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Insurance a must read for studying overseas

July 11, 2017

Indian students are increasingly opting to study abroad. According to EducationUSA, the number of Indian students in the US rose 24.9% in 2015-16 compared to 2014-15. EducationUSA is a US Department of State network of international students advising centres in over 170 countries.

While these numbers are only for the US , they indicate that the number of Indian students going abroad is growing rapidly. “Over 50% of the students from India go to the US. The other major destinations are Germany, UK, Australia and New Zealand,” said Puneet Sahni, head, product development at SBI General Insurance. And all these students have to take medical insurance because all the major universities mandate it. For this, students can either get health insurance or a travel policy that provides medical cover in foreign countries. We take a look at some basics of travel insurance policies specifically aimed at students studying abroad.

Student insurance vs regular insurance
Mukesh Kumar, executive director, HDFC Ergo General Insurance Co. Ltd said that students’ overseas travel insurance plans provide coverage throughout the tenure of the education programme of the student. “Apart from covering accidents and medical treatment, the policy also covers loss of baggage, loss of passport and documents,” he added.

Sahni said compared to a regular travel insurance policy, those directed at students are more like mediclaim covers as they are customised to suit students’ requirements for longer stays abroad. In fact, today there are policies that provide cover for up to 3 years at a go.

More than basic health cover
Travel policies, especially those aimed at students, are more than medical covers. “Students must opt for a policy that goes beyond health related coverage. While certain universities may not prescribe this requirement, it is advisable to opt for a policy that covers other contingencies such as sponsor protection, coverage for study interruption and bail bond,” said Anuj Gulati, chief executive officer, Religare Heath Insurance Co. Ltd.

A regular travel policy covers only one trip and provides cover for, among others, loss of baggage, health emergencies, trip cancellation, delay in flight and loss of passport. However, the covers for students travelling abroad are more comprehensive. Students should ensure that their insurance provides covers for “sponsor protection—to reimburse tuition fee in case of death of sponsor—and bail bond; for false arrest or wrongful detention” in addition to what regular overseas insurance policies provide, said Anand Roy, executive director and chief marketing , Star Health Insurance Co. Ltd.

“Student travel insurance policies these days also cover risks like suicide, treatment of mental or nervous disorders, and treatment for alcohol and drug dependency. Some policies also cover extended treatment in India,” said Mahavir Chopra, director-health, life and strategic initiatives, Coverfox.com. On payment of extra premium, students can opt for additional covers like psychological coverage, treatment for expectant mothers, childcare benefit and cost of screening and examinations, Kumar said.

Mistakes to avoid
Most importantly, the travel insurance policy for students has to be in line with the guidelines of their particular university. “This is important because a student stands a chance to lose the benefit of insurance waiver offered to them by the university in case their policy’s coverage does not meet with the respective university’s guidelines,” Gulati said.

Check that the policy covers out-patient expenses outside the campus too, as some policies limit coverage to in-campus clinics only. Also, check if there are any co-payments or sub-limits applicable on the policy, Gulati added.

Check if your university allows you to buy a policy from outside. “Some universities tie up with local insurers and the students are then mandated to buy those policies,” Sahni said.

The cost of policies bought in India is much cheaper compared to insurance policies bought abroad.

However, “Not understanding the requirements laid down by the educational institute before deciding on policy is one of the common mistake made by students. Apart from this, many students buy policies from the university as well as from a local insurance company, which turn out to be way expensive than the Indian policies with equal or better benefits,” Chopra said.

For instance, Sahni said, a policy with a medical cover upwards of $250,000 in the US could cost you around $700-750 a year, with sub-limits like out-patient, dental and sports-related treatments, while you can buy a similar student travel cover for Rs15,000-20,000 in India. “There have been product improvements that actually aim at matching the coverage that universities demand. More or less, those are covered but there are certain aspects like a very high OPD limit or a very high dental cover limit, which the Indian policies may not be able to cover as these are very expensive services there,” he said.

Source: Livemint.com



Crop insurance sector eyes 25 percent growth this year

May 09, 2017

The crop insurance sector is expected to see 20-25 per cent growth in FY18, as the government’s thrust and increasing awareness levels are leading to the rise in acreage and sum being insured under crop insurance.

According to the observation of agriculture insurance companies, while the premium of Rs 5,700 were collected under crop insurance and 3.09 crore farmers were covered in FY16, the amount of premium collected rose four-fold to Rs 21,500 crore in FY17 and the number of farmers covered rose to 3.90 crore.

“Post Pradhan Mantri Fasal Bima Yojana (PMFBY), the number of farmers availing crop insurance has increased. However only 27 per cent farmers in the country opt for crop insurance. Majority of farmers are still out of crop insurance coverage, which gives us scope for further growth.

The government aims to cover 50 per cent of farmers under crop insurance in the next three years, which will lead to crop insurance companies’ growth,” said Dhyanesh Bhatt, vice-president — government solutions group at ICICI Lombard General Insurance Company.

Right now, about 18 players, including five public-sector firms, are offering crop insurance in the country and low penetration in the segment offers scope for all to grow. The changed rules post PMFBY and the mandatory deductions from all farmers who take crop loans towards payment of crop insurance premium, are leading to increasing coverage of crops under insurance.

“Governments are playing a proactive role in bringing farmers under the crop insurance net and increasing the coverage through specially designed schemes. But, awareness about importance of crop insurance is rising among farmers and there are farmers who are coming forward to pay for insurance in case of commercial crops and in specific crops where huge investment is involved.

As technology usage is increasing in agriculture and weather prediction is assuming importance, even crop insurance takers are increasing.

This year, rainfall predictions are negative, which we assume will lead to increase in crop insurance coverage by 20-25 per cent,” stated Anuj Kumbhat, director of Weather Risk Management Services, which observes the weather patterns and designs insurance products for insurance firms.

According to insurance sector experts, 386 lakh hectares have been covered and the value of crop insured stood at Rs1.41 lakh crore during Kharif 2016 season, while 193 lakh hectares and sum of crop insured stood at Rs 72,000 crore in the Rabi season 2016-17.

Source: The New Indian Express



Why most Indians end up buying insurance the wrong way

May 08, 2017

Insurance should be the first step of every saver. You should get insured before you think of doing anything else financially. However, to do this correctly you will have to understand what insurance really is and how much you actually need.

Here’s the dictionary definition of insurance: an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. For life insurance, we can simplify this to: an arrangement by which a company will compensate your survivors if you die, in return for payment of a specified premium. This is the only definition of insurance. Keep in mind that much of what insurance agents try to sell you is not insurance.

How much should you be insured for? There are a variety of ways to arrive upon the answer, but a starting point could be ten years worth of your current income. This will obviously vary according to other family members’ income, assets, house etc, but rarely would an amount less than ten years’ income suffice. If you don’t believe me, quickly make a rough estimate of what your family’s budget would be if you were to die soon.

So here’s the most important question: Do you have enough insurance? The answer is no. And how do I know that? Because that’s the correct answer for a vast majority of Indians and so statistically speaking, this is likely to be your answer too. The strange thing is, in my experience, a lot of people know how much premium they pay to insurance companies, but do not know what their family will get if they were to drop dead. Actually, it’s not strange because the life insurance business is optimised around taking money and indeed, measures its success not by how much its customers are insured for, but how much money the customers pay. It does so by ensuring that a vast majority of products are not insurance but expensive and opaque investment products that have a small smattering of real insurance as a statutory requirement.

By the way, this is official. The insurance regulator (IRDA) also measures success by how much money the industry takes from customers, rather than how much insurance they have delivered and to how many people. The IRDA annual report, or any other published data in this country does not reveal the actual extent to which people are insured. IRDA uses something called ‘insurance density’, which is the per capita premium charged from customers and as well as the premium as ratio of GDP.

These numbers do not tell us how much insurance cover is delivered, only how much money the industry has extracted from people. The real questions are: When a customer dies, how much money does his family get? How many customers have what amount of this cover? What is the ratio of the total premium collected to the cover provided? Shockingly, this information either doesn’t exist (meaning IRDA has not bothered to collate it), or it’s a secret.

This attitude is perfectly reflected in the behaviour of whoever sells you insurance. However, the various ways in which agents will try and befuddle you is too long a story. You should just focus on getting ten years’ income worth of insurance. If you do this, you will get only the right kind of insurance product which is a term insurance. The reason for that is that in other kind of insurance products, getting ten years worth of life cover will cost you your entire income.

The basic principle of buying insurance is to keep insurance and investment separate and buy only pure insurance (term insurance). In India, insurance sellers have encouraged an investing culture where people are averse to buying term insurance because ‘you get back nothing’. Agents do this because they earn far higher commissions in other kinds of products. It’s not possible to be charitable while commenting honestly about this existing system so I won’t even try: this system exists because the regulator is asleep, agents are conniving and manipulative and customers are foolish. The system won’t change, so it’s up to you to learn how to actually buy insurance.

Source: The Economic Times



Government considering 100 per cent FDI in insurance broking

Mar 21, 2017

The government is considering allowing 100 per cent foreign direct investment in insurance broking with a view to giving a boost to the sector and attracting more funds.

The FDI policy, at present, allows 49 per cent foreign investment in the insurance sector that encompasses insurance broking, insurance companies, third party administrators, surveyors and loss assessors as defined by the Department of Industrial Policy and Promotion.

An official said that representations have been made to the government that insurance brokers should be treated at par with other financial services intermediaries, where 100 per cent FDI is permitted.

"Insurance broking is like any other financial or commodity broking services. The issue was recently discussed in an inter-ministerial meeting. The government is positively looking at the matter," the official said.

The official, however, clarified that the FDI cap for insurance companies would remain at 49 per cent.

Further, industry experts stated that the insurance sector is being impacted due to weak distribution networks.

There is a need to strengthen the distribution network to support the sector as a whole.

According to Prudent Insurance Brokers Director Pavanjit Singh Dhingra, the decision would help strengthen distribution as it is not high capital intensive business.

The removal of foreign investment limit will encourage more players in the markets with high technology, he said, adding it will help increase insurance penetration as India has low penetration.

Insurance penetration in the country was 3.4 per cent in 2015 against the world average of 6.2 per cent. It was 3.3 per cent in the country in 2014.

Source: The Economic Times



Gujarat, Bengal fraud-prone red zones for rampant insurance con jobs

Mar 02, 2017

Insurers have ticked several pockets in Gujarat, West Bengal, Bihar, Andhra Pradesh, Uttar Pradesh, and Odisha as fraud-prone with instances of misuse of insurance cover and fraudulent claims increasing exponentially in these areas.

The move follows insurance companies’ complaints last year about the high claims ratio of the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), a pro-poor government-sponsored policy that offers a renewable life cover of Rs 2 lakh for a premium of Rs 330 a year.

Data revealed that 30% of the claims came within the first 30 days of the person getting insured under this scheme. Corrupt practices and fraud were suspected as in most of these cases the insured person “died” within a month of taking the insurance cover.

Instances of medical insurance cover being used by relatives of the beneficiary are common in these areas. Besides, there have been several reports of life insurance cover being claimed producing fake death certificates.

“This needs to be addressed. There have been instances of fake certificates being produced to get insurance benefits. The trend can be noticed in both life and commodities segments,” said Jagvinder Brar, partner, forensic services, KPMG.

All insurance companies, based on their internal assessment, have marked as red zones several areas in Gujarat, West Bengal and the other states from where such claims have been reported frequently.

“Insurance companies are wary of customers belonging to these areas ... the scrutiny on know your customer for a new policy is more stringent in these places,” a senior executive of a large private sector insurance company said. He didn’t wish to be named.

Political compulsions, however, have kept the issue under wraps, sources said.

The rise in suspected fraudulent claims has impacted the insurance sector’s plans to take their schemes to people in rural and semi-urban areas.

Central Vigilance Commission (CVC), the country’s anti-corruption watchdog, is looking into the suspected fraud in insurance claims.

“We have received complaints of frauds and we are monitoring,” chief vigilance commissioner TM Bhasin said.

Frauds in the country’s insurance segment have risen rapidly. Industry estimates suggest a more than 40% increase in corrupt practices compared to a couple of years ago.

Source: The Hindustan Times



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