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Traditional Medicine Finds Place In Mediclaim

Posted on May 23, 2013 by pappu kumar

In a move that would further bolster the prospects of the Indian traditional medicines which are being increasingly used for critical illnesses including those related to tumors and heart diseases, the Insurance Regulatory and Development Authority (IRDA) has issued a notification for the inclusion of the non-allopathic system in the mediclaim insurance policies.

The alternate medicine system in the country forms an important part in the government’s health flagship programme, National Rural Health Programme (NRHM). Alternative treatments are referred to as Ayush (Ayurveda, Unani, Sidha and homeopathy).

However, as per the notification, insurance coverage will be provided only if non-allopathic treatments are taken in a government hospital or any institute recognized by government and or is accredited by Quality Council of India (QCI), National Accreditation Board on Health (NABH) or any other suitable institutions.

While several health insurance majors such as Apollo Munich, Reliance General Insurance and Bajaj Allianz General are already providing cover for alternative treatment in a limited way, the IRDA’s recent notification is expected to encourage many others to follow suit.

Till now many private insurance companies have been reluctant in covering ayurvedic treatments as parameters of these treatments doesn’t match with the main stream medicines and diseases and they even do not have standard pricing.

Ayush department is now drafting specifications for ayurvedic treatment that can be reimbursed like any other treatment. It is also setting standards for alternative medical hospitals so that it can be covered by private health insurers.

Indian Bank Eyeing Stake In An Insurance Company

Posted on May 23, 2013 by pappu kumar

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Chennai based Indian Bank is considering owning a stake in a life insurance company. It wants to pick up 20-25% stake in an insurance company so that it will have a share in its profits.

Bank is looking at an insurance company with significant presence in areas where the bank has strong presence. Banks has said that three or four banks has approached it and are willing to give it equity free of cost. Indian Bank will float a request for proposal soon.

Free equity is not allowed as per insurance regulations. But an insurance company can offer discounted equity to banks and the discount in the share price has to be treated as advance commission and amortised over a period not extending beyond three years.

Existing insurance regulations allows a bank to sell products of one life insurance Company and one non-life insurance company only. While the final bancassurance guidelines are still awaited from Insurance Regulatory and Development Authority (IRDA), many life insurers have been requesting IRDA to allow banks to have tie-ups with multiple insurers.

Currently, the insurance industry with 24 life insurers is categorised into three groups. The first category includes insurers promoted by banks, for example ICICI Prudential Life, HDFC Life, ING Vysya Life, SBI Life, IndiaFirst Life, Star Union Dai-Chi Life and Canara HSBC OBC Life.

The second category consists of insurers not promoted by banks but have distribution tie-ups with them, for example Life Insurance Corporation of India (LIC), TATA AIG, Birla Sun Life and Bajaj Allianz. In the third category insurers, banks are neither promoters nor distribution partners, for example Aegon Religare, Future Generali, Shriram Life, DLF Pramerica and Bharti Axa.

Several life insurance companies are desperate to rope-in banks as distribution partners and are even ready to pay upfront money. In doing so, an insurer gets ready access to the customer base of the bank through its large branch network and a cost-effective distribution setup.

According to analysts, as per thumb rule, the cost of a retail agency, corporate agency and broking channel is 1.2 to 1.5 times a bancassurance channel, where bank staff sells insurance policies along with normal banking products.

In Singapore, Malaysia, Indonesia and many European countries, the bancassurance channel is most cost-effective. There have been quite similar deals between banks and insurance firms in recent time. PNB bought 30% stake in MetLife insurance. In 2010, Axis bank bought 4% stake in Max Life. According to the arrangement, Axis Bank will distribute Max Life’s insurance policies for ten years with effect from first May 2010.

Providing equity to a bank ensures that it is locked to sell the insurer’s policies over a longer term. Life insurance companies are capital starved and a bank buying into it will not only bring in capital but also push insurance products to its customers. Banks benefit by participating in the insurance growth story.

Finance Minster, P. Chidambaram announced in the budget that the banks would be permitted to act as insurance brokers so that their branches could be used to increase insurance penetration. Being an insurance broker allows a bank to sell policies of multiple insurance companies. However, the remuneration is lower as a broker.

Categories: News | Tags: Indian Bank, Life Insurance Companies, Life Insurers, Non-Life Insurance Company

Oriental Insurance Scraps Covers For 3 Tainted IPL Players

Posted on May 23, 2013 by Akanksha

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Following the Indian Premier League franchise –Rajasthan Royals – terminating the contracts of its three players on spot fixing charges, the franchise’s official insurer Oriental Insurance too has canceled the insurance covers given to the trio.

After taking the nod from the franchise, Oriental Insurance has cancelled the policy of three players. This is because if the players are jailed or something untoward happens to them, there would be claims.

The trio was insured for a personal accident insurance policy, medical insurance policy and baggage insurance.

S Sreesanth has a personal accident cover of Rs 18 crores, a medical insurance policy of $1 million and baggage insurance of Rs 2,00,000. In case of a mishap, the medical insurance policy even allows an auctioned player to air lifted and flown to a foreign country for medical treatment.

The other two players – Ajit Chandila and Ankeet Chavan has a personal accident insurance of one crores, medical insurance of Rs 5 lakh and baggage insurance of Rs 2, 00,000.

The insurance covers had commenced from March 25 and would end on May 31, after the finals.

The three players were arrested last week on charges of spot-fixing in the ongoing IPL matches.

Categories: News | Tags: Indian Premier League, Insurance Policy, IPL, IPL Spot Fixing, Oriental Insurance, Rajasthan Royals, Spot-fixing

Max Life Profit Up 17% In FY’13

Posted on May 23, 2013 by Akanksha

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Private insurer, Max Life Insurance has reported a rise of 17% in profit before tax at Rs 860 crores in FY’13 as against Rs 733 crores in FY’12.

Its gross written premium grew 4% to Rs 6,639 crores in FY’13 as against Rs 6,391 crores in FY’12.

First year premium collection dropped meager 0.4% at Rs 1,899 crores in FY’13.

In view of all round performance in 2012-13, the company declared a total shareholder dividend of Rs 259 crores including an interim dividend of Rs 99 crores.

Categories: News | Tags: Max Life Insurance

IRDA To Share Information With Global Peers On Insurance Sector

Posted on May 22, 2013 by Akanksha

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Strengthening its international co-operation, Insurance Regulatory and Development Authority (IRDA) has joined its hands with some of its global peers for sharing and exchange of sectoral information.

IRDA has become a signatory to the global supervisory cooperation and information exchange agreement under the aegis of International Association of Insurance Supervisors (IAIS).

There are now 37 jurisdictions admitted as signatories to the IAIS Multilateral Memorandum of Understanding (MMoU), representing more than 54% of worldwide premium volumes.

The pact is a global framework for co-operation and information exchange between insurance supervisors. Besides, it sets minimum standards for signatories.

Through membership in the MMoU, jurisdictions are able to exchange relevant information with and provide assistance to other member jurisdictions, thereby promoting the financial stability of cross-border insurance operations for the benefit and protection of consumers.

Joining the MMOU will further strengthen the supervisory role of the IRDA in the home jurisdiction. Other signatories to this pact include Australia, France, Germany, Japan and the United Kingdom. IAIS represents insurance regulators and supervisors spread across more than 200 jurisdictions.

Categories: News | Tags: Insurance Information Exchange, Insurance Regulatory and Development Authority, International Association of Insurance Supervisors, Multilateral Memorandum of Understanding

A Bank Should Have Only One Broking License: IRDA Panel

Posted on May 22, 2013 by Akanksha

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A corporate bank should be allowed to have only one insurance broking license, a panel set up by Insurance Regulatory and Development Authority (IRDA) has said.

The committee, constituted by the IRDA to review the IRDA Broking Regulations 2002, submitted its report a couple of weeks ago.

As of now, banks are allowed to be corporate agent for only one insurer and there has been a demand to allow them to sell products of more than one insurer. The panel’s view assumes significance as a decision is pending with the regulator.

While pointing out that functioning of banks as insurance brokers would help increase insurance reach, it pointed out that there could be conflict of interest when a bank forms a broking firm as they are also promoters of some insurance companies.

The Reserve Bank of India’s (RBI) position on banks as broking firm also needs to be ascertained as it is the primary regulator of banks, the panel suggested. The broking arm of banks should be an independent, account unit to be manned by exclusive staff trained by institutes imparting insurance related education.

The banks should have a board-approved policy in place to address the issues related to conflict of interest and the same should be filed with the authority, it said.

On sub-broking, the committee said it should be allowed for all insurance products and not merely retail personal products. Small banks such as cooperative banks and regional rural banks should be allowed as sub-brokers. There should be cap of Rs 1 lakh premium on policies to be procured by the sub-brokers, it said.

On the whole, the panel was in favour of bancassurance channel. As they are separately regulated by RBI, there may be enhanced efficiency in insurance business and higher accountability to the policyholder as compared to the agency channel, it said.

Banks accounted for 11.25% of total new business premium collected by life insurers during FY’12. The share was 36% for private life insurers and 1.51% for Life Insurance Corporation of India (LIC).

Categories: News | Tags: Insurance Brokers, Insurance Broking License, Insurance Companies, Insurance Regulatory and Development Authority

Reliance Life Eyes 10% Growth In Premium Income This Fiscal

Posted on May 22, 2013 by Akanksha

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Private sector life insurer, Reliance Life expects to maintain a 10% growth in total premium income on the back of growth in regular premium policies and better policy renewals.

By keeping in regular touch with existing policyholders and charting out a growth path for agents, the company aims to achieve double digit business growth during the current fiscal.

Reliance Life reported a Profit Before Tax of Rs 380 crores and mopped up total premium of Rs 4,020 crores for FY’13.

Currently, traditional life insurance products accounts for 80% of its total product portfolio, while Unit-Linked Insurance Plan (ULIP) accounts for the rest.

The company recently launched a ‘career agency’ format, offering a fixed stipend and variable commission payout for its 1.25- lakh agents. The company wants to focus on its strength, which is its agency channel. The company said that it wants to be the alternative to Life Insurance Corporation of India (LIC) in the private sector.

Reliance Life, as a late entrant in the life insurance industry, does not have a bancassurance tie-up (banks acting as corporate agents for distribution of insurance products) with any big bank.

Bancassurance accounts for 30% of the premium income for private insurers. However, for Reliance Life it is miniscule on this account.

As per current Insurance Regulatory and Development Authority (IRDA) regulations, one bank can tie-up with only one insurance company for bancassurance. In the Union budget this year, the Finance Minister announced that banks will be allowed to become insurance brokers which will enable them to sell policies of multiple insurance companies. Life insurance companies with existing tie-ups with banks could potentially lose some percentage of their business once banks become brokers.

Categories: News | Tags: Agency Model, Bancassurance, LIC, Policy Renewals, Reliance Life, ULIPs

General Insurers Report Better Profits For FY’13

Posted on May 21, 2013 by Akanksha

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Dismantling of the third party motor insurance pool and prudent underwriting helped general insurance companies post higher net profits for financial year 2012-13.

State-owned New India Assurance, the country’s largest general insurer, has seen its net profit rise by 370% to Rs 844 crores in FY’13, This was the highest reported by New India Assurance in five years.

New India Assurance had a net profit of Rs 179.31 crores in FY’12. This profitability can be attributed to a strong investment income and operational profit.

Oriental Insurance’s net profit grew by 129% to Rs 533.8 crores in FY’13 compared with Rs 233 crores in FY’12. Although company’s top line grew just 8% to Rs 6,543 crores in FY’13, its profits more than doubled. A claims-free year and prudent underwriting were the main reasons for registering higher profits.

United India Insurance posted 36% rise in its net profit at Rs 527 crores in FY’13 as against Rs 387 crores in FY’12.

Private non-life insurers too were not far behind. ICICI Lombard General Insurance reported a net profit of Rs 306 crores in FY’13 compared with a net loss of Rs 416 crores in FY’12.

Bajaj Allianz General Insurance reported 138% increase in net profit to Rs 295 crores in FY’13 as against Rs 124 crores in FY’12.

However, Reliance General Insurance posted a loss of Rs 93 crores for FY’13 as against a loss of Rs 342 crores in FY’12.\

Insurers say that dismantling of the motor third party insurance pool by the Insurance Regulatory and Development Authority (IRDA) has helped the industry post higher profits. Secondly, most insurers worked on reducing cost which has helped. Otherwise, the premium rates have not been increased except in motor policies by 5-10% during FY’13.

Motor insurance business accounts for 60% of the net premium underwritten by the non-life insurance companies.

Motor third party insurance covers are mandatory as per the law for all vehicles (except for government vehicles). The policy covers the financial liability of a vehicle-owner in case of death or injury to a third person.

With third party premium rates being fixed by the IRDA, general insurance companies have been registering losses in this business and were declining providing third party covers. As a result IRDA formed the third party motor pool in 2007 where the losses in the pool were to be shared by insurance companies on the basis of their total market share.

As a result, even firms that did not have a big motor insurance portfolio had to bear losses on the basis of their overall market share. The erstwhile motor third party pool had a loss ratio of 153% and had affected the finances of insurance companies.

Categories: News | Tags: General Insurance Companies, Motor Insurance Pool, Motor Third Party Insurance, New India Assurance

False Claims, A Big Worry For Health Insurers

Posted on May 21, 2013 by Akanksha

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The high incidence of fraudulent cases is becoming a big concern for the health insurers as it leads to huge losses. About a quarter of the health insurance payout goes towards fraudulent claims.

As per estimates, health insurance portfolio has crossed Rs 50,000 crores mark in FY’13.

Insurers are trying to figure out how to handle the problem as there is no regulation on preventing a policy holder from making a false claim.

Insurers say that the problem has to be addressed in a collective manner. And therefore some insurers have already come together and are attempting to work out solutions in consultation with the General Insurance Council.

Insurers also say that there is an unholy nexus between the hospitals and patients. Insurers have found that bills are inflated by the hospitals if a patient has an insurance cover while some patients take treatment even when it is not necessary. But the industry does not have a mechanism to stop payments for such claims as the paper work is perfectly done.

Categories: News | Tags: False Claims, General Insurance Council, Health Insurance, Health Insurers

IndiaFirst To Foray Into Health, Micro Insurance

Posted on May 21, 2013 by Akanksha

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IndiaFirst Life Insurance Company is foraying into health insurance and micro insurance from the current financial year.

The company is also confident that It will achieve break even in much less than the originally expected eight years. The company started functioning three-and-a-half years ago.

The company is tying up with regional rural banks to sell health insurance and micro insurance. The company already has access to the network of Andhra Bank and Bank of Baroda to sell its products and it is also opening its own offices. The company is concentrating on the retail distribution channel which accounts for 10% of its business. It may grow to 20% this year.

The company is floated by Andhra Bank and Bank of Baroda. The company registered a growth rate of 34% last year. And during current fiscal too company is expecting a growth rate of more than 20% on a larger base.

The company is focusing on IT and it has developed its software in-house to provide better services to the customers.

The company also said that it is in a position to provide an insurance policy to an applicant within half-an-hour. Most of the policies in the range of Rs 5-10 lakhs do not require medical examination. Hence, company can easily give the policy within half-an-hour.

Categories: News | Tags: Health Insurance, IndiaFirst life insurance, Micro Insurance

Health Insurance Plans