IndiaFirst Life received Rs 125 cr capital infusion

Jointly promoted by Bank of Baroda, Andhra Bank and Britain’s, on Wednesday said its shareholders have infused Rs 125 crore capital for expanding distribution network.

"With the Rs 125 crore infusion, the total paid up capital of the company now stands at Rs 455 crore," IndiaFirst Life Managing Director and CEO P Nandagopal.

He said the company will take up the capital base to Rs 2,500 crore in 10 years.

"In the next fiscal we will infuse about Rs 200 crore. We will take up the equity base to Rs 1,500 crore by the end of the first five years. We have finished our for this fiscal," Nandagopal said.

IndiaFirst, which started operations in November 2009, is the 23rd player in the life insurance space. While BoB holds 44(%) per cent, Andhra Bank has an equity stake of 30(%) per cent and the remaining 26 per cent is with the British partner.

"We will be coming out with two traditional products for which we will file with (insurance regulator) IRDA in two weeks time. We will come out with health insurance plans next year," Nandagopal said.

The company has a network of 4,500 bank branches.

Mediclaim, motor insurance portability shortly

Insurance regulator IRDA on Tuesday said that mediclaim policy holders, who are not satisfied with the services, will soon be able to switch service providers at the same premium. The same would also be true for motor insurance policy holders. "It is high time that the insurance industry also moves to offer portability so that the mediclaim and motor insurance policy holders can switch their service provider...We have initiated a debate on the idea of portability and we would be arriving at a conclusion very soon," IRDA Chairman J Hari Narayan said at CII insurance summit.

To a question on whether this portability concept would apply to ULIPs also, he said: "Yes and no. Yes in the sense that there has to be a balance in the churn of ULIP's policy and their portfolio has to be evenly managed."

Narayan, however, added that portability cannot be randomly applied and the portfolio of an insurance company has to be balanced.

To a question on the status of Reliance General Insurance acquiring a south-based insurance company, he said: "We have certain issues which we are trying to resolve through discussions."

The IRDA chief added that work is progressing on formulating merger and acquisition norms for the sector.

"M&A norms would be announced soon. A committee is studying the issue," Narayan said.

Insurance firms squeeze outsourcing to cut costs

Hemmed in by regulatory changes and a potential squeeze in profitability, insurance companies are now increasingly looking to outsource many of their non-core functions to cut costs and remain competitive. ICICI Prudential, Max New York Life and HDFC Standard Life are among those who have initiated discussions to outsource some of their activities as focus shifts to cost control and consolidation.

Claims administration, analytics, customer care, policy administration, sales and distribution and even product development, are some of the areas that insurance companies are looking to outsource to specialist firms.

This is a departure from the past when insurance companies’ corporate strategies largely revolved around growth in policy sales and premium collection.

Max New York Life has engaged consulting firm McKinsey to carry out a comprehensive cost-benefit analysis across verticals.

“We are looking at ways to reduce costs and one of the options could be to outsource certain areas but we need to see what exactly the impact would be,” a senior official at a Mumbai-based private insurance company, who did not wish to be identified, told Hindustan Times.

Insurance companies are desperately seeking options to cut costs after sector watchdog Insurance Regulatory Development Authority (IRDA) enforced a new set of norms from this month for the controversial Unit Linked Insurance Products (ULIPs).

ULIPs — a hybrid product where a part of the money is invested in equities and the balance is set aside as premium and charges and fees — accounts for more than half of the life insurance firms’ total business.

The new norms have capped surrender charges of policies, slashed agent commissions and seek to make charges more transparent to prevent mis-selling. This will reduce profitability of companies but also help consumers by making their investments more transparent.

Business process outsourcing companies expect a major jump in their insurance related services in India in the coming months.

“We are in healthy discussions with many of the insurance companies in India for providing specialist services across all sub-verticals,” said Keshav R Murugesh, Group CEO of WNS, a leading global business process outsourcing company.

Bajaj Allianz Health Card launched

Bajaj Allianz launched a health card - JiyoFit, in association with Yes Bank, this product aims to encourage customers to lead a healthy lifestyle. This health card is first of its kind to be launched in India.

Bajaj Allianz General Insurance Chief Executive Hemant Kaul says, "Health insurance as a concept is associated with illness and hospitalization. But JiyoFit is an endeavor to shift from managing customers' illness to promoting a healthy and fit lifestyle".

The health card is not attached with a new Mediclaim policy but is an additional facility offered to a Bajaj Allianz health policyholder.

Currently, this initiative will be available in 15 cities which will be expanded further as the demand for the card grows.

Oriental Insurance to turn out two new health insurance products

Oriental Insurance Company Limited, one of India's premier insurance companies, is aiming to roll out two new health insurance products by the end of the current financial year.

The PSU insurer is also looking to expand its international operations through opening of a branch in one of the countries of the Gulf region.

"We would be coming out with two new health insurance products before the end of the current financial year. Our objective is to extend the company's health insurance products to the economically disadvantaged people who cannot afford hospitalization costs. As far as motor and fire insurance is concerned, we would not launch new products and we will only be coming out with add-ons of existing products”, R K Kaul, chairman and managing director of Oriental Insurance Company Limited told reporters.

Talking on plans for international expansion, Kaul said, “We are looking to set up a branch in one of the countries of the Gulf region and are awaiting regulatory approval for the same.”

He declined to name the country and the timeline of commencement of operations of the branch. Besides India, Oriental Insurance currently has operations in three countries- Nepal, Kuwait and Singapore.

Oriental Insurance has targeted a premium income of Rs 5470 crore for 2010-11. If achieved, this would be growth of 16.38 per cent over Rs 4700 crore which the company had achieved in 2009-10.

The insurance firm had clocked a growth of 19(%) per cent in the previous fiscal.The company plans to recruit 14,000 direct agents across the country in this financial year.

Car Insurance myths | what affects car insurance Premium?

1. New Cars Cost More to Insure - This is not always the case. Depending on the driver’s history, insurance for a brand new car is often cheaper than a five or ten year old version of the same vehicle. Newer models have top of the range security features installed, meaning that they are statistically less likely to be stolen, a fact that helps to bring insurance costs down. Older models also tend to be owned by younger or new drivers, who insurers class as a bigger risk and charge a higher premium.

2. Car Color Matters - Although insurers take many factors into account, including engine size, age and value of the car, driver’s record etc., they don’t take any notice of the color.

3. Being Loyal to Insurer leads to Cheaper Coverage - Staying with the same insurance company year on year won’t automatically lower your premiums. It always pays to shop around for a better deal and compare car insurance quotes when it’s time to renew your policy, because providers don’t necessarily reward your loyalty with a reduced price.

4. New Cars Are Stolen More - New models have much more advanced security equipment and anti-theft devices installed, meaning that criminals steer clear and target older vehicles that are easier to steal instead.

5. A Car is Worth What You Paid for It - If your car is totaled or stolen, insurers will only pay to replace it with a similar model at today’s market rate, not the value you paid for it originally.

6. Credit Scores Don’t Count - Sadly this isn’t the case. Most insurers now factor in a customer’s credit score when calculating their insurance quote. The better the credit score, the lower the premium will be. Build your score by keeping on top of credit cards debts and paying bills on time, and you’ll start to see a difference when you renew your auto insurance policy.

7. No Fault Insurance Means It’s Never My Fault - The only thing no fault insurance covers is your medical bills if you are in an accident, whoever is at fault. It doesn’t cover the other driver, it doesn’t cover damage to cars, and it certainly doesn’t mean you’re absolved of any responsibility if you are to blame.

8. I’ve never been in a Crash So I Don’t Need Insurance - Just because you’ve been lucky enough to avoid accidents so far doesn’t mean that’ll always be the case, no matter how good a driver you are. But it’s not just the peace of mind that having motor insurance can provide if something were to go wrong. It’s actually a legal requirement to have some form of insurance, so it’s not an even an option, you must have some sort of protection.

New Ulip launched by ICICI Prudential Life Insurance

ICICI Prudential Life launched its third unit-linked insurance product (ULIP) named ICICI Pru LifeLink Wealth SP, which is also in accordance to the new Insurance Regulation and Development Authority (IRDA) regime.

ICICI Prudential Life's CEO and Managing Director Sandeep Bakhshi said, "ICICI Pru LifeLink Wealth SP is a single premium product that will save customers the hassle of remembering premium payment dates or policies getting discontinued because of non-payment within a stipulated time".

About the product:

· Minimum premium is set at Rs 40,000,

· Provides customers the flexibility of choosing between 125 % and 500 % of the premium.

· Assures a loyalty benefit of up to 2.5 % of the fund-value at the end of every fifth policy year, which will start from the tenth policy year.

· In addition to this, ICICI Pru LifeLink Wealth SP also gives tax benefits on the premium paid and Change in Portfolio Strategy (CIPS), which means the customer is given an opportunity to choose from two unique portfolio strategies.

· For passive customers, the product has Trigger portfolio strategy, which gives them the opportunity to automatically capitalize and protect gains made from equity investment based on market movement.

Endowment Plus Policy launched | LIC

Life Insurance Corporation of India (LIC) launched another unit-linked pension plan named - Endowment Plus Policy, under the new Insurance Regulation and Development Authority (IRDA) regime.

Pension Plus being the first unit-linked product launched in unison with the new IRDA guidelines.

Endowment Plus offers:

· Investment-cum-insurance during the term of the policy and

· Available for people under 7-60 years for a policy term between 10 years and 20 years.

Other features:

· The minimum annual premium under the insurance policy is Rs 20,000 for regular modes and a risk cover of up to 11-30 times of annualized premium or 1.25 times of single premium.

· Critical illness and accident benefit riders are also available with this policy.

· The policy holder has the option to choose any of the 4 funds namely - Bond Fund, Secured Fund, Balanced Fund Growth Fund.

The option of switching within the funds is available any number of times during the duration of policy. The first four switches every year are free of charge and Rs 100 is levied thereafter per switch.

Insurance firms not offering new pension plans

Life insurance companies are shying away from launching new pension plans following new norms, which mandate that all unit-linked pension plans will have to offer a guaranteed return of 4.5(%) per cent. Most life insurance companies have not launched any new unit-linked pension plans after the new ULIP guidelines came into effect from September 1. Life Insurance Corporation of India's Pension Plus is the only unit-linked pension plan now on offer in the market.

Companies said the guaranteed return regime would force them to move away from equities and increase debt exposure, which may affect profitability.

It was launched on September 2. Pension products constitute 20-25(%) per cent of the total premium collected by the industry. During the last financial year (2009-10) around Rs 65,000 crore came from sale of pension products --- representing a quarter of the total premium collection of Rs 2,61,025 crore.

Firms also said that to provide a guaranteed return of 4.5(%) per cent, companies would have to earn about 6.75(%) per cent to 7(%) per cent.

“This guaranteed (4.5 per cent) return is valid on maturity date for policies where all due premiums are paid. Mortality and, or health cover could be offered along with the pension/annuity products as riders, giving enough flexibility to policyholders to choose covers of their choice,” the IRDA guidelines said.

Insurance companies said an underdeveloped long-term debt market offers limited options for them to park their money that would ensure a steady risk-free return for tenures extending up to 30 years.

“For long term investments, the best returns can be earned through equity but with the guarantee, life insurance companies would have to invest in debt instruments and that pose some problems,” a Max New York Life spokesperson told Hindustan Times.

“We are evaluating the pension market in the light of the new regulation and seeing when we can launch a pension product,” Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance however said.

An annualised return of 4.5(%) per cent does not compare well with other long-term savings instruments. A savings bank account offers 3.5 per cent, while the employees’ provident fund raised interest rates to 9.5 per cent for 2010-11. A PPF subscriber earns 8(%) per cent per annum.

“At 4.5 per cent guaranteed return (for unit-linked pension plans) even customers may not find it attractive,” a senior executive of a Mumbai-based life insurance company said, requesting anonymity

Old strategy good for new ULIPs as well

Unit-linked Insurance Plans (Ulips) are back. Insurance companies are busy presentation new versions of the products which had earned a bad name for the whole industry in their earlier avatar due to rampant mis-selling. According to financial experts, the new Ulips, which meet the latest strategy issued by the Insurance Regulatory and Development Authority (Irda), are definitely more transparent and investor-friendly.

For example, the charges are now consistently spread across the tenure of the policy, there is a longer lock-in period and surrender charges are capped. But is the new version a better product now or is it just old wine in a new bottle? “The new guidelines lay great stress on promoting Ulips, primarily as insurance products. The insurance component in the new Ulip will be significantly higher than earlier. Further, higher initial allocation could result in better returns,” says G Murlidhar, chief operating officer, Kotak Life Insurance.

Evenly spread allocation charges, or the insurer’s fee for managing a policyholder’s money, through the policy term will allow the customer to see a gradual build-up of his funds over time, encouraging him to pay premiums regularly and staying invested for the entire period of the policy, he adds.

Loansurance Group Life Plan launched | IDBI Federal Life Insurance

IDBI Federal Life Insurance launched a group cover for loans - Loansurance Group Life Plan - a solution that will enable investors protect their borrower's assets and savings.

Customers of the plan gets to cover their borrowers, it could be a loan taken by any individual or by a business entity, against default in case of death of the person who is responsible for loan repayment.

To quote IDBI Federal Life Insurance Managing Director and CEO, G V Nageswara Rao - "Loansurance can help lending institutions to build strong bonds and customer loyalty by ensuring that their debt does not become a burden on their families in their unfortunate absence. They would also be protected from the risk of non-payment of the loan due to death of the borrower".

The unique feature of the plan is its cost-effective way to ensure that the outstanding debt is settled in the unfortunate event of death of the insured member.

The plan comes with two cover options

1. Reducing cover - the insurance cover reduces as per the benefit schedule
2. Level cover - the insurance cover remains unchanged throughout the cover term.

New ulip launched in accordance with the IRDA guidelines | Kotak Wealth Insurance

Kotak Life Insurance launched Kotak Wealth Insurance – a new unit-linked insurance plan which is in accordance to the new guidelines proposed by IRDA.

Kotak Wealth Insurance is a complete package that provides investment growth along with comprehensive triple benefits in the event of death. Its power-packed range of eight fund options allows customers to balance their risk profile with the tenure their investments.

New ulip launched in accordance with the IRDA guidelines | Kotak Secure Invest Insurance

Kotak Life Insurance launched Kotak Secure Invest Insurance – a new unit-linked insurance plan which is in accordance to the new guidelines proposed by IRDA.

Kotak Secure Invest Insurance is an equity exposure insurance plan and is backed by capital guarantees with in-built investment advice of the guarantee fund. It also helps the customer gain from market participation through the guarantee fund that aims at stable capital appreciation while limiting the downside risk in falling market conditions.

Higher Returns Assured – New Ulip | HDFC Standard Life Insurance

HDFC Standard Life - private life insurance player - launched a new ULIP - HDFC Standard Life Crest - which assures higher returns.

HDFC Standard Life Crest has

• a 30-day free look-in period against the usual 15 days so that investors understand the new ULIP (Unit Linked Insurance Products) better, in compliance to with the IRDA regulations which came into effect.

From now onwards all HDFC Standard Life insurance plans will carry a 30-day free look in period. This is for the convenience of an investor in case he/she feel that the product purchased is not very suitable to his/her requirement. The investor will be given a choice to switch over to an alternative product offered from the company within a year although at a nominal additional cost.

Pension Plus scheme with guaranteed return | LIC

Life Insurance Corporation (LIC) plans to launch a unit-linked pension scheme – LIC Pension Plus.

Unique Features:

· Minimum rate of interest of 4.5% is guaranteed, after maturity, one-third of the corpus can be withdrawn as a lumpsum amount.

· The remaining two-thirds would be paid in either monthly or half-yearly installments after maturity, as decided by the policy holders.

· The Pension Plus policy is in line with the Insurance Regulatory and Development Authority's latest ULIP guidelines.

The Pension Plus plan Options:

1. Debt fund and

2. Mixed fund.

Under the debt fund, not less than 60% of the corpus would be invested government securities, while the remaining 40% would go into money market instruments.

Under the mixed fund plan, the investment in government securities would not be less than 45%, while 40% would go into money market instruments and 15-35% into equities.

Eligibility:

· This insurance plan can be subscribed by any one between 18-75 years of age and,

The minimum maturity period is 10 years.

3 new products launched by Aviva Life Insurance

Three new products are launched by the private insurer Aviva Life Insurance which includes two unit-linked insurance plans (or as we all call them, ULIPs).

The company says -
"... The two ULIP plans -- Aviva Freedom Life Advantage, Aviva Life Saver Advantage -- offer enhanced value to the customers and meet the new ULIP guidelines".

The third product - Aviva Life Shield Advantage - promises a return on the premium, with optional protection against disease and disability as well.

These products are in accordance with the new IRDA guidelines, as the commission paid to distributors and expenses charged by insurers will not be front-loaded and will be distributed over the lock-in period of the schemes, which has been raised to five years from three years (earlier).

A little about the Company –

Aviva Life Insurance is a joint venture between Dabur Group (74 %) and UK-based Aviva Group (26%).

Investors can expect better Ulip products and services

Several new unit-linked insurance plans (Ulips) have started hitting the market after the Insurance Regulatory and Development Authority’s (IrDA) new strategy on Ulips came into effect from September 1. So what has changed?

Existing Ulip customers have nothing to worry as the regulations will only apply prospectively and will not affect them in any way.

Cap on charges between gross and net yields throughout the policy term that will be mostly evenly spread, and increase of lock-in period from 3 to 5 years will enable the customer to reap higher returns.

The new guidelines restrict the penalty that an insurer can levy on premature surrender. This cap on surrender penalty will ensure greater liquidity for the customer and reduce his loss even if he surrenders early.

Enhanced customer disclosures will improve transparency and drastically decrease mis-selling. Companies on their own accord can also be projected to add check layers beyond those mandated by the regulator to weed out mis-sales.

Insurance companies will invest more in better equipping intermediaries both in terms of knowledge and advisory capability.

Further, mandatory Need Based Selling, whereby insurance agents will be required to assess the customer’s exact insurance needs based on his financial and filial profile may also soon become an integral part of the sale process.

Customers can look forward to far better product and service experience. Greater customer affinity is likely towards life insurance in general and Ulips in particular and more customers can be expected to ride out the entire policy term.

As for companies, most of the old Ulips will be off-the-shelf and they will introduce a swing of products to adhere to the new guidelines. However, margins may come under pressure. Emphasis will now be on higher business volumes, increasing average ticket size and bettering persistency levels. Insurers will qualitatively enhance the customer value proposition by introducing simpler, more transparent products, better service and support during the policy term and, improving the overall quality of engagement.

Current levels of lapsation and surrender may consequently reduce. Insurers may also look at innovative platforms to rationalise cost and enhance appeal. The product mix will also change. From the current Ulip-heavy portfolio, insurers will strive to achieve greater balance between traditional plans and Ulips. However, insurance firms which had planned to list may revisit their plans, since valuations may get affected now.

Private insurers to espouse PSU rates for cashless mediclaim

Private non-life insurance companies are expected to implement the packaged rates prescribed by their public sector counterparts for cashless mediclaim.

“Private players have expressed interest in following the packaged rates decided by the PSU insurers,” said a senior General Insurance Public Sector Association (Gipsa) member who did not want to be quoted.

The rates worked out by Gipsa are likely to be 15-20(%) per cent less than what healthcare providers charge at the instant.

“We have in principal agreed to be part of the packaged charge. But the mechanics of packaging needs to be worked out. We will join them, but how soon will depend on how fast they move and incorporate us,” said Sanjay Datta, head of health insurance at ICICI Lombard.

The PSU insurers had graded hospitals fewer than 4 categories – primary, secondary, tertiary and tertiary plus, the Gipsa member said. He added they had made a list of 43 diseases. The rates, 15-20(%) per cent less than what the hospitals charge, will differ on the basis of provider, infrastructure, location and past experiences.

“We have not properly advised on the rates but would like to join them if it brings down our costs,” said T R Ramalingum, head of underwriting, Bajaj Allianz General Insurance.

By packaging rates and stabilising costs, insurers expect to cut expenses. “The claim ratio may not fall but the cost of treatment at individual hospitals will become standardised. The rates may differ from one hospital to another based on location and facilities,” said New India Assurance Chairman and Managing Director M Ramadoss.

State-run insurers have made a list of hospitals in the National Capital Region, Mumbai, Chennai and Bangalore. The rates are worked out on the basis of those accepting the rate packages. The rates include medical procedures and hospitalisation costs.

The public sector insurance companies — New India Assurance, National India, United India and Oriental Insurance —launched a new list for the preferred provider network after they stopped the cashless facility from July. Under the new list, only healthcare providers selected by the four insurance companies are covered by the cashless mediclaim policy.

Meanwhile, the Insurance Regulatory and Development Authority (IrDA) has asked insurance companies to provide the cashless facility if the policyholder is undergoing treatment in a hospital that has been put off the preferred network list.

The insurance industry has been incurring huge losses in the health segment. In the last financial year, PSUs paid claims of Rs 5,400 crore, as against a total collection of Rs 4,900 crore.

For policyholders willing to pay higher premium to be treated at any elite hospital, insurance companies are working on a different product.

Future Generali to move out 7 new products

Future Generali Life Insurance Company Ltd, a joint venture between Future Group and the Italy-based Generali Group, would move out 7 new products by March 2011. These products would be a mix up of traditional insurance products and Unit-Linked Insurance Products (ULIPs).

Addressing media persons here, Nirakar Pradhan, chief investment officer of Future Generali India said, “We would be launching 7 new products by March 2011. These would be a mix of traditional insurance products and ULIPs. Currently, we have 18 products in our portfolio which includes 15 conventional products and 3 ULIPs.”

Future Generali is also planning to foray into the micro-insurance section given its huge prospective but the modalities are yet to be worked out, he added.

The insurance firm is eyeing a total pan-India premium collection of Rs 1200 crore for the current financial year which would be a jump of 118.97 per cent over Rs 548 crore which it had actually achieved in 2009-10. TIN the eastern region, the company's premium collection stood at Rs 53 crore in the last financial.

Two new ULIPs Plan launches by SBI Life Insurance

Private insurer SBI Life launched two Unit-Linked Life Insurance Policies (ULIPs), which observe with the new IRDA guidelines that will become successful.

"SBI Life has launched Smart Performer and Unit Plus Super... In compliance with the new IRDA guidelines, these recently launched ULIPs are equipped with enhanced features such as benefits of higher protection, multiple investment options and a wide range of riders," SBI Life said in a release.

SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Assurance. SBI has a 74(%) per cent stake in the insurance company, while BNP Paribas Assurance holds the remaining 26(%) per cent.

The Insurance Regulatory and Development Authority's (IRDA) new guidelines protecting ULIP-holders from mis-selling by dealers and onerous commissions are possible to make the equity-linked instruments more investor-friendly.

"Customers will find that the new range is highly beneficial, as it further reinforces the plan of security and long-term wealth creation," SBI Life Insurance MD & CEO M N Rao said.

Two Latest Plan launches by Birla Sun Life Insurance

Leading private insurer Birla Sun Life Insurance launched two variants of its just launched savings plan, offering 20(%) per cent assured return at standard intervals.

Bachat Moneyback and Bachat Child plans follow the achievement of the Bachat Endowment Plan, launched this May, which contributed to over 10(%) per cent of overall sales in the first quarter of this financial, Birla Sun Life Insurance Chief Actuarial Officer Fabien Jeudy said.

"Our research shows that there is rising a demand for products on the traditional platform that will help consumers save for their long-term goals during regular and affordable premia. We hope Bachat Moneyback and Bachat Child plans will address these consumer needs effectively," he said.

These plans offer regular money back of 20(%) per cent of the monthly stand premia at every 5th, 10th and 15th policy year, Jeudy said.

In Q1 of this financial, the company reported a profit of Rs 9 crore against a loss of Rs 111 crore in Q1 last financial. Its asset under management grew 44(%) per cent to Rs 16,841 crore in Q1, on a total premium income of Rs 1,143 crore, up 18 per cent. Its new premium grow 7(%) per cent to Rs 473 crore while renewal premium rise by 27(%) per cent to Rs 669 crore.

Birla Sun Life, a JV between the Aditya Birla Group and Sun Life Financial of Canada, has over 2.3 million customers.

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