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A ‘healthy’ turn to innovation in insurance

Sept 27, 2016

Insurance companies deal with risk. And, as new forms of risk constantly emerge — from driver-less cars to activity-monitoring gadgets that judge health to millennials interacting only on the digital platform — insurance players have had to evolve. Interestingly, so too, the regulator.

In July 2016, the Insurance Regulatory Development Authority introduced several regulatory changes to health insurance. Such regulation has the potential to change the way risk, indemnity and other insurance products have been traditionally covered.

We take a look here at the top five changes. Note at least one thread that connects them all – an impetus to innovation.

New products

Previously, insurers required prior IRDA approval to withdraw products in the market and were therefore reluctant to introduce new products. The structure of health insurance policies was thus kept as predictable as possible and innovation in in the range of products that could be offered was stymied. The new regulations allow insurers to roll out products on a pilot basis and allow them the flexibility to even withdraw them after 5 years, without procedural hassles. While insurers still need a valid reason to withdraw the product, it allows them far more flexibility than afforded earlier and to attempt to cover risks that had not been addressed until now.

The regulatory changes, however, mandate that when pilot products are withdrawn from the market, insurers should ensure that such customers can port to an existing health insurance product of a different provider.

The regulator has also brought in transparency in mandating minimum pay-outs and product information, enabling a menu of offerings across health insurance products, portability and easy withdrawal of pilot products through the new regulations.

Wellness credit

To promote wellness and preventive health care, insurers can now offer a discount on the renewal premium in case of demonstrated improvement in health. However, parameters that qualify for improvement have to be disclosed upfront in the product prospectus. Insurers can now promote and cross-sell outpatient consultations or treatment, pharmaceuticals or health check-ups offered by the insurer’s network providers (hospitals and clinical establishments) and offer discounts in cashless transactions.

While some insurers have been providing wellness offerings and discounts, the regulator now requires them to be mentioned in the product filing. Having mentioned it in the filing, the company cannot withdraw offers without a valid reason.

Although the 2013 regulations brought in access to the insured availing of non-allopathic treatment or AYUSH (Ayurveda,. Unani, Sidha and Homeopathy), the move towards wellness and well-being has set the regulator on par with insurance regulators in the U.S. and the U.K.

Health vs finance

Life insurers can no longer offer pure indemnity-based products which assure a sum at the end of tenure. This used to resemble a financial protection plan rather than health risk cover. The aim of the new regulations seems to be to de-link financial protection-type plans from health insurance products and restore the primary objective of providing pure health cover under health insurance. It allows the health-life product players to compete on annual pricing, product packaging and rewarding good behaviour of the insured such as early subscription to a plan and continued attachment to the provider.

‘Group’ definition

Prior regulations stipulated that there should be a commonality of purpose as well as an economic or non-economic relationship among group members. Separate guidelines governed the group, group agent and the group insurer. The new regulations mandate that the minimum size of the group be fixed at 7 as compared with the arbitrary decision left to the discretion of the insurer, earlier. This is a significant step towards sanitising the competitive group insurance market. Earlier, any collection of individuals could form a group but if they did not all have a similar risk profile then, logically, the same risk cover may not hold for each of them..

Renewal norms

The renewal norms have also been made less stringent. An insurer shall not resort to fresh underwriting of his risk by calling for a medical examination or a fresh proposal form at the renewal stage of policies. (Earlier, such a possibility existed. If the insured had made a claim the previous year, renewal procedures could change.) Insurers are now encouraged to reduce loading the premium with a risk element, in case of improvement in the risk profile of the insured.

In sum, the new health insurance regulations, cognisant of dynamic market realities, enable players to innovate and compete in the health insurance ecosystem. It admirably balances customer protection and the commercial interests of the insurers.

Source: The Hindu

General insurance firms post 19% gross direct premium growth in August

Sept 23, 2016

General Insurance companies continued to post positive growth at 19.1% (year-on-year)in gross direct premium in the month of August. Data from the General Insurance Council show that private players have seen high premium underwritten as compared to public sector insurance companies. While specialised insurers like ECGC and AIC continued to see negative growth in August.

The general insurance segment saw gross premium income at Rs 9,013.97 crore against Rs 7,566.81 crore in August last year. While private insurers registered gross premium income at Rs 4,126.26 crore up by 40.1% compared to last year. While public sector insurance companies saw growth of 15.2% at Rs 3,825.19 crore in August, 2016.

The general insurance segment in the last few months has seen sustained growth and higher participation from private players as against public sector insurers. “We are witnessing higher demand from fire and marine insurance compared to other public sector insurance companies.

Private insurers are already leading with high market share in motor insurance. In the last few months, private sector has seen higher growth also because of their participation in the crop insurance,” said a top insurance player. In the motor insurance segment, gross direct premium income underwritten by the non-life insurers up to August was Rs 19,314.53 crore with Rs 10,302.54 crore for private sector and Rs 9,011.99 crore for public sector firms. Apart from general insurance, stand-alone health insurance companies also saw surge in their premium income by 36.6% in the month of August. However two specialised players like ECGC and AIC saw growth of -34.1% in August.

Source: The Financial Express

Up to 6 new players may enter reinsurance market in India by January 2017: IRDA chief

Sept 20, 2016

Up to six new players in the reinsurance market are likely to enter India by January 2017, the Insurance Regulatory and Development Authority of India (IRDA) chief Mr T.S. Vijayan, said at an ASSOCHAM event.

About five-six (companies) have come and I think by January 2017, there should be some players in this market, we will be taking a decision in October in the next authority meeting, then they have to bring capital and start working at it, said Mr Vijayan while inaugurating an ASSOCHAM Global Insurance Summit.

He also said that IRDA would finalise the regulations pertaining to payment of commission or remuneration to insurance agents and intermediaries in October. I believe in next board/authority meeting, which will be in October, we will be able to finalise.

Talking about the whole process, he said, We discuss with everyone, we bring the draft, people give their feedback on it and we again discuss that thing. Then it is taken to Insurance Advisory Committee, looking at suggestions, they suggest it and then it goes to the authority.

On the listing of insurance companies, Mr Vijayan said, In the previous Act itself there was a provision for listing, this was changed, we wanted to have a discussion on this subject, so we brought out a paper and companies have expressed that thing, so let us see how it goes forward.

He said also that IRDA has not fixed any time-frame for the final regulations. I believe that discussions are going on how to list general insurance companies, all 5-6 of them.

He added that considering about five months are still left in this financial year, listing of more PSU insurance companies was possible. It is possible but I am not too sure, we have not got any official paper, it is in the discussion stage but nobody has approached us.

On the issue of insurance marketing firms, he said We have allowed to them sell up to three companies' product, these are evolving processes.

He said that though insurance industry in India has grown in terms of premium collections from Rs 45,000 crore in 2000 to Rs 4,63,000 crore in 2015-16, insurance penetration against world average and other Asian countries highlight much more ground to be covered.

We need to focus on number of lives or risks covered, spread across geographies, gender and level of insurance coverage, as clearly indicated by around 0.7 per cent only insurance penetration observed for Indian general insurance industry against world average of 2.77 per cent, said Mr Vijayan.

He said there are healthy growth prospects for insurance business in general and particularly in property, health and pension lines of business.

The IRDA chief said that home insurance penetration being very low in India, it is one of the most needed insurance cover.

Imparting financial literacy, incentivising Indian households to transfer savings from physical assets to financial assets and effective distribution among rural areas are expected to bring more and more individuals within insurance ambit, he said.

Mr Vijayan also said that multiple models and approaches are vital to ensure last mile connectivity and reach of insurance services to address diverse social, cultural, geographical features of rural India.

He said that innovation in products, their distribution should be made in a manner that people are encouraged to buy insurance cover by realising benefits, requirement and necessity. An environment must be created to facilitate the same by expanding distribution reach and improving accessibility options to consumers by optimal usage of technology.

In his address at the ASSOCHAM conference, Mr S.K. Roy, chairman, Life Insurance Corporation (LIC) said, For the life insurance industry these are the best times, as the current financial year has seen fantastic growth, August 2016 has seen stupendous growth as LIC's new business premium grew by more than 92 per cent for August.

We have yearned for long for this type of growth but seen very rarely, so definitely this is the very good time to be in the life insurance industry, said Mr Roy.

Going forward, industry will be working on a more stable platform of regulations than it was in last 12-18 months, that is also a very positive feature, added the LIC chief.

Mr C.V. Rao, Governor of Maharashtra while addressing the ASSOCHAM conference, said that with new insurance policies and various other steps being initiated by the government coupled with India's demographic dividend, it will further push the country's economy on growth trajectory.

As a country with more elderly population and growing middle class, there are plenty of business and opportunities for growth of insurance sector in India, said the Governor of Maharashtra.

Mr Sunil Kanoria, president of ASSOCHAM, in his address at the global insurance summit said, The going for most of the general insurance players has been tough as they operate in a highly competitive environment. Going forward, the route to profitability should be chartered by addressing issues of distribution channels, products, customer acquisition through greater product awareness, pricing, risk management and leveraging of technology.

Source: Business Standard

Railways mulling insurance for baggage, laptops and even mobiles

Sept 16, 2016

With 40 lakh people opting for passenger insurance since its launch early this month, Railways is now planning to roll out insurance for baggage, mobiles and laptops in the insurance cover.

There are also plans to expand the existing passenger insurance to include station and ticketing areas so that passengers get the cover in case of any untoward incident on station premises.

“As of now the insurance covers passenger from boarding to alighting from train. We are planning to extend it on station and ticketing areas also. There is potential to extend it to baggage and other valuables like mobile and laptop,” said IRCTC Chairman and Managing Director A K Manocha.

According to IRCTC (Indian Railway Catering and Tourism Corporation), there is immense potential to expand the insurance cover and this would bring down the premium amount. IRCTC along with three private companies provide the insurance cover.

Manocha said the response to passenger insurance was massive and plans of extending the insurance cover had to be worked out. The organisation is also planning to extend the service to unreserved passengers. It is also modifiying the ticket-booking website so that medical insurance automatically gets added to the ticket. The passenger has to opt out if the person is not interested in getting the cover. Presently, the insurance option has to be ticked while booking the ticket.

Since September 1, passengers booking tickets online have an option to get an insurance cover of up to `10 lakh by paying a premium of 92 paise. Insurance can be claimed if any untoward incidents, including terrorist attack, dacoity, rioting, shootout or arson, occurs. The scheme is a great success and on Tuesday, Railway Minister Suresh Prabhu tweeted, “Number of people opting for new insurance scheme crossed 4 million mark. Scheme a great success and it is one among many passenger friendly initiatives.”

The scheme offers travellers/nominees/legal heirs a compensation of `10 lakh in the event of death or total disabilty, `7.5 lakh for partial disability, up to `2 lakh for hospital expenses and `10,000 for transporting mortal remains from the place of a train accident.

Three companies — ICICI Lombard General Insurance, Royal Sundaram General Insurance and Shriram General Insurance provide the insurance. They have been engaged for one year with the provision of extending the contract on the basis of performance basis.

Source: The New Indian Express

Insurance for train travellers takes off

Sept 16, 2016

The makeover of Indian Railways has been in the making for a while now. The latest move by the government is to bundle travel insurance along with your train ticket—much like what the airlines do.

The Ministry of Railways announced optional travel insurance earlier this month, and it seems to have become popular as every second booking—of about 700,000 tickets booked online each day—is opting for the insurance, said Dipankar Acharya, country head, affinity and strategic relationships, Royal Sundaram General Insurance Co. Ltd. The government is implementing the scheme in partnership with ICICI Lombard General Insurance Co. Ltd, Royal Sundaram and Shriram General Insurance Co. Ltd.

The scheme is applicable only to online bookings, and will be on trial for 1 year. When asked if it will be extended to offline bookings as well, an Indian Railway Catering and Tourism Corp. (IRCTC) spokesperson said: “Eventually it may happen. But for now, this insurance scheme has been started for a period of one year for online ticket buyers only.”

Here’s a look at the important working aspects of the insurance scheme.


“It is a group insurance policy given on an individual basis,” said Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance. A premium of 92 paise per passenger is charged while booking the ticket, if you opt for insurance. “This amount will remain the same irrespective of the duration and distance of the journey,” Datta said. The insurance is optional, but once opted, all passengers under one PNR (passenger name record) will be covered. The insurance option is currently available for online bookings or e-tickets. It excludes suburban trains. Also, children below 5 years of age are not covered.

While the option is currently available for bookings through the IRCTC ticketing portal, it will soon be made available for all the other online modes of booking tickets.

“We are currently working on the integration of the systems. Once it is complete, this facility will get extended to the railway ticket booking app users as well as to travel agents,” Acharya said.


For the purposes of this scheme, accidents and victims are defined according to the sections 123, 124 and 124-A of the Railways Act, 1989.

An accident could be a collision between trains, of which at least one is a passenger train; or the derailment of a train; or other accident to a train or any part of a train carrying passengers. However, according to the section 124-A of the Act, compensation cannot be claimed if a passenger dies or suffers injury due to suicide or attempted suicide. Self-inflicted injuries, acts committed by passengers in a state of intoxication or insanity, natural death and injuries on account of “adventurous sports” are not covered. So, don’t expect a compensation if you lose a limb by falling from the roof of a train.

The insurance cover extends to acts of terrorism; violent attacks like robbery, dacoity and shoot-outs; and arson in a train carrying passengers. The coverage lasts for the actual time period of the journey, including arrival and departure.


The insurance provides a cover of Rs10 lakh in case of death or permanent total disability. For permanent partial disability the cover is up to Rs7.5 lakh. For hospitalisation expenses, the cover is up to Rs2 lakh and Rs10,000 for transportation of mortal remains of a victim. Coverage of hospitalisation expenses is in addition to the coverage of disability and death.

Passengers who opt for the insurance will be able to make the claim in addition to the compensation that the government gives in case of an accident or untoward incident. “This insurance is over and above the ex-gratia compensation that is given to accident victims,” the IRCTC spokesperson said. According to the Railway Accidents and Untoward Incidents (Compensation) Amendment Rules, 1997, the government gives a compensation of Rs4 lakh in case of death and up to Rs4 lakh in case of injuries and permanent disabilities.


If you opt for insurance, you will need to update the nominee details on the insurance company’s website. The link to this website will be provided, along with policy number, though an SMS. If a passenger does not update these details, the claim will be settled with the legal heirs of the policyholder.

The claims will have to be filed within 4 months of the date of accident, along with a report from the railway authorities on the accident and the list of dead passengers, in case of a death claim.


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