IRDA cancels PNB Principal Insurance Broking licence

NEW DELHI: Insurance regulator IRDA today said it has cancelled the licence of PNB Principal Insurance Broking pursuant to their request for surrender.

"Pursuant to the request made by the Broker for surrender of Broker licence, the Authority hereby cancels the Direct Broker Licence granted to PNB Principal Insurance Broking," IRDA said in a statement.

This is pursuant to the restructuring of the insurance broking business of state-run , under which PNB bought out the stake of its two partner.

However, the other local partner would remain with the joint venture.

The Delhi-based public sector lender PNB will also buy out Principal and stake of 26 per cent and 25 per cent, respectively in a proposed insurance broking company, which also did not get off the ground.

The Insurance Regulatory and Development Authority (IRDA) said that the shareholders of PNB Principal Insurance Broking applied to surrender its license on November 24, 2010.

IRDA said PNB Principal Insurance Broking would continue to provide service to its clients for the next six months and would "make suitable arrangements with another licensed broker to service the contracts already concluded".

Cost of group health cover to soar

Cost of group health cover to सोअर

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.

Returns on Ulip pension plans to rise to 6% in FY12

MUMBAI: Returns on Unit-linked pension products are set to rise to 6% next fiscal after the central bank raised benchmark policy rates in 2010-11 to combat inflation.

The Insurance Regulatory and Development Authority , or Irda, the insurance watchdog had benchmarked that returns on these products should be 0.5%, or 50 basis points, over the reverse repo rate, the rate at which the Reserve Bank of India absorbs funds from banks.

The re-verse repo rate is now 5.75% after a series of rate increases. The Irda had mandated a 4.5% return on unit-linked pension plans last year and had also said that rates would be reviewed annually and vary between 3-6%.

Insurance companies are unhappy with the mandated returns saying that offering a guarantee will hurt their profitability. The share of unit-linked pension products in the overall product mix of insurers has fallen sharply. For insurers such as HDFC Life , the share of pension products which contributed over 30% to overall premium income has dropped to less than 1% after September.

"The structure of the product is such that it is a debt product. Why would anyone buy a product which is offering a return of 4.5% or 6% when inflation is at 9-10 % and the economy is growing at 9%? It is not a good proposition both from the insurer and the customer's point of view," said Amitabh Chaudhary MD and CEO of HDFC Life.

Compulsory life cover with pension product and an annuity of two-third of the accumulated sum are also discouraging sales for such products ac-cording to insurance firms. In the revised structure, new offerings by private insurance companies have been restricted to only single-premium, Ulips LIC is the only insurer to have a regular premium pension product guaranteeing a 4.5% return on an annual basis.

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.

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.

Bharti Axa Life to launch two new products

CHENNAI: Private life insurer Bharti Axa Life Insurance will soon launch two new products, one a traditional participating retirement plan and the other a child protection plan, to tap the potential offered by these segments.

The company hopes to cash on the increased sales of life insurance policies that happen during March when people look at various investment avenues to save their tax liability.

"We hope to earn 20-25 per cent of our total premium from the retirement product segment. We are in the process of launching our new product Wonder Years Retirement Plan," chief marketing and operations officer Mark Meehan told IANS on phone from Mumbai.

Further with its new retirement policy Bharti Axa Life plugs the gap that resulted in this product segment after the withdrawal of its unit linked retirement policy post new regulations brought in by the insurance regulator last year.

As per the new scheme, a policyholders can to choose the sum of money they would like to receive at their 60th year (the vesting age) or 10 years (the vesting term) and pay the premium till that period.

If the policyholder dies during the course of the policy then Bharti Axa Life would pay the premiums paid to the legal heir or nominee. "We will pay back the premium received plus eight per cent interest on that," Meehan said.

Bonuses declared by the life insurer will be added to the corpus to be paid at maturity.

At the end of that period the policyholder has the option of withdrawing one-third of the total savings tax free and has to buy annuity from Bharti Axa Life or from any other life insurance company and enjoy a monthly pension.

Speaking about the proposed child protection product Bright Stars Power Plus , Meehan said it has evolved out of couple of other oferings.

He said the new child protection plan is unique as it builds savings for the child's key life stages and provides the family a triple benefit of sum assured, waiver of premium, and annual income support in case something unfortunate were to happen.

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.

IRDA may let insurers invest in gold and ETFs

MUMBAI: The Insurance Regulatory and Development Authority (Irda) is vetting a proposal to allow life insurance companies to invest in gold and exchange-traded funds, or ETFs. The move will provide greater flexibility to local insurers to invest in various asset classes.

A senior Irda official said the regulator is weighing the two options. "We may allow insurance companies to invest in gold and equity ETFs with a cap of 5-10%. There are proposals from various companies to let them invest in ETFs of commodities and equities," said the official.

An exchange-traded fund is an investment fund traded on stock exchanges just like stocks. Gold ETFs invest directly in gold and hence track its prices closely, eliminating the hassles of stocking up on physical gold. Equity ETF mirrors a basket of stocks such as S&P CNX Nifty or BSE Sensex, which reflects the composition of an index.

The Irda official said the regulator would, however, like to restrict the exposure of insurers to any single commodity.

After the regulatory changes in the Ulip space, insurance companies are not able to innovate products. "The charges are capped. There is not much innovation that we can bring. One product is replicating another," said a senior executive of a large insurance company.

Insurance companies are looking forward to new options for investment flexibility. "This will improve our investment choice. Whenever there is an inflow in Ulips, we can quickly allocate funds in ETFs and then take a call on where to invest," said Abhijit Gulanikar, chief investment officer of SBI Life .

There are 16 ETFs in India, including gold and equity. According to the current regulations, insurance companies cannot invest in commodities. These changes will, however, require amendments in regulations. After the Insurance Act is amended, Irda will have the power to introduce changes in the investment norms.