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IRDAI forms group to study loss prevention

Dec 12, 2019

A ten-member working group has been constituted by the Insurance Regulatory and Development Authority of India (IRDAI) to suggest segment-wise ways and means to improve loss prevention and loss minimisation in the general insurance industry.

The move is aimed at all stakeholders working together towards a common end on a common platform.

Though a crucial aspect for the insurance industry, loss prevention and loss minimisation measures have remained very company-specific, sources among insurers said.

There may be considerable overlap in the way companies approach the issue, yet there is little in terms of knowledge-sharing, something that the working group sought to formalise.

IRDAI Executive Director (General) M.Pulla Rao, in the order constituting the working group on Thursday, said steps for loss prevention and loss mitigation not only helped the insured and the insurer but also help mitigate economic losses in a larger context.

While loss prevention and loss minimisation are aspects insurers are concerned with right from the time a risk is assessed to the time a claim occurs, there is a need to synergise the activities of the various stakeholders involved in these activities for the benefit of all concerned, he said.

Thus, research and education in this area ought to be encouraged. Collaboration with the government and various government agencies in this regard will benefit the society at large, he said.

The working group is also expected to evaluate current practices followed by the insurance industry in the area of loss prevention and loss minimisation. It would be doing this to suggest approach to synergise the activities of the various stakeholders involved in order to ensure better loss prevention and loss minimisation.

The group, given three months to submit its report, will also give recommendations for promoting research, education and services in the area. IRDAI Member (Non-Life) T. L. Alamelu will chair the group whose members include National Insurance Academy Director G.Srinivasan; General Insurance Council Secretary General M.Nagaraja Sarma; Insurance Brokers Association of India Vice President S.K.Jain as well as representatives from both public and private general insurers.

Source: The Hindu

BIZ-DEBT ETFs Irdai Okays Debt ETFs of CPSEs as Eligible Class of Investment for Insurers

Dec 12, 2019

IRDAI on Wednesday allowed insurance companies to invest in debt ETFs (exchange traded funds) of CPSEs.

The instruments have been permitted as eligible class of investment, according to guidelines issued by the insurance regulator.

The Insurance Regulatory and Development Authority of India's (IRDAI) guidelines allow insurers to invest in various exhaustive asset categories.

"IRDAI hereby permits debt ETFs with underlying debt securities of central public sector enterprises (CPSEs) proposed to be launched in India, as eligible class of investment, and as part of mutual fund exposure," the regulator said in the circular on Wednesday.

IRDAI said such debt ETFs should be issued by mutual funds registered by SEBI and governed by its regulations.

"The debt ETF shall invest in a basket of securities issued by CPSEs which are part of constituents of a publicly available index. The minimum investment by the insurer shall not be less than creation unit size and it shall not be reduced to below creation unit size," IRDAI said.


Free insurance covers on offer

Oct 23, 2019

Indian Railway Catering and Tourism Corporation (IRCTC) for the first time is offering free insurance cover of up to INR2.5m ($35,250) to passengers travelling on the Lucknow-Delhi Tejas Express which started operations this month. The insurance plan includes INR100,000 cover against theft or robbery during the travel. IRCTC is one of many organisations in India to offer free insurance.

Uber has announced free personal accident insurance for all those who ride in its cabs. Bharti Airtel has been granting a life insurance cover INR400,000 with a INR249 prepaid mobile plan. OYO Rooms announced a complimentary INR1m personal accident insurance and baggage loss cover for all the guests staying in Oyo Rooms, Oyo Homes and other stay facilities of the group, reported Moneycontrol.

Also offering free insurance is ICICI Bank with its complimentary INR100,000 critical insurance cover encompassing 33 critical illnesses for a period of one year for all its fixed deposit (FD) holders that have fixed deposits with a term of two or a more years. Additionally, ICICI Bank has also been offering a product called ‘FD Xtra' that offers a complimentary life insurance cover for a period of one year for those who invest in FDs of INR300,000 or above for a period of at least two years. Several debit and credit cards too offer a complimentary personal accident or purchase protection cover.

The hope of the insurance industry is that through such small-ticket complimentary insurance covers, people would get a taste of insurance and would opt for better and holistic covers in future.

However, experts warn that these covers might make people believe that they have protection, when such covers are in effect inadequate. “While the complimentary covers are good to make individuals aware that such covers exist, they are not reliable. Blindly relying on group insurance covers offered with other products or even employers alone is dangerous,” said Mr Suresh Sadagopan, founder of Ladder7 Financial Advisories.

In addition, the free insurance offered with a non-financial product often comes with usage and validity conditions, and failure to meet the terms makes the insurance claim invalid.

For example, SBI specifies that for a claim to be valid for the personal accident insurance it offers with its debit card, the card must have been used at least once for either a financial or non-financial transaction during the 90 days prior to the date of the accident.

Source: Asia Insurance Review

Regulator issues rules on advertising for insurers

Oct 22, 2019

The IRDAI has, in a master circular issued on 16 October, updated restrictions placed on advertising of insurance policies and the advertising rules that insurers have to observe to safeguard consumer interests.

The IRDAI said, “The success of insurance sales communication depends on public confidence and the faith they repose in the insurers, when they receive a communication from Insurers promoting their products. As such, the Insurers are expected to adopt fair, honest and transparent practices in the market-place and avoid practices that tend to impair the confidence of the public.

“As it may be difficult for the public to understand and evaluate the inherent details in the various insurance products, it is of paramount importance that the publicity material is relevant, fair and in simple language enabling informed decision making about whether or not to buy a specific insurance product.”

The regulator says that the directions in the circular are to be considered as the minimum standards to be adhered to, in addition to compliance with the IRDAI insurance advertisement and disclosure regulations and the code of conduct prescribed by the Advertisement Standards Council of India (ASCI) and any other laws, regulations as applicable.

Guidelines on advertisements

The provisions to be complied with by all insurers (life insurers, non-life insurers and health insurers); and agents, point of sales persons, motor insurance service providers and insurance intermediaries. The provisions apply to advertisements, issued through any mode.

General requirements

General requirements include several do's and don'ts such as:


Communications are clear, fair and not misleading whatever the mode of communication. They should use material and design (including paper size, colour, font type and font size, tone and volume) to present the information legibly and in an accessible manner.

Sales material and advertisements are comprehensible in the light of the complexity of the product being sold.

The name of the product and benefits as proposed in the File and Use application are adhered to.

Mandatory disclosures shall also be in the same language as that of the whole advertisement.

All life insurance advertisements must prominently state the availability of underlying element of ‘Life Insurance Coverage’ to clearly identify the product as an insurance product.

In respect of unit linked life insurance products, the actual asset mix of various underlying funds vis-à-vis the asset composition of approved asset pattern shall be placed on the web portal of respective life insurance companies at least on a half yearly basis.


The design, content or format shall not disguise, obscure or diminish the significance of any statement, warning or other matter which an advertisement should contain as required by these provisions.

Use or denigrate names, logos, brand names, distinguishing marks, symbols etc., which may be similar to those already used by others in the market that may lead to confusion in the market place.

The names of insurance products or benefits must not use terms or phrases that convey a fabricated sense of security.

The features / benefits prominently displayed in the insurance advertisements shall not be the features / benefits that are applicable under extreme / exceptional scenarios. Life insurance advertisements should not offer, as inducement, any award / reward points, discounts and rebates, except those approved by the Authority as part of product features, either from Insurer directly or through arrangement with any third party involving any expenses / costs / outgo to the insurer.

Source: Asia Insurance Review

Non-life premiums surge despite slump in vehicle sales

Oct 17, 2019

Premium income underwritten by general insurance companies (excluding standalone health insurers) rose to INR201.45bn ($2.82bn) in September from INR144.64bn in the same month last year, according to statistics released by the IRDAI.

Premium collection of all non-life insurers (excluding standalone health insurers) during April-September rose by 17% to INR828.02bn.

The bulk of general insurers' revenue is from motor insurance, and non-life insurers are enjoying a spike in premiums in this class of business despite the fact that passenger vehicle sales continued to be weak, plunging by almost 24% in September, according to data released by the Society of Indian Automobile Manufacturers (SIAM). The buoyant insurance sales seem to be explained by the amended Motor Vehicles Act, with most of the changes taking effect on 1 September.

Under the amended law, those without third-party motor insurance attract a fine of INR2,000 for the first offence and a fine of INR4,000 for the second offence. The high penalty is contributing to higher sales of motor insurance at a time when the automobile industry is struggling, reported LiveMint.

Mr Anik Jain, co-founder and CEO of Symbo Insurance, said, “August to September, the sale of motor insurance saw a significant rise because there’s a high penalty now. The penalty is actually higher than the cost of insuring a two wheeler so this has brought a large number of uninsured vehicles within the insurance net. Own damage and third-party insurance, have seen an equal boost."

India’s passenger vehicle sales slumped 23.7% in September, the 11th straight month of declines. Passenger vehicle sales dropped to 223,317 units in September, SIAM data show, while passenger car sales dived 33.4% to 131,281 units, reported Reuters.

Source: Asia Insurance Review

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