● Private sector insurance companies score over PSUs

Employee expenses comprised 35% of the total operating expenses of the private life insurers, reflecting that while their pay packages are more competitive, they were having leaner organisational structures. More >>>

● Aviva may takeover Prudential

Aviva, UK’s largest insurer has its expansion plans fixed on Prudential, which is UK’s second largest insurer. More ...

● Mahanagar Gas Ltd. to sponsor Group Personal Accident cover

ICICI Lombard General Insurance Company, the leading private sector general insurance company in India will offer Group Personal Accident Insurance cover sponsored by Mahanagar Gas Limited (MGL) to over 2 lakh drivers operating CNG-driven taxi and auto rickshaws within MGL's area of operation. More ...

Japanese insurer, Sompo enters Indian non life insurance industry

After US based Principal Financial Group making a bid in the Indian Insurance sector, it is now the turn of a Japanese insurer, ‘Sompo’ to make its hold in India. ‘Sompo’ is looking at the ventures available to enter the non-life insurance segment. It is considering three local banks for its JV -Allahabad Bank, Indian Overseas Bank (IOB), Karnataka Bank and Dabur group. Industry sources pointed out that Allahabad Bank will hold a stake of 30%. IOB, Karnataka Bank and Dabur will hold stake of 19%, 15% and 10% stake respectively. Sompo will hold 26% stake. Presently, Allahabad Bank has tied up with National Assurance Company for bancassurance and Karnataka bank has tied up with Bajaj Allianz Life Insurance. If this JV materializes, the existing bancassurance tie-ups may have cracks. This insurer will be a third Japanese Company to make its presence in India. The other two being-Tokio Marine and Mitsui Sumitomo.

LIC launches two new plans

The insurance giant, LIC has unveiled two new policies-‘Jeevan Tarang’ and ‘Jeevan Akshay IV’. With these two new policies, the number of products launched in this fiscal by LIC has reached to seven. The insurance mammoth is pacing fast to keep in tandem with the market. Its new policy, ‘Jeevan Tarang’ is a combination of Whole life and Moneyback plan. The policy comes with flexible premium paying term options- 10,15 or 20 years. After the completion of the premium paying term, the policyholder gets survival benefit of 5.5% of the total sum assured. The policy provides risk cover up to 100 years. After its decision to withdraw, Jeevan Akshay III, LIC decided replace it with ‘Jeevan Akshay IV’-an annuity plan. The minimum age of entry is 40-79 years and the minimum purchase price of this policy is Rs 50,000 or such amount, which may secure a minimum annuity of Rs 3,000 per annum. The minimum annuity installment is Rs 250 per-month, Rs 750 per quarter, Rs 1,500 per half-year and Rs 3,000 per year.

Appellate Tribunal fails to gain favour

The insurance regulator, Insurance Regulatory and Development Authority (IRDA) has not shown much interest to set up an Insurance Appellate Tribunals, which would have taken care of the all the disputes and penalties arising from the breach of contract by the insurers. The Law Commission had recommended setting up of an Appellate Tribunal. IRDA is also not very keen in transferring the Tariff Advisory Committee (TAC) to the General Insurance Council as suggested by the KP Narasimhan (KPN) Committee. Even if IRDA favours setting up of Appellate Tribunals, it would mean to have one in each state and district headquarters. The entire task would then become exhaustive. Instead the insurance regulator may consider KPN Committee’s recommendation of keeping the present redressal system, Insurance Ombudsman and Consumer Courts untouched. However, IRDA is working on the recommendations made by the Law Commission and KPN Committee and will soon submit its reports to the government.

Tata AIG General Insurance launches 'My Business My Choice' suite of Products through its SBS Division

Tata AIG General Insurance Company Limited (Tata AIG General) today announced the launch of a new vertical - The Small Business Solutions (SBS) Division which will offer a range of comprehensive insurance solutions to specifically cater to the insurance requirements of small businesses. The Small Business Solutions Division will concentrate on providing tailor-made solutions to the following Small and Medium Enterprises (SME’s), empowering these entrepreneurs to perform better without having to worry about their insurance needs like Housing Societies, Offices & Commercial Buildings, Hotels & Restaurants and Manufacturing Units,etc. The Small Business Solutions division will offer pre-underwritten products to provide coverage against a large number of fortuitous mishaps like Fire and allied perils, Crime, Public Liability claims , Workmen Compensation claims, Personal Accident and losses in transit (Marine coverage) through a Multiline Package Policy. Most policies being sold currently for housing societies provide coverage for only fire and allied perils, which is a mandatory requirement in some states. The products offered by Tata AIG General’s SBS not only go beyond satisfying the mandatory requirements, but also entitle the policyholder to avail of special rates on various ancillary services like pest control, security, fire detecting and extinguishing appliances and gardening. These products have been launched after extensive market research and identification of the most common associated risks and allow the insured to opt for standard as well as optional covers through a single multiline policy. Tata AIG General has also developed a range of "Smart" product packages and services designed to suit the needs and budgets of all small and medium sized enterprises. Mr. Dalip Verma, Managing Director, Tata AIG General said, “Small businesses contribute to about 70% of the Country’s GDP and have risk levels that are as high as companies in other segments. Hence they need to be given the same kind of protection. We believe these products have tremendous potential as it will provide insurance solutions against many unexpected mishaps to a large segment that contributes to our growing economy. We are committed to educating small businesses regarding the measures they can take in selecting insurance plans and premiums.” The Small Business Solutions Division will market their policies under the ‘My Business, My Choice’ campaign and adopt a comprehensive distribution model to ensure that the benefits of these policies reach out to different small and medium business enterprises across the country in various sectors.

Principal to join insurance bandwagon

The US based Principal Financial Group is the new one to join the insurance bandwagon. The new insurance company on the block will be a joint venture between Principal and UK paints along with Indian group-Punjab National Bank and Vijaya Bank. Together it will form-Principal PNB Life Insurance. The company has applied to the insurance regulator for R1 license. In this venture, Principal will hold a stake of 26%. UK paints will hold 32%, followed by Punjab National Bank and Vijaya Bank, which will have a stake of 30% and 12% respectively. The new company will start up with the initial capital of Rs 110 crore and intends to use bancassurance as a medium to make its hold in the insurance market.

ICICI Prudential launches new plan

Following the new guidelines issued for Unit Linked Insurance Product, insurers are launching new ULIPs, which are in accordance with the new norms released by the IRDA. The first among private insurers is ICICI Prudential which has launched its new single premium product - LifeLink Super. The policy is structured along the new ULIP guidelines that were issued by Insurance Regulatory and Development Authority (IRDA) in December 2005. LifeLink Super will open with a New Fund Series that allocates units to customers at an NAV of Rs 10 per unit on the opening day - March 13, 2006. Explaining the rationale behind the launch of LifeLink Super, Ms Shikha Sharma, Managing Director and CEO, ICICI Prudential Life Insurance said, “The new ULIP guidelines have created a level field for the structure of single premium products, and we are excited to be the first movers in this space. With LifeLink Super, we believe we have a product that can compete with the single premium products available in the market, without diluting the concept of life insurance as a long-term instrument for protection and wealth creation. ” As per the new ULIP guidelines, LifeLink Super has a minimum term of 5 years, giving the policyholder the opportunity to adopt a long-term perspective and earn commensurate returns. There is an option to choose between two levels of sum assured (125% or 500%). The four fund options available under this policy are - equity, balanced, debt, and money markets & cash. The policy can be liquidated after the completion of three years.

Service tax may make Non life insurance costlier

The hike in service tax, which is now 12%, may lead the non life insurance industry to become more expensive. The government’s decision to levy service tax on reinsurance business may not be very good news for the non life insurance industry. The General Insurance Corporation of India caters to the reinsurance needs of the country and also underwrites risks globally. If it intends to continue with underwriting global risks, it will have to digest the service tax on the premiums received. But this would mean loss in the business. Moreover the claims that are received exceed the premium amount. The tax burden cannot be passed on to International reinsurers because it would mean more outgo at their end, moreover they do not rely for earnings on Indian business. So in all respects the likelihood is strong enough for the additional service tax on risks to be passed to the insurance companies. The consequence of the hiked service tax rates will result in increased premia rates. The government for the first time has imposed tax on the reinsurance business. However, the first premium paid is taxable and if service tax is also imposed on the reinsurance business, this would lead to double taxation. So a discussion on this issue can be assumed.

More transparency ensured through stricter norms

The norms are getting stricter and severe, making the insurance industry more transparent. This becomes evident from the fact that any suspect of money laundering will now have to be reported to the insurance regulator. The insurance companies will now have to give an account of insurance premiums paid by the insured which is beyond a certain limit, to the Insurance Regulatory and Development Authority (IRDA). However no such limit will be applicable for the transaction done through the cheques, credit cards or money transfer. Nevertheless, the insurers are free to decide to send the reports to IRDA for any money-laundering suspect. This is so because the banking system follows a set of anti money laundering norms, which takes care of other cash transactions. However the insurance companies will be provided with a ‘suspicious transactions’, which will be similar to the one agreed by the banking system.

GIC aims high

The General Insurance Corporation of India, which caters to the reinsurance needs of the country and underwrites risks, has set its mind to make a mark globally. It aims at positioning itself among the top 20 reinsurers in the world. For this new expansion plan, GIC is eyeing the international reinsurance business. Apart from this, it is also looking at the leeway of emerging as a major reinsurance player in the Afro-Asian economy. It is focusing on ‘marketing’ to use it as means to reach out globally. For the year 2004-’05, GIC’s business grew by 10% and the growth was seen in all the classes of business i.e. fire, marine, miscellaneous and life and now it has set a target of $500m for the new fiscal.

IDBI in tie up with Fortis

After considering a few options, IDBI bank has made up its mind and has finalized with Belgo-Dutch bancassurance group Fortis as its partner for its foray into the life insurance business. The parties will soon sign a Memorandum of Understanding (MoU). This deal will mark the third tie up between an Indian bank and a multinational bancassurance partner. The other two being, the JV between SBI and Cardif S.A., a life insurance company in France, which took the form of SBI Life. The second one is ING Group that tied up with Vysya Bank to result into ING Vysya. Fortis, is the result of a cross border merger between Belgian and a Dutch institution. For its venture, IDBI had short listed Fortis from the other three foreign insurers, Dai-ichi Mutual Life Insurance Company of Japan, Italian insurance group Generali and French insurer Axa. Earlier it was Bank of Baroda (BoB), which was to form a joint venture with IDBI. But the deal didn’t materialise as both the public sector bank entities wanted a stake of 49% in the JV. This is not possible, as the JV would include a foreign partner that would have a stake of 26%. So now BoB has started a fresh look and is considering a South India-based bank for its insurance JV.

Aviva on expansion move

Aviva Life Insurance is in full swing with its expansion spree in Asia. Recently it acquired a majority stake for Rs 117 crore in Sri Lanka's insurer- Eagle Insurance Company, which is the third largest in Sri Lanka. Not only this, Aviva has plans to enter the pension sector too. For now, the company has already outsourced more than 5,000 jobs to India and plans to increase the number by a few thousands. Aviva has over 4,000 people servicing its clients through the three vendors EXL Services, WNS and 24/7 Customer. In a span of two years, the company intends to outsource 7,800 more jobs to India. Besides this, Aviva also outsources its IT operations to two Indian vendors, Tata Consultancy Services and Wipro.

Tata AIG Life Insurance appoints Trevor Bull as Managing Director

Tata AIG Life Insurance Company Limited (Tata AIG Life) has appointed of Mr. Trevor Bull as the Managing Director of the Company. Prior to joining Tata AIG Life, Mr. Bull was the Senior Vice President and General Manager at American International Assurance in Korea. Based in Mumbai, Mr. Bull will provide overall leadership for managing the operations of Tata AIG Life in India and will be responsible for driving all business and market development activities. Mr. Bull has more than 28 years of relevant experience in the life insurance industry. He has served American International Assurance in Korea as Senior Vice President and General Manager since July 2002. Prior to that Mr. Bull was with the American Life Insurance Company (ALICO) in Japan. He will leverage his experience of the Asian markets to provide the right balance of professionalism and dynamism to the competitive market in India.

IRDA reluctant to accept KPN committee views

The insurance watchdog, Insurance Regulatory and Development Authority (IRDA) doesn’t seem to agree with all the suggestions and recommendations made by the K P Narsimhan Committee. The IRDA is reluctant to accept the proposed recommendations since it would result in major changes in the Insurance Act, 1938. This would also mean to have an appellate authority that will take care of the all the disputes and penalties arising from the breach of contract to the insured by the insurers. The recommendations also included introduction of different capital requirements for different category of insurance companies. Besides, the other recommendation made was to reduce the current capital requirement for insurers from Rs 200 crore to Rs 100 crore. These recommendations were followed after the finance minister made a mention in the Budget 2006-’07 of introducing the Comprehensive Bill on insurance. He also added that the KPN Committee was appointed with a view to recommend a comprehensive law on insurance and that the KPN panel had submitted its report to the IRDA.