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Govt to build talent pool for succession in public sector insurance sector
Oct 16, 2018
The government will create a talent pool of officials who will be eligible for fast-track promotions to hold the top positions at public sector general insurance companies, say Finance Ministry officials.
The government run general insurance industry will see a wave of retirement of senior officials in the next two-three years. There are not many who will be eligible to hold the top positions of these companies, reports The Indian Express.
Meanwhile, the post of the chairman and managing director (CMD) at United India Insurance hasn’t been filled as yet as the appointee — Girish Radhakrishnan, chief executive officer, New India Assurance’s London operation — has yet to get regulatory clearance to be relieved from his present assignment. New India Assurance is also operating without a CEO.
Though the merger of three companies United India, National Insurance and Oriental Insurance has been announced, the issue appears to have been placed on the back burner and MoF’s current focus is to strengthen the insurance companies.
Source: Asia Insurance Review
Foreign reinsurers continue to lobby regulator
Oct 15, 2018
Foreign reinsurance companies have made another appeal to the IRDAI to relax the order of preference for reinsurance business in India, before reinsurance contracts are due to be renewed on 1 January.
Despite multiple requests from foreign reinsurers to reconsider the order of preference, IRDAI has maintained that the national reinsurer GIC Re will hold the first right of refusal, reports Moneycontrol.
New regulations for the reinsurance business in India were finalised by the IRDAI at its 28 September 28 meeting that gives GIC Re the first right to accept reinsurance usiness in India.
A senior official at a global reinsurance firm said, “We have made significant investments in the country and would seek an equal opportunity to compete in contracts. Else, we would have not set up a branch presence in India.”
According to the rules, only if GIC Re refuses to write a risk on their books is it passed on to other reinsurers. The second preference will be other Indian reinsurers that have been in business for at least three consecutive years and the third preference will be given to foreign reinsurance branches.
Fourth on the list will be insurance offices in International Financial Services Centre, GIFT City in Gujarat. If they also refuse, the insurer can obtain the best terms for reinsurance from overseas reinsurers with a minimum credit rating of A- from an international financial credit rating agency.
Last year, several foreign reinsurers received branch licences to operate in India, following amendments in 2015 to the insurance law allowing reinsurers to set up branches in India.
Source: Asia Insurance Review
Adequacy of nuclear liability insurance discussed
Oct 12, 2018
Global nuclear industry players and Indian insurance companies met at the two-day India Nuclear Business Platform earlier this week, at which the adequacy of nuclear liability insurance was discussed, particularly with the Indian government planning on expanding nuclear power plants.
The issue is important as India plans to increase nuclear power capacity to 22GW by 2032. At end-March 2018, India had a total installed nuclear capacity of 6,780MW.
At present, nine nuclear power reactors with a capacity of 6.7GW are at various stages of construction, which would take the total installed nuclear power capacity to 13.48GW by 2024-25. In addition, government has already granted approval for another 12 nuclear power reactors with an aggregate capacity of 9GW, reports Business Standard.
The Indian government set up the INR15bn ($202m) India Nuclear Insurance Pool in June 2015, to provide cover corporate liability against any accident at nuclear plants. The cover comes under India’s Civil Liability for Nuclear Damage Act of 2010 (CLND Act). The pool was created as to promote the development of nuclear power in India.
Increasing the pool size leads to higher capital required from GIC Re and the four state-run general insurance companies. Though there are seven other Indian insurance companies with stakes in the pool, such as ICICI Lombard and Tata AIG, their stakes are small. However, the government-run New India Assurance, National Insurance, United India and Oriental Insurance, each contributes INR3bn to the pool.
The Indian side argues that the pool amount is adequate for now, and that the risks are quite unlikely.
It is essentially a matter of perception, said a senior IRDAI official. “India has never reneged on an international commitment, which too the companies should factor in,” said a government official. IRDAI though does not have a a direct role in the discussions which are a commercial issue between the GIC-Re-led consortium and foreign nuclear project developers.
Source: Asia Insurance Review
Govt-owned insurers deliberate modernisation measures
Oct 09, 2018
Public sector general insurance companies now have an annual 'insurance manthan' or retreat to look into the issues plaguing the sector. The event was held on 5-6 October.
Financial services secretary Rajeev Kumar said in a tweet that this initiative is to develop comprehensive reform agenda in six themes to modernise public sector general insurance companies, reports Moneycontrol.
The six-point agenda discussed included: a fully insured society, customer orientation, digital and analytics for future, sustainable and prudent business, reach for everyone and talent management.
Among the state owned insurers, New India Assurance and reinsurer GIC Re are listed on the stock exchange. Others including Oriental Insurance, United India Insurance and National Insurance are unlisted.
Underwriting losses stay high
The underwriting losses of public sector insurers increased by 43.9% to INR155.910bn in the fiscal year ended 31 March 2017 (FY2017), from INR108.35bn in FY2016.
The Finance Ministry has warned state owned general insurers to improve their underwriting performance and not focus solely on investment income.
In categories like group health insurance, the combined ratios have crossed 130%. This is primarily because state owned insurers price products aggressively to retain large clients.
Since 2015, the Finance Ministry has held an annual two-day retreat for banks and financial institutions, to take forward the government’s commitment to reforms in the financial sector.
From 2017, the event was rechristened 'PSB Manthan' where senior public sector bank officials meet in Gurugram to discuss and brainstorm the banking sector’s troubles and focus on improvement in credit growth and reducing non-performing assets.
With its own "manthan", the public sector insurance sector can address more closely a series of problems including high underwriting losses and lack of young talent. On the technology front too, private insurers are ahead of their public sector peers, be it in policy issuance, servicing or claims settlement. A senior executive said that another focus is on bringing the uninsured under the various social sector schemes.
Source: Asia Insurance Review
Reliance Capital establishes health market's 7th standalone insurer
Oct 08, 2018
Reliance Health Insurance has received the final approval of the IRDAI for a licence to operate as a standalone health insurance business.
A wholly owned subsidiary of Reliance Capital, the new company will commence pan-Indian operations this quarter.
The company has on board nearly 3,500 hospitals as partners, and plans to extend the partnership with 5,000 hospitals in 100 cities by March.
In a statement, Mr Anmol Ambani, Executive Director, Reliance Capital said, ''The scope of health insurance in India is massive and, given the current low penetration, is expected to grow multi-fold over the next few years. Setting up a standalone health insurance company with an extremely experienced and capable leadership will allow us to put the right kind of focus this segment requires. We are making significant investments in our technology and digital platforms which will provide a magical experience for our customers.''
Health insurance in India has been amongst the fastest growing insurance sectors growing at 20% annually and is expected to double to over INR1trn ($13.5bn) by 2021.
Mr Ambani said that three factors—changing demographics (a young India with higher income, higher assets, and more financially aware), the rising cost of healthcare, and an increase in lifestyle-related ailments—indicate significant growth potential.
With the establishment of Reliance Health Insurance, the total number of standalone health insurers registered with the IRDAI is now seven.
Source: Asia Insurance Review
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