August « 2012 « Archives of Policy Mantra Blog

Monthly Archives: August 2012

Senior Citizens to Get More Health Cover Options

Posted on August 31, 2012 by Smita

Senior citizens can hope for better health insurance plans as private non-life insurance companies are planning to come up with health insurance plans targeted towards senior citizens. These plans will be for people above 60-65 years and planning to take a new health insurance plan.

Already there are six insurance companies including three public sector insurers offering such products. Six companies that are offering such products are New India Assurance, National Insurance, United India Insurance, Star Health and Allied Insurance, Apollo Munich Health Insurance and Bajaj Allianz General Insurance.

Generally, the maximum entry age for an individual to take health insurance plan is capped at 60 or 65 years. While in senior citizen plan an individual can take a health insurance plan even if he is over 65 years.

Generally, insurance companies sees senior citizen segment as high risk category, where chances of claims are high and quantum of claim amount is also high.

Lot of innovation can be done in senior citizen segment but lack of actuarial data is a major deterrent due to which proper pricing is a challenge.

At present, there is a general exclusion of one-two years for coverage of cataract, benign prostatic hypertrophy, hernia, congenital internal disease, piles, sinus and stones.

However, dental treatment done for cosmetic reasons, injury or disease caused by war, vaccination for cosmetic reason, cost of glasses and contact lenses, hearing aids, congenital external disease or defects or anomalies, sterility, venereal disease, intentional self-injury are permanently excluded.

Apart from high premium and medical conditions, another factor that de-motivates policyholders are the limits imposed on claim amounts. Senior citizen plans generally have co-payment clause, where, in case of claim, a policyholder have to bear 20-50% of the claim amount on there own.

Instead of co-payment clause, insurers should come out with different variants of products where policyholder can choose between co-payment option or whole coverage.

Hurricane Isaac Likely to Cause $ 1.5 Billion Onshore Insured Property Damage: Equecat

Posted on August 31, 2012 by Akanksha

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Catastrophe modeler Eqecat Inc has said that Hurricane Isaac is likely to cause as much as $ 1.5 billion onshore insured property damage.

The storm made landfall in southeastern Louisiana on Tuesday evening as a category 1 hurricane with maximum sustained winds of 80 mph. But hurricane-force winds did not appear to have extended to Downtown New Orleans, although tropical storm-force winds were observed within New Orleans.

Eqecat also said that Mississippi River is expected to remain below flood stage.

Categories: News, World Insurance | Tags: Equec, Hurricane Isaac, Onshore Insured Property Damage

Parliamentary Committee Demanded Extending ESI Scheme to Glass and Bangle Workers

Posted on August 31, 2012 by Akanksha

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The parliamentary standing committee on Labour has suggested extending the Employees State Insurance (ESI) scheme to glass and bangle workers in the unorganized sector. Parliamentary committee has also suggested amending the ESI act to enable poor workers access healthcare.

The committee stated this while examining the welfare of glass and bangle workers of Firozabad in Uttar Pradesh.

Noting the pathetic condition of ESI-run dispensary in Firozabad, the committee has suggested opening a new ESI hospital at the earliest with speciality in treatment of occupational diseases related to working in glass and bangle industries.

As per the estimates of parliamentary committee, there are around 4 lakh workers in Firozabad, of which only 19,493 are covered under ESI scheme.

Since no census of workers engaged in the industry has been conducted so far, parliamentary committee has demanded their survey every ten years so that labour and employment ministry can formulate schemes effectively for the sector.

Committee also demanded setting up a social security board under Unorganised Social Security act, as no fund has been released by the center so far for unorganized sector under various schemes due to absence of the board.

Categories: News | Tags: Employees State Insurance, ESI

Health Cover Hurdle for Elderly

Posted on August 30, 2012 by Smita

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The elderly people will find it difficult to buy health insurance as public sector general insurance companies are bringing down agent’s commission by more than one-third for policies sold to individuals above the age of 55 years. Companies with high claims, too, will find it difficult to get agents to service them as group health insurance policies where claims exceed premium will not be eligible for commission.

The new commission structure is effective from this month, is aimed at paring down the losses of Public Sector General Insurers – National Insurance, New India Assurance, Oriental Insurance and United India Insurance.

As per new guidelines, insurers will pay full 15% commission on policies sold to those below 35 years of age. For individuals between the age of 35 and 55 years the commission payable to agent is 10%. And for individuals above the age of 55 years commission is capped at 5%.

The revised commission structure is aimed at discouraging adverse selection as claims are highest in the 55-plus category and this is the age group that is most proactive in buying health cover.

As per insurers, they make money on policies sold to younger people, the older segment; despite paying more than double the premium than those in 20s has always been a loss making business.

As per General Insurance agent association, due to slashing of the commissions, agents will not be able to provide service to the policyholders and this will result in lapsation of policies. Agents are demanding to defer this decision.

Some past experiences has shown that the directive on commissions adversely impacts the distribution of financial products. Take for instance Securities and Exchange Board of India (SEBI) placed curves on entry loads and Insurance Regulatory and Development Authority (IRDA) capped charges on Unit-Linked Insurance Plan (ULIPs). And consequently, both the mutual fund and life insurance business witnessed a slowdown.

Categories: News | Tags: Health Cover, Insurance Regulatory and Development Authority, IRDA, National Insurance, New India Assurance, Oriental Insurance, SEBI, Securities and Exchange Board of India, ULIP, Unit Linked Insurance Plan, United India Insurance

L&T General Posted Loss of Rs 106 Crores in FY’12

Posted on August 30, 2012 by Akanksha

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Private insurer, L&T General Insurance Company has posted a loss of Rs 106 crores in its first full financial year of operations in 2011-12.

During FY’12 L&T General’s gross written premium stood at Rs 143 crores. It sold 97,766 policies in FY’12. It was the fastest growing insurance company in India in FY’12.

L&T General is a wholly-owned subsidiary of engineering major, Larsen and Toubro. It received regulatory approval to operate as General Insurance Company in July 2010. It commenced its operations in October 2010.

Since it has properly re-deployed and utilized existing resources, it has resulted in significant growth in its motor line. However, lower price realization in this line of business has resulted in higher loss ratios.

L&T General currently operates mainly in areas like fire, marine, motor, public liability, group personal accident and group health insurance.

L&T General has pan-India presence with ten branches offices as hub locations.

As per company, going forward the growth momentum of general insurance industry is expected to continue and L&T General is well-positioned to exploit the growth opportunities.

Categories: News | Tags: L&T General Insurance, Larsen and Turbo

Private Sector Role in Universal Healthcare Inevitable: E&Y

Posted on August 30, 2012 by Akanksha

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According to a report by Ernst & Young (E&Y), to achieve Universal Health Care (UCH) in ten years, the government will have to play a dominant role but private sector participation is inevitable.

As per the estimates of E&Y, country will need to spend 5.5-6% of the Gross Domestic Product (GDP), including out-of-pocket expenditure on UCH. Of this government would need to spend 3.7-4% of GDP on UCH programme if it has to cover entire population by 2022.

Pitching the greater role for private sector, the report cites the example of China, which has covered the 84% of its population under UCH. China spends 5.1% of its GDP on healthcare, of which government accounts for 2.7%.

Dealing with financing aspect of UCH, the report pitches for the public private partnership (PPP) in primary care and infrastructure, medical education and training.

The report has suggested that there should be incentives for PPPs in areas such as mass screening and detection schemes, access to technology such as remote health and telemedicine in the face of lack of physical infrastructure and medical education.

Medical colleges should be opened in states with relatively lower number of seats, such as Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan.

Seeking infrastructure status for healthcare, the report has suggested that, the funds should be collected centrally through general taxation, such as sess and surcharges. Also, user charges should be levied with exemption to specific groups such as Below Poverty Line (BPL) families.

Since health is a state subject, the report suggests pooling of funds at the national level and allocation to states in alignment with their income and risk profiles.

On insurance policies, the reports suggest a competitive bidding process to select agencies that may or may not be state specific.

Categories: News | Tags: Below Poverty Line, BPL, E&Y, Ernst & Young, GDP, Gross Domestic Product, PPP, Public Private Partnership, UHC, Universal Health Care

ECGC to Provide Insurance for Indian Exports to Iran

Posted on August 29, 2012 by Akanksha

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State-run Export Credit Guarantee Corporation of India (ECGC) has begun to provide risk insurance cover to exporters doing business with Iran, though in small way, thereby facilitating exports to sanction-hit nation.

During last three months, ECGC has provided credit cover worth Rs 300 crores to exporters for Iran. But, this is limited to rupee-denominated exports only.

Iran was under restricted category as far as the credit cover from ECGC was concerned. In March 2012, India and Iran worked out a payment mechanism, wherein both the countries agreed that 45% of India’s imports from Iran would now be paid back in rupees through UCO bank after which commerce ministry asked ECGC to provide risk insurance cover for exports to Iran as well.

However, industry experts believe that ECGC’s exposure to Iran is very low considering that UCO bank’s line of credit to Iran has virtually doubled. UCO bank is already extending line of credit worth Rs 100 crores daily or Rs 3,000 crores a month and hence, exposure of just Rs 300 crores in three months is not sufficient.

ECGC’s role in providing credit cover for Iran is crucial in improving the sentiment of Indian exporters who desperately want to tap the huge opportunity created especially after U.S.A. and Europe sanctions on Iran over its nuclear programme. Even Iran has also evinced interest in enhancing imports from India to $25 billion in long term.

The bilateral trade between India and Iran stood at $13.6 billion in FY’11. Out of which exports from India stood at $ 2.7 billion while imports from Iran stood at $10.9 billion.

Raising exports from India to Iran, on the one hand will benefit Iran in utilising rupee and getting cheaper products from India and on the other hand it will give a greater push to Indian exports as even Indian exporters are looking at diversifying markets in the wake of slowdown in Europe and US. Besides, it will help India to narrow down trade deficit that is currently in favour of Iran.

Categories: News | Tags: ECGC, European Sanction, Export Credit Guarantee Corporation of India

Insurance policies in India: What are your options?

Posted on August 29, 2012 by PolicyMantra Team

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India being a country with diversified section of people with different caste and creed the needs of the people is also markedly different. For those who can afford to live a satisfactory lifestyle and above there is a need for insurance covers in various fields. The unpredictable lifestyle and economic instability is also a reason why insurance market is flourishing these days. It is almost a necessity rather than a luxury for people in India.

Though there are many public and private companies offering insurance services in India, the majority assets are under LIC (Life Insurance Corporation of India) which is the largest insurance company till date. Due to the popularity of insurance covers many private companies have emerged and are doing are fairly good business. Some of them are HDFC standard, , ING Vysya, Birla Sunlife, Bajaj Allianz, Aviva, Kotak, ICICI prudential, SBI Life, Metlife, Tata AIG, Bharati AXA, Reliance Life, IDBI Federal, etc. The insurance policies have also been extended to meet other diversified needs along with financial and health insurance.

So if you want to get an insurance policy in India, there are a number of options you can consider:

1. Life insurance: As the name indicates life insurance are meant to cover your life from the potential dangers. It can be both short term and permanent depending upon your needs. With a short term insurance plan you can get your life insured for a certain amount of time. A permanent insurance policy on the other hand will cover you till you pay your premiums regularly. The life insurance policies are also divided on Whole life plan, Endowment, Money back, Term Plan or ULIP depending upon the need of the policy holder.

2. Term insurance: It is a part of life insurance but provides special benefits with regard to financial needs. Term insurance mainly covers the financial needs of your dependants in times of emergencies. It provides complete protections to your family in your absence. In case of the death of the insured person it acts as an income replacement and can be used for paying off loans, rent, home loan EMI, college/school fees.

3. Medical insurance: Medical or health insurance as it is called is gaining popularity due to the increasing rate of diseases, medical inflation, and the rise in the cost of health care needs. The medical insurance provides the policy holder coverage on any kind of health and emergency medical conditions. With a medical insurance you can cover the expenses like operation costs, doctor consultation fees, accident cover, drugs etc. Many of the corporate companies in India provide for group health insurance which insures your health needs along with your family.

4. Travel insurance: Travel insurance is a type of general insurance which covers your travel losses. Whether you are going for a short trip or a long tour, a pleasure holiday or a business tour, getting travel insurance is a must. Travel insurance can cover you against accidents, loss of luggage, hospitalization charges and many more. Other general insurance includes home insurance, property insurance, casualty insurance etc.

5. Accidental Insurance: Such insurance policies are meant to cover the policy holder from the risk of any kind of accidents. Accidents are uncertain and are common in India due to hectic traffic and reckless driving habits. The costs of treatment for accidents are also high in most cases. So the best way to avoid financial hardships is to get an accidental insurance cover.

Author bio:
Jane Fonda is a blogger exquisitely involved in helping people get rid of their debt problems and financial crunches. Her articles are known for useful insights and deep thoughts on amending the financial problems that make life difficult. She specializes in writing informative articles related to credit cards, budgeting, loans and home equity.

Categories: News

Karnataka Govt. to Extend Insurance Cover to Labourers in Unorganized Sector

Posted on August 29, 2012 by Smita

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Karnataka Government will soon extend the benefits of Janashree Bima insurance scheme to labourers working in unorganized sector.

Due to this extension, 45 occupational groups including agricultural labourers, beedi workers, coolies, auto drivers etc will benefit from the scheme. About 9 lakh labourers are likely to benefit from the scheme.

Under Janashree Bima insurance scheme, annual premium is Rs 200 and out of which Rs 100 will be paid by central government from the social security fund and rest will be paid by state government. Life insurance will be provided by Life Insurance Corporation of India (LIC).

Meanwhile, the state government’s Karnataka state private commercial vehicle driver’s accident insurance scheme introduced earlier this year is likely to benefit 5 lakh drivers, including license holders of Auto Rickshaws, Taxis, Maxicabs, Lorries and Private Buses.

Categories: News | Tags: Janashree Bima, Karnataka Government, LIC, Life Insurance Corporation of India, Unorganized Sector

Finance Minister to meet Life Insurers to discuss Ways to revive the Sector

Posted on August 29, 2012 by Smita

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Finance minister, P. Chidambaram, will meet life insurance companies on first September 2012 to discus ways to revive the sector including tax-related issues and the industry’s concerns over frequent regulatory changes by the Insurance Regulatory and Development Authority (IRDA).

After taking charge as finance minister earlier this month, P. Chidambaram has promised string of measures to revive insurance and mutual funds and channelise household savings to them.

In a communication, the finance ministry has sought an industry feedback on issues related to regulator which need to be addressed. These issues will be discussed in the meeting.

This is not the first instance in which government has sought feedback about the regulator from the companies. In January, finance ministry officials met representatives from life insurance companies in the meeting life companies raised concerns over IRDA’s actions. Companies said that IRDA’s actions has hit the sales of Unit-Linked Insurance Plan (ULIP) and made pension market unattractive for companies.

Insurers say that tax-related issues are obstructing the growth of the life insurance sector. As per insurers, since five-year lock-in period is there, the restriction that the sum assured be five to ten times the annual premium is not required.

Life insurers have also asked that pension products sold by life insurers should receive the same treatment as National Pension System (NPS) and should come under Rs 1 lakh savings limit.

The life insurers have also sought changes in some of the provisions of Direct Taxes Code (DTC) bill. DTC has proposed that in order to enjoy tax benefits on premium contribution and maturity proceeds, the sum assured needs to be at least the twenty times the annual premium. At present, tax benefit can be availed if sum assured is ten times the annual premium.

There are also issues related to grandfathering of the existing policies, once the DTC is implemented that the insurance industry is expected to rise in the meeting.

The meeting will also discuss ways to increase investments by insurance companies in infrastructure without increasing risks.

Categories: News | Tags: Direct Taxes Code, DTC, Insurance Regulatory and Development Authority, IRDA, National Pension System, NPS, ULIP, Unit Linked Insurance Plan

Health Insurance Plans