Chola MS launches new pan-India individuality

S. S. Gopalarathnam, Managing Director, Chola MS General Insurance, formerly known as Cholamandalam MS, on Thursday said the company wanted to get bigger its presence in the rural health insurance segment by leveraging the reach of the Murugappa Group companies.

At a press conference to announce its new pan-India identity with focus on its association with Mitsui Sumitomo Insurance of Japan, he said Chola MS wanted to use the attendance of Coromandel Fertilisers, EID Parry and Parry Agro to reach out to farmers with a rural health insurance product. Awareness among people in rural areas about insurance too needed to be better, he said.

The focus on the health sector was well-founded, he said, adding that the health insurance segment, that was a vital component of the general insurance segment, was growing at 40(%) per cent.

Whole-time director Tsuyoshi Yamane from Mitsui Sumitomo said being among the top five insurance groups worldwide, they were committed to provide the necessary support and knowledge to increase the business of Chola MS.

ICICI Pru tops private life insurers in premium group

ICICI Prudential Life Insurance topped private sector life insurers in premium collection in the first 8 months of this financial year between April and November,

According to sales data released by Insurance Regulatory and Development Authority (Irda), ICICI Prudential mopped up Rs 4,053 crore followed by SBI Life, which garnered Rs 3,952 crore.

HDFC Standard Life garnered Rs 2,150 crore, Bajaj Allianz Rs 2,033 crore and Reliance Life Rs 1,791 crore. Insurance behemoth LIC collected a total premium of Rs 55,513 crore throughout the period.

Overall, 23 life insurers in the country together mopped up Rs 76,990 crore in first-year premiums during the period, a 39(%) per cent increase from Rs 55,357 crore in the year-ago period.

The private sector, comprising 22 life insurers, collectively registered Rs 21,476 crore worth of new business during the period.

However, Reliance Life Insurance outperformed its private sector peers in terms of the number of policies sold during this period.

Reliance Life sold 13, 12,389 policies between April and November compared with 12, 61,668 in the corresponding period of previous year.

“Our wide-ranging products, catering to every section of the society, and pan-India presence with quality service helped us notch up this business milestone," Reliance Life Insurance executive director and president Malay Ghosh said.

Bajaj Allianz and ICICI Prudential sold 9, 49,183 and 8, 26,904 policies, respectively, to stand second and third.

Life Insurance Corporation of India continued to lead the pack, notching up 1, 93, 54,765 new customers in the first 8 months, but the number was down 1(%) per cent from 1, 95, 77,088 sold a year ago.

The insurance industry as a whole saw a 6(%) per cent dip in policy sales to 2, 63, 51,967 during the period from 2, 78, 91,082 in the same period last year.

Religare get in-principle nod for insurance JVs, Edelweiss

The Insurance Regulatory and Development Authority (Irda) has given an in-principle approval to the proposed insurance ventures of Religare Enterprises and financial services firm Edelweiss Capital.

Edelweiss has produced a joint venture with Japanese insurer Tokio Marine Holdings to enter the life insurance space.

Two public sector lenders, Corporation Bank and Union Bank of India, have picked up 5(%) per cent and 7(%) per cent, respectively, in Religare’s separate health insurance venture.

Both can perhaps start operation in the next financial year. Irda is likely to approve the other two licences, R2 and R3, in the next six months. R1, R2 and R3 are the different stages of approval granted by Irda, with R3 being the final go-ahead.

Earlier, Religare Enterprises had formed a JV with Switzerland-based Swiss Re to enter the health insurance space. The company, however, parted ways with Swiss Re and decided to seek a licence from Irda after looking for a partner for a couple of months.

Religare already has an attendance in life insurance. In early 2008, it entered into a tie-up with the Netherlands-based insurer, Aegon.

Tips to choose most suitable insurance product

India is a developing country. People have a general idea about Insurance thus majority is unaware of the importance of having an insurance policy.

Firstly, Insurance is important for everyone. Even the Indian Government has planned a postal rural insurance scheme in addition to the many other schemes they are running.

Few Benefits of Insurance:

1. It brings peace of mind as you and your family members are protected.

2. With investment linked policies, insurance becomes a tool to manage future expenses.

3. Medical insurance is a sure cure for any unforeseen medical expenses on account of an illness or an accident.

4. When Insurance is selected as a retirement investment option, it becomes tool for wealth accumulation for retirement.

Questions to be asked while choosing an insurance policy:

Q1. What is the purpose of insurance?

- The possible answers are: Pure risk cover or Investment tool. Based on your of answer you can determine the type of insurance you need.

Q2. How much insurance I need?

- The answer would vary from person to person. You can use various on-line calculators to arrive at your insurance amount.

Q3. Which insurer should I go for?

- Check the references and not advice of salesmen. Compare the quotes, facilities, options to select the best insurance company for you.

While taking an insurance policy you should consider existing policies and the type of policy if this is not your first. Also you should remember your monthly budget, monthly expenses and approximate insurance premium amount as well.

When insurance is taken as an investment tool, it should take into account the future expenses such as buying home, child birth, child education, marriage etc. The term (duration) and type of the policy are affected by insurance need. The term should be flexible enough allowing you to withdraw the money at required time. In case of fund requirement about long term, you may opt for equity linked investment as historically, equity has always given higher return than fixed income.

As mentioned above, one should also compare premium and the coverage of multiple options. There are new insurance plans available in the market which allows customers to buy insurance policies on-line.

After considering all the above mentioned factors, one should take an informed decision by selecting a good insurance company which offers the best insurance plans suiting your individual needs and providing for your entire family as well.

Auto Insurance - Overview

Auto Insurance is mandatory and thus it will help if one can find cheap auto insurance. Besides being compulsory it is one of the most important types of insurance these days, after health insurance, life insurance, and home insurance.

Automotive or Motor insurance is required by law and one should be purchased as soon as the vehicle is purchased if it is the first vehicle owned by the person.

If you already have automotive insurance then you can transfer your policy from one car to another without any problem so long as the car title is in the name of the insurance holder. Auto insurance can be costly for some people, especially if they have a poor driving record or a bad credit score, but most people without traffic tickets or accidents will pay considerably less than other drivers.

One of the major benefits of acquiring a cheap auto insurance policy is

· the ability to pay the premiums on time, every time, without worrying where the money for the payments will come from.

Paying your insurance premium on time can get challenging for few. One should be careful not to miss even one payment of a premium, as this can cause the policy to become null and void, which means you will be driving without a valid auto insurance policy. Some auto insurance companies will provide their customers with the chance to pay their premiums in blocks, divided up into four payments every six months, so that they do not have to pay the entire premium at once. Make use of the competitive market situation to get the policy most suitable to you as an individual.

Ulips | Regulatory changes

In India, minority are insured; out of which about 50% people buy insurance for the income-tax remission on insurance premiums in the annual tax statement and the exemption of maturity value of insurance policies from tax

Unit-linked insurance plans (Ulips) have gained enormous popularity in life insurance segment in the current decade. According to statistics, the total new business premium generated from Ulip sales for the year ended March 2009 was Rs447 billion, or 55% of total new business, as per reports of the Insurance Regulatory and Development Authority (Irda). This has grown to about Rs60, 000 crore in the latest year. Private life companies generate over 90% of their business from single and regular premium Ulips.

Irda has brought vast changes concerning Ulips since June’10 forcing life insurance companies to completely rework their Ulip strategies. Since September’10, Insurance companies have been required to re-launch their Ulips.

Reasons for regulatory changes

Three main reasons for application of several restrictions on Ulips:

1. Due to the tax benefits discussed above customers have bought Ulips as short-term investment without serious intention to continue the policy until the final maturity date.

According to Irda, the lapse rate on Ulips was 26% in FY06 (which continued to increase), and the 13-month persistency level of Ulips has significantly trailed the traditional plans. The low level of life cover embedded in Ulips and the ease of exit had contributed to an unhealthy growth in lapsation.

2. The regulator considered that the low persistency has been encouraged by the insurers because they gained from surrender charges, which have been as high as 70-90%. Thus the “profits” earned by shareholders from the surrender charges have fuelled aggressive distribution of Ulips, forming a vicious circle.

3. Ulip distributors have not made honest effort to develop a long-term relationship with customers or make a needs-based analysis of their insurance needs. This has not made customers recognize that insurance policy is an instrument of long-term protection and growth.

In August’09, the securities market regulator issued a directive requiring asset management companies not to deduct any distribution and other charges from the investment amount of customers on mutual fund schemes with a view to encouraging retail participation. This “no entry load structure” has led to a drastic reduction in the commission earning of mutual fund distributors, thus these agents promoted sale of Ulips which fetched attractive commission.

Guaranteed returns only for traditional

Returns on NAV-guaranteed plans are higher than debt products

Last week, Pankaj Ramnath got a call from an insurance executive offering him a highest net asset value (NAV)-guaranteed unit-linked insurance plan (Ulip). Given the volatility in the equity markets, Ramnath felt a guaranteed plan was the perfect investment option.

Ramnath had various options to choose from. Birla Sun Life Insurance has launched Platinum Advantage Plan; ICICI Prudential has Pinnacle II; HDFC Standard Life Insurance has Crest, and the latest offering is from ING Vysya Life Insurance — Market Shield.

Investors expect to get returns based on the highest NAV in these funds. Suppose the NAV in the first, second and third year is 20, 30 and 40, respectively, the company will offer returns at 40 per cent even if the equity markets undergo a correction thereafter.

AT A GLANCE

Majority investments made in debt instruments, restricting returns Suitable for conservative investors, uncomfortable with volatility of equity markets An additional charge of 0.1-0.5% levied for guaranteed returns Mostly returns given based on highest NAV only if the person stays until maturity In most plans, nominee receives either sum assured or fund value, in case of policyholder’s death

Ramnath’s financial advisor, however, ruled against his investing in the product. Reason: the returns from such products are slightly higher than debt products or at best comparable to balanced funds. “Guaranteed return products are for investors who have a conservative approach and do not mind sacrificing the upside in lieu of downside protection,” says Rahul Aggarwal, CEO, Optima Insurance.

Like Ramnath, many investors think that in NAV-guaranteed funds, the insurance company will invest money just like any other Ulip (say 100 per cent in equities) and give back returns based on the highest NAV it achieves during the policy tenure.

In reality, NAV-guaranteed plans are not pure equity products such as other Ulips, which use different funds for wealth creation. To give the returns based on the highest NAV; these funds use an investing strategy where the majority of investments are in debt, and a minority portion in equity. “Fund managers of such plans have a free mandate and can move the entire portion of the fund to debt instruments at any given point of time, bringing down the overall return of the fund.”

Insurance companies keep increasing the debt allocation to lock the highest NAV. In the last few years, usually seventh to tenth year, the entire allocation is debt. A lower equity allocation restricts their returns.

In the last six months, Tata AIG’s Ulip — Tata AIG Individual Life Equity fund — gave 14.9 per cent returns, while its NAV-guaranteed fund, Tata Apex Pension 10-year Return Lock-in Fund, has given 11.1 per cent returns.

Charges for these products are the same as the other Ulips, after the regulatory changes, except that some companies levy an additional charge for providing the guarantee. This annual charge can vary between 0.1 per cent and 0.5 per cent (ING Market Shield) each year.

Except for ING’s Market Shield, most products give returns based on the highest NAV only if the person stays until maturity. If the policyholder exits midway, he/she would get the prevailing returns based on the prevailing NAV.

Most insurance companies had this product even before the Insurance Regulatory and Development Authority, or Irda, changed the structure and charges on all Ulips. In many of the earlier products, if the policyholder passed away, the nominee would get either the fund value or the sum assured depending on which of the two was higher. This feature exists in the new products, as well. Out of the products mentioned earlier, only ICICI Pru Pinnacle II provides sum assured and fund value, if the policyholder passes away.

The structure of this product category allows the fund to protect the capital, while capturing the small upside in the equity market. Someone looking for market-linked returns can look at the regular Ulip policy.

Need for Life Insurance Policy

Why do I need a Life Insurance Policy?

Everyone will ask this question before buying a Life Insurance. The answer is also very basic. Insurance is an integral part of our lives and primarily assists the intention to financially ensure the lives of our dependants after our death. With increasing uncertainty it has become imperative for people to invest in life insurance policies.

In simple terms insurance is a policy that individuals buy from a company that basically offers protection and of course financial stableness after the dying of the policy possessor. There are numerous companies offering various policies which are completely dependant on your needs (that is what kind of insurance policy you will require).

The few types of policies available are -

1. Term life insurance policy,

2. Whole life insurance,

3. Endowment Policy

4. Unit linked insurance policy etc.

Depending on your financial plans and demands you can select the one that fits you the best. Depending on how much of coverage you like to provide to your dear ones after your dying, you can decide which insurance policy you would like to go for.

Now which ever policy you choose, the monthly premium of the insurance policy always depends on the basics like the age, sum insured and also the medical history. Those with the ‘impaired risk’- the people who have critical health problem face difficulty in getting a suitable insurance policy for themselves and that, which will insure all their needs. The face amount or the sum that is insured and the total tenure of the policy decide the value of the life insurance policy.

At the time of purchasing the insurance policy, you will need to submit all-important papers supporting your application process and everything will be on pen and paper. You may even have to go through a thorough medical examination depending on the sum you are insuring.

But this does not mean that even if you know which plan is ideal for you, you just go and buy it. It is recommended that you do proper research online and compare various deals online. Then you can always equate the prices and decide best plan to suit your purpose and demands. Also, before signing on the policy, always ask your agent to make everything clear, including the lawful conditions, as the policy is a legal document.

Life cover vs home loan protection

There is the good sales pitch. And there is the bad sales pitch. And between them is the not- so-bad sales pitch. Before you start scratching your head on what we mean, allow us to clarify. When an insurance agent asks you to invest in a unit linked insurance plan (Ulip), promising that your money will triple in 5 years, that’s the bad sales pitch. The money may or may not triple in 5 years. There are no guarantees.

When a financial planner asks you to buy a term insurance to insure your life, that’s the good sales pitch. In case something was to happen to you, your family will be financially secure. In between these lies the not-so-bad sales pitch, which you might just knowledge while applying for a home loan to fund your dream home.

The marketing manager at the bank/housing finance company (HFC) will try to sell you an insurance policy along with the home loan. Now, this is the not-so-bad sales pitch. The manager will tell you that if you buy this insurance policy, known as the home loan protection plan (HLPP), along with the home loan, then in case of your unforeseen demise, the insurance company will pay the bank the principal amount of the remaining portion of your home loan. This, in turn, means that your family can continue living in the dream house.

I – genius scholarships declares by Max New York Life

The Max New York Life Insurance declared its first I-genius scholarships on Monday, last week. Delhi girl, Shruti Bhardwaj, won the highest prize of Rs 20 lakh in the junior category (class III to IV), while in senior group (class VI to VIII), there was a tie. Siddharth Yadav from Bulandsheher and Nityashree Ramakrishna from Bangalore, shared the prize money in this category of Rs 20 lakh with Rs 10 lakh each.

The scholarship program, launched in February, this year, by Max New York Life Insurance in association with The Times of India, rewards children with brilliance in both academics and extra-curricular activities to promote all-round development of the child.

Organisers said that over 10 lakh children from 500 cities were enrolled in the scholarship program and evaluation was done through a four-stage process increase over 10 months. "In addition to their performance in tests that evaluated their all round skills, the 3rd stage of the scholarship program entailed a live interaction with jury through video conference. Total 52 candidates appeared for the final evaluation at Siri Fort in the capital, of which three one from the junior category and two from the senior category - walked away with the prize. The 50 other finalists received scholarships worth Rs 1 lakh each,'' said the organiser. He added that jury included Derek O'Brien, Palash Sen and author Ruskin Bond.

Rajesh Sud, CEO and managing director of Max New York Life congratulated the winners at a glittering award ceremony. "The I-genius program was conceived to engage beyond business with the parent community to understand their needs and promote all round development of the children. We will continue to look at innovative engagement programs like this in future,'' Sud said.
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Child Plan

ULIPs have prospective for life insurers despite curbs'

Unit linked insurance policies (ULIPs) designed and sold under the new norms that came into effect Sep 1 have a great prospective for life insurers, said experts participating in a board discussion here Monday on "Future of ULIP".

The panellists, however, were not common on which segment of the market ULIPs were suitable for.

The board discussion was part of the 2-day seminar on "Current Issues in Life Assurance" organized by the Institute of Actuaries of India (IAI).

The Insurance Regulatory and Development Authority (IRDA) brought out new norms governing ULIPs capping different charges levied by the insurers.

The new norms kicked in Sep 1 and in the process sucked out around 250 policies from the market.

The life insurance industry had to be content with selling around 75 new ULIPs approved by the IRDA since then. This has brought down new business for life insurers.

Richard Holloway , managing director (South East Asia & India) Milliman Private Limited, said: " ULIP is a popular product throughout the world that has stood the test of time meeting the needs of customers, giving them higher returns and offering transparency."

He said life insurers complain that the new ULIP norms leave them with limited scope to reimburse the distributors as commissions have to be reduced.

In addition, the companies will not be able to enjoy high surrender profits - profits earned when a policy holder surrenders his policy - owing to lower surrender penalties stipulated in the new norms.

"The industry said the focus should be on mis-selling in general and not capping of charges," Holloway said.

Stating that ULIP has good potential, T.R. Ramachandran, chief executive officer & managing director of Aviva Life Insurance Company India Limited, said: "The product is not for middle or lower middle class segment. There cannot be a ULIP where the annual premium is around Rs.8, 000."

Such policyholders are buying the product just for claiming income tax exemption, he remarked.

Sanjiv Bajaj, managing director, Bajaj Capital Limited, said ULIPs had to be targeted at individuals as these offered them to accumulate wealth.

New ULIP launched by Reliance Life

Anil Ambani Group Company Reliance Life Insurance launched a unit-linked insurance plan that will provide policyholders the advantage of regular savings with improved protection and market-linked returns.

The new unit-linked plan (Ulip), Reliance Life Insurance Classic Plan, would offer protection to policyholders in the age group of 7-65 years.

"The unique plan of Reliance Life Insurance Classic Plan is that it offers flexibility and triple benefit of savings, insurance and investment - all in one single plan," Reliance Life said in a statement.

The plan also offers liquidity through part withdrawals and loans, top-up payment option and rider benefits to increase protection cover, it added.

"The new Ulip offers multiple benefits and protection - from helping policyholders plan their finances wisely at different stages of life, to providing risk cover on loss of life," Reliance Life Executive Director and President Malay Ghosh said.

Under the plan, the recipient would get double the base sum assured plus total fund value in the event of accidental death, the statement added.

The plan is available under two minimum payment options - Regular option and the Single Premium option.

Under the Regular Option, the customers would have to pay Rs 20,000 annually -- which can also be paid in monthly, quarterly and half yearly options.

For the Single Premium option, customers will have to pay a minimum of Rs 50,000 only once at the beginning during the 15-year policy tenure.

"The flexibility offered to policyholders by the company allows liquidity through partial withdrawals after 5^th policy anniversary, loan after the completion of 2^nd policy year and top-up option to increase regular savings," Ghosh added.

This is the second Ulip scheme launched by Reliance Life after the insurance regulator Insurance Regulatory and Development Authority came out with its revised strategy on Ulips a few months ago.

In October, the company had launched the Highest NAV advantage Ulip plan, which offers guarantee on maturity with the highest NAV per unit achieved throughout the entire 15 years policy term.

E-Insurance launched by Kotak Life Insurance

The options for those looking to fulfill insurance needs on their own are widening. Kotak Mahindra Old Mutual Life Insurance launched its online term insurance product this month. As the company doesn’t incur expenses to reach out to a customer to sell the product, including the agent’s commission, it is priced 10% cheaper than the term insurance cover available during the company’s agents and distributors.

The buying procedure is almost related to the rest of the online products namely ICICI Prudential Life Insurance iProtect Term Insurance and Aegon Religare Life Insurance’s iTerm plan. While ICICI Prudential and Aegon Religare Life Insurance offer only yearly options of payment, Kotak has monthly, quarterly, half-yearly and yearly options of payment.

The maximum age at maturity under ICICI Prudential’s iProtect is 75 years, 65 years under Aegon Religare’s iTerm, but 70 years under Kotak Life’s e-insurance.

The company also offers a facility of tele-underwriting wherein customers are asked questions and in case answers are acceptable, then no medical tests are required. For sum assured of `30 lakh, no tests or tele-underwriting is valid. If you need medical tests, you will have to go to the hospital to get the tests done. Rest of the documents are picked up from your residence.

Though Kotak Life Insurance and ICICI Prudential offer a maximum term of 30 years, Aegon Religare Life offers a maximum term of 25 years. The premium for the lower term is higher for Aegon Religare than the other two players in the non-smoker category.

But is lower than the Kotak premium in case of a non-smoker. Aegon Religare does not differentiate between a smoker and a non-smoking female, while deciding the premium. Kotak Life actually prices premium for smokers higher than any of the online players.

Unique Option: One feature offered here is the step-up life cover, where you are in a position to pay higher premium and realise you need a higher sum assured, you can opt for it. However, there are charges for taking the step-up option, which is dependent on the premium and the term.

In case the policy is taken for less than 15 years, then you have to pay 3% of the basic premium, while 5% of the basic premium is levied in case the term is above 15 years.
No medical tests are required if you opt for the step-up option.

Why Go For it?: If you are a non-smoking woman, then the online term cover of Kotak Life is the cheapest in the market.

Why Not?: The policy pegs risk for smoking customers much higher than other similar options. Premium for smoking men and women is higher by 7-26% vis-à-vis other players.

Under Irda scanner NAV-guaranteed Products

After life insurance products, the sector’s regulator is now rotating its attention to unit-linked insurance products (Ulips) that guarantee the highest net asset value over its term. Two life insurance companies that have filed for Ulips guaranteeing such NAVs have been questioned by the Insurance Regulatory & Development Authority (Irda).

“The regulator has asked us why they should allow us to sell such a product,’’ admitted a senior executive of a life insurance company. “It is not influenced about the idea of guaranteeing the highest NAV.”

Unlike regular Ulips that calculate payouts on the basis of NAV at the time of maturity, these policies guarantee the highest NAV over the first seven-year term.

NAV is the current market value of a fund’s net assets divided by the number of outstanding shares.

Insurance companies have to maintain additional reserves to offer such guarantees. Most firms set aside 0.5-1(%) per cent of investments as reserves. This extra capital is maintained over and above the solvency requirement prescribed by the insurance regulator.

These new products are also facing problems because of an additional layer of scrutiny. Products now have to go through actuarial, life and finance departments. Earlier, only actuarial and life departments use to approve products.

“New products are facing difficulty in getting clearance, since a new department has been added. If it is an investment-related product, then it goes to the finance department. The actuarial department use to go through the mechanism earlier,” explained G N Agarwal, appointed actuary at Future Generali.

Before the new department was added, a few insurers — including SBI Life Insurance and HDFC Standard Life — launched Ulips guaranteeing the highest NAV. While SBI Life’s product is called Smart Performer, HDFC’s is branded HDFC Standard Life Crest.

Life Insurance Corporation of India collected a record Rs15,000 crore from Wealth Plus, its guaranteed NAV product. The plan offers payment of fund value at the end of the policy term, based on highest NAV over the first seven years of the policy or NAV applicable at the end of the term, whichever is higher, according to LIC’s website.

4 new ULIPs | Kotak Life

Kotak Life Insurance, private sector insurer has filled for four unit-linked insurance products (ULIPs) in its offing out of which one has already been approved by the insurance regulator, Irda. They expect to collect up to an 8 % premium from it’s on- line offerings in the next 18 months.

Kotak currently already has two ULIPs in its portfolio. Post the IRDA circular regarding new norms for ULIPs (issued and enforced from September 1), business in October was just about 50 % of the normal business due to lack of products in this category.

Their normal business is almost Rs 100 crore. Company hopes that with the increase in the number of products their business is bound to improve. Till date, the growth is close to 30 % already in new business.

By August itself the total premium collection was Rs 1,292.52 crore, of which Rs 537.72 crore was from the total new business, according the company data.

SMS-based service launched by SBI Life

SBI Life Insurance launched SMS Solve - a first of its kind initiative in the insurance industry allowing customers to resolve their grievances in simple, paperless and faster manner!

The new project enables customers to easily access SBI Life 24/7 and register grievances about the service by sending an SMS ‘SOLVE' to 56161. The message along with the customers' mobile number, date and time would be registered at the central processing centre. This would be followed by a call within 24 hours to the customer from VCare cell, a cell with personnel exclusively trained for the SMS service, which takes note of the grievance and addresses it. In case the grievance failed to be addressed across the line, the cell would take it to the higher level and customers would be intimated in 48 hours.

The Insurance Regulatory and Development Authority Chairman, J. Hari Narayan, launched the service and interacted with the VCare cell in the presence of SBI Managing Director and Group Executive Director R. Sridharan. This new approach is much appreciated and will provide much better and prompt service to SBI customers. This innovative mechanism is bound to revolutionize the dealings with the customers.

About the company:

SBI Life, leads with a market share of 19.03 % among private insurers and a total market share of 5.09 %, posted a net profit of Rs.217 crore during the first-half of the current financial year, up 87 % over the corresponding period last year, and the company's new business premium surged to Rs. 3,173 crore, registering 30 % growth. SBI Life's assets under management grew to Rs. 34,406 crore.

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LIC for high premium | Aam Aadmi scheme

Faced with a high claim ratio for Aam Aadmi Bima Yojana in Andhra Pradesh, the Life Insurance Corporation of India (LIC) has sought an increase in premium to Rs320 from Rs 200.

The group insurance plan was introduced by the Centre for the landless agricultural labourers.

About 5.2 million are covered under the Aam Aadmi scheme in 2010-11 in Andhra Pradesh. For the 2 year period 2008-10, the state paid Rs76 crore premium for while the LIC disbursed claims, including scholarships, worth Rs281.25 crore for the scheme.

According to officials, the LIC has moved the plan for increasing the premium. However, this might not be possible. “This is a nationwide scheme. If they have to increase the premium, they should do across the country or not do it at all (in Andhra Pradesh),” said a senior government official.

Rural Development minister Vatti Vasantha Kumar said a call on increasing the premium would be decided soon. He, however, clarified that the matter was between state and central governments and would not impact the implementation of the scheme at the grassroot level.

Under the Aam Aadmi scheme LIC provides an insurance cover of Rs30,000 for natural death, Rs75,000 for accidental death, Rs37,500 for permanent partial disability and Rs75,000 for permanent total disability due to accident.

When contracted, LIC regional manager Thyagarajan declined to comment on the issue.

In another central-sponsored scheme Janashree Bima Yojana, where the premium of Rs150 per member is shared by the Government of India and the member on a 50-50 basis, LIC has developed claims worth Rs122.94 crore for the premium of Rs44.34 crore collected in the state in the last 2 years.

However, there is no request for increasing the premium in this case. LIC has 3.9 million under Janashree Bima in the state for 2010-11.

A free add-on scholarship benefit for the children of the members of Aam Aasmi Bima and Janashree Bima is also comprehensive. Scholarships of Rs100 a month is also extended to two children studying between 9 and 12 standard. It is paid on a half yearly basis - in January and July each year.

According to Society for Elimination of Rural Poverty (Serp) chief executive officer B Raj Sehker, the claim ratio for these two schemes is high due to community participation.

The data of all the enrolled members is on the Internet. Call centres at the district level have been established with trained personnel to register the claims. An immediate assistance of Rs 5,000 to the bereaved families through 1,000 Bima Mitras (community members) in 22 districts is given. This amount is taken from the social capital raised from active self-help groups, he said.

Serp plans to bring all SHG members and their spouses under insurance cover. It targets to cover 18 million lives by 2014, he said.

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LIC Policy

IRDA: Keep watch for fake insurance Representative

The Insurance Regulatory and Development Authority (IRDA) has warned the public to watch out for corrupt persons selling insurance policies by claiming to be the regulator's representatives.

IRDA has asserted that it is a regulatory body not involved directly or indirectly in the sale of insurance and financial products. As such, it said complaints should be stiff against persons claiming to be its representative for the reason of selling insurance policies.

"Any person making any kind of contract with such individuals or agents will be doing the same at their own risk. If any member of the public notices such instances, he or she may lodge a police complaint in the local police station," IRDA said in a public notice.

It said it has experimental that the general publics are receiving calls from individuals claiming to be IRDA's representatives, who offer insurance policies of different insurance companies with various benefits.

Meanwhile, in view of the large quantum of unclaimed life insurance settlement amounts lying with the insurers, the IRDA has asked all insurers to reproduce such sums in its balance sheet under the head, 'current liabilities'.

At present, such unclaimed amounts are not disclosed independently.

These unclaimed amounts include claims settled but not paid to the policyholders or insured persons and excess premium or tax or any other charges that are refundable to the policyholders, among other things.

You May Soon Be Able To key Health Insurers

The penetration of medical insurance is extremely low in our country, at around 15%, including all types of insurance central government health scheme, employee state insurance, group health and individual health. There are concerted efforts initiated by the government as well as the Insurance Regulatory and Development Authority (Irda) to improve the reach of health insurance to all sections of society and safeguard the interest of policy holders.

One of the important initiatives of the regulator is the proposed portability of health insurance. This is to ensure that a customer continues to enjoy benefits under his health policy even if he wishes to change his insurance provider for genuine reasons.

In the current scenario, a customer is more or less wedged to an insurance company, given that if he chooses another insurer during renewal, his policy starts afresh with all the waiting periods commencing again. For the uninitiated, waiting period is the time frame during which some of the claims shall not be payable under the health policy. For most new health policies there is a waiting period of 30 days under which no claim can be made other than accidents. Besides, there is also a one or two years waiting period for diseases like cataract, hysterectomy etc. And for other diseases which may have been existing prior to taking the policy commonly known as pre-existing diseases, the waiting period is for four years.

In simple words, policyholders will no longer be compelled to renew their health policies with their existing insurance company for fear of the waiting period starting all over again. As and when Irda introduces the portable health product in the market, customers who opt for such products will have the freedom to shift insurers without worrying about losing their continuity benefits.

Senior citizens, in particular, will benefit since they will find it difficult to shift their insurer if they are unhappy with their present one, as other companies would be reluctant to offer them new policies.

The introduction of a portable health product would also prove beneficial to insurance companies. This could act as a powerful product to approach the new customer segment hitherto untapped. And with competition, insurance companies would be thriving to continuously improve their efficiency standards in terms of customer engagement and relationship to ensure that the customers do not move away from them citing service deficiency.

In the current market scenario, it is very difficult to make a price comparison between products with exactly the same features. For customers who are price sensitive, opting for a health product with a lower premium might actually harm them at a later stage when they realise that the product features and terms & conditions do not cover (fully or partially) some of the ailments /conditions for which they have actually purchased the health product in the first place.

Portable health product on the other hand would have exactly the same features and terms & conditions and therefore a person intending to buy a portable product has to just compare the price before opting for the insurance company of his choice.

Bajaj Allianz Life Q2 net zoom 91(%) to Rs369 crore

Bajaj Allianz Life Insurance said its net profit increased 91% to Rs369 crore for the September 2010 quarter from Rs193 crore during the same period last year.
The company has cited reduction in fixed expenses and growth in assets under management (AUM) as the reasons for this rise.

During the first half to end-September, its new business premium increased to Rs1, 511 crore from Rs1, 441 crore, a year ago.

However, its gross written premium (GWP) fell to Rs4, 151 crore from Rs4, 521 due to dip in renewal premiums, a company's spokesperson said.

Bajaj Allianz General Insurance net profit increased 22% to Rs66 crore from Rs54 crore in the year-ago period. According to the company, strong auto sales, capital expenditure by corporates and strong economic conditions have lead to an increase in profits. The GWP collected by the company rose to Rs1, 420 crore from Rs1, 218 crore.

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Cost-manage push up private insurers' profits

Private life insurance companies have posted robust profits in the second quarter of this fiscal aided by tight cost controls.

However, going forward, companies expect pressure on their profitability as the new regulations governing unit-linked plans could squeeze margins.

SBI Life Insurance posted a net profit of Rs 103 crore in the second quarter, against Rs 77 crore in the year-ago period, as the company reported one of the lowest expense to GWP (Gross Written Premium) ratio in the current fiscal. It brought down its expense to GWP ratio to 7.76 per cent from 9.18 per cent at the end of the first quarter. Mr M.N. Rao, Managing Director and Chief Executive Officer of SBI Life, said despite the challenging environment, the company could post good profits.

Bajaj Allianz Life Insurance reported a business profit of Rs 199 crore, against Rs 125 crore in the year ago period despite a slowdown in business in September.

Mr Sanjiv Bajaj, Managing Director, Bajaj Finserv, said the company focussed on cost rationalization measures to maintain its margins. “We brought down the total commission to GWP ratio to 7.52 per cent from 8.86 per cent. The ratio of operating expenses to GWP also came down to 16 per cent from 17.55 per cent,” he said.

New regulations

Kotak Life Insurance net profit increased to Rs 13.4 crore from Rs 4.4 crore. Mr G. Murlidhar, Chief Operating Officer, Kotak Life, said growth in new business premium along with stable expenditure helped the company register profits. “Our costs have always been under control as we have not been expanding much,” he said.

For most of the companies, new business premium growth slowed down in September after the new regulations came into effect. Going ahead, companies expect their profitability to be adversely impacted as sales slow down and margins get compressed.

Sales are likely to be sluggish for a few more quarters as agents get used to the new commission structures, said Mr Bajaj.

Margins will be adversely impacted in the new regulatory regime, said Mr Murlidhar.

HDFC SL hopes to break-even in FY-12

Insurer HDFC Standard Life Insurance Company Ltd expects to break-even in the 2011/12 financial year, helped by an increase in premium income and reduction in operating costs, its chief executive said.

The joint venture between India's top mortgage lender, HDFC, and Britain's Standard Life, had posted a loss of 2.75 billion rupees ($62 million) in the year ended March 2010, lower than 5.03 billion a year ago and is expected to stay in the red this year.

"If the premium continues to see the growth we are seeing and if we are able to manage the costs well, we should be able to break-even next year," Amitabh Chaudhry said in an interview late on Wednesday.

HDFC Standard Life could launch an initial public offering in the second half of 2011 if an insurance bill, which proposes raising the foreign holding in insurance firms to 49 per cent from 26 per cent, is approved by the Indian parliament.

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Listing daytime still away for insurers

Insurance companies will have to wait for some more time before listing, despite SEBI clearing disclosure rules, as the final guidelines from IRDA have not come and the Insurance Bill has not been passed.

Before insurance companies come out with IPOs, there are a couple of issues that need to be resolved: When will the 26 per cent FDI limit be increased to 49 per cent and two, will FII investments be included in the limit.

“There should be a clear idea on when the Insurance Bill is going to be passed,” said Mr Amitabh Chaudhry, Managing Director and CEO of HDFC Standard Life. “We would like to wait for the Bill before listing. But the final decision will depend on how much time it takes. It will take at least 9 more months for the companies to come out with an IPO.”

There is no clarification on the 25(%) per cent public shareholding clause, he added.

Companies that have evinced interest in listing include Reliance Life, HDFC Standard Life, ICICI Prudential and SBI Life.

Insurers said the SEBI disclosure requirements are on the lines of the recommendation of the SEBI-IRDA committee. The capital markets regulator had said that the SEBI (ICDR) Regulations, 2009, will also apply to insurance companies.

According to the recommendations of the committee, SEBI has asked insurers for additional disclosures, like risk factors specific to insurance companies and broad headings under which an overview of the insurance industry will be disclosed. However, companies were exempted exemption from appointing a monitoring agency.

Another stumbling block is that the IRDA may not relax the listing requirement that insurers have to be 10 years old for IPOs. The rule disqualifies Reliance Life Insurance.

Mr Malay Ghosh, Executive Director and President, Reliance Life Insurance, said: “As and when the guidelines come, and if they (the regulators) allow us, we will come out with an IPO.”

Insurance company officials say that most companies have seen some major changes in operating models in the last month after the new IRDA guidelines. “Investors will expect that some kind of an operating model be in place and will need to look at the emerging trends. But there is no trend currently due to the changes in the guidelines as there have been major changes in the operating model. It will take at least six months for a trend to emerge,” said Mr Chaudhry.

SBI Saral Maha Anand | Ulip launched

SBI Life Insurance has launched a low-premium Ulip - Saral Maha Anand.

About the Product:

· The minimum annual premium is Rs 15,000 and the maximum yearly premium is capped at Rs 29,000.

· The sum assured component ranges from 10-20 times of the annual premium and is restricted to a maximum of Rs 7.5 lakh.

· SBI Life Maha Anand is meant for investors in the age group of 18-55 years. The maturity age is up to 65 years.

· Like most other Ulips , policyholders can opt for a yearly, half-yearly, quarterly or monthly payments.

· The product offers customers four investment options depending on their risk profiles: Index, Equity, Balanced and Bond fund.

· It also offers partial withdrawal of up to 15% of the fund value after completion of five years. Investors can use this window to meet emergency liquidity needs.

Charges:

· Premium allocation charge is 6.25% of the premium amount for the first year and it goes down to 3.75% between the second and fifth year, and from thereon, further to 3% until the 10^th year of the policy.

· The policy administration charges are Rs 33.33 per month.

· The fund management charges are 1.25% for the index fund and balanced fund, 1.35% for the equity fund and 1% for the bond fund.

Financial advisors say that the cost structure of this regular Ulip is still high despite the flexibility of low premium. Hence, if an investor wants to make the most out of this product, s/he has to invest for the maximum possible term and invest a higher amount to earn decent returns.

Pros:

The low premiums could interest those who are unable to afford the huge premiums payouts in most other Ulips.

Cons:

Though it’s a low-premium product, the charges are not significantly lower than those of the company’s other Ulips.

SBI Saral Maha Anand | Ulip launched

SBI Life Insurance has launched a low-premium Ulip - Saral Maha Anand.

About the Product:

· The minimum annual premium is Rs 15,000 and the maximum yearly premium is capped at Rs 29,000.

· The sum assured component ranges from 10-20 times of the annual premium and is restricted to a maximum of Rs 7.5 lakh.

· SBI Life Maha Anand is meant for investors in the age group of 18-55 years. The maturity age is up to 65 years.

· Like most other Ulips , policyholders can opt for a yearly, half-yearly, quarterly or monthly payments.

· The product offers customers four investment options depending on their risk profiles: Index, Equity, Balanced and Bond fund.

· It also offers partial withdrawal of up to 15% of the fund value after completion of five years. Investors can use this window to meet emergency liquidity needs.

Charges:

· Premium allocation charge is 6.25% of the premium amount for the first year and it goes down to 3.75% between the second and fifth year, and from thereon, further to 3% until the 10^th year of the policy.

· The policy administration charges are Rs 33.33 per month.

· The fund management charges are 1.25% for the index fund and balanced fund, 1.35% for the equity fund and 1% for the bond fund.

Financial advisors say that the cost structure of this regular Ulip is still high despite the flexibility of low premium. Hence, if an investor wants to make the most out of this product, s/he has to invest for the maximum possible term and invest a higher amount to earn decent returns.

Pros:

The low premiums could interest those who are unable to afford the huge premiums payouts in most other Ulips.

Cons:

Though it’s a low-premium product, the charges are not significantly lower than those of the company’s other Ulips.

New ULIP by ING Life Insurance

ING Life Insurance has also launched a new Unit Linked Insurance Product christened ING Prospering Life. This ULIP promises to fulfill wealth accumulation and protection needs of its owners.

This new ULIP comes with a host of customer benefits:

· IT includes 5 fund options to choose from

· Automatic Asset allocation

· Unlimited switches with partial withdrawals free of charge.

· The product offers an annualized premium ranging between Rs 48,000 and Rs 96,000

· Competitive priced against other long term investment options

· The sum assured is an amount 10 times the annual premium at inception for those below the age of 45 & 7 times the annual premium at inception for those above the age of 45.

· The minimum top up premium is Rs 5000.

LIC crosses Rs 1,000 crore score under new ULIP Plans

Country's largest insurer, Life Insurance Corporation (LIC), today said it has crossed the Rs 1,000 crore-mark from its two new unit-linked plans, which were launched after the latest guidelines of the sectoral regulator IRDA took effect last month.

"Life Insurance Corporation of India has crossed the Rs 1,000 crore marks under the new ULIP plans, Pension Plus and Endowment Plus. The total premium income under these two plans as at October 18, 2010 was an awesome Rs 1,282 crore approximately," LIC said in a statement.

The new plans were introduced last month. Pension Plus was launched on September 2 and about Rs 150 crore of premiums have been collected under it from more than 30,000 policies.

Endowment Plus plan was launched on September 20 and it was LIC's 16th linked product. Over Rs 1,000 crore has been garnered from Endowment Plus alone from over 2 lakh policies, in merely 29 days.

As per new guidelines, effective September 1, Insurance Regulatory and Development Authority (IRDA), the commission paid to distributors and expenses charged by insurers will no longer be front-loaded. Instead, they will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.

Currently, ULIP products account for over 50 per cent of the total premium collected by the life insurance companies.

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Bajaj Finserv Q2 net up 57 pc at Rs 69 crore

Bajaj Group's Financial services arm Bajaj Finserv reported a nearly 57 per cent jump in its consolidated net profit at Rs 69 crore, for the quarter ended September 30, over the same period last year.

The company had a net profit of Rs 44 crore in July-September quarter last fiscal, the company said in a statement.

The total income of the company rose to Rs 464 crore in the second quarter of the current fiscal compared to Rs 107 crore in the corresponding period.

Bajaj Finserv is a holding company, which operates through its subsidiairies and joint ventures. Bajaj Allianz General Insurance, Bajaj Allianz Life Insurance and Bajaj Finance Limited are its subsidiaries.

Bajaj Finance, the company's retail arm, has reported a profit after tax of Rs 53 crore in the second quarter of the current fiscal as compared to Rs 22 crore in the corresponding period last year.

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Auto Insurance Policy | Common Exclusions

The insurance policy jargon is such that most of us find it difficult to understand. In fact it is not surprising, that many people don’t even fully read their insurance policy. The reason is that all standard insurance policy contracts are long, boring, confusing, and actually, misleading. For example, in many cases a coverage is excluded in one section, only to be added back later on in the policy. It can get frustrating, that you need a lawyer or an expert, to help you understand what exactly is covered.

There are few common misconceptions about what is and what isn’t covered in an insurance contract, which can be cleared by understanding the policy exclusions.

1. Delivery for Commercial Purposes: If you pick up a job delivering pizzas a few nights a week, there will be no coverage from your personal auto insurance, if you happen to get in an accident while delivering. Commercial deliveries are excluded from the standard personal auto insurance policy.

Always check with the company you are working for, to see if they have a commercial auto policy, that will cover you, while you make deliveries.

2. Company Vehicles: The insuring agreement of personal auto policy excludes, “coverage for the use of a vehicle furnished or available for your regular use.”

For instance: Your employer supplies you a company vehicle. Suppose your spouse also has a car of their own, which is insured under a personal auto policy, which you are named under. If your spouse were driving your company car, she has no coverage under the commercial auto policy.

3. Vehicles not Considered Autos: Auto insurance doesn’t cover all things with a motor. Typical exclusions include boats, four wheelers, motorcycles, go carts, and golf carts.

Before adding this on to your auto policy, first check with homeowners insurance, to see if it’s covered through your policy. In most cases, you have to add a special endorsement, either to your home or auto insurance, or buy a separate policy.

4. Personal Contents: The gadgets we carry in our cars today are not cheap. The combined cost of even a cheap cell phone costs, your CD collection and iPod, you’re easily approaching Rs20, 000 of personal contents in the car. Unfortunately, if someone were to break into you car and steal these items, none of that is covered under your auto insurance policy.

However, personal contents are covered under your home/renters insurance policy.

Endorsements to Insurance Contracts: All of the above are excluded from the standard insurance contract. That doesn’t mean that individual carriers, can’t add them back in. Adding coverage to a policy is called an endorsement.

The next time you’re reviewing your insurance agreement, check to see what your policy is endorsed for. There are a lot of special perks, the better insurance companies will give, that often go unnoticed.

To conclude: It is a good practice to read your insurance contract. Set aside just a few minutes of your time, to get through your auto, home, life, and health insurance contracts. It is bound to prove beneficial and you will definitely learn a lot.

Reasons for cancellation of an Insurance Policy

There has to be a very good reason for an Insurance company to cancel a policy. The top five reasons for having your policy cancelled are discussed below:

1. Failing to pay on time.

The first and most obvious reason for cancellation would be failing to pay or paying late. This applies to all types of insurance. Each state has rules governing when an insurance company may drop your policy. Grace periods will also vary depending on which line of insurance you purchase (health, auto, home, life) and which insurance company you choose. Some car insurance companies may seize the opportunity to drop you if you’re only a few days late – especially if you're habitually behind on payments. However, many insurers value your business and won't drop you if you're a few days late.

Advice - Pay your bills on time. This usually means your premium must be received by the due date. Dropping the payment in the mail on the due date may not be good enough. If you’re worried about being late on your payments, check with your insurance company about its grace period. If you've been cancelled by your car insurance company, it may require that you to pay the balance due for the full term before they reinstate your insurance.

2. Falsifying the truth.

If you knowingly tell lies to your insurance company, it has the right to cancel your policy. To an insurance company, it’s bad business to give you a lower rate for lying. For example, lying to your auto insurer about the number of miles you drive annually can be cause for cancellation. Some insurers may simply increase your car insurance rates for this particular lie, but they can also cancel your policy and refuse to pay your claim — assuming you provided inaccurate information intentionally.

Life insurance companies may also cancel your policy if you lie. For example, if you lie about your deep-sea diving hobby and then die during a dive, your life insurance company could deny your beneficiaries’ claim. Any lie caught within the two-year contestability period of a policy can provoke the insurer to scale down the death benefit or even rescind the policy, depending on state law.

Advice - When applying for any type of insurance ‘honesty is the best policy’.

3. Your driver’s license has been suspended or revoked during the policy period

If your auto insurance company finds out that your license has been suspended or revoked, it will cancel your policy. This rule also applies to other members of your household. For example, if you have a child listed on your policy who has had his or her license revoked/suspended, your insurance company may cancel your policy if you fail to disclose this information. Car insurance companies often check your DMV record (and that of other members of your household) at renewal time. They will also find out about a license suspension if the person in question is involved in a car accident.

Advice - If someone in your household experiences problems with their license, notify your insurer. Your policy will not be cancelled (unless you’re the culprit). Your insurer may simply exclude coverage for that person.

4. You ignoring telephone calls from your insurance company

Ignoring your insurance company is never a good idea. If your insurer makes an effort to contact you – especially during a claims-settlement process – you’re obligated to comply. For example, if you get into a car accident, your insurance company will surely want to interview you or may even require you to attend a deposition if a lawsuit is involved. Failing to comply could be grounds for policy cancellation. A standard car insurance policy states that the insurer has “no duty to provide coverage” unless the insured is in full compliance with a number of duties. These include promptly notifying your insurer where, when and how the accident happened. A standard policy states that “a person seeking coverage must cooperate with us in the investigation, settlement or defense of any claim or suit” and “promptly send us copies of any notices or legal papers received in connection with the accident or loss.” This can include exams by physicians and medical records.

5. You commit suicide

Generally, life insurance policies have a contestability clause that says, among other things, the policy will not pay out if you commit suicide within the first two years of the policy. However, if you commit suicide two years and one day after you purchase the policy, your beneficiaries will be paid!