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Motor insurance to have more touch-points

Jul 14, 2016

Customers will now find it much easier to buy motor insurance policies or renew their existing ones on the go as the Insurance Regulatory Authority of India (Irdai) has allowed more touch points and prevented insurers from discriminating between dealers.

Irdai also said it might consider relaxing agency norms to ease distribution of simple policies including motor third-party policies through agencies such as pollution-check centres. It is, however, not clear if there will be any mandatory training requirement. According to senior insurance executives, basic training in the products and how the premium is calculated, among others, should be provided to these new players.

The Insurance Laws (Amendment) Act passed in 2015 says nobody can be refused a motor insurance policy. According to the Motor Vehicles Act, all vehicles running on Indian roads should have a third-party motor insurance policy, which covers owners from third-party liabilities arising from accidents.

Irdai is also encouraging insurers to bring out over-the-counter products that can be sold easily through shops, and medical stores, among others.

Earlier this year, the regulator had said all agents should have an equal opportunity to source motor business. Under existing rules, policyholders have a right to choose any agent, intermediary or insurer to avail of insurance services.

Irdai recently said that some general insurance companies having tie-ups with a particular motor dealer were not accepting motor business, if it was sourced by any other agent or intermediary. The regulator clarified there shall be no restriction whatsoever on sourcing or servicing motor insurance business (including personal accident policies) by any agent, intermediary or insurer on the grounds that they have a tie-up with a motor dealer or manufacturer.

Further, it has to ensured that no clause/agreement/tie-up in variation with the above directions shall be entered into by any insurer with any motor dealers/ manufacturers etc. It should also be ensured that all existing agreements confirm with the above direction.

Source: Business Standard



General Insurance Council to create fraudulent claims data bank

Jul 14, 2016

With most of the regulatory issues relating to the non-life insurance industry ironed out, the General Insurance Council of India is now into development of data bank of fraudulent claims, clearing house and standardisation of policy wordings for commercial policies, said a top official.

"Most of the regulatory issues have been sorted out. The foreign direct investment (FDI) limit has been increased to 49 per cent. We have decided to move ahead with couple of initiatives for the collective benefit of the industry," R. Chandrasekaran, Secretary General of the council, told IANS.

According to him, the council is now working on building a data bank on fraudulent claims, setting up a clearing house to settle inter-company dues and also standardise the policy wordings for commercial insurance policies.

The council outsourced the development of the software for motor and health insurance claims fraudulent data bank and has given it to insurers.

"The insurers have to key in the necessary data about claims they think are fraudulent. The data that was keyed in will come to our system to build a data bank over a period of six months. Insurers who have keyed in the data in our software module can access the data bank for their decision making purpose," Chandrasekaran said.

According to him, once the data is gathered, a pattern on fraudulent claims can be made out.

"We exist for the benefit of the industry. So, the software module will not be priced. Our members contribute funds for the collective benefit of all," Chandrasekaran added.

The system is expected to go live in two weeks' time, he added.

While there is no official estimate as to the quantum of fraudulent claims dealt by the insurers, the general consensus is around 10 per cent of the health insurance claims are fraud.

One of the unique aspects of non-life insurance is 'co-insurance'. Simply put, it is the sharing of a big risk and the premium among two or more insurers.

However, the policy will be issued by the lead insurer who will receive the full premium and then pay the other co-insurers of the risk.

Similarly the claim will be settled in the ratio of the co-insurance share. The same modalities work for reinsurers.

"Clearing houses for non-life insurers are common overseas. This will help in settling inter-company balances. We will start with fire insurance co-insurance," Chandrasekaran said.

He said there will be a software platform that will do the needful on feeding the data. The settlement cycle will be around six months.

While co-insurance contracts are majorly for fire insurance, there are other policies like the transit insurance that can be under co-insurance contracts.

According to Chandrasekaran, the Council is also working on standardisation of wordings in respect of commercial insurance policies without hampering innovation in risk covers.

--IANS

Source: Business Standard



Insurance e-commerce: Flash sales of policies may be coming soon

Jul 8, 2016

Heard of flash sales of smartphones on e-commerce websites? Soon, one could be lured into buying insurance products in milliseconds. It may sound like an exaggeration now but soon one may be able to buy such products online just like one orders food or buys movie tickets. Welcome to e-commerce in the insurance sector in the form of e-insurance policies.

But insurance is anyway being bought online. So, what's changing? Well soon, one may be able to buy insurance from not only the insurer's website, but also any third-party website. Here's how it's taking shape.

The Insurance Regulatory and Development Authority of India (IRDAI) has floated a draft proposal to allow e-commerce in insurance, the regulations of which will be called the Insurance Regulatory and Development Authority of India (Insurance e-commerce) Regulations, 2016. The idea is to help increase insurance penetration and bring about more financial inclusion. Alok Bansal, Co-founder & CFO, PolicyBazaar.com, feels, "New norms are an indication of the larger goals that the regulator is working on, which is to provide greater access to the consumers, which in turn helps create a larger market for insurance products."

E-commerce players

The draft aims to open up the distribution space by allowing for the creation of Self-Network Platform (SNP), which can be a regular website (desktop or mobile version), or mobile app or both. As per the draft, besides the insurer, insurance intermediaries, insurance agents or any other person recognised by IRDAI will be allowed to set up such a platform and start selling insurance products. Naval Goel, Founder & CEO, PolicyX.com, says, "This draft will encourage more competition in the fast-growing online insurance sector and will help customers to choose from a wide variety of service providers. IRDAI has ensured that the insurer is responsible for the agent who has set up the Self-Network Platform for selling and servicing of the product which implies strict adhering to the guidelines set down by the regulator."

Digital covers

It means that once the draft proposal is implemented, a prospective buyer would be able to electronically fill the proposal form of an insurer's product, digitally sign it and complete other formalities online, including furnishing the KYC requirement electronically and getting the policy document delivered into the electronic Insurance Account (eIA) of the policyholder. "It's a signal to the whole ecosystem to start taking the digital medium seriously," Bansal says.

A demat account is therefore indispensable before you buy the product from an e-commerce site. An electronic or digital signature, or single-factor authentication such as one-time password, PAN card and date of birth may be used for underwriting and acceptance of risk for insurance business transacted on the Insurance SNP.

Distinguishing the products

On the e-commerce platform, the product will carry a prefix "i" against its name. Varun Dua, Co-founder & CEO, Coverfox.com, says, "There will be only two types of products, Online and Offline. The Self-Network Platform will have to credit all products sold online into the customer's e-Insurance account as per the recent e-Insurance policy regulation issued by IRDAI."

Online offerings

As per the draft regulations, the insurers may allow existing products to be sold on the e-commerce platform or may offer new products to suit the online immunity. Dua says, "Most insurers would love to distribute their existing policies through their online channel. We don't foresee insurers selecting few or new ones. All products that are relevant to an online buyer would get distributed through the Self-Network Platform." Insurers may offer differential pricing for the same product when sold on the e-commerce sites. Naval Goel, Founder & CEO, PolicyX.com, adds, "They will be selective in getting the products online. They will also plan completely new products for Self-Network Platform"

Threat of mis-buying

Insurance is a complex hybrid product combining insurance and investment. Proper needs analysis is required to buy the right life insurance product. Even in health insurance, there are many products with varying features. Making the right choice requires a bit of understanding or the right kind of guidance. Even though online platforms offer many products to choose from, making the right decision could pose a challenge. Bansal says, "Advisory plays a big role in decision making for little complicated and critical insurance products. For instance, health, term, critical illness covers always require more advice than simpler products like travel, two-wheeler, motor cover that involve personal liability, assets, events being covered. In the latter products, advisory plays a limited role."

Nilesh Parmar, COO, Edelweiss Tokio Life Insurance, says, "The ability to provide an online experience that most genuinely translates the offline experience of need-based selling on to the e-commerce platform would stand out as the key differentiator between the best insurance SNPs and the rest of the pack as no biases will creep in since there is no human being involved between the customer and the platform."

What if the customer also wants advisory from the insurance online platform? "It has to make a commercial sense too. In the products priced at less that Rs 1,000, advisory economics will break down at that level. On our platform, 80% of the purchases made for travel, two-wheeler, motor covers are unassisted and don't require any human intervention/advisory." So, there could be a robo-advisory kind of model in insurance that may come at a price for advisory.

Selling dashboard

Similar to any other product on the e-commerce site that carries specifications, the insurance product too needs to carry information on the type of consumer for whom it is intended , its main characteristics, the options and coverage provided by it, the exclusions and limitations associated with it, the total premium and other charges (including all applicable taxes). Importantly, the cancellation policy should also be there along with the time limit within which the policy can be cancelled and the procedures for cancelling.

In addition, e-commerce sites would be asked to disclose the turnaround time for each service and the process to be followed. The process and timeline for services such as issuance of policy, crediting to the eIA, change of name or address, registering of nomination or assignments, surrender, maturity payouts, revival of policies, duplicate policy amongst any other service operations as may be specific for the products also need to be disclosed. Easwara Narayanan, Chief Operating Officer, Future Generali India Insurance, informs, "Dispensing with the hard copy of the proposal form and physical or wet signature is a well thought out enabler. Authentication through OTP (One-time Password), PAN card or date of birth makes the whole process easier."

A mechanism to address policyholders' grievances, which are to be attended in the time frame specified by the Authority from time to time, is to be provided by the website. The grievances registered shall, however, be managed through IRDAI's Integrated Grievance Management System.

Integrated insurance services

IRDAI makes it clear that SNPs will not be merely sales-oriented platform but have to address all service-related issues of the policyholder. Before selling, the e-commerce player has to enter into an agreement and get real-time connectivity with the insurer to service the customers. The platform will have to enable seamless integration of filling up the proposal form, acceptance of the proposal, compliance of KYC norms, payment of premiums, issuance of insurance policies and endorsements, acceptance of policy servicing requests, settlement of claims, payment of benefits and any other activity as part of the insurance policy. Features like free-look or grace period will be exactly the same for both online and offline customers.

Conclusion

IRDAI will be considering the feedback of the concerned players and analyse the pros and cons before implementing the regulation. It will be interesting to note how the pricing and commission structure will take shape. It remains to be seen whether it will merely open up the space or also help consumers take an informed buying decision.

Source: The Economic Times



Health insurance for government staff renewed

Jul 8, 2016

The State government has enhanced the coverage under the health insurance scheme for government employees and extended the scheme to cover treatment for cancer and organ transplant surgeries.

The government has extended its insurance scheme for another four years, up to June 30, 2020.

The insurance scheme that was implemented in 2012 for four years through the United India Insurance Company expired on June 30 and was due for renewal.

Rs. 7.5 lakh-coverage
Government employees, who are beneficiaries of the Chief Minister’s Comprehensive Health Insurance Scheme, can expect to be covered for up to Rs. 7.5 lakh of the treatment cost.

A release said the government had extended the scheme to cover dependents of beneficiaries with 40 per cent disability, irrespective of their age.

Henceforth, accident victims admitted to a hospital that was not empanelled under the scheme would be covered, the government has announced. It had extended cover to hospitals not empanelled in the scheme if and when victims of accident were admitted to such hospitals for treatment.

Under the scheme, the employees had to pay a premium of Rs. 180 a month and the government would pay Rs. 17.90 crore to the insurance company.

According to the release, around 10.22 lakh employees and their families were expected to benefit from the scheme.

Source: The Hindu



Insurance penetration in India stays low at 3.44%

Jul 1, 2016

Insurance premium jumps 7.9% to $72 billion in 2015: study

Despite insurance premium collection in India witnessing a growth of 7.9 per cent, penetration of insurance in the country remained low at 3.44 per cent, says a global study by Swiss Re.

Insurance penetration, which is measured as a percentage of premiums to a country's gross domestic product (GDP), stood at 3.44 per cent in 2015, compared to the global average of 6.23 per cent. Advanced markets posted penetration of 8.1 per cent, led by Japan, which witnessed insurance penetration of 10.8 per cent, UK (10 per cent) and France (9.3 per cent).

Insurance penetration level in India was better against the emerging market at 2.9 per cent. However, Brazil and China have registered higher penetration at 3.9 per cent and 3.6 per cent, respectively.

“Insurance companies have seen their foreign partners increasing stake in Indian entities and taking the insurance business in the country seriously. Higher incomes and savings, coupled with changing lifestyles, are expected to drive rising insurance penetration in the country,” said Sandeep Patel, MD and CEO, Cigna TTK Health Insurance.

Total insurance premium in India grew by 7.9 per cent to $72 billion in 2015, compared to a contraction of 1.2 per cent in 2014. The improved performance was aided by stronger growth in both life and non-life premiums.

Life premium rose 7.8 per cent to $57 billion, compared to a contraction of 2.1 per cent in 2014. The recovery was underpinned by investment-linked products, which posted strong growth through bancassurance channels.

Non-life premium increased 8.1 per cent to $15 billion, compared to the growth of 2.2% in 2014. Growth was led by stronger health (including personal accident) and motor third-party liability premiums.

In India, insurance density, which is premiums per capita, stood at $55, against $281 in China and $332 in Brazil. The UK and the US posted insurance density of $4,359 and $4,096, respectively.

Global insurance premiums grew by 3.8 per cent in 2015, compared to 3.4 per cent gain in direct insurance premiums written in 2014. There was a slight slowdown in the life sector in 2015, with global premium growth dipping to 4 per cent from 4.3 per cent due to weaker performance in the advanced markets. On the non-life side, strong growth in the advanced markets of Asia and improvement in North America and Western Europe, contributed to a 3.6 per cent increase in global premiums, up from 2.4 per cent growth in 2014.

"Interest rates and the macroeconomic and financial market environments will continue to shape the outlook for the insurance industry," said Kurt Karl, chief economist at Swiss Re.

"With profitability under pressure, life insurers will continue to focus on improving capital management, lowering expenses and enhancing investment yields. Profitability in non-life will also remain subdued on still-low investment returns and soft pricing conditions," he added.

Source: Financial Chronicle



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