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Govt allows 49% FDI in insurance under automatic route

Mar 21, 2016

Seeking to attract more foreign investment, the government has relaxed FDI norms for the insurance sector by permitting overseas companies to buy 49 per cent stake in domestic insurers without prior approval.

Currently, up to 26 per cent FDI is permitted through the automatic approval route. For FDI up to 49 per cent, the approval of the Foreign Investment Promotion Board is required.

“The foreign investment proposals up to 49 per cent of the total paid up equity of the Indian insurance company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India,” said a Government notification.

There are 52 insurance companies operating in India, of which 24 are in the life insurance business and 28 in general insurance.

During April-December 2015, FDI into the country grew by 40 per cent to $ 29.44 billion.

Source: The Hindu



BS Insurance round Table: 'Listing of insurance firms to become a reality'

Mar 18, 2016

Listing of insurance companies in the country will soon be a reality, said the panelists at the Business Standard Insurance Round Table here on Thursday. Finance Minister Arun Jaitley said in the Union Budget 2016-17 that public sector general insurance companies would be listed, and hopes have been raised for the first listing of an insurance company in the industry.

G Srinivasan, chairman and managing director, New India Assurance said that the listing process was possible in a short span of time. "While we have to go through the process, all four public sector insurers are in a position to list, though it could take six to nine months. New India Assurance will be one of the first companies to be listed."

Apart from Srinivasan, the other panelists in the Round Table included HDFC Life MD & CEO Amitabh Chaudhry, SBI Life MD & CEO Arijit Basu, Religare Health Insurance MD & CEO Anuj Gulati, Marsh India Insurance Brokers CEO Sanjay Kedia, and Life Insurance Corporation of India Executive Director Vipin Anand.

Getting insurers to list on the stock exchanges has been an area of focus for the insurance regulator. The regulator has even said that they may nudge insurers to list if they feel a need to do so. Among private insurers, only HDFC Life has announced its plan to list on the markets, though it has not specified any timeline.

Chaudhry said the impact of listing will be huge on existing and prospective customers if it is done at the right price and if the post-listing performance is decent. "The confidence will improve and the trust deficit will come down. As we become owned by customers, we have to sign up for standards which are higher than what we are at today," he said.

According to him, the Insurance Regulatory and Development Authority of India (Irdai) has been pushing for listing because it wants them to stand on their own feet and not depend on promoters. "We are looking forward to it as and when it happens," Chaudhry added.

A lot of expectations have been generated on if and when Life Insurance Corporation of India (LIC) would list. While LIC's Vipin Anand said that this was a government decision and there is not development on this front as of now, he added that the scrutiny that LIC faces as a public sector insurer is much higher than some of the listed entities.

While New India's Srinivasan said listing would help improve the profile and image of the industry, Anand explained that even after 15 years of private sector insurers, LIC continues to be the dominant player in the market and its image among customers remains the best.

"Listed or not listed, a competent performing public sector insurer can hold its own," Anand added.

Adding to this, Religare Health's Anuj Gulati said, "The level of financial reporting we do, the amount of data we put up on our website is no less than what listed entities do."

Distribution of insurance products was an important point of discussion, where there were opposing views on open architecture between insurers having bank partners and those that didn't.

SBI Life's Arijit Basu explained that mis-selling is very low in the bancassurance channel, and is about one-fifth of that in the agency channel.

He said enforcing open architecture at banks would not be beneficial. "We have 80 per cent of our sales through the bancassurance channel, and we are still covering only 30 per cent of State Bank of India's branches. That is the problem. Insurance itself is a nascent activity for banks. If you were to impose something, it would be detrimental," he said. However, he added that bancassurance would eventually go the open architecture way in the next few years, a thought shared by other panelists as well.

In the past, banks have not agreed to become insurance brokers, preferring the corporate agency route. Marsh India's Sanjay Kedia said that any insurer owned by a bank, would not prefer open architecture.

"Open architecture will work for banks that have no insurance subsidiary or partner, but the bank will be driven by which insurance company offers the higher commission and incentives for volumes and will promote those products," he said.

Among distribution channels, agents account for the lion's share in terms of size and number of policies that they contribute to the industry. LIC's Anand explained that to sell insurance to the 300 million young people, there is a need to attract younger generation to the profession. He added that while youngsters are joining the profession, the numbers are much below the demand.

To make India an insured population, the country needs at least five million new insurance agents, he added. There are currently about two million agents.

Insurance also remains a push product, which has led to low penetration and density. Srinivasan said that there is a situation of insurance inertia in the country wherein people are aware of the need for insurance, but are still not buying it.

He stated the example of the recent Chennai floods where there were heavy damages to households. While it was expected that this would motivate people to buy home insurance, the actual data showed that home insurance purchase has not happened.

The solution, according to the panelists, was to have simple products at affordable costs. Citing data from the recent Pradhan Mantri Jan Suraksha Yojana, where millions have been insured in a short span, the insurance executives said that the country needed simple and cheap products that could compete in the market.

Source: Business Standard



Insurers hiring specialists to improve service

Mar 17, 2016

Insurance companies are hiring specialists to not only meet the needs of the business but also to deal with policy-servicing requests of customers.

Being a long-term product, insurers are required to deal with requests at all times including assistance during the policy tenure and at time of claims.

In case of health insurance plans where claims are to be paid either as cashless or reimbursement. Here, doctors are being hired to assist policyholders.

Amit Bhandari, head- Health & Agricultural Insurance, Underwriting & Claims, at ICICI Lombard said that they have brought doctors on board who also help customers get a second opinion if they are not satisfied with the diagnosis done by their doctor.

Most of these services are usually part of the policy as a value-added component intended to provide more than just insurance cover.

Both public and private general insurers are increasingly hiring doctors in their team not only for health claim but also for complicated cases. So even if a disputed claim has to be resolved at the Ombudsman office, the doctor is present to give information about the medical terminology.

Apart from insurers, third party administrators who handle health claims as well as insurance ombudsman office take help of doctors.

For instance, insurance companies provide road-side assistance in motor insurance. This provides assistance during motor vehicle repairs, damage on roads. For this, insurers like ICICI Lombard have hired engineers who can suggest basic solution to motor repairs based on description provided by customer over phone before a professional from nearby garages can come and provide assistance.

In the life insurance space too, insurers are looking at hiring at specialists like counsellors who can come of help of policyholders at time of death claim.

Going forward, these niche professionals would be available round to the clock so that whenever any grievance comes up, they are able to handle it in a timely manner.

Source: Business Standard



Motor premiums: Pay As You Drive is yet to take off

Mar 17, 2016

Indian IT companies like TCS, Infosys, Tech Mahindra, Harman India are providing an IT backbone for global insurers in delivering telematics solutions for bringing out "Pay As You Drive" premiums for motor insurance policies.

"Pay As You Drive (PAYD)" policies give policyholders better pricing as the premium charged is based on driving pattern, risk behaviour and traffic violations from data captured on the person's telematics-enabled carmobile device. Simply put: you pay less if you drive safely .

Global insurers like AIG Inc, Norwich Union, AXA SA and Allianz AG have adopted telematics solutions in America, Europe and other developed markets in tie-ups with automakers, telecom providers and smartphone makers to incorporate driving behaviour and usage information in the underwriting processes.

Most global insurers, including Aviva, AIG, AXA, Allianz have a presence in India through their joint venture partnerships in India like Tata AIG, Bharati Axa, Bajaj Allianz, etc but its implementation is still in the stage of pilot projects. "India has the technical expertise, but not the regulation to back it up. Automakers are wary of bringing out more expensive cars on the road by fitting them with a telematics' black box amidst cut-throat competition. Manufacturing costs as will go up as they try to adhere to Bharat Stage VI emission norms," says Vinaya Kumar Nerella, VP, Toyota Tsusho Insurance Broker India "Another drawback to fitting it in cars is that a fourwheeler motor insurance policy is about Rs 3,000-Rs 4,000 on average -and the cost of a black box is also roughly the same.So it doesn't make sense in the Indian market, where premium rates are already competitive and loss ratios are at all time high. Smartphone-based telematics solutions would be more viable," says Vijay Kumar, CTO, motor insurance, Bajaj Allianz General Insurance Co.

Most general insurers from ICICI Lombard General Insurance to Liberty Videocon General Insurance already have a pilot project on the ground for telematics. "We are also launching a pilot project soon. Telematics is definitely the way forward as it's not just about insurance, it also delivers on safety , emergency care during accidents, etc," says M Ravichandran, president-insurance, Tata AIG General Insurance.

In case of an accident, the telematics device can be used to dial 100 or 101 for police, fire personnel and ambulance services. "This will really help cut the time for getting medical aid during road accidents and avoid fatalities. The device can also be connected to road-side assistance tow-away trucks, replacement rental cars and reduce the associated claims costs," says a senior executive at TCS.

"The device can also alert the user on vehicle performance issues and trigger a maintenance check," he adds. On the aspect of road safe ty Infosys is working on advanced driver assist systems (ADAS) enabled services.

"Infosys has a system for detecting driver fatigue using facial analysis the software detects eye blinks, yawning and facial expressions and triggers a notification either through haptic (vibration) alert on the smart watch or beeps on the head unit panel," says Sudip Singh, SVP and Global Head of Engineering Services, Infosys.

"Infosys has developed a telematics dongle that can be retrofitted on any model of a automotive vehicle that will collect driving data. The dongle has accelerometer, gyroscope, magnetometer, GPS sensors along with bluetooth GSM modem for transmitting the driving data to the cloud.An algorithm running in the cloud computes the driving quality and scores the driving. This can be used by insurance companies to compute risk and insurance premium," he added Many long-distance goods carrying trucks in India already have a GPS locater enabled. Even for short-distance transport of goods one can now track via GPS-enabled devices thanks to the boom of online retailers like Flipkart, Amazon and Snapdeal.

"With telematics, we'll have better risk management for fleet insurance in the case of marine cargo. It would also be pretty easy to track stolen vehicles," adds Tata AIG's Ravichandran.

Source: The Times of India



Updated List of Web Aggregators: IRDAI Web Portal

Mar 09, 2016

IRDAI has published the latest list of Insurance Web Aggregators on its website.

As per IRDA (Web Aggregators) Regulations 2013, a “Web Aggregator” is a Company registered under Companies Act, 1956 (1 of 1956), approved by the Authority under these guidelines, which maintains/owns a web site and provides information pertaining to insurance products and price comparisons of products of different Insurers and offers leads to an Insurer / Insurance Broker.

Check the latest list here!



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