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Delay in insurance claim is deficiency in service: Forum

May 20, 2018

Delay in processing insurance claim amounts to deficiency in service and unfair trade practice by an insurance company, the consumer disputes redressal forum, Ernakulam, observed.

The forum while hearing the case of a minor who suffered fracture while playing at a park made this observation and asked the insurance company not just to pay the insured amount but also compensate for deficiency in the service offered.

The judgement of the forum delivered last month came on a petition filed by Rajesh Balakrishnan on behalf of his minor son in Muvattupuzha in 2016. The insurance company was asked to pay Rs 20,000 to compensate the complainant for deficiency of service.

As per the petition, Rajesh along with his family visited Thanneerchal park on April 12, 2016. His son while playing on the slide boy fell down and sustained several bodily injuries. Immediately, the boy was taken toa private hospital in Tripunithura.

Doctors diagnosed a fractured elbow. The boy was hospitalised for two days and the total medical expense was around Rs 20, 000. Thereafter, Rajesh approached park officials seeking compensation. The park officials informed Rajesh that they were insured with the National Insurance Company and advised him to lodge the claim before it. Subsequently, the complainant approached the company seeking insurance claim, but to no avail. The insurance company contended before the forum that they had not received any complaint from Rajesh and hence he was not entitled for any benefits from the company.

But Rajesh produced postal receipts of the complaints he sent to the insurance company and the signed acknowledgment. He also produced evidence including the medical details to prove his claim.

The forum noted that the insurance company could not produce any evidence that they had promptly replied to the complaint filed by Rajesh on July 25, 2016. “The delay in processing the claim is not only deficiency in service but also an unfair trade practice. We are of the opinion that the first opposite party (insurance company) is also liable to compensate for the deficient service offered and for the unfair trade practice happened on their side,” noted the forum headed by president Cherian K Kuriakose.

The forum asked the company to process his claim and pay the amount in accordance with terms and conditions of the policy. Besides, it asked the company to compensate Rs 20,000 to Rajesh for deficiency in service and unfair trade practice committed by the latter and it should meet the cost of proceedings of the complainant at the forum.

“We had not received any letter claiming the insurance amount from the complainant. We got details of the claim, he sent us, from the advocate when the case up came in consumer forum. We are yet to receive the copy of the judgement,” said an official of National Insurance Company with the divisional office in Tripunithura.

Health-cum-life insurance for ryots soon

May 16, 2018

Chief Minister K. Chandrasekhar Rao has instructed the principal secretaries of Finance and Agriculture departments to hold discussions with the Life Insurance Corporation (LIC) authorities for evolving modalities for introducing the scheme, including fixing the premium.

The Chief Minister averred that the health-cum-life insurance cover for farmers announced by him is sure to show the way for the entire farming community across the country. Mr. Rao, who examined the salient features of the insurance scheme introduced by the Central Government in which farmers have to share the premium that should be paid to the insurers, opined that the State should opt for its own scheme that should be offered free of cost to farmers. Mr. Rao held a meeting with Ministers and senior officials on the proposed insurance scheme, being designed as group insurance scheme, and the processes required to be completed before officially launching it. He recalled that farmers of Telangana faced lot of distress in the united State and hence, the TRS government had taken up a spree of initiatives for alleviating their distress. The proposed that the insurance scheme is one such measure illustrating the government’s commitment to farmers’ cause.

The previous governments in the united State had never considered the farmers’ issues with a human angle. Asserting that the government is firm on addressing the farmers’ issues, he stressed the need for bringing the community out of trauma they face by putting in place variety of schemes, including the investment support scheme, insurance scheme and many such measures that are expected to follow.

The Chief Minister underlined the need for ensuring payment of ₹5 lakh as insurance amount to the families of farmers who die, whatever may be the reason. The government is committed to help farmers wholeheartedly and every farmer should get the benefit of insurance scheme irrespective of the size of the landholding, he said.

He said the government had decided to entrust the responsibility of implementing the insurance scheme to the LIC, a Government of India undertaking, owing to its large network and the trust people have in it. The scheme is yet another initiative with longevity which the future governments at any point of time should invariably continue. Budgetary allocations should be made for the payment of premium so that it can become an assured payment, Mr. Rao said.

Given the importance attached to the scheme, the officials concerned should work out with the LIC authorities about the different models, including age group wise model, and finalise the scheme after thorough discussions. The insurance papers should be prepared village and mandal-wise and adequate care should be taken regarding the entry of the name of the nominee during the preparation of the policy, the Chief Minister said. Ministers Eatala Rajender, G. Jagdish Reddy and P. Mahender Reddy, government’s chief advisor Rajiv Sharma, Chief Secretary S.K. Joshi and other senior officials attended the meeting.

Insurance Q4: Claim losses haunt non-life players, margins spruce up life insurers’ numbers

May 15, 2018

For the insurance sector, the quarter gone by was a mixed bag in terms of earnings.

Rising claims in third party motor insurance and crop insurance hurt underwriting profits of general insurance companies in the March quarter. On the other hand, life insurance companies rode on protection products to report better margins and an improved profitability.

Underwriting losses, which refer to premiums earned versus claims paid out, are a true reflection of the financial strength of an insurance company.

If the underwriting loss is 150 percent, it means that for every Rs 100 collected as premium, Rs 150 was paid out as claim. If the figure is below 100 percent, it means that an insurer is making an underwriting profit.

Crop, health insurance drag down financials

Among general insurers, state-owned New India Assurance posted a net profit of Rs 335.96 crore for the March quarter. The insurance company's gross written premium increased 15.3 percent year-on-year (YoY) to Rs 26,554 crore.

However, the insurer reported an underwriting loss of Rs 2,525 crore for FY18 (compared to Rs 3,547 crore in FY17) driven by high claims in health and third party motor insurance. G Srinivasan, Chairman and Managing Director, New India Assurance, said that the focus will be to reduce the loss ratios by correcting prices further.

Private sector player ICICI Lombard General Insurance posted an 18 percent year-on-year rise in its March quarter net profit to Rs 211.87 crore. While the private insurer’s gross direct premium income (GDPI) increased by 10 percent to Rs 2,926 crore in Q4FY18, it posted an underwriting loss of Rs 9.6 crore for the quarter under review.

In the post-earnings conference call, Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance, said that the underwriting performance was impacted by losses in the crop insurance segment, especially those arising from kharif crops. Crop insurance saw a 135 percent loss ratio.

Loss ratios plummet

Loss ratios in the crop insurance segment are estimated to be around 140 percent, which means that for every Rs 100 collected as premium, Rs 140 would have been paid out as claims. This is because crop insurance is closely linked to weather-based anomalies. Any unfavourable change in weather could result in either a shortfall in yield or destruction of crops.

Also, the practice of offering discounts to retain corporate clients has cost insurers dearly. Though industry-wide loss figures have contracted, there is still room for improvement.

Protection business improves margins for life insurers

On the life insurance front, protection plans have been a boon, helping companies improve their margins and overall profitability.

For instance, private life insurer HDFC Life Insurance posted a 40.4 percent year-on-year rise in its net profit for the quarter ended March to Rs 346.86 crore. The company's new business premiums for FY18 grew 32 percent to Rs 11350 crore on the back of a strong growth in the protection business.

Amitabh Chaudhry, MD & CEO, HDFC Life said that protection products tend to have higher margins and that was one factor that led to an increase in margins. On the products front, he said that the company has actively tried to keep the share of unit-linked insurance products (ULIPs) in its overall business under check.

Capitalising on an increase in premium income, SBI Life Insurance posted a 13.4 percent rise in its March quarter net profit to Rs 381.2 crore, compared with the same quarter last year.

The private life insurance company posted a 27 percent year-on-year rise in its annualised premium equivalent (APE) to Rs 8,540 crore in FY18. SBI Life said that this growth was driven by an increase in new business premium from individuals, generated through bancassurance and the agency channel.

Some insurers took a hit on their bottom line, particularly because of strain stemming from new business. ICICI Prudential Life Insurance's standalone net profit for the March quarter declined 16.6 percent year-on-year on account of higher strain from new business.

In an interaction with Moneycontrol, Sandeep Batra, Executive Director, ICICI Prudential Life Insurance, however, said that there was a 71 percent growth in the annualised premium equivalent (APE) of its protection business, resulting in the value of new business (VNB) growing by 93 percent to Rs 1,286 crore in FY18.

"Savings and protection are two distinct opportunities and we remain focused on them. However, the protection segment could grow at a faster pace given the under-penetration," Batra said.

New business strain refers to the acquisition costs incurred by an insurance company over and above the premiums collected by it, in the initial years of the business being written on its books.

Private insurers beat LIC in premium growth

In absolute terms, private sector companies beat Life Insurance Corporation of India (LIC) in terms of growth in new premium collection. LIC collected Rs 1.34 lakh crore of new premiums in FY18, 8 percent higher than in the last fiscal year. Private life insurers, on the other hand, collected Rs 59,314.55 crore in FY18, 17.1 percent higher than in FY17.

This was on account of the growth in both new business as well as a rise in the profitability of the business. New business premium grew 20 percent year-on-year. Renewals rose because of a rise in 13th month persistency numbers for private insurance companies. Detailed data for LIC has not yet been made available.

BSE looks to enter insurance broking business

May 14, 2018

Asia's oldest stock exchange, BSE, is planning to enter the insurance sector by applying for a broking licence. As per a Business Line report, BSE is looking to roll out its insurance distribution business by the end of 2018.

The news report quoted Ashishkumar Chauhan, MD and CEO, BSE saying that they are in the process of applying to the insurance regulator seeking necessary approvals for its venture into insurance distribution.

The stock exchange has entered into a joint venture agreement with Nasdaq-listed Ebix Inc for setting up a subsidiary company for the distribution of insurance products of life. This broking company will distribute products of non-life and standalone health insurance companies.

Here, while BSE and Ebix will hold 40 percent each in the joint venture company, the rest 20 per cent will be held by individuals or companies nominated by BSE or Ebix.

The company, called BSE-Ebix Insurance Broking has been set up, said Chauhan in an industry event in Kolkata on May 12.

Planning to buy health insurance? Here’s why family-floater plans are better

May 07, 2018

When it comes to health insurance, most families rely only on the group health insurance cover offered by their employer. But there are families in which each member holds individual policies under which he or she is insured for a small sum.

Given the rising medical inflation, individual health plans with a small quantum of insurance cover may not be sufficient. So it’s important to have a separate family-floater health plan to take care of your family in the event of a medical emergency.

What is a family-floater health insurance plan?

A family-floater plan is nothing but a health insurance policy for the entire family.

"It covers all the members under a single umbrella of health insurance. Here, the chosen sum insured is available for the entire family in case of a health emergency and its related expenses. This feature itself gives it the name 'Family Floater', as the sum insured floats among all the family members for use," said Mahavir Chopra, Director - Health, Life and Strategic Initiatives, Coverfox.

The logic behind purchasing such a plan is that there would rarely be an instance of the entire family falling sick and needing hospitalisation or other health-related services at the same time.

Why must one have a family-floater plan?

The sole reason for why one should opt for a family-floater health insurance plan is health inflation, which is currently rising at a rapid pace.

"Modern lifestyle, stressful working conditions and new age diseases have acted as a stimulus in raising the health care costs. If one wishes to protect his hard-earned income from the claws of health expenses, a floater health cover is absolutely necessary," Chopra said.

As is the case with most things, buying insurance in bulk is always better. A family-floater plan will cover the entire family under one policy and will therefore, cost less than multiple individual policies.

"One of the key benefit is the premium paid for a family floater plan will be lesser than opting for an individual plans for each family member," said Anurag Rastogi, Member of Executive Management, HDFC ERGO General Insurance.

Before buying a family-floater health insurance plan, one should consider the age of his or her family members. Present ailments, if any, must also be considered and so should the family's medical history.

"Compare various family floater plans and understand the track record of the company in terms of claim settlement," said Bhaskar Nerurkar, Head, Health Administration Team, Bajaj Allianz General Insurance.

"Apart from premium difference of individual and floater policy, one should also check for sub limit applicable, renewable conditions, no claim bonus and other continuity benefits, etc. before opting for a family floater policy," said Jyoti Punja, Chief Customer Officer, Cigna TTK Health Insurance.

Anurag Rastogi of HDFC ERGO General Insurance was of the opinion that one must consider pre-existing ailments of all family members before purchasing the policy, so that any member with a condition could be insured separately.

"One must also check for any pre-existing diseases, as it would be beneficial to cover a person with medical history separately, for reason that his or her claim might utilize the entire sum insured in event a major claim. In such cases, policies with restoration or regain benefit would be helpful to choose from," he said.

Difference between individual plans and family-floater plans

Although the features and benefits offered under individual health insurance plans and family-floater plans are largely the same, there are a few features that set the two apart. Coverfox's Mahavir Chopra explains:

Sum Insured - In a family-floater plan, the chosen sum insured is used by all the members who have been insured in the policy. In contrast, in the case of an individual policy, the sum insured is for the use of the insured member only. So, if a family-floater policy has a sum insured of Rs 10 lakh, and if a member makes a claim of Rs 1 lakh, there is still Rs 9 lakh left for the other members to use.

Coverage - An individual health insurance plan covers just one person, whereas a family-floater plan covers all the members of a family i.e. spouse, children, parents/parents-in law. Some new-age plans even extend the coverage to brothers, sisters and other family members under the same plan. A family-floater plan even covers newborn children who are only 90 days old or less, something an individual health insurance plan does not provide.

Premiums - Age determines the premium in both these kinds of policies. The age of the eldest member of the family under a family floater plan is what determines the premium payable, even though he or she may not be the proposer or policyholder. This makes it cheaper than buying a separate individual policy for each and every member of the family.

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