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IRDAI extends deadline for linking Aadhaar with insurance policies

Mar 23, 2018

The Insurance Regulatory and Development Authority of India (IRDAI) has extended the deadline for linking of insurance policies with Aadhaarnumbers.

As per an an earlier order, all insurers should complete linking of insurance policies with Aadhaar before March 31, 2018.

The present direction has come in the wake of a recent decision of the Supreme Court to extend deadline till the final disposal of a writ petition filed challenging mandatory Aadhaar linkage.

In a circular to all life, general and standalone general insurers, the authority said: ``For existing insurance policies, the date of linking Aadhaar is extended till the matter is finally heard and judgement is pronounced by the Supreme Court of India.’’

For the new insurance policies, a customer is allowed six months from the date of commencement of account based relationship (or buying of policy) to submit Aadhaar number and PAN/Form 60 to the insurers, it said.

In the absence of Aadhaar, a customer can submit any of the officially allowed document as mentioned in the Prevention of Money-laundering (Maintenance of Records) Rules 2005.

Your Health Insurance May Become Costlier. Here’s Why

Mar 23, 2018

Health insurance could become costlier as insurers factor in the costs of covering genetic disorders.

The Insurance and Regulatory Authority of India on March 20 ordered insurers to not reject claims stemming from genetic disorders for all existing and new policies, according to a circular on its website. That followed last month’s Delhi High Court verdict that barred such exclusions to deny payments.

“When we go for the next price correction, certainly we will have to factor in the cost of that [genetic disorders] treatment also,” said G Srinivasan, chairman and managing director of New India Assurance Company, India’s largest general insurer. “The impact will have to be assessed for each of our policies; based on that we will get back to the regulator and request for price corrections.”

Insurers pay Rs 101 as claims for every Rs 100 earned in health premium, the highest among all businesses. They excluded genetic disorders from plans without specifying the diseases covered. Among the conditions for which claims were not paid included Down’s syndrome, thalassemia, haemophilia, muscular dystrophy, sickle cell anaemia and amino acid problems.There are 52 types of genetic diseases or syndromes, among which 51 are known to have an inheritance pattern, according to Indian Genetic Disease Database, a 2010 initiative of Council of Scientific & Industrial Research and Indian Institute of Chemical Biology. Insurers said it’s difficult to price in the risk for related ailments as they could crop up anytime in life. In comparison, implications of congenital defects are known since birth.

Now that insurers can no longer deny such claims, they will look to benchmark the possible costs.

For now, claims will have to be settled case-by-case, said Sanjay Datta, chief-underwriting and claims, at ICICI Lombard Insurance Company. Insurers will have to go by the experience of settlement and then approach the regulator with revised prices, he said.

Other general insurers like HDFC Ergo and Star Health Insurance agreed. “Genetic disorders need to be defined clearly for the sake of industry level uniformity,” an HDFC Ergo spokesperson said in an emailed response to BloombergQuint’s query. “Diseases such as diabetes, hypertension, cardiac conditions and many such others could also be hereditary and were never excluded.”

Another way out could be including genetic disorders as an add-on, which usually come with added costs.

As genetic disorders, similar to chronic diseases, are special risks, they cannot be included as part of the basic policy but can be added on to the cover as rider/s, if required, by the policyholder, a Star Health Insurance official told BloombergQuint requesting anonymity.

The exact impact on the pricing will have to be quantified by actuaries based on the incidences of genetic disorders in the past, said HDFC Ergo. “Additional disclosures will also be required from policyholders.”

Small cars have higher insurance loss ratio than SUVs

Mar 19, 2018

Insurance companies generally tend to believe that SUVs or mini-SUVs would have higher loss ratio and hence they price the premium accordingly, while they overlook the potential of small cars to make claims. But a study has found that SUVs like Scorpio or Fortuner have lesser loss ratio compared to ones like Eon, Alto and Celerio.

As per the data pulled out by PolicyBazaar, SUVs and mini-SUVs demonstrated a very good and profitable loss performance across different models of companies, including Mahindra, Honda, Toyota, Maruti and Hyundai. Creta reported a loss ratio of 32 per cent, Fortuner 45 per cent, Ertiga 52 per cent, Scorpio 60 per cent, XUV 500 62 per cent and Innova 67 per cent.

However, some of the smaller cars like Eon has 86 per cent loss ratio, Alto 70 per cent and Celerio 74 per cent. Among the hatchbacks, Swift reported a loss ratio of 78 per cent, I20 88 per cent, Etios Liva 110 per cent. Some of the sedans too have a higher loss ratio- Amaze 84 per cent, Corolla Altis 104 per cent and Etios 82 per cent.

“The loss ratio among different segments comes as a surprise. Usually, insurance companies believe that the loss ratios of SUVs are higher. But these are SUVs owned by digitally-aware customers who renew the premiums online. Their usage might be different from people who frequently use their cars for long drives. But the pricing is uniform across customer segments,” said Vaidyanathan Ramani, head, Product and Innovations Center,

When it comes to small cars and hatchbacks, the popular notion is that they are mainly for city use, hence insurers tend to price the premiums lower. On lower premiums, the loss ratios become higher.

The study also found that metros had lesser loss ratios compared to their regions. In case of the NCR region, Delhi had an average loss ratio of 66 per cent, much lesser than other parts of the region like Noida with 87 per cent, Faridabad 87 per cent, Ghaziabad 72 per cent and Gurugram 75 per cent. Mumbai had a loss ratio of 48 per cent, much lower than 63 per cent for the whole of Maharashtra.

“The cars in the cities do not get a chance to over-speed and even if they bump into each other, the severity of the damage is less. That is not the case with cars that ply on highways. Insurance companies have been looking at the regions as a whole in terms of loss ratio. But that is not the true picture,” said Ramani.

The brand of the car too makes a difference. Maruti and Hyundai had lower than average loss ratio of 68 per cent and 72 per cent and some brands like Skoda and Volkswagen had above 100 per cent. “The cars which have higher safety standards tend to make larger claims for replacing more number of parts on damage,’ he said.

PolicyBazaar also found that claims ratio was lesser among customers who bought the policies online on their own compared to those who bought it online with some assistance.

Have you checked if your insurance agent is blacklisted?

Mar 19, 2018

Picture this. You get a call from the friendly neighbourhood agent to buy a policy now that only last few days of the financial year remain. "Buy it now to save taxes," he says. You do as he says but realise later that he is not an authorised agent and has fled with the cash.

Annually, about 4000-5000 policies are fraudulently sold by agents who have been blacklisted by companies. Since they have been associated with insurance companies in the past, these agents have all the policy documents needed to close a transaction. Since none of us bother checking the agent's licence, there is a chance of being duped.

All insurance companies are required by Insurance Regulatory and Development Authority of India (IRDAI) to disclose the list of blacklisted agents on their website for customers. This also gives the customer an idea of why an agent was terminated from service. Further, IRDAI also has launched a common portal wherein the list of insurance agents and the company they work for, can also be verified in the future.

Often, fraudulent persons, knowing fully well how policy sales work, cheat customers and collect the first year premium and flee. Usually, they demand the premiums in cash so that they do not leave any trail behind. In some cases, individuals have also received calls to surrender existing policies and buy "special double the investment" plans with bonuses from IRDAI.

Due to these incidents, IRDAI has mandated insurers to display in all their print and television advertisements that the regulator does not declare any bonuses nor does it sell any policies.

One simple way would be to verify the licence issued by the insurance company to the agent. They can visit the insurance company's website and cross verify to see whether they are still associated with the company. Since there is a lag in updating the blacklisted agents' list, a customer can get the agent's licence number and call up the customer care to check if he is still an active agent with them.

Insurers usually take no responsibility against unknown persons selling their policies and even if a complaint is made, it will be rejected.

With some customers still buying insurance at the end of a financial year and usually in the last two weeks of March, they are an easy target for unscrupulous agents who misuse the system. While rushing in to complete the tax savings for the year, it will be a good idea to invest a few minutes in ascertaining the identity of the agent you are buying it from. Else, you could be taken for a ride.

More Indian companies taking cyber insurance cover

Mar 16, 2018

The ransomware attacks over the past two years has significantly increased Indian companies’ desire to take cyber insurance.

Gurgaon-based Secure-Now, an insurance brokerage and risk advisory firm that works with companies in the e-commerce and mobile wallets space, said it saw a 200% increase in demand for cyber insurance last year, compared to the year before. Tapan Singhel, MD and CEO of Bajaj Allianz, which has sharply scaled up its cyber covers, says two years ago, they would rarely see such a demand from companies for cyber insurance.

Cyber insurance covers loss or damage to data, network downtime, cyber extortion, customer data breach, and loss of intellectual property. Insurance providers first do an assessment of a company’s cyber security and data resilience status, and then provide appropriate covers.

‘Cyber is no longer a separate risk’

In May last year, the WannaCry ransomware attack is estimated to have infected more than 230,000 computers in over 150 countries in just one day. The following month, the Petya attack again impacted many countries. India was the third most affected country by the WannaCry attack, according to estimates by security solutions company Kaspersky Lab. Startups like Uber and Zomato also suffered data breaches last year. This has had its impact. “Three or four years ago, we would have to pitch to clients on why they should secure their company. Now, we have inbound interest from companies, especially e-commerce and consumer facing companies that keep third-party data,” says Abhishek Bondia, founder of SecureNow.

Vivek Chudgar, senior director — Asia Pacific for US-based security company FireEye, which does assessments and forensic investigations for insurance companies, says companies have come to realize the big risks involved. “Cyber is no longer a separate risk. Companies are at risk of losing information to competition and that has made them aware,” he says. FireEye, in partnership with insurance brokerage firm Marsh India, will launch several initiatives in the cyber insurance space later this year.

Delhi-based Lucideus is a cyber-assessment company that provides ratings to companies based on their cyber maturity. These assessments are used by insurance brokers and cover providers to decide on premiums and appropriate solutions. Saket Modi, who started Lucideus in 2011, says companies are now proactively doing cyber assessments. “With even SMEs being digitally enabled, the demand is growing,” he says, adding that cyber assessment may become a mandatory requirement in the next five years.

Traditional insurance cover providers like ICICI Lombard and Bajaj Allianz, which were selling cyber covers in a small way, are now scaling up with new solutions. Bajaj Allianz launched cyber insurance covers for individuals last year, where it provides security covers between Rs 1 lakh and Rs 1 crore. The insurance provider says it saw a 50% increase in this retail business in each of the past two years. Enterprise covers have gone up to $50 million. “They are mainly for malware attacks,” says Singhel.

For a Rs 5 crore cover, the premium usually ranges from Rs 5 to 10 lakh for the manufacturing industry, education sector, and for consulting, accountancy and similar professional services. It can go up to Rs 25 lakh for financial services, healthcare and telecom industry, which are more vulnerable to attacks. Security experts say insurance is still at a nascent stage in India, at least five years behind that of the US ecosystem. Most companies are still not very serious about it. Currently, most of the demand comes from the online retail and IT service sectors that deal in crucial third-party user data.

Source: The Times of India

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