Kotak gold fund launched

After Reliance Mutual fund, which launched a gold fund last month, it is the turn of Kotak Mutual Fund to launch a gold savings fund. With this fund, you can invest in gold without having a demat account. The issue is currently open for subscription and closes on March 18.

THE PRODUCT

Kotak Gold Fund is an open-ended fund of funds (FoF) scheme, which is passively managed and will invest primarily in Kotak Gold Exchange Traded Fund। So its returns will mirror the returns of Kotak Gold Exchange traded fund. While there is no entry load, there is an exit load of 2% if you redeem or switch out units on or before the completion of one year from the date of allotment of units, 1% if you switch between six months and one year of allotment and no exit load after one year of allotment. The minimum amount on application is . 5,000. You can also do a SIP for . 1,000 per month.

THE CASE FOR GOLD

Financial planners recommend gold as an alternate asset class of investment in a portfolio and recommend investors to have 5-10 % of their portfolio in gold. They are reiterating the advice now due to the uncertainties hovering over the world economy and the trouble brewing in the Arab world. Gold is also considered a safe bet and a hedge against inflation by some. It has a very low correlation to other asset classes, making it a handy asset to diversify the overall portfolio.

WHO SHOULD APPLY

Investors who wish to build up their gold portfolio and hold gold as an asset class in their portfolio can apply. Besides this, investors who do not want to go through the trouble of operating a broking account and a demat account, could look at this mode of buying gold via SIPs.

WHY NOT TO APPLY

Being an FoF, the expense ratio here is likely to be higher, compared to an exchange-traded fund. While the expense ratio for the most liquid Benchmark Gold Exchange traded fund is 1%, Kotak Gold fund will have a higher expense ratio of 1.5% per annum. Hence, investors holding a demat account, may find it marginally cheaper to buy gold through the ETF route rather than investing through this fund.

Insurance firms must cut premium charges in rural areas: PwC

HYDERABAD: Insurance companies must reduce premium charges and collection cost in order to penetrate in to rural and Below Poverty Line masses, global professional services firm PricewaterhouseCoopers (PwC) has said.

PwC said this in a report released here today on health insurance in India.

The report, jointly prepared by PwC India and India Health Progress - a healthcare communication consultant - made 12 recommendations for the sector penetration across groups.

"For penetration among the BPL category and rural sections, insurance premiums should be kept low and manageable. Over time and efficiencies can be achieved and costs lowered," Sujay Shetty, Leader-Pharmaceuticals and Life Sciences, PWC India, told reporters after releasing the report.

He said less than 15 per cent of India's population is covered under some form of health insurance, including Government-supported schemes. Only 2.2 per cent of the population is covered under private health insurance, of which rural health penetration is less than 10 per cent.

"Health Insurance is particularly critical for BPL people. This is because an illness is especially threatening for BPL families. Not only is it a threat to their income earning capacity, it could also result in the family falling in to a debt trap," Ranga Iyer, healthcare consultant, said.

The report calls for a new business model to cater to the demand for insurance products, considering Public-Private- Partnerships, outpatient coverage, creation of a credit bureau for reliable data and setting up a healthcare regulator.

LIC launches Samridhi Plus under Ulip portfolio

MUMBAI: Life Insurance Corporation of India today launched 'Samridhi Plus' under its unit linked portfolio offering insurance protection, safety and growth.

Samridhi Plus safeguards policyholders' investment from market fluctuations, LIC said in a statement here.

Accident benefit option is also available under this plan that will be equal to the life cover up to a maximum of Rs 50 lakh, subject to certain conditions।

The policy term for the plan is fixed for 10 years, it said.

The minimum age at entry level for Samridhi Plus is 8 years while the maximum age is 65 years.

The minimum premium ranges from Rs 1500 (monthly - ECS) to Rs 30,000 (single premium) depending on the mode of payment while the maximum is Rs 1 lakh per annum under any mode for the 5 year premium paying term.

Stock market correction offers value picks for long-term investors

The stock markets have been through a correction over the last couple of months due to concerns on the high inflation rate, monetary policy tightening and impact on the growth of industrial output mainly in the capital-intensive segments। The markets had a technical pull-back last week as some concerns eased on the global and domestic fronts, and also in anticipation of some positive announcements in the forthcoming Union Budget.

However, caution is advised in the markets as it is close to the Union Budget announcement. As in the past, high volatility is expected in the markets in anticipation of the Budget, and as a reaction to the announcements made. Although there was a technical pull-back rally in the markets last week, many blue-chip stocks are still available at attractive levels for investors looking at a long term.

The economy is expected to post a healthy growth rate of over 8.5 percent in the current fiscal, and the expectations are it will continue to maintain the growth rate in the next fiscal year as well despite the monetary policy tightening. These are some strategies for various categories of investors:

Investors planning to invest now

The stock markets have corrected over the last few weeks and are down by almost 12 percent from their peak levels. Many blue-chip stocks are trading at 20 to 30 percent below their highs, and therefore offer good investment opportunities. However, you should not take investment decisions in a hurry. It is advisable to follow the stock markets for some time and do some homework to identify stocks and ideal price levels before taking investment decisions.

Since the markets are quite volatile, it is advisable to accumulate selected stocks in smaller lots at regular intervals in order to get a good average entry price. You should avoid getting sentimental in the stock markets and define profit/loss targets for your equity positions. You should book profits or cut losses when the target is hit.

For long-term investors in the market

The general tendency of a long-term investor is to 'buy and forget' the equity investments. In fact, some investors do not even track the price movements and quarterly results of their stocks. It is important to note the investment outlooks of stocks keep changing with time based on the market conditions as well as the business performance.

Therefore, investors should track the news and developments related to stocks, sectors and the overall market closely. Those who have invested in the markets with a long-term horizon (couple of years or more) should also look at the market trends and developments. Since the sentiment is bullish worldwide, it is advisable to maintain your current positions. However, a periodic review of the portfolio should be made from time to time, based on the current macroeconomic and business conditions, and quarterly results.

Investors should take the necessary steps to make the required adjustments in their portfolios based on the macroeconomic conditions and company results. Long-term investors who cannot track the markets and related developments regularly would be better off investing their money in equity mutual funds.

Insurance cover for army personnel increased

EW DELHI: Extending a better life insurance cover for its personnel, Indian Army has increased the Army Group Insurance Fund (AGIF) by Rs 10 lakh and Rs 5 lakh for its 35,000 officers and over one million jawans respectively.

"The government has taken a decision to increase the AGIF coverage for soldiers in the Army. Under the new scheme, the officers would avail coverage of Rs 40 lakh, while the same has been increased to Rs 20 lakh for jawans," Defence Ministry officials told PTI.

The premium amount payable by the soldiers has also been increased accordingly.

Now jawans would have to pay a minimum of Rs 2000 annually while earlier they were paying between Rs 600 to Rs 1000.

For officers, the same amount has been increased from Rs 2000 to Rs 4000.

"It is the minimum deduction from the salary of soldiers and after the sixth pay commission soldiers are contributing even more voluntarily," the officials said.

The decision, which would come into effect from April 1, was pending with the Ministry for quite some time.

Earlier, the officers were provided an insurance package of Rs 30 lakh and for the Personnel Below Officer Ranks (PBORs), it was Rs 15 lakh.

"The policy was pending with the ministry and its concerned department for review and the Army had mentioned few important points to raise the insurance limits," officials said.

While counter-insurgency operations in Jammu and Kashmir and North-East region have always been a major task for the Army, its role during disasters and natural calamities across the country, has further increased the stress on its men.

"The soldiers posted in difficult terrain and elsewhere must believe that the organisation is taking care of the basic needs of his family.

"Besides, there are issues of rising prices and meeting the requirements of good education and health for the old parents. It takes out a lot of stress and even motivates him to perform better," officials said.

Over the years, a number of new monetary measures have been initiated by the Indian army to ensure better life and facilities for the family members of its soldiers.

The focus has been mainly on ensuring good education for the children and re-employment of the soldier in case of disability during action.

Various options have been made available for the children from military background.

Along with education loans, soldiers get due assistance from Army Welfare Corpus in form of scholarship, tuition fee and higher technical education through educational institutions run by the army.

"There are provisions for covering the tuition fee and the cost of books for children pursuing professional courses.

"A significant amount is spent by the army in ensuring these measures. It is very important for the organisation to take care of the family members specially parents and children so that he can perform his tasks well," officials said.

Insurance M&A norms to be out in 2-3 months

MUMBAI: The Insurance Regulatory and Development Authority (Irda) will come out with guidelines for mergers and acquisitions for the industry over the next two-three months, while the IPO norms will be out in the next 15-20 days, a senior Irda official said today.

"We have been examining the pros and cons of the mergers and acquisitions in the industry and we are sure to come out with the final guidelines within the next two to three months," Irda Member (Actuaries) R Kannan told reporters here, on the sidelines of an international conference on actuaries.

When asked about the IPO norms for insurance companies, Kannan said, "they (the initial public offering guidelines) will be out within the next 15-20 days".

Earlier this fiscal, the Anil Ambani group company Reliance General insurance had expressed its readiness to take over the Chennai-based Royal Sundaram Alliance Insurance by buying out the entire 74 per cent stake of the domestic promoter Royal Sundaram.

But when the group approached for regulatory nod, it was held back as there were no proper regulatory systems in place on the M&A norms in the insurance space.

Royal Sundaram Alliance Insurance is a joint venture between the Sundaram Group and the England-based RSA, which owns 26 per cent stake in the company.

Irda to unveil new norms on unit-linked pension products

nsurance regulator Irda plans to review a rule that mandates insurers to offer guaranteed maturity benefits on unit-linked pension plans to boost sales of these products. The regulator will unveil new guidelines on pension products offered by insurers in a fortnight and they will come into force from April 1 this year, said a senior Irda official.

"The 4.5% guaranteed return attached to the pension plan is something that deters insurers from launching pension products. Very few companies have launched pension products after the new norms came into force last year. We therefore plan to frame guidelines for pension products, keeping in view the differences in risk appetite for investors," said Irda member-actuary R Kannan.

Today, insurers are mandated to offer a 4.5% guaranteed return on pension products offered under the unit-linked platform. The regulator had reckoned that a guaranteed return would protect policyholders even when markets crash. The idea was to encourage long-term savings and help policyholders build a nest egg to cater to their needs as they grow old.

However, a review has been warranted after a spate of complaints from insurers saying they are not in a position to guarantee returns on unit-linked pension plans as it would hurt their profitability. In fact, the insurance regulator had earlier hinted that a 4.5% return was not sacrosanct and could come up for review, depending on the economic environment.

"A 4.5% guaranteed return was more reasonable compared with the 7.5% interest on government bonds and 4% interest on savings bank accounts. Insurance companies abroad mostly have only 70-100 bps profit margins in linked products. Compared to this, Indian insurance companies have a wider profit margin," said Mr Kannan.

He said the new guidelines for pension products will address the varying risk appetite of investors, but declined to elaborate. Mr Kannan also said Irda will unveil the guidelines for initial public offering of life insurance companies in a couple of weeks.

The regulator is likely to ask life insurance companies to follow all the Sebi disclosure norms for a share offer, along with some additional norms that are being finalised by it on profitability. The idea is to help investors take informed decisions.

Sebi had cleared the life insurance IPO guidelines in October last year. All life insurance companies that have completed 10 years of operations will be allowed to list on bourses. HDFC Life, ICICI Prudential & SBI Life are companies that can raise equity from the markets.

Health insurance for poor set to cover beedi, non-coal mine workers

NEW DELHI: The government's health insurance scheme for the poor may be extended to workers of non-coal mines and beedi factories , benefiting over 50 lakh people engaged in these sectors. The finance ministry has discussed the feasibility of this move with the labour ministry, the nodal ministry running the scheme, and could announce it in the budget next week, a government official said.

" In fact, we would be very happy if it is done as these two occupations involve health hazards and workers would benefit extensively from the health cover," an official of the labour ministry said.

The health insurance scheme, called Rashtriya Swasthya Bima Yojana, provides cashless medical treatment up to 30,000 every year to five members of all families below the poverty line. Smart cards are issued to facilitate treatment at empanelled government and private hospitals. Insurance premium varies between 300 and 600. The scheme was launched in 2008 and currently covers 2.18 crore families in 27 states and union territories.

In last year's budget, it was extended to people who work for more than 15 days under the government's Mahatma Gandhi Rural Employment Guarantee Act. Construction workers and street vendors have subsequently been brought into its ambit.

" While it will not be difficult to include non-coal miners in the scheme instantly, the government may take more time in incorporating beedi workers," the labour ministry official added. Indian Railways and the postal department have also decided to be part of the health insurance scheme and provide for it from their own budgets.

Railways Minister Mamata Banerjee has extended the scheme to all railway coolies and has agreed to pay three-fourth of the premium amount. The postal department has agreed to pay half the premium amount for its postmen.

The scheme is also attracting international bodies. "The German embassy has decided to extend the scheme to casual workers including domestic helps, gardeners and sweepers employed by it and its staff and we have approved the request," Anil Swarup, director general, labour and welfare, said.

Separate disclosure norms for life, general insurance companies

NEW DELHI: The Economic Survey 2010-11 today said there will be different set of norms for life and non-life insurance companies for coming out with a public float.

"It is proposed that the disclosure requirements for life and non-life companies would be separately mandated given the nature of their respective business," the Economic Survey tabled in the Parliament said.

The Survey said that investors would be required to be made aware of the financial performance, company profile, financial position, risk exposure, corporate governance and management of these companies.

"The IRDA is participating in the meetings of the Standing Committee on Disclosures and Accounting Issues (SCODA) set up by the SEBI to finalise the disclosure requirements for insurance companies in their prospectus documents," the Survey added.

"Several insurance companies will be completing 10 years of their operations shortly, after which they may be allowed by the regulator to go in for an IPO," the Survey said.

In October last year, capital market regulator SEBI had given approval to insurance companies for coming out with a public float.

Several private sector insurers, including Reliance Life and HDFC Standard Life, have shown interest in tapping the capital market to augment their resource base.

Among the life insurers, HDFC Standard Life and SBI Life have completed 10 years of operations.

As per the disclosure norms in offer document of life companies approved by the SEBI, the insurers would have to come up with disclosure of risk factors specific to the companies.

Also, the offer document would have a glossary of terms used in the insurance sector.

Besides, the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies.

In the general insurance industry there are 24 players, of which four are from the public sector.

LIC launches Samridhi Plus under Ulip portfolio

MUMBAI: Life Insurance Corporation of India today launched 'Samridhi Plus' under its unit linked portfolio offering insurance protection, safety and growth.

Samridhi Plus safeguards policyholders' investment from market fluctuations, LIC said in a statement here.

Accident benefit option is also available under this plan that will be equal to the life cover up to a maximum of Rs 50 lakh, subject to certain conditions.

The policy term for the plan is fixed for 10 years, it said.

The minimum age at entry level for Samridhi Plus is 8 years while the maximum age is 65 years.

The minimum premium ranges from Rs 1500 (monthly - ECS) to Rs 30,000 (single premium) depending on the mode of payment while the maximum is Rs 1 lakh per annum under any mode for the 5 year premium paying term.

LIC entrance exam paper leaked, one held

NEW DELHI: The question papers of an all-India examination for posts of 375 assistant administrative officers in the Life Insurance Corporation of India ( LIC )) were leaked, police said Sunday. A youth, allegedly selling them for Rs.5 lakh each, was arrested.

On the basis of a tip-off, police got hold of two sets of question papers for the morning and afternoon sessions of the exam which was held Sunday.

They arrested Pawan Kumar, a geography graduate from Delhi University from Naraina area of west Delhi, police said. He sold the papers to four candidates who are being interrogated and are likely to be arrested soon.

"We went to three centres in Delhi and one in Chandigarh and tallied the seized copies with the original question paper which were found to be the same," a police official said.

Kumar had earlier failed to clear the civil services examination and was a businessman for the last six years. He had been arrested on a previous occasion for impersonation in Delhi pre-medical entrance test in 2005, the official added.

Police are searching for the man who provided these papers to Kumar for selling.

Health insurance to be extended to MGNREGA beneficiaries

NEW DELHI: The Union Budget stepped up plan allocation for the health sector by 20 per cent with a focus on health insurance , which Finance Minister Pranab Mukherjee announced would be extended now to unorganised sector workers in hazardous mining and associated industries.

"The Rashtriya Swashthya Bima Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. It is now being extended to MGNREGA beneficiaries, beedi workers and others," Mukherjee said in his budget speech today.

He said that in the current year, the government proposed to further extend this scheme to cover unorganised sector workers in hazardous mining and associated industries like slate and slate pencil, dolomite mica and asbestos.

The Finance Minister rescinded the service tax levied on health check up or treatment instead imposing a tax on all services provided by hospitals with 25 or more beds that have the facility of central air conditioning. "Though the tax is on high-end treatment, I propose to extend the levy to diagnostic tests of all kinds with the same rate of abatement," he said.

However, all government hospitals shall be outside this levy. The total allocation for the health sector has been hiked to Rs 26,760 crore from Rs 23,530 crore last year.

While urban family welfare services gave got an increased budget of Rs 203 crore from Rs 172 crore, the total allocation contraception project has seen a decrease to Rs 298 crore from Rs 358 crore. The allocation for reproductive and child health projects have been increased from Rs 3 crore to Rs 4.5 crore.

Routine immunisation has seen a boost from Rs 417 crore to Rs 511 crore while pulse polio immunisation has been decreased from Rs 1017 crore to Rs 663 crore. The UPA Government's flagship National Rural Health Mission has seen a hiked budget allocation from Rs 2100 crore to Rs 2356 crore.

ULIPs to get costlier with increase in service tax

MUMBAI: The proposed increase in the service tax on life insurance products will make both traditional and unit-linked insurance plans, or Ulips, more expensive. The industry expects the costs to go up by 50-75 basis points (one bps = 0.01%).

Although companies are yet to figure out the impact of the proposed increase, most insurance executives said premiums may go up by as much as 75 basis points.

"Policies are going to get costlier with the increase in service tax. While traditional plans will cost nearly 50 basis points more, Ulips may see a 75 basis points increase," said SB Mathur, secretary general, Life Insurance Council.

The budget for FY12 has proposed a 50% increase in service tax for traditional plans - where investments from the premium collected are made as per the regulatory guidelines. Currently, policyholders of traditional endowment or moneyback plans need to pay 1% of the total premium as service charge.

In Ulips, where the policyholder chooses the investment mix (how much to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for investment, like premium allocation and policy administration charges. At present, the service tax is only on mortality and fund management charges.

"This taxing of the allocation charges and policy administration charges will affect the yield, and we envisage at least 20-25 bps reduction in yield for the policyholder," said G Srinivasan, CFO, Bharti Axa Life Insurance.

A senior executive of a life insurance company said efforts made by the Insurance Regulatory and Development Authority, or Irda, to increase the returns for policyholders by capping the charge will get neutralised to an extent.

Insurers, however, are not clear whether the service tax will be part of the 3% cap on the total charges.

Last year, Irda had put a cap on various charges, including surrender and fund management charges. The difference between the gross and the net yield is capped at 3% for policies with less than 10 years of maturity; for policies with a maturity of more than 10 years, the difference is capped at 2.25%.

P Nandagopal, managing director of India First Life Insurance, said there is no clarity on whether the service tax will come under the charges prescribed for Ulips. "In case it is outside the 3% cap, the premium will go up for policyholders. If it is within the prescribed cap, insurers will have to control expenses well."

"The increase in service tax will increase the cost of insurance for policyholders," said GV Nageswara Rao, managing director and CEO of IDBI Federal Life Insurance Company.

Budget 2011: Insurance players feel left out

Budget 2011: Insurance players feel left आउट

The Budget has left the insurance players a bit disappointed. They were expecting the finance minister to earmark a separate tax exemption limit for the life insurance premium. This was in addition to Section 80C which permits tax deductions up to Rs 1 lakh.

However, the finance minister didn't play the ball. "Availability of separate tax ex-emption for life Insurance premium would have encouraged penetration of a long term product such as life insurance. Currently, tax savings products such as PPF, life insurance premiums, PF contributions and National Savings Certificates are covered under the Rs 1-lakh limit under Section 80C of the Income-Tax Act," says Amitabh Chaudhary, MD & CEO, HDFC Life .

Another cause for concern is the move to tax the proceeds from life insurance policies under the proposed DTC regime. "The budget reaffirms the FM's intent to adhere to DTC datelines. Therefore, the final draft of the discussions which will be released later this year assumes importance. We will await the release of this paper to see if the industry's demands earlier put forward find mention in the discussion paper. These were in the areas of taxing the maturity proceeds of life insurance policies and the taxation format. If these are not considered, it will adversely impact the life insurance business and the industry," says TR Ramachandran, CEO & MD, Aviva India.

"If the proceeds are taxed (EET), it will discourage investors from long-term savings as it may result in unjustified tax burden, especially, on those customers who do not avail the benefit under Section 80C. Existing policyholders who have made the investment on the basis of existing tax structure (EEE) need to be protected if EET is implemented." But according to others these factors don't alter your position as an insurance customer.

"You buy insurance products for security reasons, it is a protection tool and that is why we advise term plans. It still stands as the best product. The proposed changes in taxation do not affect the product as you don't receive any proceeds on maturity." As those who prefer endowment or Ulip and are worried about parting the money on maturity can take comfort from the fact that even other form of investments like mutual funds will also be taxed under the DTC regime.

Buffett's Berkshire to enter India

NEW DELHI: Berkshire Hathaway, the conglomerate led by billionaire Warren Buffett , today said it plans to enter the Indian non-life insurance sector as a corporate agent of leading player Bajaj Allianz General.

The move would mark the foray of Berkshire Hathaway's direct entry into the Indian market, where the billionaire investor Buffett is yet to make substantial investments.

As part of its planned India entry, the US conglomerate has incorporated Berkshire India to sell and distribute general insurance products in India.

Berkshire India would directly sell insurance to consumers through the portal 'berkshireinsurance.com' and by way of telemarketing, it said in a statement.

Initially, the focus would be on motor insurance but the company would continuously update its business model.

"If the market proves receptive, the Company will seek to expand its products to include health insurance, life and travel insurance and other personal lines, as well," it noted.

Berkshire Hathaway is a sprawling US conglomerate Berkshire Hathaway that is into various businesses, including property and casualty insurance and reinsurance, finance, manufacturing, and retailing.

It has significant stakes in global majors, including Coca-Cola and Kraft, that also has a good presence in India.

Berkshire India CEO Arun Balakrishnan said that his company and Bajaj Allianz share a common goal of providing exemplary customer service.

"We have been watching the Indian insurance industry for a long time and are very excited about the immense opportunity in the emerging retail insurance sector," Berkshire India's Director Kara Raiguel said.

Berkshire Hathaway has been very successful in the online and direct distribution model in the US and we would like to replicate that success in India as well, he added.

According to him, buying financial products directly over the Internet is a relatively new and growing opportunity in India.

Known for his business acumen and investment style, Buffett is Chairman of Berkshire Hathaway.

Berkshire India to sell Bajaj Allianz products

KOLKATA: Billionnaire investor Warren Buffett's Berkshire Hathaway will enter India's insurance turf as a corporate agent for Bajaj Allianz General Insurance (BAGI), the company said in a statement on Wednesday.

Berkshire India, which is a Berkshire Hathaway subsidiary, will sell and distribute general insurance products through its online distribution portal and a telemarketing channel on behalf of BAGI. It will initially focus on the motor insurance space.

Berkshire India plans to offer top-of-the-line services at attractive rates in distributing insurance products. If the market is receptive, it will try to expand its product portfolio to include health insurance, life and travel insurance and other personal lines as well.

"We've been tracking the Indian insurance turf for years and are thrilled about the emerging retail insurance opportunity. Berkshire Hathaway has a successful online and direct distribution model in the US and as corporate agent of Bajaj Allianz, it would like to replicate that success in India," Kara Raiguel, Berkshire India director, said in a statement.

Berkshire India CEO Arun Balakrishnan said: "Buying financial products directly over the internet is a relatively new and growing opportunity in India. We will engage directly with consumers using the online platform to provide insurance products efficiently. Building an easy to use website and offering a hassle-free way to buy insurance with superior customer service will be the company's core focus. Bajaj Allianz and Berkshire India share a common goal of providing exemplary customer service."

"BAGI has some 40 corporate agents who contribute nearly 40% of its premium income. The tie-up will help expand our customers base," a BAGI spokesman said.

Cost of group health cover to soar

MUMBAI: The cost of providing group health insurance is set to go up by 25% to 50% for majority of the corporates that provide this benefit as insurance companies prepare to hike rates in April when most policies come up for renewal.

More than half of the companies that buy group health insurance for their employees have ended up claiming more for employee treatments than what they had paid as premium.

This has resulted in what insures describe as an "underwriting loss in their group health insurance business" . Many multinationals buy group health policies which coincide with the calendar year and premium under these policies have gone up by 5% to 10%.

However, the larger policies which are purchased by big employers like IT companies will come up for renewal in April and insurers say that prices will rise for those companies with an adverse claims ratio.

Under claims data for the last 3 years, 50% companies are observed to be experiencing a high claims ratio of 100-150 %, says a report on healthcare trends by Towers Watson, a global consultancy. The report says that all respondent companies with claim costs between 125% to 150% faced premium increase to the extent of 25% to 50% this year as against only 9% last year.

"The insurance industry has realized that it is not worth carrying with losses and every insurer has made correction in their group insurance premium ," said Antony Jacob, CEO, Apollo Munich Health Insurance. "I believe that in the next 12 to 24 months group health insurance will stop being a loss making business."

One reason for the increase in health insurance was the advancement in medical technology which resulted in medical inflation growing at a faster rate than general inflation. Claims are higher for companies that provide insurance coverage to employees' parents . The insurers face a higher level of losses with total parental claims forming 60% of the claims for the companies that cover employee families.

"Companies are also trying to deal with this by putting some restrictions on the cover provided to parents. Some companies have even started excluding parental cover from group benefits ," said Sanjay Dutta, head of health at ICICI Lombard General Insurance. "However, the increase is not across the board it is largely on a case-to-case basis ," he added.

Birla Sun Life launches unit-linked Foresight Plan

MUMBAI: Private insurer Birla Sun Life Insurance Company , a subsidiary of Aditya Birla Nuvo , today announced the launch of BSLI Foresight Plan - a unit-linked plan .

BSLI Foresight Plan provides customers the upside of market returns, while shielding their investments from downside risks, its Chief Actuarial Officer Fabien Jeudy said here.

This medium-term unit linked savings plan is apt for a volatile market providing the perfect blend of guarantee, flexibility and liquidity options, he told reporters.

"Equity markets have a huge potential towards meeting customer's long-term wealth creation needs. However, many customers tend to stay away from this attractive opportunity due to lack of knowledge on timing the market and the resultant fear of loosing their money," he said.

Keeping this customer need in mind, the company has designed BSLI Foresight Plan, an innovative investment avenue that addresses this requirement.

The company is positive about the performance of this product and expects to collect about Rs 1,000 crore premium within the first year, he said.

Foresight Plan can be customised for different investors and offers flexibilities like choice of basic premium from single to yearly category, choice of investment options such as self-managed option with choice of 10 funds or guaranteed option among others.

The product has a minimum five years of lock-in period and offers tax saving benefits as per the regulatory guidelines.

BSLI is a joint venture between the Aditya Birla Group and Sun Life Financial Inc, one of the leading international financial services organisations from Canada.

Insurance cos working on 'drive less pay less' policies

KOLKATA: Drive less, pay less. That's going to be the selling point of at least three motor insurance companies . Modelled on the popular model followed in Italy, this policy lets you pay the premium according to the miles you drive. If you are not a frequent user of your vehicles, you get to pay less premium when your motor insurance policy comes up for renewal.

Bajaj Allianz, ICICI Lombard and Bharti AXA General Insurance are working on versions of the so-called pay-as-you-drive policies. ICICI Lombard has, in fact, initiated a pilot project under which it has installed tracking equipment on a set of vehicles - a mix of owner-driven and commercial.

The equipment are currently tracking data like distance traversed, condition of roads used, driving time - like day or night. "We started the pilot project some six months ago and are now collecting data. Once the volume of the data reaches a critical level we will engage our actuaries - persons who do all the mathematics while designing an insurance product, to design a 'pay-as-you-drive' policy," said Amitabh Jain, head motor customer services at ICICI Lombard.

Amarnath Ananthanarayan, CEO, Bharti AXA General Insurance said: "We are looking at a renewal discount model. While the premium charged in the first year will be like any regular vehicle cover, we will offer discounts and rebates on subsequent renewals on the basis of the distance travelled by the car in the first year of cover. The policy, however, is still on the drawing board and we hope to launch it late this year.

Disasters down under may raise reinsurance premiums

KOLKATA: Flood in Australia and quakes in New Zealand may lead to increased reinsurance premiums for Indian general firms during the renewal season, slated to start from April. The size of the reinsurance market that gets placed abroad is about Rs 3,000-3 ,500 crore.

Large reinsurers such as Munich Re and Swiss Re, and Lloyds have taken substantial hit from casualties arising out of the two catastrophes . They now want to factor that in their risk-profiling while offering covers to general insurers in India and the world over.

This may lead to higher premiums for Indian corporates renewing their covers. "Preliminary talks between reinsurers and general-cover companies indicate the reinsurance premium charged will consider global national catastrophes and that will raise premiums to some extent," a senior Munich Re official told ET. However, the Indian insurance market has not witnessed any national disaster till now in the current financial year. "This means insurers will in turn try and bargain for reduced premiums .

But, there are certain reinsurers operating in India, which did not have any exposure either in Australia or New Zealand. These companies would possibly not ask for increased premiums," he said. Established general insurers are also aiming at increasing their retention limits - the amount of the insurance that an insurer retains is the retention limit (aka net retention), and the amount that is ceded to the reinsurer is the cession.

"Alternatively, there are also instances where the reinsurers would be insisting on higher retention to increase the reinsured stake on the risk underwritten by them as a measure to increase the quality of underwriting, and to reduce their exposure," Rajeev Singh, head - reinsurance at Bajaj Allianz General Insurance said.

SBI Life launches Smart Wealth Assure Ulip plan

NEW DELHI: SBI Life Insurance today launched an unit linked plan -- Smart Wealth Assure-- aiming to provide guaranteed fixed returns to the policyholder.

Smart Wealth Assure guarantees at inception a pre-specified NAV applicable at the end of the 10-year term, SBI Life said in a statement.

SBI Life Smart Wealth Assure is a single premium plan and offers policyholders optional Accidental Death benefit and partial withdrawal facility from 6th policy year onwards.

The scheme would be available at a minimum amount of Rs 50,000, and would cover policyholders from 8 years to a maximum 65 years of age with a policy term of 10 to 30 years.

With launch of Smart Wealth Assure, SBI Life now has a bouquet of eight Ulips catering to the long-term wealth creation and life insurance needs of varied customer segments.

"Our aim is to build a sizeable and attractive suite of Simple and Smart products so as to allow our customers to choose relevant solutions that best meet their needs, aligned to their income and risk profile," SBI Life Insurance MD & CEO M N Rao said.

The fund would provide guaranteed fixed return, which provide the policy holder to choose for either of equity fund or P/E Managed Fund or Bond Fund , it added.

Usually the Return Guarantee Fund aims to provide guaranteed fixed return by investing mostly in fixed income securities, namely debt instruments.

As of January, 2011, SBI Life's market share among private life insurers stood at 18.9 per cent, while it was 5.6 per cent when it came to total market share.

More women embrace centre's health cover plan in second year

New Delhi: The government's flaghsip health insurance scheme for the poor has generated greater demand from women who tend to neglect their health because of financial reasons, a gender study by the labour ministry has showed.

In the second year of implementation of the rashtriya swasthya bima yojana, or RSBY, the number of women availing hospitalisation benefit has exceeded that by men.

The scheme provides cashless treatment up to 30,000 annually to a family of five at empanelled government and private hospitals through smart cards for a token annual premium of 30. The scheme initially targetted only below the poverty line (BPL) families, but is now being extended to unorganised workers such as coolies, rickshaw pullers and miners.

"Poor women are the worst sufferers in terms of accessing health care. There is a lot of pent-up demand for medical treatment, which is now being expressed," the director general in the labour and welfare department Anil Swarup said.

Even during the first year, the female hospitalisation ratio-a measure of those that avail hospitalisation facilities as compared to those that are enrolled-was more for women at 2.86% than for men at 2.42% in the 167 districts in 17 states that submitted data.

Although just nine districts have submitted data for the second year, the numbers show significant improvement with women hospitalisation ratio at 4.33% compared to 2.89% for men. "While much more data is to come in from various districts for the second year, the trend certainly shows a definite improvement in number of women beneficiaries," Mr Swarup said.

Women now feel encouraged to get themselves treated for ailments as healthcare can now be accessed by just swiping the health card and not paying any additional money, points out M Ramadoss, CMD, New India Insurance, an accredited insurance company for RSBY.

"We find a lot of women in tribal areas using the health cards as they now have the wherewithal for getting treatment," Mr Ramadoss said.

It is not just women, but poor in general are better off in terms of receiving health care after the implementation of RSBY, the labour ministry says. While just 1.7% of the poorest 40% in the country accessed hospitalisation facilities as per National Sample Survey Organisation data for 2004, the access improved to 2.6% as per data supplied by 167 districts that have completed one year of implementation of RSBY.

As per current data, 23 million cards have been issued to poor families in 330 districts in 27 states. "We hope to see the numbers go up," Swarup said.

Insurance cover for cricketers in IPL4 is three times higher than auction price

KOLKATA: The Indian Premier League (IPL) 2011 will see individual covers for auctioned players double this time, with Gautam Gambhir from Kolkata Knight Riders getting the highest individual insurance of 32 crore.

Last year, the highest cover went to West Indies player Kieron Pollard from Mumbai Indians who got the largest individual cover of 15 crore.

The cover, like last year, will include personal accident insurance, a mediclaim and a loss of baggage insurance, including cricketing kit for each of the players. Covers for each player were decided on a simple formula - three times the auction price any player has fetched. Last time, it was six times the auction price.

By that calculation, Gambhir, who fetched $2,400,000 ( 10.8 crore) in the auction will command a cover of $7,200,000 ( 32 crore) during the entire tenure of the tournament starting April 8. The cover will be active till the time the final is played - May 28 and will remain effective in India and abroad, wherever, IPL matches are played.

"Despite the reduction in the multiple, players are being offered higher covers because they fetched higher auction prices this time. The multiple has been reduced possibly because of a lot of changes in the rules of IPL that were introduced some time ago," a senior insurance official told ET.

Public sector insurers, including New India Assurance and Oriental Insurance , are in talks with the Board of Control for Cricket in India (BCCI) for offering a host of covers, including individual as well as terror cover.

Going by auction prices, the second highest cover of 28 crore will go to Yusuf Pathan from KKR and and Robin Uthappa of Pune Warriors. Rohit Sharma from Mumbai Indians will get a 27-crore cover. Irfan Pathan and Sachin Tendulkar will get 25 crore and 24 crore, respectively.

In contrast, during IPL 2010, Dhoni, the skipper for the Chennai Super Kings bagged a 10-crore cover followed by Andrew Symonds at 9 crore from Deccan Chargers. Tendulkar, the captain for Mumbai Indians, got a 7.5-crore policy.

However, covers during IPL 2009 were higher than the current year because matches were played in South Africa . The highest individual cover of $10.5 million ( 52 crore) was for Mahendra Singh Dhoni - the Indian skipper and the captain of Chennai Super Kings - during that year. Sachin Tendulkar, playing for Mumbai Indians had a cover of $7.8 million ( 39 crore) while Sourav Ganguly, who was with Kolkata Knight Riders, got a $7.65-million ( 38.2 crore) cover. Kings XI Punjab's Yuvraj Singh had a $ 7.5-million ( 37 crore) cover.

Premium on mega risk policies falls by up to 20%

MUMBAI: Oil rigs and aviation companies' insurance cost may fall by a fifth, following the softening of rates at reinsurers due to easing risk perception in the absence of major natural calamities or terrorist strikes.

These policies, known as mega policies, are the ones with a sum assured of more than 2,500 crore.

"Mega-risk policies are mainly reinsurance-driven. Premium rates move with global claim experiences. Not many claims have come last year," said KG Krishnamoorthy Rao, MD and CEO of Future Generali . Around 80-90% of the risk in such policies is reinsured.

Reinsurance rates across most lines of natural catastrophe have declined around the world on excess capacity and strong balance sheets of reinsurers.

Reinsurance rates depend upon two factors - claim experiences over the last one year and capacity in the market.

"Reinsurance rate depends upon demand supply. At present, there is enough capacity in the market, therefore, rates are softening," said G Srinivasan, chairman and managing director of United India Insurance .

Aviation reinsurance rates have fallen by 15% in 2010 while terrorism has seen a drop of 20%. The rates in aviation insurance segments would decrease by another 10%, said executives. General Insurance Corporation , Munich Re, Swiss Re are some of the reinsurers active in India. At present, the insurance regulator has stipulated that at least 10% of the risk has to be placed with national reinsurer GIC.

Mega risks constitute 10% of the industry's total income. This year non-life insurance companies have collected total premium of 34,507 crore during the first 10 months of the financial year.

Also, around 80% of the insurance contracts come up for renewal in April.

On the retail insurance front, policyholders are most likely to see an increase of 20-25% on motor insurance in the next six months. During the last year, insurers have lowered the discounts. Similarly, retail health insurance is likely to witness an increase in rates on medical inflation.

Health insurance scheme for government employees

New Delhi: Health Minister Ghulam Nabi Azad Friday said a health insurance scheme will be introduced for the central government employees.

"The central government is contemplating introduction of a health insurance scheme for the central government employees and pensioners in consultation with other concerned ministries and departments," Azad told the Lok Sabha during question hour.

"The proposal is to make this scheme on voluntary cum contributory basis for serving employees and pensioners except for new joinees in respect of whom it is proposed to be on mandatory cum contributory basis," the minister said.

He, however, said that no time frame can be given for the introduction of the programme.

Calamity insurance costs to go up after Japan disaster: Insurers

NEW DELHI: As Japan suffers the jolt of a severe earthquake and tsunami, insurance companies feel the cost of catastrophic insurance for next year will move skywards.

"Since most of the re-insurance treaties in India are due for renewal in April, there may be some impact on the premium rates, especially for the catastrophic cover," Future Generali India Insurance MD & CEO K G Krishnamoorthy Rao told PTI.

A 33-foot tsunami, triggered by a powerful 8.9-magnitude quake, struck Japan today, leaving huge damage to properties and reportedly killing 26 people.

Although the extent of the damage is yet to be quantified, the re-insurers would have to take a hit while compensating for the loss.

"The Japanese earthquake or tsunami will have an effect on the re-insurance market but only next year from a rate perspective," Bharti AXA General Insurance CEO & MD Amarnath Ananthanarayanan said.

The reinsurance companies, which act as insurers of last resort for general insurers, would be making up for majority of the losses. These companies usually take up the cost associated to an event when the claim to be settled is too high.

"The estimation of losses will take time. However this can affect a few insurers and reinsurance firms operating in the region," Rao said.

The first three months of the current year saw insurance companies bearing the brunt of rising claims on account of events like floods in Australia, storms in the US and a severe earthquake in New Zealand.

Expert also said the global re-insurance companies, like Munich Re or Swiss Re , might have to enhance their natural catastrophe budget for 2011.

"In terms of the Indian reinsurance market, given that there have been fortunately no major catastrophes, the reinsurers will want to take a greater share of the Indian pie and therefore the rates will be very reasonable despite this earthquake or tsunami," Ananthanarayanan said.

Bharti AXA Life launches 2 products

NEW DELHI: Private sector Bharti AXA Life Insurance today announced the launch of two products - a retirement plan and a child protection plan.

While the retirement plan - Bharti AXA Life Wonder Years Retirement Plan - will be a traditional product and offer combined benefits of guaranteed returns and life insurance cover.

The child plan - Bharti AXA Life Bright Stars Power Plus - would have the features that protects and build savings for the child's key lifestages.

"Both the products are based on extensive consumer research and hence address the needs highlighted by customers. They have been specifically designed to provide returns at the key life stages," Bharti AXA Life Chief Marketing & Operations Officer Mark Meehan said.

Bharti AXA Life Insurance is a joint venture between Bharti Enterprises and AXA. While Bharti Enterprises hold 74 per cent stake in JV, the remaining 26 per cent is held by AXA Asia Pacific Holdings Ltd (APH).

Indian insurers taking stock of risk exposure to Tsunami

CHENNAI: Indian insurers - New India Assurance Company Ltd and General Insurance Corporation of India (GIC Re) - are taking stock of their risk exposure in Japan following Friday's tsunami that hit the country severely.

"All our branch staff in Tokyo are safe and are not affected by the tsunami. It is too early to estimate the probable loss though the branch has confirmed losses likely to be reported," Chairman-cum-Managing Director of New India Assurance A. Ramadoss told IANS.

The company has around 40 employees in Japan. According to him, the company's Japanese branch underwrites a premium of around Rs.150 crore.

India's national reinsurer General Insurance Corporation of India (GIC Re) is taking stock of its exposure in reinsuring risks underwritten in Japan following the earthquake and tsunami that Friday hit that country severely.

"We are in the process of collating information. Now we are not in a position to make any statement," an official of GIC Re told media.

The company's Chairman and Managing Director Yogesh Lohiya was not available to comment on the likely scenario that would emerge.

Industry officials do not expect any major hardening of reinsurance rates for catastrophic risks because of Japanese tsunami though they agree that the property losses is going to be high as Japan is highly insured nation.

"Such hardening of reinsurance would happen only in the case of aviation or marine/transit losses. Losses to property/life is country specific and there may not be any global hardening of reinsurance rates," an official of a private non-life insurer told IANS preferring anonymity.

Ramadoss said: "In Japan insurers may increase the premium rates or increase the deductibles - the amount of loss that the insurers would not pay."

According to him, general insurers in Asia including the Indian companies are in the process of renewing their annual reinsurance contracts.

"Normally, the Asian reinsurance contracts come up for renewal in April. However today (Friday) we are getting e-mails from reinsurers stating they would like to have some more time to quote following the Japanese tsunami," an official of a government owned insurer told IANS.

According to an industry official, the Indian Ocean tsunami did not affect the general or even the life insurers much as the properties and lives were not insured.

"But in Japan going by the television visuals lots of automobiles, refinery and other property have been damaged. This is bound to affect the primary insurers," he said.

Japan's Nippon may buy 26% in Reliance Life

MUMBAI: Japan's largest life insurer Nippon Life Insurance is in talks with financial services firm Reliance Capital , controlled by Anil Ambani, to acquire a 26% stake into the Indian company's life insurance subsidiary for $724 million.

According to a person with knowledge of the deal, the two companies have been in talks for more than six months now. " Reliance Life and Nippon Life have been in talks for more than six months. The deal was not going through because of some valuation issues. The talks got revived in the last two weeks," said the person, who declined to be identified as he is not authorised to talk to the media.

Reliance Life is the only life insurance company in which an Indian promoter owns 100% unlike many other ventures where overseas life insurers are partners. India's insurance sector laws have capped FDI at 26% although successive governments have attempted to raise the foreign investment threshold.

Reliance Life MD and CEO Sam Ghosh declined to comment on the deal.

The life insurance business is highly capital intensive and takes close to 10 years for an insurer to break-even. That would mean only companies which have a cash pile or financial muscle can last the course. There have been reports of the Indian insurer planning an initial public offering and bringing in a strategic investor ahead of the planned share sale.

Earlier, Reliance Life was in talks with Swiss Life and China Life, but failed to close the deal. The company even tried to divest its stake through a public offer last year. It had approached the government to allow companies to list after completing five years of operation against the norm which stipulates that insurers can launch an IPO only after 10 years. Insurance companies are awaiting an amendment to the Insurance Act, which will raise FDI to 49%.

Dai-ichi Life and Tokio Marine Life Insurance are the Japanese companies operating in India. Dai-ichi Life has tied up with Bank of India and while Tokio Marine has partnered with Edelweiss for India foray.

Nippon Life to acquire 26% stake in Reliance Life

NEW DELHI: Japanese insurance firm Nippon Life Insurance Company will acquire a 26 per cent stake in Reliance Life Insurance for $680 million.

"Nippon Life Insurance will invest an aggregate value of Rs 3,062 crore ($680 million) to acquire a 26 per cent strategic stake in Reliance Life Insurance," the Anil Ambani Group firm said in a statement today.

The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore ($2.6 billion), the statement said, adding that the transaction is subject to necessary regulatory approvals.

Nippon is the 6th largest life insurer in the world and the No. 1 private life insurer in Asia and Japan.

Commenting on the development, Reliance Capital Chairman Anil Ambani said, "At this time, our thoughts are with the people of Japan, bravely facing an unprecedented natural catastrophe. We pray for strength to the country, its people and our new partners in the entire Nippon Life family, to overcome the trauma of the tragic loss of life and devastation caused by this calamity."

Reliance Capital currently holds a 100 per cent stake in Reliance Life.

"We both share the same passion and philosophy and, together, we believe we can develop a strategic partnership to help Reliance Life Insurance become a world-class insurance company in India," said Nippon Life Insurance President Kunie Okamoto.

Shares of Reliance Capital were up 5.46 per cent at Rs 538.75 on the BSE at 1116 hours.

Nippon Life buys 25% in Reliance life

MUMBAI: Nippon Life, Japan's biggest life insurance company, on Monday acquired a 26% stake in Reliance Life for a sum of Rs 3,062 crore, surprising analysts with a valuation that was higher than expected. The deal, that values Reliance Life at Rs 11,500 crore, or around $2.6 billion, is the largest foreign direct investment in the financial services industry. Shares of Reliance Capital, the financial services arm of the Anil Dhirubhai Ambani Group , or ADAG, and the owner of Reliance Life, went up by 10% to Rs 562 on the Bombay Stock Exchange as it will receive most of the money.

"Some part of the money will be raised by way of primary issuance, but a large part will be through a secondary sale," said Reliance Capital MD and CEO Sam Ghosh . The company will infuse another Rs 30-40 crore into the business. Through this secondary sale, which will be combined with a small issue of new shares, Reliance Capital's stake will come down to 74% from 100%. Reliance Life, a subsidiary of Reliance Capital, is the only life insurance company 100% owned by an Indian promoter.

Analysts said the valuation is significantly higher than expectations. "We estimated the valuation to be $1.6-1.7 billion against $2.6 billion. But since the Japanese company wanted to enter the market, they were ready to pay a premium. India is a growing market and this gives them a presence here," said Suresh Ganapathy, an analyst with Macquarie . Manish Karwa of Kotak Securities said the valuation is 40% higher than expectations. "Inorganic way is the easiest entry for Nippon Life," said an analyst with KPMG .

Of the 22 companies that have entered the insurance market since the industry was thrown open, foreign and private investment in 2000, twenty have foreign partners, according to data on the website of insurance regulator Irda. The stake sale in Reliance Life is the first instance of induction of FDI by way of a secondary sale. The company did not require any capital during the third quarter, Mr Ghosh said, adding that it plans to break-even this quarter. The nature of the business is such that it requires regular capital infusion, said analysts.

For every policy sold, the company has to put aside extra capital as solvency margin, which is the excess of reserve over liability. One of the key yardsticks to measure the performance of a life insurance company is capital efficiency. This is assessed as the ratio of the gross written premium (GWP) with the capital deployed. GWP is the total premium income including renewal and new business. Reliance Life's GWP stood at Rs 1,447 crore at the end of December 2010 while its total capital stood at Rs 3,094 crore.

According to a report by JP Morgan , the deal valuations would impact Kotak and SBI positively as both banks have insurance joint ventures. "Aditya Birla Nuvo and Max India would also be big beneficiaries as insurance is the largest contributor to their valuation," the report said. Reliance Life has been searching for a partner for a couple of years. The deal with Nippon Life has taken place at a time when the insurance regulator is working on IPO guidelines by private insurance companies. An amendment to the Insurance Act that, if approved by Parliament, would raise the FDI limit to 49% from 26%, is also pending.

Mr Ghosh said the company would wait for this to happen before listing. On Monday, the company said its renewal premium grew by 25% to Rs 857 crore at the end of December 2010 against Rs 686 crore for the corresponding period last year. Due to the change in policy regulations, its new business premium declined by 35.6% to Rs 593.7 crore. The number of agents stood at 215,952 at the end of December 2010, a rise of 33% compared with 162,370 a year ago. Its assets under management stood at Rs 11,700 crore at the end of December 2010. The increase in distribution force helped Reliance Life clock the highest number of polices in the private sector life insurance industry to 308,923.

Primer on Personal Accident Insurance

Personal accident insurance policies can be a good tool to manage the risk associated with accidents . Non-life insurance companies offer these products for both individuals and groups. If you are a person exposed to the risk of an accident, you should ideally buy one. For ex-ample , a cab driver , who spends most of his time driving a cab on the road where most of the accidents take place should have a personal accident cover.

Personal accident insurance policies not only insure an individual in case of a death due to accident , but they also assure monetary payouts in case of disability - both temporary and permanent nature. The buyers should run through the schedule of benefits where the insurer enlists the 'condition insured' and the 'amount payable' before he signs above the dotted line. For example, if an insured individual loses sight in one eye, he is entitled for 50% of the sum assured.

The schedule comprises a host of such conditions to the extent of 'loss of toe' . The policy also pays for medical expenses arising out of accident subject to sub limits. An insured individual is also entitled for hospital confinement allowance if he is hospitalised due to an accident . The insurance companies have also realised the need of 'family assistance' . In case of the unfortunate death of the insured in an accident, the children are also entitled for 'education assistance payouts' if the buyer has bought this optional benefit at the time of purchase of the policy.

If you are willing to pay a bit more, the insurers also offer you additional benefits such as 'house modification allowance' and 'loss of employment allowance' for the assured who have met with an accident. There is no need to go for a medical test to buy personal accident insurance policies and generally the tenure of the policies is one year.

Of course, there are options available where one can pay for longer tenures and enjoy a discount on the premium payable. The cover can be extended to your family if you are willing to pay a bit more to include them. The sum assured may vary from Rs 1 lakh to Rs 1 crore. The insurance company offers a no-claim bonus of 5% for each claim-free year.

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Buy a Rs 2163 car policy and get to meet Warren Buffet

MUMBAI: Indian investors wanting to hear Warren Buffett no longer need to fly 8,218 miles across the Atlantic. They can just dole out $48 for car insurance to secure an invite to meet the "Oracle of Omaha" in New Delhi. Billionaire investor Buffett, chairman and chief executive officer of Berkshire Hathaway, will meet customers of berkshireinsurance .com on March 25 during his first visit to India, the Omaha, Nebraska-based company said on Monday in an e-mailed statement.

"It's a great experience," said NGN Puranik, MD at Enam Securities in Mumbai, who spent more than $4,000 to attend Berkshire's 2007 annual meeting in Omaha. "If people are getting an opportunity to meet him by buying a policy, they should definitely do it." The New Delhi event may give Indian investors a chance to hear Buffett's home-spun wisdom of financial success that's turned the company's annual meeting into a must-visit event, with 40,000 attending last year. Buffett also will seek to recruit affluent business leaders to his charity projects in a nation that's home to Asia's richest billionaires.

Berkshire started selling insurance to Indian consumers via the internet portal and on phone this month after forging an agreement with Bajaj Allianz General Insurance, Berkshire said March 2. Berkshire, whose insurance units include car-coverage specialist Geico and re-insurer General Re, initially will focus on the auto sector in the south Asian nation. Buffett will meet policyholders at the Taj Palace Hotel in New Delhi from 6 pm to 8 pm on March 25, according to Berkshire's website.

New policies purchased through berkshireinsurance.com will qualify for an invite, Kara Raiguel, a director of Berkshire India, said in an e-mail. The price to insure a Maruti Suzuki India 800 built in 1996 would cost Rs 2,163 ($48), according to the website. "I've always wanted to attend one of Buffett's meetings," said Monish Shah, a 27-year-old investor based in Mumbai. "If I can buy a car policy for a future date, I will definitely get one, just to meet him."

Warren Buffett to visit India next week for insurance launch

MUMBAI: Billionaire investor Warren Buffett will travel to India next week to launch his firm's insurance selling portal and will meet policyholders at an event in New Delhi, according to information on the company's website.

Earlier this month, Berkshire Hathaway Inc , the firm run by Buffett tied up as a corporate agent for India's Bajaj Allianz General Insurance, marking its entry into the insurance sector in Asia's third-largest economy.

Berkshire India , which will sell general insurance products through its Berkshireinsurance.com online distribution portalhas invited all policyholders to register for the March 25 event at New Delhi's Taj Palace Hotel.

The invitation is limited to one person per policy, and on first-come-first-served basis, Berkshire said on its website.

Buffett, ranked the world's third-richest man by the Forbes 2011 list, is scheduled to attend a ground-breaking ceremony in South Korea on March 21, and will speak at a new factory opening in Japan on March 22.

IndiaFirst launches LifeStore

New Delhi: IndiaFirst Life Insurance , a joint venture between and along with the UK's leading risk, wealth and investment company Legal & General, has announced the launch of LifeStore - a complete do-it-yourself online store for understanding and buying insurance.

LifeStore is a 'do-it-yourself' website which aims to help customers transact their insurance requirements on the back of authentic information, online advice, services and realistic expectations.

"Through LifeStore, we aim to reach out to millions of internet users - a sizable number of whom are either active and/ or potential customers - thus widening the scope of the market across the country. The core objective behind launching LifeStore is to help simplify insurance and encourage customers to make their own decisions related to insurance through the power of the knowledge anytime and anywhere," said P Nandagopal, managing director & CEO, IndiaFirst Life Insurance.

Through LifeStore, IndiaFirst will now be tapping the approximately 70 million internet users in India. "The digital medium is a growing category and still untapped. This is one of our business priority areas and we are looking at further expanding onto the mobile platform and interactive kiosks as well,'' he added.

Apart from simplifying insurance and reducing fear about the category, this will bring the concept of transparency to the fore and increase channels for the customers to reach insurance service providers.

Cloud over Buffett’s India visit

Bangalore: Warren Buffett's maiden trip to India has run into uncertainty following the tragedy in Japan. Buffett, chairman and CEO of Berkshire Hathaway and the third richest man in the world, was scheduled to be here between March 23 and 25 after stopovers in Korea and Japan.

Several media reports have said that Buffett has cancelled the Japan leg of his trip. That has led to speculation that the entire trip may have been cancelled. Some officials involved in organizing events during his visit to India said there was uncertainty. The officials did not want to be named.

Kara Raiguel, director of Berkshire India, said the company was not aware of Buffett cancelling his trip to Japan. "We are pleased that Buffett is coming to India for the first time and he is able to interact with the customers of Berkshireinsurance.com ," she said.

Life insurers' new business income falls 39% in February

MUMBAI: New business premium income of life insurance companies fell for the sixth straight month as strict regulations on sale of the once popular Unit Linked Insurance Policy took sheen off investing in insurance products. Insurers collected new business premium of Rs 3,009 crore in February 2011, down 39% from Rs 4,896 crore a year earlier, according to the latest data collated by the industry.

The drop in collection is due to a shift towards conventional insurance policies which have regulator-designed investment norms. These have lower-ticket size and not many pension products were sold either during the month. "Pension products contributed 30% of the new business premium in the period last year which is missing,'' said India First MD and CEO P Nandagopal.

"Also, ticket size has dropped as industry has moved to traditional products." State-owned Life Insurance Corporation of India's sale plunged 45% to Rs 1,296 crore in February. In the corresponding month last year, the company had collected a total new business premium of Rs 2,353 crore. Insurance company executives' said that offering a guarantee of 4.5% on pension products is not viable for the industry.

"The product is not attractive with a mandatory two-third annuitisation, return of 4.5% and compulsory life cover," said HDFC Life MD and CEO Amitabh Chaudhary. While the private players reported a drop of 33% during the month to Rs 1,713 crore against Rs 2,543 crore in February 2010. Private insurers such as ICICI Prudential and SBI Life reported a fall of 55% and 4% respectively. Generally, last quarter generates 40% of the total new business premium collected during the financial year as this is the tax season and individuals buy insurance policies to get benefit under Section 80C and Section 80 D of the Income Tax Act.

Reliance Life-Nippon deal

Reliance Life-Nippon deal may not be a benchmark for insurance valuation

MUMBAI: The Reliance Life- Nippon Life deal may not impact valuations of insurance majors and can not be used as a benchmark for those looking to either list their shares or offload a stake to a strategic or financial partner. Industry experts said the deal is an exception and was priced at a high premium as Nippon Life desperately wanted to enter the Indian market and Reliance Life had the business in place.

"Nippon wanted to enter the Indian market and Reliance has a quality portfolio with the ability to attain profit soon," said a senior executive of a large life insurance company. This is the first secondary sale of shares in the insurance industry. Major acquisitions have been few and far between as the industry majors have been focusing on achieving a respectable size and posting profits. Reliance Life acquired AMP Samnar in 2005 for Rs 100 crore.

Reliance sold a 26% stake to Nippon Life on Monday for Rs 3,062 crore. The deal is subject to regulatory approval. "Valuation depends on factors like business model, distribution reach, profitability and the quality of products and portfolio. A company with a bank as sponsor will command a better valuation," said an analyst.

There are no fixed standards for valuing an insurance business. Insurers at present, do the job by adding the embedded value and the New Business Achieved profit (NBAP). Embedded value is defined as the sum total of net worth and present value of future profit. A major factor of expense overrun, recurring operating expenses, is not subtracted in this method and it tends to present a misleading picture.

The Insurance Regulatory and Development Authority (Irda) is working on a standard method for valuing an insurance company. Kajal Gandhi, AVP, ICICI Securities , reckons that Reliance Life does not set benchmarks for the industry valuation as the deal was one of its kinds. Nippon Life insurance was keen to enter Indian market since past 2-3 years and was ready to pay the high premium. Unless other insurance companies get a similar opportunity such valuations look difficult.

IndiaFirst Life Insurance expects 5% business from online store

EW DELHI: IndiaFirst Life Insurance today said it expects five per cent of its total business to come from the newly launched online store.

"With the new concept we are aiming to target the youth who are more into internet and online platforms. We expect, atleast five per cent of our business will be from LifeStore," IndiaFirst Managing Director and CEO P Nandagopal said.

IndiaFirst Life Insurance, a joint venture between public sector lenders, Bank of Baroda and Andhra Bank , and a UK-based investment firm Legal & General, had last week launched 'LifeStore', which is being touted as a complete do-it-yourself online store for understanding and buying insurance.

"We want to reach the seven crore internet users in the country. They can now go through all our offers online and choose themselves. Besides, we have also set up a helpline for them," Nandagopal said.

Among other features, LifeStore offers live video call, product audio visuals, step-by-step comparison of products, update on company performance and investments.

"This is much more than a mere official company website. Besides, data shows that 24 per cent internet users look for financial information with insurance registering an annual increase of 33 per cent in terms of web search interest," he added.

Nandagopal said the company is now looking to develop an application specifically aimed at mobile phone users.

The Rs 455 crore IndiaFirst started operations in March 2010. While Bank of Baroda holds a 44 per cent stake in the firm, Andhra Bank, and Legal & General own 30 per cent and 26 per cent stake, respectively.

IndiaFirst currently has two lakh individual and six lakh group policies.

Insurers want to calculate solvency at fair value

MUMBAI: In a bid to enhance solvency margins and make higher provisioning for third-party motor pool, insurance companies are asking the regulator to allow them to calculate solvency margins at fair value. Currently, companies calculate solvency margins at book value. Solvency margin is the minimum surplus on the insurer's assets over their liability set by the regulator.

"We are asking the regulator to allow us to calculate solvency margin at fair value, instead of book value. Our solvency margin will go up even after making the required provisions," said National India Insurance chairman and managing director NSR Chandraprasad. The Insurance Regulatory and Development Authority (Irda) had increased the provisions made for motor pool to 153% for the last four years against 126% maintained by companies.

For this, companies will have to provide Rs 3,500 crore till March end. This is despite the regulator relaxing the solvency margin requirement. Against the required 150%, Irda has allowed to maintain 130% solvency margin for March 31, 2011. For the next three years, insurance companies can maintain a solvency ratio of minimum 137%, 145%, and 150%.

State-owned insurance companies like Oriental Insurance and National India Insurance had less than 150% solvency margin at the end of last year. At the end of the third quarter, their margins have improved, but are still below the regulatory requirement.

Also, general insurers are now reeling under underwriting losses. Providing funds to meet the increased provisions for the third-party motor pool will be difficult. The companies are not allowed to declare dividends to shareholders or give bonus or performance incentives to any person in the management without prior approval from the regulator till solvency margin reaches 150%.

Irda said the ultimate loss ratios for 2007-08, 2008-09 and 2009-10 were 172.3%, 181.81% and 194.15%, respectively. Loss ratio is the percentage of incurred losses to earned premiums. There is a peer review, which will arrive at the actual loss ratios. The actual gap between the claims incurred and the provisions made by insurance companies is expected to go up to Rs 7,000 crore.


The four public sector insurance companies - New India Assurance , National India Insurance, United India Insurance and Oriental Insurance - may approach the government if the regulator does not allow calculating solvency at fair value, said Mr Chandraprasad.

Cos want fair play

Solvency margin is the minimum surplus on the insurer's assets over liability set by the regulator Currently, cos calculate solvency margins at the book value Irda had raised provisions made for motor pool to 153% for the last four years against cos' 126% For this, Insurers will have to provide Rs 3,500 cr till March end Irda has allowed to maintain 130% solvency margin for March 31, 2011.