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Pollution certificate now mandatory to renew motor insurance: IRDAI

Aug 23, 2020

The Insurance Regulatory and Development Authority (IRDAI) has issued a new circular to insurance providers in India, asking them to obtain valid pollution under control (PUC) certificate for the vehicle while renewing the policy.

If the vehicle’s PUC certificate’s validity is expired during the time of the accident, the insurance companies will not cover any damages, the regulatory body said, adding that the pollution license is essential for all claims.

Earlier, the Supreme Court had directed Insurance Companies not to insure a vehicle unless it has a valid PUC certificate on the date of renewal of the insurance policy. IRDAI has issued a circular to all general Insurance Companies to ensure that the direction of Supreme Court of India is followed scrupulously with a special focus on compliance in the Delhi – NCR.

In its circular addressed to all CEOs and CMDs of general insurance companies, the regulatory body noted, “Central pollution control board (CPCB) has raised concerns regarding status of compliance of above direction of Hon’ble Supreme Court of India in National Capital Region of Delhi (Delhi – NCR). Please ensure that the direction of the Supreme Court of India is followed scrupulously with special focus on compliance in National Capital Region of Delhi (Delhi – NCR).”

The PUC certificate is a document that any person driving a motor vehicle can be asked to produce by a police officer in uniform authorised by the state government. The pollution checking centres issue certificates if a vehicle is found complying with the prescribed emission norms.


India:General insurers turn to inhouse claims processing teams

Aug 14, 2020

With the rise in health insurance claims, accelerated by the COVID-19 pandemic, and more complaints over payment delays, general insurers have been pushed to set up internal teams to ensure quicker compensation.

An in-house processing team is able to clearly explain which expenses under health insurance are payable and which ones are not. This is because they are internal company experts. Sometimes an expense covered under a policy’s terms may be inadvertently excluded. In such instances, an in-house team would be able to resolve the discrepancy quickly, reported Moneycontrol.

In comparison, a third-party administrator (TPA) has to first check with the insurance company as to why a particular claim component has been excluded from the final settlement. Insurance regulator IRDAI has directed TPAs not to take health claims payment decisions on behalf of insurance companies. This means that a TPA will merely be involved with the processing of claims.

Last December, IRDAI allowed policyholders to choose a TPA for their health insurance policy. This can be done at the time of buying the policy or renewing it. If the policyholder does not choose a TPA of his choice, then the company will allot him a TPA of its choice. Also, if the insurer engages the services of only one TPA, the policyholder will have no option but to stick to that TPA.

Mr Bhaskar Nerurkar, head, Health Claims, Bajaj Allianz General Insurance, told Financial Express that a policyholder must look at parameters such as digital support offered by TPAs, turnaround time taken by the TPA and also the network providers to settle the claims. “The data on TPAs servicing will be transparently and readily available in future in the public domain so that a policyholder can make an informed choice,” he said.


India:Motor insurance sector faces decline

Aug 14, 2020

The motor insurance business in India is projected to contract by 27.2% in 2020 which would be a sharp decline from the 10.1% growth witnessed in 2019 according to data and analytics firm GlobalData. The firm has revised India's motor insurance forecast in the aftermath of the COVID-19 outbreak.

As per the latest data, the motor insurance business is expected to register a compound annual growth rate of 1.1% over 2019-2023 in comparison to the earlier forecast of 11.3%. The lower growth is primarily attributed to the current economic uncertainty and lockdown restrictions imposed in India to control COVID-19 pandemic.

“The recent lockdown restrictions resulted in the decline of consumer spending and impacted the new vehicle sales. In June 2020, the passenger vehicles and two-wheelers sales declined by 50% and 40%, respectively, compared to June 2019. This has impacted motor insurance premium collections,” said GlobalData insurance analyst Pratyusha Mekala.

According to the Insurance Regulatory and Development Authority of India (IRDAI), overall motor insurance premiums registered growth of 1% in June 2020 compared to the previous year. This growth could be due to the higher share of renewal premiums.

While the motor own-damage sub-segment declined by 2.7% due to the fall in vehicle sales, the mandatory third-party liability segment reported 3.2% growth during the same period and supported the overall insurance growth in June 2020.

The recent regulatory changes following the pandemic are also said to have impacted motor insurance premium growth.

In March 2020, the IRDAI put on hold the proposed hike ranging between 2-10% on third-party liability insurance premium. Additionally, the move to discontinue long-term own-damage motor policies, effective 1 August, will also result in lower spending on motor insurance this year.

Therefore, Ms Mekala noted that motor insurance business recovery in India is expected to be stretched despite the gradual revival of the economy. “The pressure on new vehicle sales is likely to continue until 2021, resulting in sluggish growth in motor insurance premium,” she said.


India:Schools provide health insurance cover to all staff

Aug 13, 2020

Two schools in the western Indian state of Gujarat have provided health insurance cover to all their teaching and non-teaching staff which also covers COVID-19. The COVID-19 pandemic has brought about huge challenges to schools across the country as most institutions remain closed and most adopting the online schooling system.

The Ahmedabad-based Udgam school and Zebar school have provided this health insurance cover for INR300,000 ($4,010) and a life cover of INR1m that also includes COVID-19 treatment for all its teaching and non-teaching staff.


Reinsurance firms reluctant to cover covid-only plans

July 24, 2020

The absence of the reinsurance option for covid 19 policies has been a challenge for the insurance industry, said representatives of both life and health insurers during the Pivot or Perish online insurance meet organized by Mint on Thursday. Prasun Sikdar, managing director and chief executive officer, Manipal Cigna Health Insurance Co. Ltd, said indemnity covers do not present a huge reinsurance need since most corona patients are asymptomatic or have mild symptoms. But a benefit-based corona policy will need reinsurance due to the uncertainty about the diagnosis rate.

Bhargav Dasgupta, managing director and chief executive officer, ICICI Lombard General Insurance, also emphasized on the need for reinsurance in benefit-based policies, such as Corona Rakshak, due to the higher possibility of fraud. The Insurance Regulatory and Development Authority has allowed two covid-19 policies—Corona Kavach and Corona Rakshak. Corona Kavach is an indemnity product, wherein a patient is reimbursed the actual cost of treatment, and non-life firms are mandated to offer the product.

Corona Rakshak, however, is a benefit-based policy wherein the patient is offered a fixed amount on being hospitalized for 72 hours for covid-19. For such policies, the full amount has to be paid if the beneficiary is diagnosed with covid-19. “If your frequency assumption on the number of people who fall sick goes wrong, you could end up losing a lot of money and for that you need reinsurance," said Dasgupta, adding that while insurers were mandated to launch the corona policies, there has been no compulsion on reinsurers to provide cover. This has led to a wide variance in premiums as companies are modelling the risks differently, and smaller insurers are being compelled to quote higher premiums as the risks are higher, Dasgupta added.


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