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IRDA mandates 3rd party insurance for three-wheelers

19th Nov, 2015

With IRDA (Insurance Regulatory and Development Authority) making third party insurance mandatory for battery operated three wheeled vehicles, the chances of an accident victim getting compensation have risen.

After e-carts and e-rickshaws came under the Motor Vehicles Amendment Act 2015, the insurance regulator has stepped on the gas by bringing in e-rickshaws (not exceeding 4,000 watts) under third party motor insuranc."Increase in number of vehicles would can in turn mean increase in road accidents, prompting a need of third party insurance," executive director of HDFC Ergo General Insurance, Mukesh Kumar said.

There are around one lakh battery operated three wheelers currently plying on Indian roads and majority ferry passengers. The insurance regulator has indicated that e-rickshaws that carry up to six passengers would have to bear a premium of 1,066 plus charges based on licensed capacity of the vehicle.

Officials also state that some concessions have been provided to battery operated three wheelers to ensure faster compliance.

In any case, penetration of third party motor insurance in three wheelers in much better than that in two wheelers segment.

As per industry estimates, over 80% of regular three wheelers in India have some form of motor insurance whereas in cities like Chennai more than 60% of two wheelers and motor cycles currently don't have any insurance, even third party insurance, which is compulsory.

"Three wheelers are more liable to police checks and are used for commercial purposes, while two wheelers are mostly for personal use," Narayanan said.

Source: The Economic Times

United India Targets Rs 11,800 Crore Premium

19th Nov, 2015

Riding on the growth of motor and health insurance segments, public sector United India Insurance Company has set a target of clocking a total premium of Rs 11,800 crore during the current financial year.

The company has reported a healthy premium of Rs 5,914 crore for the half-year ended September 30, 2015 as against the premium completion of Rs 5,291 crore last year, with a growth rate of 11.77%.

The company has also reported Profit after Tax (PAT) of Rs 356.21 crore for the half year period under review.

The Chennai-based company had registered a total premium of Rs 9,709 crore in the same period of the previous year, United India Insurance said in a statement.

The major growth drivers for the company were motor and health segments, which grew at 14 per cent and 22 per cent respectively.

“The company has set a target of collecting total premium of Rs 11,800 crore during the current financial year,” the company said in a statement.

Stating that the first six months' numbers were yielding desired results, the company said it would focus on retail, micro, small and medium enterprises and rural insurance segments in future.

The claims ratio has been contained at 83.52% during H1 2015-16. The management expenses for the half year stood at 24% which includes the provision for the wage revision.

The investment income stood at over Rs 1073.84 crore (Rs 1,067.40 crore). The market value of the company’s total investment portfolio at the end of the second quarter was Rs 25,331 crore and the net worth of the company stood at a robust Rs 5,947 crore as on September 30, 2015.

Source: The New Indian Express

General insurance claims likely to get settled faster

09th Nov, 2015

General insurance claims are now likely to get settled faster as the regulator has raised the claims limit for hiring external surveyors to ₹50,000 for motor insurance and ₹1 lakh for other types of insurance.

The earlier limit was ₹20,000 for all types of claims. The Insurance Regulatory and Development Authority of India (IRDAI) said that it will review this limit every three years.

“Claim settlement now can be done much faster using our internal surveyor teams. External surveyors typically are overburdened as they serve many companies which may result in delays,” said SS Gopalarathnam, Managing Director, Cholamandalam MS General Insurance. The move to increase the surveyor limits follows the relaxations allowed by the regulator during the Jammu and Kashmir and Uttarakhand floods, which caused large-scale damage to property and vehicles.

Sanjay Datta, Chief, Underwriting, ICICI Lombard, said that insurers now have a choice on whether they would want to appoint a surveyor or not depending on the complexity of the claims. He said, especially during natural calamities, insurers will be able to disburse claims faster without waiting for the report of external surveyors.

Insurance industry officials also say that since the frequency of claims is higher in motor insurance, insurers will be able to appoint automobile experts in-house to settle the claims. According to Praveen Vashishta, Chairman of Howden Insurance Brokers, the limits were meant to be set for a reasonable amount adjusted to inflation. However, at present even if a small part in a car gets damaged, the figure could cross ₹50,000.

He added that the logic behind having external surveyors is that they bring in neutrality in the interest of customers. However, even though they are supposed to be an independent neutral party, they are remunerated by the insurer.

Source: The Hindu Business Line

Top reinsurers to open branch offices in India

01st Nov, 2015

IRDA norms on retrocession viewed as being restrictive Top foreign reinsurers, namely Swiss Re, Hannover Re and Scor Re would soon be applying to the insurance regulator for opening branch offices in India. The Insurance Regulatory and Development Authority (IRDA) on Friday came out with the regulations for registration and operations of branch office of foreign reinsurers.

Officials of Swiss Re and Hannover Re confirmed to Financial Chronicle that they would be applying for opening their branch office in India. However Munich Re and Reinsurance Group of America (RGA) refused to confirm.

A foreign reinsurer representative, on condition of anonymity, said, “Most of the foreign reinsurers would be interested in opening a branch office. The regulations ensure that only big reinsurers are eligible to apply. While the eligibility conditions are not a problem, some of the operational requirements are restrictive.”

“For instance, the new regulations state that you can retain 50 per cent of the business in India which would mean that you could retrocede the remaining 50 per cent to the parent office. But there is set of non-life reinsurance 2013 regulations which limit retrocession per entity depending on the credit rating. So the head office cannot receive the remaining 50 per cent of the Indian business,” the reinsurer representative said.

“We feel the regulations are positive. However, the intra group retrocession needs to be clarified. We don’t expect a rush from foreign reinsurers to open a branch office in the first year itself,” said an official of another foreign reinsurance company.

According to regulations, a foreign reinsurer desiring to carry on reinsurance business through its branch office in India should have net owned-funds worth Rs 5,000 crore at any time and should have been in reinsurance business for at least 10 years. The norms also require a foreign reinsurer to be registered or certified in a national regulatory environment of a country with which the Indian government has signed a double taxation avoidance agreement (DTAA).

The foreign reinsurer should have a minimum credit rating having at least good financial security characteristics from any of the internationally renowned credit rating agencies for the last three years, Irdai said in the gazette notification.

The applicant shall have a solvency margin as stipulated by its home regulator. The applicant will have to infuse a minimum assigned capital of Rs 100 crore into the branch office,” the notification said.

The branch office has to retain the core activities such as underwriting, claims settlement and regulatory compliance while others, such as back- office servicing and IT, can be outsourced.

All appointments, including remuneration of senior management in the branch office, will need Irdai approval.

Source: Financial Chronicle

Insurance: health over life

18th Oct, 2015

Hospital bills are exorbitant, so having health insurance is a must. It ensures that you don’t dip into your retirement income in paying for medical expenses

One of the joys of being a senior citizen is that your working days are behind you. This also means having working children and financial assets that make buying a life insurance policy unnecessary. However, what you need to consider seriously is a health insurance policy. Hospital bills are exorbitant, so having health insurance helps. It ensures that you don’t dip into your retirement income or deplete your savings in paying for medical care. But don’t just buy any policy that passes off as health insurance. Understand the types of policies that are there and what you need.

Health insurance for you

There are broadly two kinds of health insurance policies: indemnity and defined benefit policies. A basic health insurance policy is an indemnity product that pays for your hospitalisation. It covers hospitalisation expenses, pre- and post-hospitalisation expenses and listed day-care procedures. Defined benefit policies pay a stipulated sum on an insured event. The most popular being a critical illness policy, it will pay the sum assured—the defined benefit—if you contract any of the insured critical illnesses, and the plan will then terminate. But a basic health insurance pays for your hospitalisation up to the sum insured in a policy year and can be renewed for life. What you need first is an indemnity product.

The good news is that the rules make it mandatory for insurers to renew health insurance for life and give policies to first-time buyers at least till the age of 65 years. But if you are older, your choice narrows down considerably. For instance, for a 70-year-old, according to the Mint Mediclaim Ratings, there are 15 plans in the market for a sum insured of Rs.5 lakh, whereas a 35-year-old has 34 options to sample from. Increase the sum insured to Rs.20 lakh, and there are only 7 plans to choose from if you are 70 years old.

“For first-time buyers, insurers are required to offer health insurance at least up to 65 years of age. Beyond that, it usually gets difficult for a person to get insurance over 70 years, and quite difficult in the 80s. Since health insurance policies are renewable for life, insurers normally carry out proper medical underwriting of individuals who are over 45 years. They have the right to reject a policy if the customer has serious or chronic illness,” said Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance Co. Ltd.

However, it is not a cakewalk to get insurance if you are below 65 either. “Health insurance policies are renewable for life, so if an insurer agrees to insure a senior citizen it has to provide the cover for life. For this reason insurers will carry out proper medical underwriting of individuals who are over 45 years. Insurers have the right to reject a policy if the customer has serious or chronic illness,” said Datta.

Although, it may not be as bad as it used to be. “The acceptance rate is much higher now than, say, a couple of years ago. But, in general, if you are over 55 years of age, it would be difficult to buy health insurance. Given that at this age you are bound to have some pre-exiting ailment, most insurers that agree to insure you after assessing the severity of illness will load the policy. This can be anywhere between 10% and 50%,” said Kapil Mehta, executive director, SecureNow Insurance Broker Pvt. Ltd.

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