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Insurer can't escape third party liability: Tribunal

20th Feb, 2015

PUNE: An insurance company cannot deny compensation to the third party claimant on the grounds that the insured vehicle, involved in a road accident, was being driven by a person who did not possess a valid driving licence, a Motor Accident Claims Tribunal (MACT) has ruled.

"Recovery of compensation is the statutory right of the third party applicant. The insurance company, at the most, is entitled to recover the amount of compensation from the insured but, cannot avoid its liability to pay compensation to the third party," MACT member V P Avhad ruled on February 11 while relying on a couple of judgments in 2013 by the Bombay high court and the Supreme Court.

The tribunal directed the United India Insurance Company to pay Rs 6.39 lakh compensation to the husband and two sons of a 48-year-old woman who died of injuries sustained in a road accident caused by a speeding car near HA ground in Pimpri in March 2013. The company also has to pay 7.5% p.a. interest from August 3, 2013 when the claim was filed, till realization. "Insurer is at liberty to proceed against the insured for recovery of compensation amount," the ruling stated.

Both, the car driver and the insurance company, had denied involvement of the car in the accident and had claimed that the police falsely implicated the driver on the basis of information provided by some unknown person. The car driver also claimed that he was not in a position to pay compensation. On its part, the insurance company claimed that the driver had breached the terms and conditions of the insurance policy by driving the car without valid licence and hence it was not liable to pay compensation.

Lawyer Atul B Gunjal, who appeared for the claimants, told TOI, "The evidence provided by injured witness i.e. the victim's husband, who had noted down the registration number of the offending car, and police investigation papers including the spot panchanama proved conclusive in enabling the tribunal to hold that it was a case of rash and negligent driving of the car that caused the accident."

Gunjal said, "Since the victim was a woman with no source of income from any employment, the tribunal relied on a 2010 Supreme Court verdict which held that gratuitous services of mother or wife of the applicant cannot be equated with the services of an employee. Loss of personal care and attention suffered by the husband and children cannot be measured in terms of money." The tribunal assessed a notional income of the victim at Rs 5,000 per month for calculating the overall compensation amount.

Source : The Times of India



Will e-insurance policies get a discount on premium?

10th Feb, 2015

In a bid to encourage e-insurance or dematerialisation of insurance policies, the Insurance Regulatory and Development Authority of India has suggested that insurance companies offer a discount in premium for policies issued in electronic form, since the cost incurred by the insurers is lower in case of e-policies. The regulator said this in revised guidelines on Insurance Repositories and Electronic Issuance of Policy. But will insurance companies be forthcoming to offer the discount? Is price the only hurdle that is stopping insurance buyers from opting for e-insurance?

While there is nothing stopping insurance companies from offering discount on premium by seeking IRDAI approval as part of File & Use for e-insurance policies even without any explicit regulatory guidelines, it may not be practically feasible for companies to do so, says V Viswanand, Senior Director and COO, Max Life Insurance. "Going electronic is not resulting in any actual savings for companies, right now. The cost we incur on servicing is mainly on account of the reminder calls made to policyholders for renewal of premiums and customer-initiated servicing aspects. We will have to continue doing this, irrespective of whether the policy is in demat or physical form,'' he points out.

By issuing e-insurance, companies can save the expenses spent on printing the policy document, but are still required to send a single page confirmation in physical form to policyholders. This does not add up enough for companies to offer lower premiums across the lifetime of the policy, he adds.

Currently, regulation allows repositories to offer services like updating of addresses and issuing fund statements. But servicing the policy is still done by the insurance company. Until all policies are converted into e-policies, insurance companies may incur a double cost -- fees paid to repositories for maintaining the e-policies and money spent on issuing regular policies.

According to a senior official from another private life insurance company, the discount on account of demat may work out to only Rs 100-150 per policy and it needs to be seen if buyers feel that is worth the trouble of converting the policies into electronic form. "The real discount we can offer on premiums is only in case where the policies are bought directly from the company, because we save on the agents' commissions,'' he says.

Even making demat compulsory will leave only to a moderate saving in costs. But even that is rather difficult to implement at lower market segments, since only a minority are electronically savvy policyholders. "In fact two-thirds of our customers have no email ids to provide us,'' Viswanand adds.

One option could be to make demat mandatory for policies of a certain size, for instance, if premiums are above Rs 50,000 or Rs 1 lakh.

IRDAI launched a pilot project on e-insurance policies in June last year, where it was made mandatory for insurance companies to convert a minimum of 1,000 or 5 per cent of the total individual policies issued into demat form. But the cumbersome paper-based documentation required to convert policies into demat or even to issue e-insurance policies was a big hurdle.

"The single form for all insurance repositories and electronic consent made applicable for conversion to e-insurance is a welcome step. However, until annual maintenance fee charged by insurance repositories drops further and/or they take on additional policy servicing aspects as well, demat of insurance policies is unlikely to take off in a big way,'' Viswanand adds.

Often, in case of offline policies, it is the agent who discourages buyers from choosing the demat option for fear of losing customers.

"Demat of policies makes it easier to track the policy and ensure that it reaches the buyer. But currently distribution is a challenge," says an insurance company official.

Source : Business Standard



Health Insurance TPA of India to begin business in April 2015

9th Feb, 2015

The Health Insurance Third Party Administrator (TPA) of India which has been set up to manage health claims of public general insurers is all set to begin operations in April 2015.

Though the company had secured a license from Insurance Regulatory and Development Authority of India (Irdai) for functioning as TPA, it was getting its IT processes in place.

TPA licenses are valid for a period of three years from the date of issue/ renewal, unless renewed further.

This TPA had earlier run into trouble after the Competition Commission of India (CCI) had ordered an investigation by the Director General, CCI against General Insurers' (Public Sector) Association of India (GIPSA) and other public sector general insurers for alleged anti- competitive practices.

But, insurance officials said that the claim management process would be equally spread.

CCI had observed that the Opposite Parties have floated in house TPAs to reduce their claim ratio which may potentially result into rejection of claims on ad-hoc basis.

The said practice was found by the Commission to not be in alignment with prevailing global practices where the TPAs and insurers are operating independently.

Officials involved in setting up the Health Insurance TPA of India explained that they too want the company to compete with other TPAs in the market.

"At no point will the business for them be 100%. We will continue to keep a healthy mix between the external TPAs and in-house TPA," a senior official said.

This common TPA to process health claims has National Insurance Company, New IndiaAssurance Company, United Insurance Company, Oriental Insurance Company and General Insurance Corporation of India as stakeholders.

The first four have 23.75 per cent stake each and GIC has five per cent.

This TPA will look into health claims and handle claims received by these public general insurers. The common TPA has been proposed to prohibit large-scale leakages, while settling insurance claims in the health segment. Further, it is intended to process claims of public general insurers in-house, rather than handling by an external agency.

This TPA has been formed with an authorised capital of Rs 300 crore and paid-up capital of Rs10 crore.

Source : Business Standard



Reinsuarance back-up safeguards GICs from premium loss

6th Feb, 2015

Hyderabad : Despite facing the natural calamities in quick succession in the current year the general insurance companies are not expected to be overly burdened by the premium loss as they are all have the reinsurance back up. As a result the risk premium is unlikely to go up in any significant fashion next year, according to M Ramaprasad, member (non-life) of the Insurance Regulatory and Development Authority of India (IRDAI).

Speaking to reporters on the sidelines of an event on Thursday, Ramaprasad said the initial worries about the increased impact of natural calamities on the non-life companies were put to rest when they found that all the general insurance players have taken reinsurance to bring down the risk involved in their business.

According to Prasad, the recent Hudhud cyclone that inflicted heavy damages to the industries and other establishments in the coastal city of Visakhapatnam and the surrounding areas in Andhra Pradesh had resulted in damage claims of around Rs 2,600 crore.

The New India Assurance Company and the United India Insurance Company, the two public sector general insurers, have been handling most of these claims, according to him. Of this, almost Rs 1000 crore-Rs 1,200-crore claims were received only from two entities-- the Vizag Steel and a power project-- he said while responding to a question on reports that Hinduja power project, which is yet to start operations, had suffered major damages under the cyclone impact.

Similarly the general insurance companies had received claims worth about Rs 2,000 crore on account of the damages suffered by the industry and other businesses in the Jammu and Kashmir floods earlier this year, according to Prasad. While the total claims from these two instances would be in the range of around Rs 4,500 crore, the companies would get back at least Rs 1,500 crore by way of reinsurance and the actual loss of premium would not be more than 6 per cent of the total size of premiums collected by the companies this year, he said.

Till January 2015, the general insurance companies have collected about Rs 85,000 crore in total business premium in the current financial year as compared to Rs 77,000 crore in the same period previous year, registering around 10 per cent growth.

The growth in premium collections has been is little lower since the general insurance companies have faced a particularly sluggish growth in motor premium collections in the first six months, according to him.

Source : The Kashmir Monitor



New India to offer 3-year bike cover

5th Feb, 2015

MUMBAI: For the first time, two-wheeler owners will have the option of buying a three-year insurance cover for the vehicle with the country's largest insurer New India Assurance receiving approval for such a product from the insurance regulator. A long-term policy for two-wheelers is expected to reduce the number of uninsured vehicles on the roads.

"We will be launching this policy in a few days and the pricing will be announced at the time of the launch," said G Srinivasan, chairman, New India Assurance, speaking during the announcement of the company's third quarter results.

The non-life insurer reported a net profit of Rs 996 crore for the third quarter up 42% from the previous year.

Source : Times of India



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