The government has secured the support of BJP on the bill to reform the pension sector by agreeing to the main opposition's demand that the scheme offer a minimum assured return and foreign investment be capped at 26%.
The new pension scheme (NPS) will offer an option for an assured return of 8.6% for investments in government bonds, while subscribers willing to take a higher degree of risk can look at other choices, where their contributions are invested in a mix of private and government placements.
An understanding over the Pension Fund Regulatory and Development Authority (PFRDA) Bill was arrived at a meeting on Monday between finance minister Pranab Mukherjee and BJP leaders L K Advani, Arun Jaitley, Sushma Swaraj and Yashwant Sinha in Parliament. However, no consensus was possible with regard to the Companies Bill.
This is the second occasion on which the government and BJP have cooperated on the PFRDA Bill that seeks to give statutory cover to the NPS in force since 2003. The bill was introduced in Parliament in the face of Left resistance with BJP's backing and now its prospects of passage seem bright and it may be moved on Wednesday.
The terms of the deal are on the lines of the recommendations of the parliamentary finance standing committee that did not agree with the Centre's proposal that foreign investment in pension funds be raised to 49%, and also called for an assured rate of return, arguing that senior citizens should be given security on their investment.
The panel was also critical about the mediocre performance of the fund so far and the relatively low number of subscribers. While the government looked uncertain about the bill last week, Mukherjee's renewed bid for an agreement has borne fruit. BJP also seems prepared to be more accommodative towards Mukherjee, who the party feels is not needlessly combative towards the opposition.
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Passage of the pension bill will be an important gain for the government after the reverses it has suffered over reform initiatives like FDI in multi-brand retail apart from the finance standing committee turning down proposed changes in the banking laws that would have given private investors voting rights equal to their investment.
On the Companies Bill, UPA conceded BJP's demand for allowing Limited Liability Partnership that would enable a group comprising only professionals from a category like chartered accountants or company secretaries to form their own company.
But the government has proposed so many changes to the bill - already scrutinized by a House panel - that it is now looking very different.
Tuesday, December 20, 2011
Friday, December 16, 2011
Company directors rush for insurance cover
Six months ago, directors of Kolkata-based
It is this increasing vulnerability of senior corporate executives towards litigations that has set the ball rolling for directors and officers’ liability cover for insurance companies.
With the upcoming Companies Bill 2011 seeking to introduce a more rigorous regime for board members, especially independent directors, insurance companies are recording numerous inquiries for insurance for directors.
Directors and officers’ liability insurance provides cover against legal expenses in various cases like shareholders claims, accusations of accounting irregularities, exposures related to mergers and acquisitions, corporate governance and compliance with various legal statutes.
“There is definitely an increase in the number of companies opting for directors and officers’ liability insurance. We have seen more inquiries from corporates in the last few months,” said Sanjay Datta, head (customer service- health and accident), ICICI Lombard General Insurance.
In the aftermath of the Satyam scandal, in which Ramalinga Raju, former head of Satyam Computers, was accused of massive accounting discrepancies, insurance for directors gained steam. More recently, the 2G spectrum auction scam and the bribes-for-loans scandal that involved state-controlled banks and lenders, too, landed senior corporate executives in jail.
The Companies Bill 2011, tabled in the Lok Sabha on Wednesday, proposes to introduce class action suits for the first time in the country. This would empower investors to sue a company for ‘oppression and mismanagement’ and claim damages.
Ashok Pareek, central council member, Institute of Companies Secretaries of India, and executive director of Srei Capital Markets, said, “Currently, less than five per cent of listed companies have bought such cover, but going forward, the Companies Bill 2011 would pave the way for many companies to opt for directors liability insurance cover.”
A National Insurance executive said, “In the last few months, we have seen more inquiries for insurance cover for directors. This is especially true for corporates with foreign board members. Outside
Interestingly, the scope of the policy differs from companies to companies, as these provide insurances against varied risks.
Bajaj Allianz launches guaranteed maturity insurance plan
Type of policy: A single premium Unit Linked Plan. The investment objective of this fund is to provide capital appreciation by investing in a mix of debt and debt-related securities.
Premium: Minimum premium is 5,000 and in multiples of 5,000.
Term of the Policy: The tenure of the policy is 10 years and you are allowed to make partial withdrawals after five years, limited to 1/3rd of the single premium.
Maturity benefit: Higher of the guaranteed maturity value of all the'guaranteed maturity certificates' held at maturity or the fund value as on maturity date. The plan guarantees 200% returns on maturity - that means your money doubles in 10 year (CAGR of 7.18%).
Death benefit: It is calculated as higher of the prevailing sum assured reduced by the value of the units withdrawn through partial withdrawals from the fund value in two years prior to the death, or fund value as on date of receipt of intimation of death.
The sum assured under the plan is five times the single premium in the first policy year and will, for subsequent years, reduce to 1.25 times of the single premium for those who enter the policy before they are 45, and 1.10 times of the single premium for those entering after 45.
Click here to apply Bajaj Allianz Life Insurance
Eligibility: The minimum age at entry in the plan is eight years and the maximum is 60 years
Charges: There is no premium allocation charge. But the policy administration charges are 1.85% per annum of the total single premium in the first five years of the policy, subject to a maximum of 6,000 and 0.70% per annum of the total single premium subject to a maximum of 6,000 per annum.
Policy administration charges and mortality charges are deducted monthly through cancellation of units. Fund management charge is 1% per annum adjusted in the unit price.
The good: It is a simple plan to understand and offers minimum guaranteed return on maturity
The bad: The policy offers reduced life cover from the first anniversary of the policy. Hence, it doesn't serve the purpose of insurance. Also guaranteed returns under the policy are less than the current 10- year G-sec yield or interest rate offered by most banks, without taking tax benefits into account.
Friday, December 9, 2011
Insurance industry to grow from next fiscal: Swiss Re
"The non-life segment is expected to grow by 7.9 per cent in 2012 and 8.5 per cent in 2013, while in the life segment is expected to rise by 7.5 per cent in 2012 and by 11 per cent in 2013. The main drivers for this growth will be health, micro-insurance and innovative product offerings," Swiss Re Vice-President Amit Kalra told reporters here after launching
However, this growth trend in non-life is lower than that of 2010, as the motor and trade-related lines are likely to see a slight slowdown, he said.
This segment will mainly be driven by premia from the health sector, he said, adding there are huge untapped opportunities in retail personal lines, liability, micro- insurance and agriculture.
Foreign direct investment in retail could have boosted premium for the non-life industry as international companies take insurance for their establishments, Kalra said.
Globally, in the life segment, premia growth will recover, led by
Growth will be supported by recovery in unit-linked products, he said, adding there is also down side risks if the capital markets continue to be suppressed.
Meanwhile, global outlook, he said, remains uncertain due to the world economic crisis, but it would still perform better than banks, he said.
Kotak Life Insurance launched unit-linked Invest Maxima
Private insurer Kotak Life Insurance today launched Invest Maxima, an investment oriented Unit Linked Insurance Plan (ULIP).
The plan offers zero premium allocation charge feature that maximises the investible component and the choice of three different portfolio management strategies which affords customers tremendous flexibility in managing their portfolio, Kotak Mahindra Old Mutual Life Insurance said in a release issued here.
Customers are given the flexibility to choose from two options, one which offers a choice of five attractive fund options, or the other that enables them to invest in the equity market in a systematic manner over a period of time or a customized combination of the two.
In the last policy year, customers can choose to exit the policy in a secure and systematic manner, by selecting the Systematic Exit Strategy option, which gradually diverts all fund balances into a lower risk money market fund, to avoid volatility and safeguard returns on maturity.
Apart from regular premium payment option, the plan also offers limited and single premium payment options.
The minimum age is 0 years and the maximum age is 65 years.
The maturity of the plan is minimum 10 years and the maximum is 75 years.
There are three premium options, in regular the minimum amount is Rs 50,000, in limited Rs 75,000 and in single premium it is Rs 1, 00,000.
Kotak Mahindra Old Mutual Life Insurance is a 74:26 joint venture between Kotak Mahindra Bank, its affiliates and
The plan will provide tax benefits to customers.
Monday, December 5, 2011
Forum to insurance firm: Pay woman 2.5 lakh
The district consumer disputes redressal forum ordered an insurance company to pay a complainant Rs 2.5 lakh for her treatment of a cardiac ailment.
The insurance company was rejecting her claim saying that the illness for which she was treated was not covered under the policy.
The woman had purchased a 'health first' insurance policy from Tata AIG Life Insurance Company Limited, valid for a period of 13 years, from January 9, 2004, to January 9, 2017.
As per the policy, the insurance company had to pay the complainant's hospital and medicine expenses, in case of a serious ailment. The policy amount was Rs 5 lakh. In July 2005, the woman felt pain in cardiac region and consulted several doctors for treatment, even in Mumbai. In October 2005, the woman was given a permanent pace maker by doctors. She was admitted in a hospital in Mumbai for treatment. The treatment cost her Rs 4.5 lakh and she filed a mediclaim with the insurance company.
The insurance company paid her Rs 1,500 only, for being admitted in the hospital for three days, at Rs 500 per day, as was defined in the policy. The company denied paying other expenses saying her illness was not a 'critical illness'.
After being taken for a ride by the insurance company, the aggrieved woman filed her complaint with the consumer forum.
The company confessed that it had rejected her claim because the illness for which she was treated was not covered under the said policy. The illness necessitating a permanent pace maker was also not specified in the policy taken by the woman.
The critical illness cover promised the woman 'a lump sum payment of up to Rs 5 lakh' in case she was diagnosed with a critical illness.
The policy further said that it will ensure that woman has access to the most technologically advanced treatment, and can pay for medicine related costs and other recuperation costs.
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