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What does the insurance industry expect from Budget 2016?

Jan 29, 2016

Insurance companies hope the finance minister will be more generous in Budget 2016, than he was last year. And while tax exemptions remain their biggest priority, this year's wish list includes more measures to support and promote the government's pet insurance schemes.

India has immense potential as an insurance market. But it needs some serious support from the government if that potential is to be achieved, starting with more tax incentives for buying personal insurance policies. That's the crux of the insurance sector's wish list for Budget 2016.

Global reinsurance giant Swiss Re points out that insurance penetration in India in FY15 was just 3.3 percent, significantly lower than the global average of 6.2 percent.

Now this number could increase, thanks to Prime Minister Narendra Modi's insurance schemes, the Pradhan Mantri Suraksha Bima Yojana and the Pradhan Mantri Jeevan Jyoti Bima Yojana. But, players launching a scheme is not enough.

"See we have been telling the government that personal lines of business need a push and the tax breaks have always helped the Indian customers to go in a particular direction in the case of life insurance policies," says G Srinivasan, CMD, New India Assurance.

"So we have asked for a very small exemption. We have said that if this exemption is given, a lot of people will go for householder's policies, personal accident policies, which is today necessary for every individual," Srinivasan adds.

Currently, life insurance premiums are eligible for exemption under Section 80C of the Income Tax Act. Insurers like HDFC Standard Life feel life insurance needs a separate exemption, similar to that given to contributions made to the New Pension Scheme (NPS). Remember, 2015 saw an exemption of 50,000 rupees being provided to NPS contributions, over and above the Rs 1.5 lakh deduction limit allowed under the Income Tax Act.

Amitabh Chaudhry, MD & CEO, HDFC Standard Life Insurance says, "while last year he (the finance minister) made a major move in terms of giving a different category for NPS from a tax-saving perspective, we do believe that it is important that he, maybe, needs to carve out something similar for life insurance."

This is because, Chaudhry says, right now, the life insurance category is all mixed up and a lot of other things are allowed in it. So, separate provisions for life and pension schemes would be very helpful.

In addition, players feel the government must aggressively push its two insurance schemes to improve penetration. And one way to do this would be to enhance the insurance cover provided under these schemes from the current Rs 2 lakh. Service tax levied on life insurance products is also another sore area.


Health insurance market maintained double digit growth last fiscal year

Jan 28, 2016

The health insurance segment in the country continues to witness steady growth on the back of growing healthcare costs and increasing penetration levels with total premium collection growing 15 per cent in 2014-15 year-on-year. During 2014-15, the gross health insurance premium collected by non-life insurance companies was Rs.20,096 crore compared with Rs.17,495 crore in 2013-14, recording an increase of 14.87 per cent, according to the latest annual report of IRDAI (Insurance Regulatory & Development Authority of India).

The four public sector general insurance companies – New India, United India, Oriental and National – accounted for a major share of health insurance premium at 64 per cent of total health segment. Stand-alone health insurers contributed 14 per cent. While there is a marginal increase in the share of public sector and stand-alone health insurers, there is a drop in the share of private non-life insurers whose market share has come down from 26 per cent in 2013-14 to 22 per cent in 2014-15.

Over the past five years, there is a marked increase in the share of individual health insurance premium in total health insurance premium collected- increasing from 35 per cent in 2010-11 to 44 per cent in 2014-15.

The share of group health insurance business (other than government business) in total health insurance premium has remained static at around 45 per cent. . About 24 per cent of India’s total population has been covered under one of the health insurance policies in 2014-15.

Source: The Hindu

Insurance costs to go up 20-25% as more cars become Bharat Stage VI compliant

Jan 27, 2016

Insurance premiums might go up by as much as 20-25% as automakers start bringing out greener, more fuel-efficient cars that are Bharat Stage VI emission norms compliant, says industry experts. The Union government has directed auto manufacturers that all four wheelers in India should be Bharat Stage-VI compliant by 2020. Automakers have said that the average cost of producing a car, which uses fuel compliant with the European regulator's emission standards, will go up by 1-2.5 lakh.

"Its a fairly simple formula. If manufacturing costs go up then so will the price of the car and the sum insured. If the sum insured goes up then you will have to pay higher premiums," says Tapan Singhel, CEO, Bajaj Allianz General Insurance.

The auto industry has been lobbying for pushing the deadline on implementation of Bharat Stage VI to 2023 as the move requires heavy investments in infrastructure and resources. Automakers will have to invest significantly in new technology that could increase the cost of a diesel car by as much as Rs 65,000 to Rs 1 lakh and the cost of petrol engines from Rs 7,000 to Rs 11,000, according to sources.

With more sophisticated technology like diesel particle filters (DPF) and selective catalytic reduction (SCR) involved, small diesel vehicles could become prohibitively expensive, which will have a cascading effect on vehicle insurance.

"It is similar to what we saw with CNG vehicles. Insurance costs did go up with the introduction of CNG buses and cars; because these vehicles on average cost more than their less environment friendly counterparts," says the head of underwriting at a general insurance company.

As to the premise that the spike in insurance premiums could see a little moderation from the safety features installed in cars, industry sources say the idea is a little "far-fetched."

"Third-party premiums are fixed by the Insurance Regulatory and Development Authority of India (IRDA). And owned-damage (OD) premium rates though fixed by general insurers again are subject to IRDA clearance. So if cars in future have more safety features - and say accident rates go down - again keeping in mind that its human error more than technical glitches in cars that account for most road accidents - then there is a slight possibility in the distant future that actuaries could factor that in ... But its really quite far-fetched," says the underwriting head.

There is also the view that the IRDA will need to gradually increase rates to make it more acceptable to purchasers of vehicle insurance. "They'll have to stagger the possible rate hike. If it's brought in over a period of time it will be more acceptable," says Vinod Sahgal, managing director, Bajaj Capital Insurance Broking Ltd.

Source: The Times of India

Yoga powers its way into health insurance wellness packages of ICICI Lombard, Bajaj Allianz and others

Jan 27, 2016

The buzz around Yoga seems to have struck a chord with health insurers. The growing popularity of this ancient form of exercise has prompted general insurers such as ICICI Lombard, Bajaj Allianz and Royal Sundaram to incorporate it in their wellness and preventive healthcare benefit packages.

While the trend is more prevalent in the employees' group health insurance schemes, some insurers are now planning to extend it to their retail health policies too. "We are planning to introduce such programmes for our retail customers," said Nikhil Apte, chief product officer, product factory (health insurance), Royal Sundaram. The company plans to offer online Yoga coaching sessions or DVDs to its retail policyholders.

ICICI Lombard has already recognised Yoga as an eligible preventive healthcare tool by making it part of an add-on cover attached to its regular health policy. "Policyholders who buy our add-on cover that offers preventive healthcare and wellness benefits can file a claim for reimbursement of expenses incurred on enrolling for Yoga sessions," says Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance. The customers have to produce receipts of fees paid to Yoga institutes to claim the benefit. The sum insured under this add-on plan ranges from Rs 2,500 to Rs 10,000 a year, depending on the cover amount chosen.

While the demand has been rising steadily, the success of the International Yoga Day last year has spurred insurers to act. "We had tie-ups with the leading Yoga centres in the past but after seeing the success of International Yoga Day last year we decided to revive it and bring it under the ambit of our value added services portfolio," said Suresh Sugathan, head, health administration team, Bajaj Allianz General Insurance. The insurer is planning to offer discounts and incentives as part of its range of value-added offerings. "We are in talks with some Yoga centres and institutes for a tie-up. Policyholders who sign up for Yoga sessions at these institutes will be eligible for discounts on programme fees," he added.

In the employees' group health insurance space, Yoga is being seen as a cost-containment measure, along with other preventive healthcare programmes. Insurance officials and brokers cite its ability to manage stress, one of the primary causes of heart ailments, diabetes and other lifestyle diseases that affect employees' health, as the core benefit. "Since Yoga helps control stress levels, the claims filed by employees could go down, helping the corporate clients keep their subsequent year's premium under check, as premiums are linked to previous year's claim ratio," said Sanjay Kedia, CEO, Marsh Insurance Brokers.

The cost-benefit trade-off works in insurers' favour, say officials. "For instance, organising five Yoga sessions in a year (for corporate clients) could cost around Rs 50,000, but it could reduce the scope for ailments triggered by stress and hypothetically cut down insurers' claims payout by say Rs 5 lakh," said Apte.

Source: The Economic Times

Millennials more aware of own damage, TP insurance: Survey

Jan 21, 2016

A large number of millenials have availed own damage (OD) and third party (TP) insurance policies for their cars and bikes, a survey said today.

The survey was conducted by ICICI Lombard General Insurance among 1,073 millennials, comprising both car and two-wheeler owners, spread over Mumbai, Delhi, Pune, Bengaluru, Ahmedabad and Kolkata.

Even as 76 per cent of people surveyed were aware of car insurance policy in OD and TP, 41 per cent had availed of it, the survey report, released here, said.

In case of third party motor insurance, 78 per cent of people surveyed were aware of the insurance policy and 23 per cent among them had already availed of the same.

When it comes to OD and TP bike insurance, 80 per cent respondents were aware of bike insurance policy and 38 per cent among them had already availed of the same.

In case of third party bike insurance, 73 per cent of people surveyed were aware of it, while 23 per cent among them had already availed of the policy, the report said.

The study says that around a quarter of millennial vehicle owners have made claims, whereas bike owners display low familiarity with the claims process.

"The survey reveals that the Indian millennial is concerned about maintaining his/her vehicle through regular servicing.

"However, when it comes to adopting the right safety approach in terms of insuring vehicles and being aware of the processes, for example claims, not many seem to be in the know how," ICICI Lombard Chief - Underwriting, Claims and Reinsurance, Sanjay Datta said.

"It is important that multiple stakeholders including insurers work towards increasing awareness," he said.

Millennials from Kolkata emerged as the least inclined to sharing their car with others (at 71 per cent), followed by Pune (54 per cent), while Mumbai showed the highest inclination to car pool, as per the report. Among bike owners, Delhi emerged as the least inclined to

In matters of road safety, almost 40 per cent of car/bike owners claimed they never drove rashly, but when they did, it was only due to a medical emergency.

Some common road safety violations among car owners as per the survey were 'playing loud music' (39 per cent), 'overtaking' (46 per cent) and 'talking on mobile while driving' (39 per cent).

Among bike owners, 'not wearing helmet' (41 per cent), 'lane crossing' (40 per cent), 'jumping signals' (39 per cent) and 'talking on mobile while riding' (39 per cent) were the common causes.

A total of 60 per cent of millennial vehicle owners initiate a claim only when there is a major damage to the vehicle, but more car/bike owners in Kolkata (69 per cent) stated that they would initiate a claim even if there is a minor damage.

Source: Business Standard

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