7.02 lakh agents while they terminated 10.40 lakh agents. This means 3.4 lakh agents were terminated in FY11 which is the terminating rate of 39.42%.

 

As per insurers, being an insurance agent does not suit everyone as it is a difficult job. This coupled with stringent norms on Unit-Linked Insurance Plan (ULIP) which capped the commission of agents made it unattractive for agents. Monthly remuneration of agents fell to Rs 4,000.

 

Termination rate of agents is high in private insurance companies as during fiscal year 2010-11 private insurance companies appointed 3.95 lakh agents while they terminated 6.69 lakh a termination rate of 51%. This means private insurers terminated 2.7 lakh agents. Due to drop in sales of ULIPs private insurers adopting cost cutting measures and one of them is to terminate inactive agents.

 

Life Insurance Corporation of India (LIC) terminated 3.72 lakh agents while it appointed 3.06 lakh agents during FY’11.

 

This high termination of agents may have negative impact on insurance companies. Insurers spend huge capital on the recruitment and training of these agents this all may go in vein. If agent leaves the business then probability of policies getting lapsed which were procured by him has high chances due to lack of servicing.

 

During FY’11 number of individual agents declined by 11.38% at 26.39 lakh against 29.78 lakh in FY’10.

 

IRDA’s report also said that one of the reasons of fall in new business premium income of insurers is perception of potential insurance agents. Potential agents do not take this profession as stable business.

 

At the end of March 2011 number of LIC’S individual agents stood at 13.37 lakh and for private insurers it stood at 13.02 lakh. New business procured by individual agents fell from 79.61% in FY’10 to 78.95% in FY’11.

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IDBI Federal life unveiled Childsurance Dreambuilder insurance plan

Posted on December 30, 2011 by
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IDBI Federal Policy mantraPrivate insurer IDBI Federal life insurance has launched new child Unit-Linked Insurance Plan (ULIP) by the name IDBI Federal Childsurance Dreambuilder insurance plan. It is designed to provide both optimum returns and safety.

 

Plan has five unique features to ensure child’s future and child’s education remains unaffected in any circumstances.

 

Features

  • Joint life cover
  • Lump sum of future premiums (on death)
  • Guaranteed loyalty additions
  • Education support benefit
  • Systematic allocator option

 

Plan also comes with dual tax benefit. Minimum annual premium is Rs 25,000 and maximum annual premium is Rs 100,000. Additional top ups of minimum of Rs 5,000 can be made at any time to accumulate corpus faster.

 

IDBI Federal life insurance is a joint venture between IDBI bank, Federal bank and Europe based Ageas.

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Health insurers increased their efforts to counter fraud claims

Posted on December 30, 2011 by
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insurance FraudIn order to prevent increasing fraudulent claims health insurance companies and their Third Party Administrators (TPA) have increased their efforts to counter frauds. Insurers are becoming pro active and investigating suspicious claims and for this they are even enlisting support of external agencies.

 

In health insurance fraud can originate either from application level due to incomplete disclosure or at claim level, individuals with hospitals feign illness to get claim. And there are also cases where hospitals inflate bills for insured.

 

As per the recent insurance frauds survey conducted by consulting firm Ernst & Young, rising cases of insurance frauds is not only increasing cost for insurers but it also rising premiums for policyholders. In the survey 40% respondents said there is rise in insurance frauds in last year. 80% Respondents of the survey said that insurance frauds may increase costs for insurers by 1% or in some cases it can go above 5%.

 

Measures

First measure that they have taken is to pay surprise visit to hospital during insured’s stay or to their homes to check their case papers. Sometimes insurers also outsource this to agencies that specialize in this investigation. Doctors who will represent insurers will visit hospitals and verify whether or not claim is genuine.

 

Another step that insurers have taken is to black list hospitals. If one Insurer finds that claim is fraudulent then it blacklists that hospital and insurers share this data with each other. Insurers also share this data with General Insurance Council (GIC) which maintains database of it.

 

Insurers are also trying to make sure that such hospital is not empanelled by any other insurers. Logic behind this is that it will impact their business and then it might force them to change their practices.

 

Four public sector general insurers are also pro active to take fraud preventing steps. General Insurers Public Sector Association (GIPSA) also insists on intimation before discharge of insured in case of all reimbursement cases.

 

Last year all public sector general insurers cracked down hospitals which according to them were over charging. Only when hospitals agreed for standard rates for cashless treatments prescribed by them general insurers put them on their Preferred Provider Network (PPN) list.

 

As per insurers fraud counter mechanism will also help genuine claimants as if frauds will be prevented then it will not hinder their claim process.

 

As per insurers to avoid coming under the scanner of health insurance companies policyholders should also make due diligence. Policyholders should also inquire about the bills of the hospitals this will help in them in long run. As if they wish to shift to another health insurance company then policyholder with healthy claim history can get good premium rates from new insurer.

 

Let PolicyMantra helps you in buying best health insurance for you click here

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Expected hike in global reinsurance rates will also increase your premium outgo

Posted on December 29, 2011 by
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Insurance IndiaDue to catastrophes such as earthquakes in Japan and floods in Australia and Thailand global reinsurance companies have faced a big hit on their balance sheets in 2011; hence, they will increase their rates by 15-20% when policies will come to them for renewal from first January 2012.

 

Even though there is no catastrophe in India but still rates for Indian insurance companies will also go up. As after 9/11 attack in U.S.A. terrorism insurance rates increased across the world although attack happened in America.

 

Indian insurance companies will pass on this hike to their customers which mean your premium for insurance cover will perhaps rise.

 

Unlike western markets renewal programmed for Asia Pacific begins from first April.

 

Indian only reinsurer General Insurance corporation of India (GIC) had to suffer hit of Rs 900 crore on account of natural disasters in Japan, New Zealand, Thailand and Australia.

 

Treaty reinsurance is a reinsurance of insured exposures, which are accepted within the terms of the reinsurance contract which is called a treaty. There are two kinds of Treaty reinsurance i. e. proportional and non-proportional. In proportional treaties reinsurers pay for losses in the same proportion of premiums they receives, while in non-proportional treaties reinsurers pays amount greater than the threshold.

 

According to Swiss Re’s report total insured losses have doubled in 2011 as compared to previous year. During 2011 global insurance industry took a hit of $ 108 billion against $48 billion in previous year on account of natural catastrophes and man made disasters.

 

Claims from natural catastrophes reached worth of $ 103 billion for global insurance industry in 2011 against $ 43 billion in 2010.

 

For liabilities below 1,000 crore reinsurers have 70% share while for mega risks reinsurers have 90% of the share.

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Magma Fincorp expecting to get final approval for its general insurance venture by first half of next year

Posted on December 29, 2011 by
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insurance licenseRetail finance company Magma Fincorp is expecting that it will get General insurance license by the first half of next year. As per the company it has already received R1 from Insurance Regulatory and Development Authority (IRDA) and it will get R2 in the current fiscal and final approval in the first half of next year.

 

To enter a general insurance business a company requires clearing at three stages. In the first stage or R1 IRDA assesses the promoters. In the second stage or R2 sectoral regulator investigates the business model of the company. In the third stage or R3 regulator investigates the constitution of the company.

 

Magma Fincorp, its promoters Celica developers and Germany based HDI Gerling has formed a joint venture by the name Magma HDI general insurance company. In this joint venture Magma Fincorp will hold 37% stake, Celica Developers will hold 37% stake and HDI Gerling will hold 26% stake.

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Maharashtra government launched Rajiv Gandhi Jeevandayee Arogya Yojana

Posted on December 29, 2011 by
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Arogya YojanaMaharashtra government has launched cashless health insurance policy by the name Rajiv Gandhi Jeevandayee Arogya Yojana. This scheme will cover 972 surgery procedures and 122 follow up procedures. Policy will come in to effect from first March 2012.

 

Families whose annual income is less than Rs 1 lakh can register them selves under this scheme. People who are covered under this policy can avail free medical facilities upto Rs 1.5 lakh and they can also avail upto Rs 2.5 lakh for kidney transplant surgery.

 

Initially in the first phase policy will be launched in eight districts which will cover 50 lakh families. State government will spend Rs 800 crore annually to pay the premium for the insured families.

 

Policy is being implemented in Public Private Partnership (PPP) mode with National insurance company.

 

State government is working to empanel both private and public sector hospitals for this scheme. There will be help desk in each hospital 24×7 to help card holders to get treatment.

 

There will be Arogya Mitras who will facilitate the direct traffic of patients to health camps. After treatment patients will also get money to get back to their homes.

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Premium income of Life insurance industry surged by 9.85% in FY’11

Posted on December 29, 2011 by
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life insuranceLife insurance industry for Financial year 2010-11 recorded growth of 9.83% in premium income which stood at Rs 2,91,605 crore against Rs 2,65,447 crore in previous Financial year.

 

Of 23 life insurance companies which were operational in FY’11 12 insurers reported profit. Companies that reported profit includes Life Insurance Corporation of India (LIC), ICICI Prudential, TATA AIG, Birla sun Life, Max New York, Bajaj Allianz, SBI Life, Kotak Mahindra, MetLife, Aviva, Sahara India and Sriram.

 

During FY’11 country’s largest public sector life insurer LIC reported net profit of 1,172 crore against Rs 1,062 crore in previous Financial year which is the rise of 10.47%.

 

Largest private sector life insurer ICICI Prudential reported net profit of Rs 808 crore in FY’11. ICICI Prudential reported profit for the second consecutive year after reporting loss for eight years.

 

Birla Sun life, Max New York and TATA AIG reported profit of Rs 305 crore, Rs 194 crore and Rs 52 crore respectively after reporting loss for consecutive nine years.

 

For financial year 2010-11 increase in expenses was less than increase in gross premium collection for life insurers. Commission expense ratio (commission expenses as a percentage of premiums) declined to 6.29% against 6.81% in FY’10. However, operating expenses of life insurers increased to 14.04 % in FY’11 against 11.84% in previous fiscal.

 

Operating expenses towards life insurance business stood at Rs 32,942 crore in FY’11 against Rs 28,888 crore in FY’10.

 

Cumulative losses of life insurance industry as of 31 March 2011 stood at Rs 20,569 crore against Rs 20,143 crore in 2009-10.

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LIC’s claim settlement ratio better than private life insurers

Posted on December 29, 2011 by
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life insuranceLife State owned Life Insurance Corporation of India (LIC) has performed better than its private life insurers in terms of claim settlement ratios. For FY’11 LIC’s claim settlement ratio increased to 97.03% against 96.54% in previous year.

 

Percentage of claim rejected by LIC stood at 0.01%. Ratio of repudiation to total claim declined from 1.21% in FY’10 to 1.00% in FY’11.

 

On the contrary private life insurers rejected more claims during financial year 2010-11; their ratio of repudiation stood at 8.90% as compared to 7.61% in FY’10. However, private life insurers showed improvement in claim settlement ratio in Fiscal year 2010-11 which stood at 86.04% against 84.87% in FY’10.

 

During FY’11 overall Life insurance industry’s claim settlement has increased to 95.58% against 95.24% in FY’10. Industry’s repudiation ratio has also increased in FY’11 which stood at 2.04% as compared to 1.93% in FY’10.

 

In pending claims also LIC performed better than private life insurers. During FY’11 private insurer’s had 5.36% pending claims while LIC had 0.03% pending claims. 75% of LIC’s claims were outstanding for less than three months while private insurer’s 54% claims were pending between three to six months.

 

In FY’11 life insurance companies settled 8.13 lakh claims on individual policies with total payout of Rs 7,595 crore. Number of claim repudiated stood at 17,350 for the total amount of Rs 336 crore. Number of pending claims stood at 16,415 for the amount of Rs 306 crore.

 

However, in managing operational cost private insurers have performed better than LIC. Operating expenses as a percentage of gross premiums increased for LIC from 6.58% in FY’10 to 8.34% in FY’11 while it declined for private life insurers to 18.11% in FY’11 against 20.97% in FY’10.

 

Operating expenses for overall life insurance industry increased to 11.30% in FY’11 against 10.88% in FY’10.

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