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Insurance Company Told to Cover Tsunami Damages

Apr 07, 2016

The Madras High Court has overruled an insurance company that had denied the claims of a shipping company for losses caused by a tsunami to the shipping company’s barges.

SBK Shipping Private Limited, Cuddalore Harbour entered into a insurance contract with United India Insurance Company Limited, insuring its four barges. Clause IV of the contract states that the insurance covers loss or damage to the subject matter caused by perils of the seas, rivers, lakes or other navigable waters. It also covers loss caused by other actions such as fire, violent threat and piracy where as Clause V of the contract states that the insurance shall not cover loss, damage, liability or expenses caused by earthquake or volcanic eruption.

United India Insurance Company denied the claims for damage of barges suffered by SBK Shipping Private Limited stating the losses fall under the category ‘Perils of the Sea’ and since an earthquake (not the tsunami) was the ‘proximate cause’ (as distinct from ‘remote cause’), the losses suffered by the shipping company are excluded from insurance claims.

The division bench comprising Justice R Sudhakar and Justice S Vaidyanathan dismissed United India Insurance Company’s appeal saying, “We are unable to accept the argument of the Insurance company that the earthquake is the proximate cause for the damage of the vessel. On the contrary, it is the remote cause. If the tsunami, a peril of the sea, is the direct cause for the damage, there is no need to embark on further enquiry as to what is the proximate cause of tsunami. The proximity is in relation to the damage and if the claim answers the same it is maintainable,” the judges said.

“Scientifically it is stated that the earthquake was the cause of the tsunami, but for persons who suffered the wrath of the tsunami in TN, the earthquake is virtually a remote cause. The proximate cause for the damage caused to the property is giant tidal waves of tsunami, a ‘peril of the sea’ and not the earthquake,” the judges stated.

Source: The New Indian Express

Third party insurance to cost more

Mar 29, 2016

Come Friday, premium rates for the mandatory, third party insurance cover are set to increase for various categories of motor vehicles, including by a steep 40 per cent for private cars in the 1000-1500 cc segment.

Setting the stage for the hike was an order of the Insurance Regulatory and Development Authority of India (IRDAI) on Monday notifying the premium rates for 2016-17.

The order, which follows an exposure draft issued earlier this month mooting a 3 to 30 per cent hike in the rates for different vehicles, pegged the premium for private cars (not exceeding 1000 cc) at Rs.2,055.

This will be over 28 per cent more compared to the Rs.1,468 premium that such owners need to pay at present. The draft had proposed a premium of Rs.1,908.

For private, 1000-1500 cc cars, a segment which features some of the popular, fast moving models such as Maruti Swift, Honda Amaze and Ford Ecosport, the premium will be Rs.2,237.

The existing rate is Rs.1,598 while the draft had proposed Rs.1,998.

For the cars above 1500 cc, the new premium rate is Rs.6,164 or 25 higher compared to the Rs.4,931 that is levied now.

The draft had also proposed Rs.6,164. The new rates of third party premium for two wheelers is as follows, similar to what was the exposure draft had suggested: Not exceeding 75 cc – Rs.569 (existing Rs.519); 75 cc-150 cc – Rs.619 (Rs.538); 150 cc-350 cc – Rs.693 (Rs.554). There is a reduction in the premium for two-wheelers over 350 cc from Rs.884 to Rs.796.

IRDAI’s Senior Joint Director Suresh Mathur said some stakeholders had wanted the minimum increase in the rates to reflect the increase in Cost Inflation Index over the year.

The Authority, however, decided not to increase the proposed premium rates in such cases and keep the premium as proposed in the exposure draft.

No cancellation

Insurers, he said, are not permitted to cancel the current insurance policies and issue fresh policies to effect new premium rates.

While maintaining the existing rates for some category of goods carrying vehicles, public carriers (other than 3 wheelers), the regulator has notified an increase, ranging from 15-30 per cent for others.

Source: The Hindu

ARTICLE: "How health insurance policies and hospital malpractices take patients for a ride"

Mar 29, 2016

In January 2015, life took an unexpected turn for author Naina Rao (name changed) when she was diagnosed with ovarian cancer. Over the next year, in the midst of all the hospital visits, surgery, chemotherapy, physical pain and emotional turbulence, she had to contend with another unwanted beast: a health insurance company inexplicably rejecting her claim.

Rao and her husband had signed up for a health insurance plan with a private sector insurer in 2011. The policy, at a premium of Rs 50,000 for two years, offered “cashless” treatment at all major hospitals in Mumbai. In other words, the hospital bills would be settled directly by the insurance company at the time of discharge. When it was time to renew the policy in 2013, the agent offered the couple a better plan for the same premium amount, assuring them that the new plan would be considered “continuous” with the old plan of 2011 – they would not be considered as new clients...

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Health insurance TPA to begin operations from next fiscal

Mar 24, 2016

The Health Insurance TPA of India (HI-TPA), which has been set up by public sector non-life insurance companies to manage their in-house health claims, will begin operations within next few weeks. While a soft launch has already been done, formal launch of operations would happen in the next few days.

Industry sources said that hiring is also complete, which also includes personnel on deputation basis from other state-owned general insurance company. When the TPA is operational, a portion of claims (8-10%) that are now being handled by external third party administrators (TPAs) would move to the new body.

This TPA launched pilot operations in October 2015 in Delhi. The company was then been allotted one office each from all 4 principal insurers-National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. The objective of setting up of the TPA was to reduce turnaround time for health claims.

However, external TPAs would also continue to service claims for the public general insurers.

Both cashless as well as reimbursement claims will be processed via this TPA. Further, HI TPA would provide the pre-authorisation to the insured member for availing treatment on cashless basis at Network hospital. The TPA is even coming out with a mobile application for ease of process in the near future.

For cashless claim, a member has to just show the card at the hospital after which the hospital fills the pre-authorisation request & sends it to HI TPA. The TPA will then review it and approval is granted. For reimbursement claims, the insured member has to inform the HI TPA/Insurer within 24 hours of hospitalisation. The very first member ID card was issued to a policyholder of National Insurance.

The new entity will not only provide pre-authorisation service and process claims, it would also provide network empanelment, verification and investigation, and pre-policy health check-up. Apart from this, they are in the process of establishing provider network under tripartite agreements between Insurer-Provider and TPA for extension of cashless facility to member customers. If required, HI TPA will also carry out spot verification of cashless cases and investigation of reimbursement claims as need be.

Health Insurance TPA is a joint venture of public sector non-life insurance companies – National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company, and General Insurance Corporation of India. The first four have 23.75% stake each in the new company while GIC has 5% stake.

The internal TPA was set up to prohibit large-scale leakages while settling insurance claims in the health segment. Insurers expect the new body to speed up the claims settlement process and reduce the claims ratio of insurance firms. This move is also expected to reduce costs for insurers, who pay a commission to TPAs for processing the claims.

It was incorporated on August 14, 2013 with two key objectives - to enhance customer experience and to bring in greater efficiency in health insurance claims processing. Health Insurance TPA is headquartered in New Delhi and is looking to develop its footprint/branches in different cities in due course.

Source: Business Standard

Irdai wants public sector general insurers in crop insurance scheme

Mar 24, 2016

Insurance Regulatory and Development Authority of India (IRDAI) will take up the matter of non-inclusion of public general insurance companies in the Pradhan Mantri Fasal Bima Yojana. At present, they are not part of the scheme.

Nilesh Sathe, Member-Life, IRDAI said that they will take up the issue with the government. These state-owned insurers have about 300,000 agents that sell insurance products in rural and urban areas.

G Srinivasan, chairman and managing director of New India Assurance said that the scheme will be successful only if they are made part of the scheme. "Our branch network and people on ground are very high. This can make a big difference to the scheme in rural areas. We are hopeful that we would be made part of the scheme," he added. Public sector non-life insurers have more than 9,000 offices across the country.

The government is planning to spend Rs 5,500 crore for the crop insurance scheme that was announced earlier. In his budget speech finance minister Arun Jaitley said that the farmers will pay a nominal premium for the coverage.

The Pradhan Mantri Fasal Bima Yojana has been approved by the cabinet in January. Here, there will be a uniform premium of 2 per cent to be paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5 per cent. The balance premium will be paid by the government.

Here, there is no upper limit on government subsidy and even if balance premium is 90 per cent, it will be borne by the government. Insurance executives said that the Modified National Agricultural Insurance Scheme (MNAIS) had high premium rate due to which farmers could not afford it. It is anticipated that there would be clusters that would be formed of districts to implement the scheme. Senior insurance officials said that that how the clusters are classified will define how the premiums will be fixed.

Apart from this, Regional Rural Banks also raised the issue of providing coverage to crop damage due to attacks by wild animals. Several cases of crop damage have been reported due to attacks on the farm land by elephants, which have destroyed the crops. However, ministry officials said that they will look into this issue.

The use of technology has been mandated in the PM Crop Insurance Scheme unlike the other schemes prior to this. The idea was to have one scheme that had the best features of all previous schemes incorporated into it, with weakness removed.

PMFBY will have actuarial yield-based scheme with provision for upfront premium subsidy to be released to insurers. The sum insured will be same for both loanee and non-loanee farmers. Also, there would be no capping and there will be full claim amount paid against the sum insured. This scheme will also cover localised risks like inundation and post harvest losses.

Source: Business Standard

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