The Insurance Times

General Insurance News

HDFC ERGO General Insurance to give weather insurance to maharashtra farmers

JBY and AABY need convergence as there are “significant overlaps and they cater to same or similar categories of population.

HDFC ERGO General Insurance has been allowed by the Maharashtra government to implement Pilot Weather Based Crop Insurance Scheme (WBCIS) for Loanee and Non Loanee farmers for Rabi 2012-13.

The convergence of such schemes will lead to better management and allocation of the funds, the official said while adding that it will also ensure that budgetary allocations yields results. “This is a move towards a social security system for everyone in the country.

Non-Loanee farmers are those who have not taken any loan from financial institutions. Those who had taken such loans are automatically insured by state-run Agriculture Insurance Company of India. .

Weather Based Crop Insurance Scheme offers insurance cover against losses of farmers due to aberrant weather conditions during the crop cycle. Claim amounts will be settled on the basis of data taken from reference weather stations mentioned in the scheme and managed by independent third party organization.

Central life insurance schemes likely to merge The government is planning to merge two centrallysponsored life insurance schemes — Janashree Bima Yojana (JBY) and Aam Aadmi Bima Yojana (AABY) — in a bid to streamline expenditure and effectively allocate resources to ensure better delivery of the schemes.

A Cabinet note on the merged scheme, to be called Aam Aadmi Janashree Bima Yojana, has already been circulated among the concerned departments last month, official sources said.

The move comes eight months after the former chief economic advisor to the finance minister, Kaushik Basu, in the Economic Survey 2011-12 said many schemes including

National insurance company to pay Rs 25.17 lakh as compensation The Motor Accident Claims Tribunal (MACT) has granted a compensation of Rs 25.17 lakh to the parents of a youth, who was killed in a road accident in 2010.

The MACT asked National Insurance Company Limited, with which the bus was insured, to pay the money to the parents of Akshay Soloman, who had died after it hit him from behind.

"I award Rs 25.17 lakh as compensation with interest at the rate of 7.5 per cent per annum including interim award, if any from the date of filing the petition (December 13, 2010) ..., in favour of the petitioner and against the respondents on account of their liability being joint and several.

"Both petitioners (parents) shall have the equal share in the award amount," MACT presiding officer S K Aggarwal said.

The order came on the plea of Akshay's parents, who had claimed a compensation of Rs 25 lakh. 21-year-old Akshay was returning home from office on his motorbike around 5.30 pm on November 30, 2010, when the bus hit him near Punjabi Bagh flyover here. He died on the spot.

The Insurance Times, Novmebr 2012 5

Government, industry to prepare road map boosting general insurance The government along with the industry will prepare a road map for improving penetration of the general insurance in the country which is less than one per cent, a senior official said.

"Our (general insurance) penetration rate is low. It is 0.7 per cent. How do we improve it to average standard which is 1.5 to 4 per cent? The road map is to be prepared by all of us", Financial Services Secretary D K Mittal said. He was speaking to reporters after meeting of the representatives of the general insurance industry with Finance Minister P Chidambaram.

There was a general feeling that a lot needed to be done to promote non-life insurance sector in the country, Bharti AXA General Insurance CEO Amarnath Ananthanarayanan said after the meeting. Among other things, he said, low profitability was also hampering growth of general insurance business in the country.

Government of Maharashtra to introduce insurance scheme for women folk artists The chief minister of Maharashtra Mr. Prithviraj Chavan recently said that the government is planning to introduce an insurance scheme for women folk artists to bring them at par with their male counterparts. Speaking at the inauguration of All India Women Folk Artists convention in Mumbai, he said, “Women artists have always been relegated to the background. The state government will try to accord appropriate status to the artists.�

United India insurance gets a new CMD Mr. Kharat took over from the outgoing CMD G.Srinivasan who is now the CMD of New India Assurance, another public sector general insurance company.

Prior to this new role, Mr. Kharat served as the CMD of Agriculture Insurance Company of India Ltd. In the past, Mr. Kharat has worked as General Manager in United India Insurance and Divisional Manager, Senior Divisional Manager and regional head in New India Assurance.

United India launches premium payment facility through Mobile United India Insurance launched a mobile-based real-time fund transfer facility for payment of premium recently. M6

The Insurance Times, November 2012

Power enables customers to renew their policies and also remit the premiums for approved proposals.

According to Prof Gaurav Raina, an IIT Madras professor, who is consultant for this initiative, the premium remittance is acknowledged immediately through an SMS and insurance policy delivered through e-mail to the consumer. This can be transacted anytime from anywhere, across service providers and mobile phones, "It is completely interoperable," he said.

Chairman and Managing Director, United India Insurance Co. Ltd. said M-Power is simple, safe and secure, cost-effective and is totally hassle-free.

To use this facility, one has to get an MMID (an identification number called mobile money identifier) from his/her bank and enable one's mobile with the application given by the bank. However, Srinivasan said currently there are only 10 banks on board this platform. But, the number will rise in the days to come, as this facility can also be used to make payments to several other merchant establishments.

According to Srinivasan, this initiative is a result of the insurance company's customer preferences study. "With the kind of mobile phone penetration in India, such a facility will go a long way in growing our business, besides making life easier for our consumers,"he said.

G Srinivasan will be the new CMD of New India Assurance Mr. G Srinivasan, former Chairman cum Managing Director (CMD) of United India Insurance Company Ltd, will now take over as the CMD of New India Assurance.

After the suspension of Mr. M Ramadoss in 2011, there was no chairman at New India Assurance for more than a year.

The government finally cleared the appointment process of Mr. Srinivasan as the head of New India Assurance. The government had suspended former chairman of New India, M Ramadoss as there were some serious allegations against him while he was heading Oriental Insurance. The final decision is yet to be taken in this matter and the case is pending with Central Bureau of Investigation (CBI).

Non-life industry grows 18 percent Non-life insurance companies reported an 18 per cent growth in premium collections in the April-August period, reflecting an upturn in the business environment. The premium income of the general insurance sector, comprising 21

private and four public sector insurers, stood at Rs.27,942 crore in the first five months of the current fiscal, 18 per cent higher than the Rs.23,748 crore in the corresponding period last year.

former world champion Lewis Hamilton has been participating promotional shows in India recently. Hamilton promotes Vodafone, while former champion and one of the greats of the sport Michel Schumacher endorses luxury carmaker Mercedes Benz.

Actuaries Institute to help students With the demand for actuaries exceeding supply, the Institute of Actuaries of India (IAI) plans to increase special coaching classes for students who are about to pass the course. The IAI also plans to increase subject counseling sessions to hike the number of actuaries in the market, M. Karunanidhi, the new president of IAI told. Actuaries are experts in assessing the financial impact of future events, which is of prime importance in the insurance business

New India Assurance hopes to grow 18-20% New India Assurance expects to post 18-20 per cent gross premium growth in the current financial year after reaching the Rs.10,000 crore mark last fiscal, a top company official said recently.

"We will maintain our leadership position. We hope to see 18-20 percent growth in premium in the current financial year, in line with the industry growth projections," company's Chairman and Managing Director (officiating) A. R. Sekar told. "We have not seen losses from foreign operations‌ it should be a profitable growth," Sekar said.

The largest general insurer had reported a loss of Rs.412 crore for the first time since its inception in 2010-11on account of around Rs.300 crore losses from foreign operations. However, the company swiftly swung back the very next fiscal (2011-12) with Rs.179.4 crore profit. On growth in various segments Sekar said, "Both corporate and retail segments are witnessing sound growth rates,. But growth in retail is higher than other segments".

Reliance General offers Rs.500 crore Third-party cover for Formula 1 Jaypee Sports Internal Limited (JPS), the company that hosts Formula 1 race in India, is seeking an insurance cover for Rs.750 crore to protect it against event cancellation and loss or injury to spectators.

Reliance General Insurance will underwrite the Rs.500 crore cover for third party eventualities, and the Rs.250 crore cover for maritime transit and event cancellation is yet to be finalized, said a person familiar with the matter,.

Formula 1 is becoming popular in India McLaren driver and

Indeed, Kingfisher Airlines Vijay Mallya, along with the Sahara group, own a team named Force India.

On the insurance front, one policy covers both JPSLand Formula in the country. Income from selling tickets and food forms the revenue for JPSL, which is expected to be $5 million.

Under the Rs.500 crore third party liability, players and spectators are covered against any injury or loss. Insurance broker ACE, was the arranger of the third party cover, for which the premium payment is said to be around Rs.10 crore, said one of the persons in the know of the deal.

Reliance General Insurance is looking for reinsurance support for the third-party insurance in the international market. A Reliance General Insurance spokespersons decline to comment for the story India does not have the capacity to reinsure such a large cover.

L&T insurance bets big on health cover biz, plans 5-6 products L&T General Insurance, a whollyowned subsidiary of L&T Limited, is eyeing the health cover business for which it plans to launch five to six products in the near future, a senior company official said recently. At present the health cover business contributes only 10 per cent of the total portfolio, L&T Insurance CEO and whole-time Director Joydeep Roy told reporters at the launch of 'my:health Medisure Classic Insurance' here.

"We want to make the health cover business a substantial one in the long run," Roy added. L&T Insurance which started general insurance business two-and-a-half years ago, has a capital base of Rs 415 crore. Roy said last year, the company earned a premium income of Rs 143 crore.

"We expect a good growth this year. In the first half of the current fiscal, there was a 30 per cent growth in premium income," he said.

Replying to a query, he said the company is expecting a break-even in six to seven years. L&T Insurance has done away with the age entry barrier in the new scheme launched today and premium would be frozen after attaining the age of 80 years.

The Insurance Times, Novmebr 2012 7

IRDA News

IRDA proposes modification in depreciation rates in motor segment Insurance Regulatory and Development Authority (IRDA) recently brought out a proposal to include paint material in the list of items which have depreciation rates.

These rates apply for replacement of parts for partial loss claims in respect of vehicles and accessories and is covered by the General Regulation (9) of the erstwhile India Motor Tariff. It is applicable for motor insurance claims under own damage (OD) category in motor insurance segment.

In an exposure draft, IRDA said that different practices are being followed by general insurers as regard to the application of depreciation on painting. "The Authority has received representation from the General Insurance Council highlighting the need to recognise the depreciation aspect and also to have a uniform practice across the country and across all the non-life insurance companies," said IRDA in the draft.

The authority said that paint will be included in the category of 'rubber, nylon/plastic parts, tyres and tubes, batteries and air bags' which presently attract 50 per cent depreciation. IRDA added that since paint material is polymer based and hence the depreciation applicable to plastic parts can be applied for it.

Therefore, it has been proposed that depreciation rate of 50 per cent for painting charges, would be applied on the material cost which shall be 35 per cent of total painting charges or the actual, whichever is lower. IRDA said that the net effect would be the maximum depreciation rate of 17.5 per cent being applied on the total painting charges.

The insurance regulator has proposed to the companies to make the above changes in individual package policy in the policy wordings.

The stakeholders have been advised to give their suggestions on the draft to the regulator by 9 November.

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The Insurance Times, November 2012

IRDA member decries low penetration of general insurance The low penetration of general insurance companies is a major concern, said M Ramaprasad, member, Insurance Regulatory and Development Authority. Speaking at a meeting organised by the National Insurance Academy, Pune, he said the non-life penetration was 0.7 per cent of the gross domestic product, a very low number. "The stagnant rate of penetration in nonlife insurance is an issue," he said.

Saying general insurance premiums were expected to cross Rs 60,000 crore this year, Ramaprasad said mis-selling of products and customers' low knowledge of products were still issues plaguing the sector. "Through our system of monitoring grievances, we find about 60 per cent of customer grievances related to mis-selling of products to them,� he said.

For the general insurance sector to prosper, it needed good product designers, transparency and products the common citizen can understand, he said.

IRDA draft on paint material may bring down motor premium The exposure draft of IRDA (Insurance Regulatory and Development Authority) has proposed to include paint material in the list of items which have depreciation rates. The move is aimed at having a uniform practice across the country and across all the non-life insurance companies.

According to general insurers, the recommendation

would help in unifying the practice of applying depreciation across insurers. It may also lead to lower premium for customers provided the painting charges do not increase in the near future.

IRDA refuses to approve MF-like pension plans The insurance regulator turned the tables on the industry on the dispute over delay in product clearances, saying most pension plans filed with it do not comply with regulations.

The features of these products read more like mutual funds, which have a shorter time horizon, the regulator said.

Tax breaks, easy policy terms in insurance rejig The government recently announced a raft of new measures - including simpler policy structure, easier knowyour-customer (KYC) norms and possible tax breaks - aimed at providing a fillip to the insurance sector, which is expected to generate long-term funds for investment, especially for infrastructure.

A decision on tax benefits, ranging from service tax exemption for certain policies to addition at exemption for investment in pension plans sand deduction for postretirement medical scheme, was expected by October 10, finance minister P. Chidambaram told reporters while announcing the measures which he had promised soon after taking charge in August. The measures related to service tax can be implemented through notifications, but income tax related changes may have to wait until the Budget as the law needs to be amended.

IRDA frowns on arbitrary hike of health premiums Your health insurance renewal premiums may turn cheaper if insurance regulator IRDA has its way. The Insurance Regulatory and Development authority plans to rein in companies resorting to arbitrary hikes in renewal premiums on health policies in which benefits have been previously claimed.

Several insurers have been charging higher premiums on health policy renewal if the policyholder had made a claim in the previous year, IRDA Chairman J. Hari Narayan said at CII's 6th Health Insurance Summit 2012 in New Delhi recently.

The soon-to-be issued regulations for health insurance,

which is the fastest growing segment in the insurance industry, will squarely address the issue of "loading", he said.

The extra amount charged by health insurers in renewal premium when claims are previously made is commonly referred to as "loading" in industry parlance. The draft norms for health insurance segment provides that "loading" must be done at the time of underwriting the policy and not at the time of underwriting the claim.

"The way regulation would be fashioned is when you are loading the premium, the loading cannot be on the basis of individual claim experience, it will have to be based on the behaviour of ensure class", Hari Narayan told newspersons.

Country lacks effective regulatory system, says IRDA chief India does not have an effective system to regulate and manage its healthcare sector, said J. Hari Narayan, Chairman, Insurance Regulatory and Development authority. He said he would be glad if this issue is considered by Parliament or State Governments.

Addressing a gathering at a forum on health insurance, organised in Chennai by the Consumers' Association of India, he said the State Government run health insurance schemes were very successful.

It will be good if the State Governments concerned could include those who are not part of the target group by collecting premium from those individuals, he said. It will work out cheaper for those individuals, as the insurance companies could pass on the benefit to them. Elaborating on this, he said, every insurance company spends some money on consumer acquisition if it is going to be a collective cover, the insurer can pass on the cost benefit to the consumer.

Though health insurance is no more widely accepted and has been growing in the last five to six years, it should penetrate the market further as a majority of spending on health is met out of an individual's pocket. The health insurance sector grew by 33 per cent in the first half of the current financial year. Last year, it grew by 23-per cent.

IRDA's rural area product draft disappoints insurance firms The Insurance Regulatory and Development authority (IRDA)'s exposure draft on a standard insurance product for The Insurance Times, Novmebr 2012 9

the rural and social sectors has not found favour with insurance companies.

These companies feel the draft guidelines would be difficult to implement, as it would be unviable to sell products in rural areas at a nominal costs.

In the draft, IRDA said in rural regions, insurers would not be allowed to market any product other than the proposed standard product that meets the social and rural sector obligations.

Insurers usually sell products that offer either lower benefits on premiums for the standard product, or higher premiums for products whose benefits are less compared to the standard product.

The regulator said that for distribution, two general insurers and two life insurers would be responsible for offering the standard product in each state. It added insurers responsible for a particular state would be termed the lead insurer for the state.

It was also proposed that insurers would have to meet at least 75 per cent of their rural and social sector obligations from such allotted state(s),while other state would account for the remaining 25 per cent obligations.

Recently, IRDA Chairman J.Hari Narayan had said it was important that insurance companies fulfill rural and social sector obligations. "We are examining a way to have a lead insurers for each state/geography, so that it would bring greater stability in insurance for these regions,"he had said.

Amitabha Chaudhry, managing director and chief executive of HDFC Insurance, said that though it was a good initiative, many questions remained unanswered.

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Govt move to give lifeline to life insurance biz For the insurance companies, the moves would provide a lifeline amid falling sales, which dipped 9% during the last fiscal and were down over 3% during April-August 2012.

While the steps have been announced, the issues related to change in norms have to be notified by the Insurance Regulatory& Development Authority (IRDA) resulting in some skepticism.

"On the face of it they look positive but it depends on how they are implemented," said HDFC Standard Life, MD & CEO Amitabh Chaudhry pointing to earlier attempts to fast-track product approvals, a key element of Chidambaram's game plan.

Another key step in the government's package, finalized after talks with the industry and the regulator, relates to simpler terms of life insurance policies aimed at removing the clutter that has come to be associated with such covers.

Several investors have shied away from buying insurance policies due to the complicated structure.

"This is truly transformational. It addresses the core issue which is customer satisfaction. It will result in simpler products which are easy to understand along with protecting their interests," said ICICI Prudential MD &CEO Sandeep Bakshi.

In addition, KYC or the requirement to submit a fresh set of documents establishing the identity and address will no longer hamper policy purchases as a check done by a bank at the time of opening an account will be used for insurance too.

To get more people on board and cover their risks, IRDA will issue guidelines which will allow homogeneous groups such as taxi drivers, nurses or even members of resident welfare associations to come together to buy life insurance.

Currently, only employer-employee groups are recognized for group business, the finance minister said.

He also promised to end the arbitrage between "units" and traditional policies such as money-back, which the industry viewed as a pointer to an across-theboard reduction commission paid to agents, which can be as high as 40% in some cases. "It appears to be a move to realign the commission and expense structure and bring the traditional products in line with Ulips,"said Reliance Capital's Sam Ghosh.

IRDA asks health insurers for indicative premiums for five years on new products The Insurance Regulatory and Development Authority (IRDA) has asked health

The Insurance Times, November 2012

insurance companies to indicate premium to be paid by the policyholder in the first five yearswhile filing new products for its approval.

The Insurance Regulatory and Development Authority (IRDA) has asked health insurance companies to indicate premium to be paid by the policyholder in the first five yearswhile filing new products for its approval. However, the companies are free to increase the renewal premium based on medical inflation, cost of healthcare and its underwriting practice, say insurance industry sources.

product is cleared by IRDA. For any pricing change, the insurance company has to submit recent three years claims experience on the original pricing, along with the expected experience and the reasoning," said a senior executive with a large private sector insurer.

"Medical inflation is a cause of concern to insurers, and pricing of health insurance products need to factor in higher claim costs at the initial stage itself, obviating the need for steep price revisions in premiums in subsequent years."

Insurers to be allowed to invest more freely "The health insurer can increase the premium every year at the time of renewal, but these hikes cannot exceed the amount mentioned in the premium chart," said JF Jawadwala, executive director, Nandi Insurance Broking and Risk Management Services.

Finance Minister P. Chidambaram recently announced a revival package for the life insurance sector. The steps include easing investment norms for insurance companies, faster product clearances and tax incentives to improve insurance penetration in the country.

"There is no formal, written communication from the IRDA regarding raising renewal premiums. However, the regulator is advising companies to furnish a five-year renewal premium chart while filing new products, which spells out the quantum of premium hikes policyholders will see during the period."

At present, insurance companies are required to put 75 per cent of their debt market investments in AAA-rated instruments. These do not include investments in government securities.

"Even for the older products, the IRDA expects the insurers to hold the premiums for at least two to three years.

Whenever the insurer wants to increase the premium of the product the company has to approach the IRDA and given a written explanation for the increase in premium of a particular group/product," added Antony Jacob, chief executive officer, Apollo Munich Health Insurance.

IRDA chief J Hari Narayan had publicly criticised insurance companies in the past for their practice of "loading" of premium on the basis of previous claims made by the policyholder. Except on some newer products, health insurers typically increase the premiums (called loading in insurance parlance) on renewal if the policyholder has made a claim in the previous year.

"We have seen that if a party makes a claim in a given year, it is likely that the insurance company may increase the premium because you have made a claim. To some extent, it means they are doing underwriting at the time of the claim.

And that is not the way you do underwriting. That is what we are bringing in draft regulations," he had said, at an industry conference earlier this month.

"The draft exposure guidelines state that premiums shall not be allowed to increase for a period of one year once the

The minister said the Insurance Regulatory & Development Authority (IRDA) would consider relaxing the stipulation, and provide the minimum requirement of 75 per cent in AAA instruments would apply to debt investments including government securities and other investments.

"This is expected to release a space of 12.5 per cent for investments in less than AAA-rated debt instruments," Chidambaram told reporters while announcing a 12-point action plan for the sector.

Currently, there are not too many AAA instruments for the insurance companies to invest in.

There has been no change in equity investment norms. To address the industry's concerns on regulatory delays in product approval, guidelines will be issued by the end of November for mandating a 30-day norm for clearance of products. To speed up clearances, the insurance regulator will also introduce a system of 'use & file', against the current practice of "file & use". This means it will designs some standard products for the industry to use without seeking its approval, provided the product fulfils the stipulated conditions.

Sam Ghosh, CEO of Reliance Capital, said, "Product approval, which was the biggest concern, will now happen quicker since the "use & file" system is being brought in. It has The Insurance Times, Novmebr 2012 11

addressed our concerns on the product side and will lead to growth."

In the last two years, the industry saw a severe slowdown, with policy insurances falling eight per cent in 2011-12.

IRDA/NL/ORD/MISC / 189/08/2012 Dated 08th August, 2012

Order of Insurance Regulatory and Development Authority Against National IRDA circular NO IRDA/NL/Misc/159/07/2011 dated 08th July, 2011 mandated every non-life insurer to submit information pertaining to Policies, premium, claims, agent and offices in prescribed formats (form I to X) within 21 days of the end of every quarter.

National Insurance Company Ltd failed to comply with the above circular, by not submitting the required information in time despite repeated reminders.

The company submitted the reports for II quarter on 07.12.2011 (against the last date of 21st Oct, 2011) and reports for the III quarter were submitted on 16.02.2012 (last date 21.01.2012) and for IV quarter were submitted by 18.06.2012 (against 21.04.2012).

The company was issued with show cause notice on 28th November, 2011 in this regard which was not replied and the company failed to justify the reasons for the delay.

Hence, by not submitting the information as required by the above circular, insurer has violated Section 14(2) (h) of IRDA Act, 1999.

In view of the above submission and in exercise of the power conferred upon the Authority by the provisions of Section 102(a) of the Insurance Act, 1938, the Authority imposes a penalty of Rs 5 Lakh on National Insurance Company Ltd for the breach of Section 14(2) (h) of IRDA Act, 1999.

Therefore, the Insurer (National Insurance Company Ltd) is directed to remit the penalty of Rs 5 Lakh (Rs 500000) within a period of 15 days from the date of receipt of this order through a Demand Draft Favoring IRDA payable at Hyderabad, which may be sent to Shri Randip Singh Jagpal, JD (Non- Life), IRDA, III Floor, Parishram Bhavan, Basheer Bagh, Hyderabad. 500004 Further National Insurance Company is advised to submit the required information in time.

Place: Hyderabad Date: 08.08.2012

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(M. Rama Prasad) Member (NL)

The Insurance Times, November 2012

IRDA / NL / ORD / MISC / 190/08/2012 Dated 08th August, 2012

Order of Insurance Regulatory and Development Authority Against New India IRDA circular NO IRDA/NL/Misc/159/07/2011 dated 08th July, 2011 mandated every non-life insurer to submit information pertaining to Policies, premium, claims, agent and offices in prescribed formats (form I to X) within 21 days of the end of every quarter. New India Assurance Company Ltd failed to comply with the above circular, by not submitting the required information in time despite repeated reminders.

The company submitted the reports for II quarter on 03.12.2011 (against the last date of 21st Oct, 2011) and reports for the III quarter were submitted on 17.02.2012 (last date 21.01.2012) and for IV quarter were submitted by 15.06.2012 (against 21.04.2012).

The company was issued with show cause notice on 28th November, 2011 in this regard which was not replied and the company failed to justify the reasons for the delay. Hence, by not submitting the information as required by the above circular, insurer has violated Section 14(2) (h) of IRDA Act, 1999.

In view of the above submission and in exercise of the power conferred upon the Authority by the provisions of Section 102(a) of the Insurance Act, 1938, the Authority imposes a penalty of Rs 5 Lakh on National Insurance Company Ltd for the breach of Section 14(2) (h) of IRDA Act, 1999.

Therefore, the Insurer (New India Assurance Company Ltd) is directed to remit the penalty of Rs 5 Lakh (Rs 500000) within a period of 15 days from the date of receipt of this order through a Demand Draft Favoring IRDA payable at Hyderabad, which may be sent to Shri Randip Singh Jagpal, JD (Non-Life), IRDA, III Floor, Parishram Bhavan, Basheer Bagh, Hyderabad. 500004 Further New India Assurance Company Ltd is advised to submit the required information in time.

Place: Hyderabad Date: 08.08.2012

(M. Rama Prasad) Member (NL)

General Insurance Year Book (A Ready Referencer of Non Life Insurance Industry in India) Contact for more details Sashi Publications PH: 033 22696035/ 22184184, 40078428, Visit : www.sashipublications.com

LIC

News

LIC to invest Rs. 2,40,000 cr in FY13, 15% of it in equities

LIC's key to success: Incentives and perks to keep agents performing

Life Insurance Corporation of India (LIC) has invested up to Rs 8,000 crore in equities in the last six months. The public sector behemoth has an investment target of Rs 2.4 lakh crore for the present year, of which 10-15 per cent will be invested in equities.

Insurance agents of Life Insurance Corporation (LIC) may not be employees of the giant Government owned insurer, but then LIC is not your standard PSU. A key reason why LIC has managed to hold its own against private competition is its hundreds of thousands of agents who procure the vast bulk of its business. The insurer has, over the years, honed a complex system of incentives and perks to keep its agents performing.

Speaking to the media on the sidelines of a Ficci seminar on capital markets, DK Mehrotra, CMD, LIC said, “Our investment target is Rs 2,40,000 crore for FY13, of which 10-15 per cent will be in the equity market. We have so far made investments of around Rs 75,000 crore, of which Rs 7,000-8,000 crore is in equities.”

He said that he expects LIC’s corpus to grow from the present Rs 12,00,000 crore to Rs 32,00,000 crore by 2020.

“Today, our mark-to-market value (MTM) of our equity investments is more than Rs 3,00,000 crore. When the markets our bearish, we find this as an opportunity to buy.

We have a robust research team which is scanning around 2,000 companies all the time,” said Mehrotra.

On a question on LIC asking the insurance regulator to relax the investment limit of investing up to 10 per cent in the shares of a single company, Mehrotra said, “The present cap of 10 per cent restricts participation in the equity market. Presently, there is a lack of headroom in good investable companies due to this cap. We have presented our case to the regulator and would be happy if the cap is increased to even 15 per cent to 20 per cent.”

On a question on whether LIC will go for an IPO, Mehrotra said, “We have sovereign guarantee, government support and do not require capital, therefore IPO is not necessary for us.”

There is a minimum amount of business they have to do every year, to maintain their status as agents on LIC's records. Agents are organized into a hierarchy of clubs - at the branch level which is the lowest ,then the division, the zone and finally the chairman's club. Movement from one to the other depends on the amount of business procured. For instance, to get into the branch manager's club, an agent has to mobilize business which pays him or her a commission of at least Rs 35000 on new policies, and Rs 50,000 of 'renewal' premium commission (premiums on policies sold in earlier years).

This criterion has to be met in at least two of three preceding years and the current year as well. Additional criteria in terms of actual lives insured must also to be met.

From there, the bar gets progressively higher - for the chairman's club, the criteria has to be a minimum business of Rs 2lakh first year commission, and Rs 2lakh renewal commission.

Club membership entitles you to an office allowance, reimbursements of phone bills, and loans for office expenses and overheads, or for a son or daughter's wedding, and cheap home loans and car loans. A member of the chairman's club for instance, can get an interest-free car loan of up to Rs 6lakh repayable in 6 years. They can take subsequent car loans of up to Rs 7.5lakh, also interest free.

The Insurance Times, Novmebr 2012 13

Postal Life Insurance can now cover more groups of employees Life insurance behemoth, Life Insurance Corporation of India, and new-generation private life insurers had better sit up and take notice. The Government has allowed the country’s oldest life insurer, the Postal Life Insurance, to cover more groups of people.

The Department of Posts can now offer Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) to employees engaged/ appointed on contract basis by Central/State Governments, where the contract is extendable. Employees of joint ventures in which Central/State Government, public sector undertakings and public sector banks have a minimum 10 per cent shareholding and employees of all scheduled commercial banks can be offered life insurance cover by the Department.

Members/employees of co-operative credit societies and other co-operative societies registered under the Cooperative Societies Act and partly/fully funded by the Central/State Government, Reserve Bank of India, National Bank for Agriculture and Rural Development and public sector banks can also be covered by the Department.

Further, employees of deemed universities and educational institutes accredited by recognised bodies such as National Assessment and Accreditation Council, All-India Council of Technical Education, Medical Council of India, and/or affiliated to Universities/Boards are eligible for insurance cover from For rural population Rural Postal Life Insurance was introduced in 1993, to provide cover to the rural population, especially those in the weaker sections and to women workers. Insurance industry experts say that the Department of Posts, with its vast network of 1.55-lakh odd post-offices across the country, may be well-placed to meet the rural/social sector obligation under the Insurance Regulatory and Development Authority’s rules. PLI has grown from a few hundred policies in 1884 to 50.07 lakh as on March 31, 2012. As on March 31, there were over 1.35 crore active RPLI policies.

LIC has equity investments worth at least Rs.3 trillion allocated across 800 listed firms. Of 24 life insurers, LIC is the largest with total assets worth at least Rs.13 trillion. During the first six months of the fiscal, LIC booked profits in at least 90 listed firms.

The benchmark Sensex has risen 7.81% between April and September. In October, it rose further after the government cleared some key reform proposals and eased foreign direct investment restrictions in aviation and retail.

LIC has booked profit in almost all frontline stocks, including Larsen and Toubro Ltd (L&T), Tata Steel Ltd, Tata Power Co. Ltd, Mahindra and Mahindra Ltd (M&M), Maruti Suzuki Ltd, ICICI Bank Ltd and HDFC Bank Ltd. All these stocks have had a good run since April.

Of these stocks, L&T, M&M, ICICI Bank and HDFC Bank outperformed the 30-share Sensex by a wide margin. During this period, the value of pure equity schemes managed by the Indian mutual fund industry rose close to 4%, from Rs.1.56 trillion to Rs.1.62 trillion.

“LIC books profit whenever there is a fair appreciation in stocks. We realize that we play an important role in supporting the equity markets. Our investments are mostly long-term and we have often managed to book profits even during market dips,” said an LIC official who declined to be named. “From the profits, we pay dividends and bonus, and our investment strategy is balanced in such way that we create maximum value for both policyholders and stakeholders,” An email sent to LIC’s spokesperson did not elicit a response till press time. The insurer has at least 300 million policies in force. In the first half of this fiscal, LIC collected premium of Rs.35,341.53 crore, marginally lower than Rs.36,721.39 crore during the same period a year ago.

LIC books Rs.25,500 crore profit in first half of fiscal

As the largest domestic institutional investor, LIC has been a key market mover. During 2008 and 2011, when foreign institutional investors (FIIs) were pulling out of Indian stocks, domestic institutional investors, led by LIC, invested heavily in the market. In 2008, when FIIs sold Indian stocks worth Rs.53,796.9 crore in the wake of a global liquidity crisis, domestic institutions, which largely consist of life insurers, bought Indian equities worth Rs.72,966.78 crore.

State-owned Life Insurance Corp. of India (LIC) booked a profit of at least Rs.25,567.57 crore in the first six months of 2012-13, data compiled by Mint shows. During this period, India’s benchmark equity index rose around 8%.

Similarly, in 2011, domestic investors bought Indian equities worth Rs.26,788.44 crore net of selling when FIIs were net sellers of shares worth Rs.34,17.7 crore.

14

The Insurance Times, November 2012

Health Insurance

Max Bupa health insurance invites india to walk for health Max Bupa Health Insurance (Business Wire India) In keeping with its philosophy of placing customer’s health first, Max Bupa Health Insurance Company Limited announced the launch of one of its kind multi-city initiative Walk for Health. Aimed at encouraging people to build more walking into their daily routine, Max Bupa Walk for Health, is an attempt to bring about positive long term sustainable behavioural change into their lives.

News

report projects that more than 630 million persons, or about half of the country’s population, can be covered with health insurance by 2015. By this time, spending through health insurance is also likely to reach 8.4% of total health spending, up from 6.4% in 2009-10, the study says.

Insurance cover for day care medical services by end of year You could soon get insurance cover for day care medical services which include the outpatient department (OPD)and dental services.

Health insurance majors, such as Max Bupa and Bajaj Allianz

Government-sponsored health insurance in India: General Insurance, are in the process of finalizing such OPD Are you covered? insurance products by the end of this year, even as certain Health spending is one of the important causes of poverty in India. The country’s public financing for health care is less than 1% of the world’s total health expenditure, although it is home to over 16% of the world’s population. Families meet almost 70% of their health expenses out of their own pockets, placing considerable financial burden on poor households, often pushing them deeper into poverty.

As India contemplates a significant increase in public spending on health care, the World Bank has carried out the first comprehensive review of India’s major government sponsored health insurance schemes.

The report, “Government-Sponsored Health Insurance in India: Are You Covered?”, authored by Gerard La Forgia and Somil Nagpal, finds that over the last five years, governmentsponsored schemes have contributed to a significant increase in the population covered by health insurance in the country, scaling up at a pace possibly unseen elsewhere in the world. Over 300 million people, or more than 25% of India’s population, gained access to some form of health insurance by 2010, up from 55 million in 2003-04. More than 180 million of these were people below the poverty line. The

issues, including the opportunity of misuse and leakage, need to be addressed. The cost of day care services, such as dialysis and arthroscopy, has risen significantly in the past five years.

Consumers with OPD insurance cover will be able to avail daycare medical facility without hurting their pockets.

Incase of repeated visits for certain medical requirements, the amount could even add upto a few lakhs of rupees. For example, the average cost of arthroscopy today is about Rs.40,000, while it was about Rs.25,000 about four years ago.

With raising costs of medical care, consumers are finding it difficult to bear the expenses, especially in case of repeated visits. Currently, insurance cover is provided only to those who are hospitalized or suffering from critical illnesses.

"Certain treatments can be done in a few hours without hospitalisation and insurance for daycare services has become the need of the hour,"Rajeev Sharma, senior consultant, orthopedic surgery, Apollo Hospital told newspersons.

The Insurance Times, Novmebr 2012 15

State launches medical insurance for NVF jawans Mamata Banerjee's government has introduced a medical insurance scheme for about 30,000 jawans of National Volunteers Force (NVF) and civic police volunteers, who are not permanent employees of the state's home department.

The NVF home guards and civic police volunteers will be able to avail of medical benefits if they meet with any accident while on duty. Such an insurance benefit is being introduced for the first time by the state government.

Even though the civic police volunteers were recruited by the previous Left Front government, they did not introduce any insurance scheme for them who get a daily allowance of Rs.240.

The additional director general of police (general welfare)Anil Kumar said recently that "since these civic police volunteers are not permanent employees of the state government, we are not in a position to offer them any medical benefit incase of any accident.

But now they would be able to get the medical benefit and in case any of these employees dies out of any accident, his family will get a one time payment of Rs.5 lakh.In case of any injury due to accident, these volunteers would get a medical benefit of Rs.50,000.

According to Kumar, the border wing home guards will also get the same medical benefit.

Tips to buy health insurance policy Growing incidence of lifestyle disease and rapidly rising medical costs have made health insurance one of the most bought insurance products these days. To meet the growing demand, health insurance companies have introduced several innovative plans to cater to the needs of the consumers and the target buyer group. The consumers are literally spoilt for choice. However, buying health insurance calls for greater awareness and cost benefit balancing by consumers in order to buy the best product to provide maximum cover at reasonable cost.

The Right Policy First, the customer should buy a plan with maximum renewable age or lifetime insurance policy. The sole purpose of buying health insurance is to protect yourself and the family from mounting healthcare costs throughout your life. A viable option is to choose a life-time plan or one that provides insurance cover for post retirement as well.

16

The Insurance Times, November 2012

Second and the most important point to keep in mind is that the policy should provide adequate cover to protect all the dependent members of the family. Accordingly, the sum insured should be decide according to the family size, past medical history and the area of residence.

A buyer needs to be careful as many companies do not pay for pre-existing diseases and the complications arising from them. These days, however, some companies allow for pre-existing diseases after a specific waiting period and if the insurance policy renewals are continuous.

Similarly, women insurers need to ensure whether maternity benefits are covered under given health insurance.

The Health Insurance hype The Chattisgarh government's decision to extend health insurance to all its unorganised sector workers has given rise to much euphoria. This is misplaced. This notion that all the state needs to do is to pay for insurance and that insurance spread will take care of healthcare, for all its popularity with a lot of same, sincere people belongs in the same category as unreasonable ecstasy, hallucinations, impaired memory, increased heart rate and other effects of smoking pot.

Whether delivered at the instance of the government or insurance companies, healthcare calls for providers, doctors nurses and other para-medical staff. The country has a shortage of about six lakh doctors. The shortage in other healthcare staff is larger :Will the government allocating the bulk of its healthcare expenditure on insurance premia produce doctors, nurses, lab assistants, radiologists, pharmacists, et al?

The starting point of healthcare has to be pubic health and nutrition. Safe drinking water, hygienic disposal of human and animal waste, relief from animal waste, relief from indoor smoke - caused by wood burning stoves and kerosene lamps - and across to nutritious food these are prerequisites.

None of this comes under the ministry of health. But unless these are provided, people's health will remain fragile and the cost of subsequent illness and its management will go up.

Pvt. Life Insurance News

ING life insurance appoints law & kenneth as it new advertising agency

SBI life insurance buys nearly 31 lakh shares of TV broadcast

ING Life Insurance today announced the appointment of Law & Kenneth Communications as its mainline advertising partner.

SBI Life Insurance Company Ltd recently acquired a 30.66 lakh shares of TV18 Broadcast Ltd in a deal worth Rs 8.43 crore through open market route. As per bulk deal data, SBI Life Insurance Company purchased 30.66 lakh shares of TV18 Broadcast for Rs 8.43 crore on the National Stock Exchange.

In another bulk deal, SBI Life Equity Fund purchased 19.34 lakh shares of the media firm for Rs 5.32 crore on BSE. Separately, Franklin Templeton Mutual Fund offloaded 18.86 lakh shares of TV18 Broadcast on the NSE for a deal valuing at Rs 5.19 crore.

The appointment comes on the back of a pitch process that was initiated in October 2011 with a clear objective to find a strategic partner who would bring forth its planning skills and consumer knowledge to play an important role in ING Life’s growth plans.

About Law & Kenneth coming on board, Mohit Goel, Executive Vice President – Marketing, ING Life India said, “We have been through an ‘exciting and intensive’ evaluation process during the course of which we tested multiple advertising agencies on their strategic thinking and planning capability. The process followed by us was quite different from a typical evaluation of an agency that is largely based on creative output and capability. We felt that Law & Kenneth’s expertise in planning and strategy would add a lot of value to our business. We look forward to a fruitful and long term relationship”

SBI Life Insurance gets new MD & CEO Atanu Sen has assumed charge as managing director and CEO of SBI Life Insurance, the largest private life insurer of the country.

According to the latest IRDA report covering industry data up to June 12, SBI Life ranks first amongst private life insurer of the country. According to the latest IRDA report covering industry data up to June 12, SBI Life ranks first amongst private life insurance companies in terms of new business premium collection for 2012-13.

Besides, Templeton Mutual Fund sold about 19 lakh shares of the media firm for Rs 5.22 crore on the BSE. At both the bourses, the transactions took place at an average price of Rs 27.5 apiece. Shares of TV18 Broadcast jumped by over 12 per cent to close at Rs 30 apiece on the BSE.

Aegon Religare life insurance to expand online product offering Aegon Religare Life Insurance Company has decided to expand its product offering in the online space. "We have filed with the insurance regulator a unit linked insurance policy (ULIP) to be sold only online. While an online health insurance policy is under development we will also launch an improved new online term assurance policy i-term," Chief Marketing Officer Yateesh Srivastava told.

Happy with the Rs.11-crore premium from its online term assurance policy, mostly from high networth individuals that was not in the company's fold earlier, the Mumbai-based company, he said, would expand the number of cities where online purchase of policy is possible.

"Currently the online purchase of term assurance policy is available in 42 cities where we have tie-ups with clinical laboratories. As there is a demand for online term assurance policy from other cities we will be expanding there signing The Insurance Times, Novmebr 2012 17

up with clinical laboratories to do the medical examination for some policies," said Srivastava.

M&C Saatchi-i wins a bronze at DMA ECHO Awards 2012

SBI life insurance to launch four new products

M&C Saatchi-i was the only Indian agency to win metal at the DMA Echo Awards 2012. The agency won Bronze for its entry 'Saptapadi' for Birla Sun Life Insurance.

SBI Life Insurance will soon be launching a host of plans across savings, protection and pension platforms.

The products have been filed with the Insurance Regulatory and Development Authority (IRDA) for approval.

Atanu Sen, MD & CEO, SBI Life said, "We would shortly be launching four new products, subsequent to IRDA approval. These plans include a family income protection plan, monthly income savings plan, traditional pension plan and market linked plan (ULIP) targeting younger audience.

These products will strengthen our existing suite of plans, enabling customers a wide choice of offerings to choose from."

These products will be available across SBI Life's multi distribution channels including bancassurance through State Bank branches, retail agency and institutional alliances. SBI Life has added 39 new branches and recruited additional 14,000 insurance Advisors and 2,000 certified insurance facilitators, during this financial year 2012-13.

Reliance life insurance begins post-sales service in insurance market Taking a leaf out of its Japanese partner Nippon Life's book, private sector insurer Reliance Life has begun its post-sales service drive across the country and plans to cover over 10 lakh customers by March next.

Reliance Life Insurance Company (RLIC) has asked its 1.5 lakh representatives, including staff, advisors and channel partners to meet about ten per cent (over one million) of its existing customers by end of current fiscal to provide services beyond premium collection. RLIC, part of Anil Ambani-led Reliance Group's financial services arm Reliance Capital, has begun this drive under its 'Reliance Life Plus Club' initiative.

According to RLIC, it is the first insurance company in India to introduce a structured post-sales customer service platform. Commenting on the new initiative, RLIC President and Executive Director Malay Ghosh said: "Our post-sales service drive is already in force and action is part of our daily business routine. We have instructed over 1200 pan-India branches to implement it like sales targets. We hope to meet one million customers by March 2013" 18

The Insurance Times, November 2012

Rakhshin Patel, partner, M&C Saatchi-i, said, “Winning international recognition for India can only be topped by making a habit of doing so. And it thrills me that after becoming the only Indian agency to win two Echo awards in the same category in as many years, we can now aim to take it even one level higher and make it three wins in a row.”

Ajay Kakar, chief marketing officer – financial services, Aditya Birla Group, added, “Our endeavour is to always delight our customers, not just with our products and services but also with our communication.

Our direct marketing partner, M&C Saatchi-i, continues to do us proud, winning regularly at both domestic and international award shows. I am extremely delighted to be working with the talented and committed people at this agency. They bring top level strategic and creative inputs to the table, with high levels of passion, that actually make our interactions a joy and our work extremely effective. The teams at Birla Sun Life Insurance and M&C Saatchi-i have demonstrated what passion and team work can do, by bringing in their second Echo award in a row.”

HDFC Standard Life insurance asked to pay Rs five lakh Insurance Ombudsman in Chandigarh has asked private insurer HDFC Standard Life Insurance to pay Rs five lakh with interest to an NRI complainant after holding the company responsible for mis-selling a policy.

"An award is passed with a direction to the insurance company to make payment of Rs five lakh with interest at rate of eight per cent from the date of complaint that is March 2, 2010," said Insurance Ombudsman (Chandigarh), Manik Sonawane in his order.

Mis-selling means deliberate, reckless or negligent sale of products or services in circumstances where the contract is either misrepresented, or the product/service is unsuitable for the customer's needs.

The complainant, Satnam Singh Randhawa, who is working as a driver in USA, had said in his complaint filed in 2010 that he bought life insurance policy from HDFC Standard

Life Insurance under single premium mode in 2006 during his visit to India.

He said the agent of the company told him that it was a single premium policy but later on it was found that it was a yearly premium policy with Rs five lakh to be paid annually.

Even the company representative acknowledged during the proceedings that the proposal form was not for single premium policy and Rs Five lakh was an annual premium under the said policy.

Reliance life insurance introduces life plaza Reliance Life Insurance Company (RLIC) introduced a distribution channel - Life Plaza - aimed at creating awareness about life insurance and said it plans to set up about 200 branches across the country by the end of the current financial year. "The main objective of our new distribution format is to generate greater awareness about life insurance in and around different locations where these Life Plazas will operate and create a pull for life insurance products," Malay Ghosh, President and Executive Director, Reliance Life Insurance, said.

RLIC targets to hire about 1,000 people under this new distribution format within this fiscal and would focus on Tier II, Tier III and Tier IV cities for recruitment and setting up of Life Plazas, he said. Reliance Life Plaza would promote need-based sales, fill service gaps and also offer financial and value-added services such as tax and financial planning, Aadhar card registration, pan card generation, health check-ups and nutrition counselling.

All Life Plazas will be managed by RLIC employees, who will handle customers' queries and process the documentation instantly at the venue, with a view to tap new customers and also provide service to existing RLIC policyholders, the company said.

Every five minutes an online term plan is bought in india Despite a slowdown in the life insurance sector, sales of online term plans are booming. Nearly 55,750 term policies were sold in the past six months, an average of one policy in every five minutes. Whereas in 2011-12, nearly 49,500 plans were sold.

The leading private insurer Aegon Religare Life Insurance, which opened up the online sale of life insurance nearly two

years back, is the largest player in this segment followed by Aviva Life insurance. With its popular plan ‘Click2Protect’, which was launched in January, 2011, HDFC Life is third in the segment. While ICICI Prudential Life Insurance and Kotak Life Insurance are the other big players in online sales segment. Other big players such as Reliance Life Insurance and Bajaj Allianz have also initiated this popular trend of insurance selling.

However, the largest insurer of the country, Life Insurance Corporation (LIC) of India is still reluctant to accept the new trend. It is fully dependent on tradition way of selling plans because of its huge agent network.

Insurance premium may turn 3% cheaper The first year premium on your insurance policy may soon get cheaper by upto 3%, thanks to finance minister P. Chidambaram's announcement that government is considering removal of service tax on first year premium payments. At present, a life insurance policy holder pays 3% service tax n such premiums.

"If the service tax is removed, the benefit will be directly passed on to customers, making premiums cheaper for new customers," said Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance. "Any reduction in cost will benefit the sector and will help companies to attract new customers."

The finance minister had said that the government is considering steps to revive the insurance sector including tax breaks for pension schemes, quick approval by of insurance products, allowing banks to sell policies of more than one insurance company.

Insurance companies have been facing slow growth due to a volatile market and slowing economy. First-year premium collections of 24 insurance companies fell 9% to Rs.114,233 crore in 2011-12 against Rs.125,826 crore in the year ago period.

"Removal or reduction in service tax would encourage people to buy insurance policies because they will be able to get more insurance cover with the same amount of money," said Deepak Sood, managing Director and CEO, Future Generali India Life Insurance. "In India, buying insurance cover is still not in the priority of individuals.

Customers need to be encouraged in such steps."

The Insurance Times, Novmebr 2012 19

International

Swiss Re appoints 2 members to group executive committee Swiss Re’s Board of Directors announces that Guido Fürer, currently head chief investment office, is appointed as group chief investment officer of Swiss Re and member of the group executive committee, from 1 November 2012.

He succeeds David Blumer who has decided to leave the company. Additionally, John R Dacey, Swiss Re’s head group strategy & strategic investments, is named as a new member of the group executive committee from 1 November 2012. In addition, John R Dacey will also become Chairman of Swiss Re’s Admin Re business.

Walter B. Kielholz, chairman of the board of directors of Swiss Re Ltd, says: “Mr. Fürer’s appointment as group chief investment officer represents a smooth transition for this important area of our company. He has a successful track record of 15 years at Swiss Re, and his experience and expertise ensure that our very successful Asset Management strategy will continue to be implemented in a consistent and transparent manner.

“Appointing John R. Dacey to the Group Executive Committee underscores the central role played by Group Strategy & Strategic Investments in advancing our strategy and exploiting our research expertise. In addition to these responsibilities, Mr. Dacey will act as Chairman of Admin Re. He has many years of executive management experience in primary insurance, and this will be of great value to our Admin Re business.”

Currently head chief investment office and member of the group management board, Guido Fürer has been responsible for Swiss Re's global asset allocation, portfolio steering and portfolio analytics, as well as for the Reinsurance Business Unit's investments. In assuming the role of Group Chief 20

The Insurance Times, November 2012

News

Investment Officer, he will take on overall responsibility for managing all investments of the Swiss Re Group.

Death toll from Sandy climbs, millions without power Millions of people were left reeling in the aftermath of the whipping winds and heavy rains of the massive storm Sandy on Tuesday as New York City and many parts of the eastern United States struggled with epic flooding and extensive power outages.

The storm killed at least 40 people, including at least 18 in New York City, and insurance companies started to tally billions of dollars in losses. Sandy, which crashed ashore with hurricane-force winds on Monday near the New Jersey gambling resort of Atlantic City, was the biggest storm to hit the country in generations. It swamped parts of New York's subway system and lower Manhattan's Wall Street district, closing financial markets for a second day.

Businesses and homes along New Jersey's shore were wrecked and communities were submerged under floodwater across a large area. More than 8 million homes and businesses in several states were without electricity as trees toppled by Sandy's fierce winds took down power lines.

Across the region, crews began the monumental task of getting power back on.

The storm reached as far inland as Ohio and caused thousands of flight cancellations. Cellphone outages also were widespread. Parts of West Virginia were buried under 3 feet (1 meter) of drifting snow from the storm.

Some east coast cities like Washington, Philadelphia and Boston were spared the worst effects from Sandy and appeared ready to return to normal by Wednesday.

But New York City, large parts of New Jersey and some other areas will need at least several days to get back on their feet.

PML & RE-INSURANCE'S INVOLVEMENT K. S. Burli M.E.(Electrical). FIV Risk Management Consultant (Insurance) Approved Valuer

I

nsurance is a business of Probability, spreading of losses when the probable event takes place. Spreading the losses takes place in the agreed business participation by way of Insurance & Re-insurance contracts.

Whenever, big Risks are underwritten, Insurance Company "Re-insures" portion of the Risks with the Re-insurance companies, who in turn participate in the risk spreading at agreed terms & conditions.

When Re-insurer accepts the Risk, it expects the Insurance Company, which cedes, to have some retention based on the capacity of that company, which in turn, indirectly have a control on the selection of risk transferred. It also expects the PML (Probable Maximum Loss) assessment (Estimation) to be based on their market knowledge & perception.

This leads to Re-insurer's involvement in PML assessment/ Estimation, whenever there is a fundamental & big difference by the insurer.

I wish to share, through this article, practical example of my assessment of PML of a big Refinery Risk in 1986 in India.

What is PML? 4 Probable means capable of being proved or 4 Which may reasonably be expected to happen 4 Wherein reasonable is meant in the sense of "Having

Sound Judgement" or sensible or "as is judged appropriate or suitable to the circumstances or purpose" 4 Insurers are accepting risks on Probable Maximum Loss basis rather than on a Possible Maximum loss basis

My Practical experience & observations: I had the privilege of assessing one of the big Refineries in south India in 1986, with a lot of urgency & differences of methods of assessing PML, at my level, corporate level, Regulatory level & Re-insurance level.

It was first estimated by Re-insurer on Sept. 9, 1985 for Material Damage & LOP for FIRE risk.

Suddenly I was forced to give PML within days. I went to the advisory committee local office & with the available information submitted my PML as 90% of Material damage & 100% of LOP. Regulators started asking explanations with 4pager telexes.

Aghast with my calculations, they summoned all Engineers of regulators & 2 Engineers from Re-insurer who had inspected the risk & had a marathon discussion within themselves without my presence!

Then they advised as under: "Re: Fire Policies issued to ‌‌Refineries Ltd. Dt. 25th March, 1986 The Insurance Times, Novmebr 2012 21

Kindly refer to the PML report on the above risk assessing the PML around Rs. 341Crs. However, GIC have not accepted this PML Assessment and have referred the matter to Swiss Re Engineers who, based on the information made available to them at the time of their visit in September, 1985, have assessed the PML at Rs. 160 Crs. We enclose a copy of Re-insurer's Report which we would request you to ask your engineers to go through & let us have your comments at the earliest. This may also be used as the basis for assessment of PML in similar cases.

In this connection, we have received a copy of the PML Assessment made by Mr. X, Engineer of the regulatory body on 7th March, 1986, where the PML has been assessed at Rs.1605 million. A copy of the report is also enclosed for your ready reference."

My observations: Points on PML of Refinery by SwissRe Engineer's Report At the outset, I would like to make it clear that the PML is a guess made on the assumptions based on certain technical data available &being an Electrical Engineer, I thought it fit to consult the chemical Engineer Mr. X of the Regulator on certain basics which I am not well conversant with (In Chemical Engineering) before my guessing the PML loss magnitude.

After going through the calculations sent by Re-insurer's Engineer & Mr. X of Regulator, I feel the following 1. As per the corporate letter dt. 25-08-86, if the basis of assessment of PML is to be followed as per Re-insurer's report, a chemical Engineer will understand better than any other Engineer with different faculty of Engineering, since the formulae & the assumptions made need a lot of explanations to other faculty Engineers. Secondary explosions may create further explosions for which there are no guidelines or assumptions.

2. I have been given to understand that PML assessments made in major loss events (Including the Flexborough) do not tally with the losses suffered. I have a feeling that the weightage of such experiences should find a place in our calculations 3. If for the business operations, the Re-Insurance department wants to limit our PML for reinsurance underwriting considerations, it is better to include the appropriate factor of such nature in the form of guide lines.

Conclusion: Business decisions & technical correctness are two different 22

The Insurance Times, November 2012

things & business decisions prevail. intervention in big risks is welcome sign.

Re-insurer's

What way PML assessment affects Re-insurers?

No hard & fast rules can be laid down & no mathematical formulae can be prescribed to work out such estimates of a maximum loss.

Following key factors govern the method of thinking in the process of arriving at the maximum loss estimates.

4 Intimate knowledge of the hazards involved in each case 4 Experience gained by the knowledge of past losses 4 Logical approach & common sense 4 The estimates are essentially personal ones & a number of subjective factors are involved as it depends upon the estimator's judgment of type of plants, processes, insured perils & knowledge and experience of comparable risks.

4 It, therefore, becomes imperative that these estimates are prepared by specialized people & are based on facts and figures relating to particular risk.

4 The estimates are exposed to numerous fluctuating factors 4 Rising costs on buildings / machineries such as Increasing concentration of values, Changes in process & technology etc. THEREFORE PML NEEDS TO BE CONTINUOUSLY REVIEWED with every treaty each time during renewal.

Aviva India lays off over 150 employees In another example of the economic slowdown taking its toll, Aviva Life Insurance has laid off more than 150 people as part of its restructuring exercise to bring down costs, according to company sources. However, Aviva’s official spokesperson said that only 80 people had been laid off. “To simplify our organisational model and make it more efficient, we have rightsized management layers to make the organisation more nimble and agile,” said the spokesperson.

India’s private life insurance industry witnessed a decline in fresh policy sales since September 2010 with companies deciding against launching and selling unit-linked pension products. Such unit-linked products constituted 30% of the total premium collection in 2009-10. According to an industry source, the industry’s attrition rate has also increased significantly. Finance minister P Chidambaram has said the government would take all steps to ensure that the industry regains its growth momentum. Insurance majors are looking to rope in joint venture partners to enhance their distribution network and boost finances in this cash-starved sector.

HIGHTIME TO IMPROVE THE HEALTH OF HEALTH INSURANCE IN INDIA RANA J. K. Chief- Customer Service, Unison Insurance Broking Services P.Ltd. Haryana

H

ealth insurance is a cause of concern for everyone.

There are several issues that need regulatory intervention and direction. The Insurance Regulatory and Development Authority who have the task of protecting policyholders, has initiated several steps in this direction.

The Regulatory body has issued draft health insurance regulations addressing several areas of concern which were raised in public interest litigation (PIL) by social activist Gaurang Damani. The draft covers product design, renewability, portability, file and use procedures, protection of policyholders' interest, servicing of health insurance policy, third party administrators (TPA), contract between insurer and hospitals and so on.

Among the more common issues that citizens face are rising health insurance premium, senior citizens' inability to increase sum insured, mediclaim policies getting restrictive with different caps, increase in the number of claim rejections for frivolous reasons, cashless facility restricted to few hospitals, claims based loading even after decades of no-claims from the policyholder, stringent hospitalization intimation and claims submission deadlines, poor and

delayed grievance redressal, several Third Party Administrator (TPA) issues which has harassed policyholders to no end and lack of control on medical charges of hospitals and consultants.

Obviously the regulatory intervention can play a great role since the quality and coverage of our public health services in India are so poor that an overwhelming majority has virtually no recourse to any kind of quality healthcare.

This must change. At the same time, a regulator is needed for the healthcare sector to ensure ethical and transparent standards. Clearly, India needs innovative models to tackle rising healthcare costs. We should not go the US way in which hospitals and health insurers thrive but patients are saddled with huge healthcare costs.

A practical solution is for hospitals here is to adopt low-cost models, taking a page from institutions such as Narayana Hrudayalaya and ArvindNetralaya that follow a high-volume, low-margin, standardised procedure-driven approach.

Insurers can also offer volume discounts to pare costs.

Health insurance, ultimately, has to be underpinned by a The Insurance Times, Novmebr 2012 23

functional, publicly funded system of preventive and primary healthcare.

Innovative good features: With the entry of exclusive health insurance companies in India, one can see the much-needed innovation in health insurance products. The recently launched health plans are customer-centric and offer some good benefits that cater to various requirements.

Stand-alone health insurance companies like Max Bupa, Star Health and Apollo Munich are pioneering innovation in health insurance policies and have done a good job so far.

Some of the good features that can be seen in the recent health insurance plans are: 1. Lifelong renewability: In many of the recently launched plans, the insurers did not put a cap on the maturity age till which the plan can be renewed. Now, the plan can be renewed lifelong. And now, IRDA has issued a draft guidelines requesting for all policies to offer lifelong renewal facility.

2.

No sub limits: For quite some time now, all health policies came with a sub limit on various heads. The health insurance policy puts a cap on your room rent to 1% of your Sum Assured amount. With the new policies from Star Health, Tata AIG and Apollo Munich, there is no restriction on the sub limits

3.

Vaccination expenses along with maternity benefits: Some plans from Max Bupa Health Insurance Company provide first year vaccination expenses over and above the maternity benefits. This will provide further boost to provide proper and timely vaccinations for children.

4.

Varied Premium structure for different zones: Some companies have introduced the concept of Zone Based Premiums for Metros and Smaller Towns. New India Assurance, Bharti AXA and L&T Insurance follow the practice of pricing their health insurance policies for small towns lower than the pricing in metro cities, simply because the medical expenditure and cost of treatment is lower in small towns

5.

Day care procedure: Many medical insurance policies provide reimbursement for Day Care Facilities which does not mandate the policyholder to be hospitalized.

But this concept is not very prevalent and most people with existing policies are not aware of the same. It's now that few companies' emphasis on this benefit and have started propagating this feature.

There are many such benefits that are designed for the 24

The Insurance Times, November 2012

benefit of the policyholders. Recently, the Insurance regulator has suggested some changes in the health insurance regulations and if passed into a bill, these changes will bring a smile on the faces of all the customers.

Claim Settlement: Regarding handling health insurance claims, the Regulator is of the opinion that the system is working well, by and large.

Last year out of the 47 lakh claims received, 9.4 lakh claims were rejected. The data shows that 80% of the claims are met and the industry has paid out as much as Rs.5,885crore.

More than half the claims were settled within 30 days. The most frequent claims are from fever due to unknown origin followed by cataract. The issue is where demarcation occurs considering the spirit of regulations and recognizing the practicality of dealing with claim. A large part will get addressed when medical protocols get standardized.

Some work has been done by IRDA in collaboration with chambers of commerce and industry to develop protocols.

So far, they have developed 10 of them. IRDA has written to the ministry of health, which has set up an expert body to finalize the protocols. It has not yet been notified to IRDA, but they should be close to standardizing 80 processes (medical protocols).

Co-Pay System: Recently, New India Assurance, the largest non-life Insurer of India, added reputed Jaslok hospital in Mumbai to its list of Preferred-Provider-Network (PPN). Its mediclaim policy states that there will be 20% co-pay for customers going to Jaslok hospital. On this issue customers are not happy since they have to bear the cost of co-payment.

The regulator has a different view and has clarified that, "We have issued a circular that customers should have access to current list of hospitals on PPN. If insurance companies have a clause in the policy about a specific hospital on PPN charging co-pay, then it is as per the contract. If customers are not happy with it, they can always move to another insurance company's product."

Mandatory Renewal Notice: Health insurance is a cause of concern for everyone. With rising medical inflation and annual hike in health insurance premium, quality healthcare seems to be a distant dream, except for the elite who can afford the expensive hospital treatment or pricey health insurance premiums. Insurance companies do not renew policies automatically and therefore, most of the policies get lapsed. There is no renewal notice

sent to each policyholder. IRDA does not want to mandate renewal notices as it can get gamed. If the regulator mandates it and if the insured say that they have not received it, will the cover be considered as continued? The policyholder will go to court over the dispute. There are certain things that are not mandated. The customer knows the annual cover due date and hence can do the necessary renewal.

setting the renewability age to just 50-55 years on the basis of your past records, this will be a big breather. b)

IRDA has also sought more clarity from insurers at the time of policy issuance and settlement. So, a standard policy form will be issued, which will highlight important policy details for the customer's ease. The policy document is also required to mention the cumulative bonus that a policyholder earns.

Cover for HIV infected people: IRDA has released an exposure draft, proposing to make it compulsory for insurers to provide cover to people suffering from HIV. This is also for people who are exposed to the threat of being infected with HIV. Persons who are not yet showing AIDS symptoms but are in stage 1 or 2 of HIV infection and those who comply with the treatment protocol of the medication can avail of this cover.

A company rewards you with a bonus when you don't make any claim for a specified period of time. At the time of settlement, the regulator has introduced a form asking insurance companies to provide clear reasoning for claim rejection. A detailed explanation will also have to be given at the time of loading of policies. Loading refers to the increase in premium after a claim has been made.

IRDA has further explained that insurers would not be allowed to reject claims from a person who was HIV negative before the policy, but subsequently got infected. It stated that insurance companies can term HIV/AIDS as a critical illness and also provide the cover under group insurance schemes. c) The draft further says that all life and non-life insurers will 'have to put in place an underwriting policy on health insurance coverage for persons suffering from HIV. It has invited comments from insurers within a months' time.

However, the biggest challenge to the proposal is in deciding the pricing of these products, as there is shortage of data for analysis and research in the health insurance sector.

A slew of changes: The Regulator announced a slew of changes in health insurance. After a clean-up act in life insurance, the watchdog appears to have turned its attention to health insurance. Indeed, the exposure draft guideline issued by it has proposed changes in every facet - product structure, renewability and claim settlement included.

Hospitalization & settlement: If these guidelines come into effect, the preferred network of hospitals clause will be removed. This means you can go to any hospital at the time of need and won't have to pore over a booklet to find out which hospital has an agreement with your insurer.

Treatment of multiple policies: If you have more than one health insurance policy, you can get the claim settled completely by any one of the insurers. It is left to the companies to settle the bill amongst themselves later.

Earlier, the insurers had to share the claim payouts and these generally led to delays in claim settlement.

d) Alternative treatment: With the rising popularity of alternative medication, IRDA had been mulling bringing health insurance under the umbrella. Finally, there seems to be headway. These guidelines say that non-allopathic treatment in any government recognised hospital will also be eligible for insurance.

Though these are exposure draft guidelines, the reason they gain such importance is that these are going to be the final guidelines, with some very minor changes. a) Product design: To begin with, any one up to the age of 65 years can now buy a health insurance product.

This move aims to include more senior citizens under the health insurance ambit. So far, insurers could deny cover to people over 60 as it was not mandatory. What's more, a lifetime renewability of health insurance product may also be possible. With some companies The Insurance Times, Novmebr 2012 25

e)

Standard definition: In the absence of a standard definition for critical illness, companies were rejecting several claims. Now, there will be a standard definition of the term (and other terms) for all health insurance companies.

f)

Medical reimbursement: Once these guidelines come into effect, you will get a full refund for the medical test you undertake before taking a policy. The medical reimbursement for the policyholder will be pegged at 50% for non-life and 100% for life.

g) Policy tenure: IRDA has also put a cap on the minimum policy term. With this, policies offered by life insurance companies should have a minimum term of four years.

On the other hand, any health product from general insurance companies will have a minimum term of three years. The rationale behind this is that a longer term allows for a better servicing of the policy.

Sensible health covers: Sensible universal health cover for masses is certainly a possibility in India. The government-initiated products like RSBY (RashtriyaSwasthyaBimaYojna) has done well for the masses with premium as low as Rs400 per family for a cover of Rs30,000 sum insured.

They cover primary and secondary health care. Arogya Shree is another success story in Andhra Pradesh which covers tertiary health care i.e. covering only if any procedure is performed. A product, which is a combination of two, can be promoted to masses for bulk penetration. This can be offered to certain section of society at nominal cost.

The other half of the population, which is at a higher income level, can buy this product at a higher rate, which will still be much lower than an individual mediclaim product. The product may be up to certain sum insured. If anyone needs higher sum insured, they can buy 'top-up' policy to cover over and above the sum insured.

IRDA has suggested insurance companies to offer a special window for fast-tracking on senior citizens grievance redressal. Some companies have started it.

Mediclaim should be offered entry till age 65 years and exit age till minimum 80 years. For new product approval, the Regulator is asking for no limit for entry and exit age. The existing mediclaim products may not offer this feature.

The premium rates for the young are higher than what really 26

The Insurance Times, November 2012

should be due to the need to keep senior citizen premium low. There is a built- in normalisation to benefit senior citizens. The Insurance Council and the insurance industry have to come up with a minimum standard to cover these.

Insurers have to respond as an industry to this demand and the need of the society.

Minimum cover for the disadvantaged and the disabled will necessarily have to be offered and there should not be ground for increase in price or rejecting any case. Anything above the minimum will have to be gradually improved with buildup of more experience.

The draft rules on health policies say an insurer can raise the premium based on the age of the insured, though insurers will have to disclose upfront premiums charged from senior citizens. Building a database on claims history should follow, especially for this group, to help insurers price these products.

The Regulator wants that no party should be refused an insurance policy and disability should not be a ground for rejecting insurance. It is also against the rules to refuse medical insurance to senior citizens. The enforcement on the ground may need to be tightened. The other half of the population, which is at a higher income level can buy this product at a higher rate, which will still be much lower than an individual mediclaim product.

The product may be up to certain sum insured. If anyone needs higher sum insured, they can buy 'top-up' policy to cover over and above the sum insured, which is offered by this mass product. Now insurers should be responsible for carrying out an empanelment process of hospitals or healthcare providers to provide Cashless facility to the policyholder.

The TPA role is effectively marginalised. They should also provide coverage to Non-allopathic treatments provided the treatment has been undergone in a government hospital or in any institute recognized by the government. ID card to have logo of the insurance Company. Incase the policy is renewed, provisions to be established by the insurer to ensure there shall not be any need for re-issue of fresh cards provided there is no change in the details of the policyholder.

It means auto-renewal of same ID cards.

All insurers shall have an agreement directly with the hospitals to establish the list of network providers. This is expected that these positive changes in the Health insurance will certainly improve the health of the health insurance in India.

WHY INDIAN INSURERS DON'T INSURE DISABLES?

Jagendra Kumar

H

ealth insurance is a cause of concern for everyone.

With rising medical inflation and annual hike in health insurance premium, quality healthcare seems to be a distant dream, except for the elite who can afford the expensive hospital treatment or pricey health insurance premiums.

A disability is a condition in which the function of a certain part of the body is quite impaired compared to that of other people. A person may either be born disabled or may become disabled later in life due to an illness or accident.

Broadly speaking, a person may suffer from mental, hearing, speech, visual or physical disabilities or a combination thereof. Chairman, IRDA (Insurance Regulatory and Development Authority) has recently said that no person should be refused an insurance policy and disability should not be a ground for rejecting insurance.

It is also against the rules to refuse medical insurance to senior citizens. However, enforcement on the ground may need to be tightened. Disability by itself does not entail any higher risk of life or limb as compared to non-disabled; the disabled are not at all more likely to die early, either due to disease or accident. No empirical study corroborates the

fallacious argument advanced by agents and officers of various insurance companies in unduly denying the disabled their legitimate rights.

As persons with disabilities including the visuallychallenged form an integral part of society and are equally, nay more in the need of insurance services. Visuallychallenged, i.e. persons with blindness or low vision along with other persons with disabilities are engaged in various vocations and activities and are trying their best to lead meaningful and productive life in society.

However, their stake in many life activities is often made more perilous by societal attitudes and negative bias toward persons with disabilities in general. So, they like all others try to insure themselves and their family members against various risks including early death. There is a steady flow of aggrieved persons who have been denied their legitimate insurance needs often arbitrarily due to their disability by various insurance providers.

Certain policies are denied to disabled persons on the ground that they are disabled, blind, and so do not form an acceptable subject for insurance. The policies denied mainly The Insurance Times, Novmebr 2012 27

include joint policies, marital policies, mediclaim policies and even sometimes life insurance. Even when sometimes the policy is given, the premium charged is higher than that for non-disabled on the ground that disability constitutes higher medical risk for death.

However, getting insurance is sometimes a challenge for people with disabilities. People with disabilities might be able to buy individual insurance policies. But because of preexisting conditions, they sometimes have difficulty getting coverage.

At other times, even after charging higher premia, the sum insured for disabled is substantially lower than that for nondisabled. When extra premium is not charged, the disabled gets lower sum insured for same premium as compared to the non-disabled, the same discrimination in different disguise.

Medicare is a federal health insurance for the elderly and for people who have been declared disabled by Social Security.

People with disabilities become eligible for Medicare only after they have been disabled two years. The first milestone was reached when on February 22, 2006, during the 5th National Meeting of the State Commissioners for Persons with Disabilities in Delhi, a Core Group was formed to formulate a scheme for Health Insurance for Persons with Disabilities.

Indian scenario: India has some 40 to 80 million persons with disability. But low literacy, few jobs and widespread social stigma are making disabled people among the most excluded in India.

Children with disabilities are less likely to be in school, disabled adults are more likely to be unemployed, and families with a disabled member are often worse off than average.

With better education and more access to jobs, people with disabilities can become an integral part of society, as well as help generate higher economic growth that will benefit the country as a whole. In the years to come, the number of disabled people in India is expected to rise sharply as age related disabilities grow and traffic accidents increase.

This is borne out by the fact that internationally, the highest reported disability rates are in OECD countries. India has a growing disability rights movement and one of the more progressive policy frameworks in the developing world. But, a lot more needs to be done in implementation and "getting the basics right".

People with disabilities need to be better integrated into society by overcoming stigma; disabled adults need to be empowered with employable skills; and the private sector needs to be encouraged to insure them. The scale of disability in India needs to be better understood by improving the measurement of disability. Most importantly, persons with disabilities should themselves be made active participants in the insurance process.

A challenge for disables: Disability insurance falls in the grey area between life and general insurance and both wait for the other to introduce this product. That is the reason such a policy cover is yet to make a foray into the Indian markets. Health insurance is especially important for people with certain disabilities because their conditions require regular medical care.

28

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Efforts of government: In 2008, the Government of India launched a health insurance scheme called Niramaya, for persons with autism, cerebral palsy, mental retardation and multiple disabilities. The scheme served a large section of people who so far remained outside the scope of any medical insurance in the country.

The Niramaya scheme was disabled-friendly in form and conditions.

It was implemented and monitored by the National Trust for Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities through a Third Party Nodal Agency (TPNA) with the active participation of the Local Level Committees (LLC). The TPNA liaised with the insurance company, empaneled health service providers, LLCs, the National Trust, the state government and all the stakeholders concerned, to generate awareness about the scheme, to underwrite the risks, and to ensure speedy settlement of claims. The programme was bound to change the lives of people with disability, especially the poor section and those identified as living below the poverty line (BPL). These people remain outside the ambit of even minimal social protection.

In the last decade, the Life Insurance Corporation tabled a life insurance plan for people with disability. Under the plan, the affected persons received money in the form of a monthly pension from the insured sum only after the death of the parents. Parents, however, were in favour of getting the money in a lump sum after the tenure of the premium payment so that they could plan for their children's future.

At that time, children with delayed mental age could not legally handle money or property even after attaining adulthood, and the provision for appointing a legal guardian

for adult persons who were incapable of taking care of themselves came into effect along with the National Trust Act, in 2000.

Scheme for disables: In the year 2009 it was planned that disabled who have been denied insurance cover by companies all these years stand to get insurance as a right once the scheme is in place. They may get their own insurance scheme funded by a unique corpus.

The insurance scheme was to be funded through a Rs 2400 corpus that accrued to the Ministry for Social Justice and Empowerment from public sector banks. These banks, had made a profit while rounding off their accounts, were asked by the Supreme Court to spend the money for public good specifically for the disabled after a PIL three years ago.

Interest from this corpus was to be used for various disability welfare schemes and the insurance scheme was to benefit from this fund.

The National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental retardation and multiple disabilities and the Chief Commissioner for Persons with Disabilities was working on the social security cum insurance cover with various insurance companies. Recently through a gazette notification No:12/2012 dated 17.03.2012 the Central Government, being necessary in the public interest, has exempted the healthcare taxable services from the whole of the service tax leviable thereon under section 66 B of the said Finance Act. These health care services" means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine and includes services by way of supply of meals for the patient or transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

Common issues: Medical insurance is a scientific system to meet the urgent needs of society. Healthcare schemes in India, however, are mostly suggested by agents, intermediaries and company representatives. Very often costs are manipulated and inflated - in medical tests, prescribed medicines and stay in hospitals. Add-on covers are major part at extra cost but still they are not brought to the knowledge of the buyers. There

are certain exclusions which can be waived of on extra premium, if suggested; they will certainly meet the requirement of the customers. In mainstream development policy a simplistic view prevails where the conventional belief is that disabled people are incapable of earning and thus are economically dependent on their families or communities, or on charity. Most development programmes in India are inaccessible to disabled people mostly because of social or physical barriers that surround them.

The common issues that most citizens face are rising health insurance premium, inability of senior citizens' to increase sum insured, TPA and intermediary treatment and restrictive mediclaim policies Among the more common issues that citizens face are rising health insurance premium, senior citizens' inability to increase sum insured, mediclaim policies getting restrictive with different caps, increase in the number of claim rejections for frivolous reasons, cashless facility restricted to few hospitals, claims based loading even after decades of no-claims from the policyholder, stringent hospitalization intimation and claims submission deadlines, poor and delayed grievance redressal, several Third Party Administrator (TPA) issues which has harassed policyholders to no end and lack of control on medical charges of hospitals.

Disability covers : In Health insurance policies the exclusions like war and warlike situations, natural calamity, act of terrorism have no relevance since a person may suffer any disability, or injury in any such event. These perils may also be waived off to cover the provisions of Prosthetics under all medical/ accidental insurance policies.

This waiver may be given to the insurer on an enhanced/ additional premium. Worldwide, in countries which have a market economy, insurance companies are mandated by regulations to provide prosthetic coverage under Medical/ Accident insurance policies.

There are many war veterans, amputee themselves, and notfor-profit organizations for challenging ones, that encourages and helps amputees not only to lead a normal life, but look beyond and participate in sports and other activities. There is need to cover repair and replacement of prosthesis, if this is deemed appropriate by the insured's treating physician/prosthetist.

At present, only few medical policies cover prosthetics. The need for various implants is real and it has to be addressed.

Some health policies cover prosthesis and there is need for The Insurance Times, Novmebr 2012 29

others to cover. There is increasing need for various types of implants. Disability can happen due to accidents, medical condition or at birth. Prosthesis is essential part of the treatment for loss of limb. However, certain embellishments may be viewed as cosmetics and may not be covered.

Max Bupa covers up to the extent of sum insured. While the Employee State Insurance Corporation (ESIC) does give limited facility for fresh amputees, some group plans cover prosthetics for even existing amputees. Individual mediclaim should cover fresh amputee and possibly existing amputees too. In most cases, medical treatment under insurance does not cover prosthetics/artificial limb, when in fact, this is absolutely essential for an amputee to live a normal life.

The Blind Graduates Forum of India (TBGFI) has requested the insurance regulator to issue a circular to all insurance providers clearly instructing them not to discriminate in many manner whatsoever against persons with disabilities, especially those who are blind and have low vision.

Delhi High Court has already struck down one such arbitrary practice by Postal Life Insurance which used to charge a higher premium from the disabled and also restrict the sum assured to Rs.1 lakh, instead of the normally available Rs.5 lakh. Yet, those who are blind are being discriminated even when they are earning and in a position to pay for insurance protection for themselves and their families like anyone else.

This varies from outright denial of mediclaim and sometimes life insurance, charging extra premium due to perceived higher medical risk for death, lower sum insured and no risk cover for insuring against accidents or diseases.

Legal aspects: The Constitution of India confers the right of equality before law and equal protection of laws to all citizens, including persons with disabilities. This right clearly implies that there should not be any undue discrimination against persons with disabilities including blind when it comes to affording them insurance cover.

Preexisting disease may constitute extra risk in insurance parlance, but disability cannot be equated with disease and the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, clearly defines disabilities and mandates equal treatment to persons with disabilities in all walks of life including all services. The United Nations has adopted an international convention on the rights of persons with disabilities which also talks of 30

The Insurance Times, November 2012

equal, accessible and non-discriminatory services to all persons with disabilities. UNCRPD mandates, in Article 25 that the states parties shall ‌. "(e) Prohibit discrimination against persons with disabilities in the provision of health insurance, and life insurance where such insurance is permitted by national law, which shall be provided in a fair and reasonable manner."

Disability in any form has a detrimental effect since it can come in the way of you being able to work, thereby rendering you incapable of earning. Undoubtedly life after disability is difficult but if there is an insurance cover, the immediate expenses can be met. Further, financial stability is necessary because there are bills to pay, children's education to take care of and medication expenses to cope with.

Providing social security to the disabled and their families has been one of the objectives of the Persons with Disabilities Act 1995. The chapter thirteen of the act contains various schemes to be implemented by the "appropriate Governments" and "local authorities" including financial assistance, insurance scheme for the benefit of the disabled, alternative security scheme where insurance is not possible and unemployment allowance to persons with disabilities registered under special employment exchange.

Benefits assured to people with disability under various legislations have not often materialized. For example, people with disability are supposed to get a disability identity card issued by the state authority on the basis of the medical certificate that they produce. This card allows them to avail of various government facilities such as concessions in various modes of transport, enrolment in employment exchanges, stipend, pension etc.

However, lack of coordination between medical professionals and the executive authority has resulted in a majority of disabled people in the country not having this card and therefore being deprived of the facilities that are rightfully theirs.

In other countries, there are support systems for such people, either in the form of direct financial assistance or in terms of identification of opportunities. In India, a separate Disability Insurance policy or programme is quite unheard of.

However, normally life insurance policies have 'riders' and personal accident policies have add-ons, which compensate in an event where insured become disabled and is no longer able to earn. But such riders come with additional premiums

increasing the amount of premium paid for the insurance.

Also, the premiums for disability insurance are based on the age, sex, occupation and the amount of potential lost income of the insured. If one has a higher chance of injury, then he has to pay higher premiums.

In India, however, the insured gets a lump sum benefit and the policies cover only accidents, and not illnesses like a paralytic stroke that results in disability. Another factor is that there are no tax breaks for disability insurance policies. It is mostly personal accident policies and critical illness policies that help a person in case of disabilities.

Personal accident insurance covers the risk of bodily injuries arising directly from an accident that was caused by an external, violent and visible means and results in death or disability.

Therefore, the best thing to do is to opt for the disability rider in a health plan and get a premium waiver ride. Also, getting a critical illness policy cover will also help. It would be a welcome relief, especially for people who wish to take such a policy if something suitable was available with one option instead of having to opt for more than one policy to be able to get protection from such a disaster.

Apollo Munich's Optima RESTORE wins the "Innovation of the Year" Award at the Asia Insurance Industry Awards 2012 sought after category, saw numerous entries from different parts of Asia, as it recognizes and rewards the idea that generated the most innovative approach to a significant business area with real impact on the market or business.

Apollo Munich's Optima RESTORE product was awarded the "Innovation of the Year" award as it was the very first product in India (and elsewhere) to offer a restore benefit that not only automatically reinstates the basic sum insured, in case the insured exhausts their sum insured in a policy year, but also doubles the sum insured after two claim free years. These unbelievable benefits are offered automatically, and with no additional charge.

ĂŤ First Standalone Health Insurer to win at Asia Insurance Awards ĂŤ First Indian General Insurer to win the Innovation Award ĂŤ Optima Restore arguably the fastest launch of any product in the retail health insurance segment in India

Speaking about the award, Antony Jacob, CEO, Apollo Munich Health Insurance, said, "Receiving the "Innovation of the Year" award from an eminent jury of highly respected insurance industry stalwarts and being among the top contenders from across Asia corroborates all the hard work and months of research that went into the development of Optima RESTORE. With this unbelievable product, we have strived to walk the 'Let's Uncomplicate' path and I believe we have been able to bring in more acceptability in making health insurance a financial planning tool that Indians require."

In a few months since its launch, Optima Restore can already lay claim to being the fastest launch of any retail health insurance plan in India. Very quickly, it has become 48% of Apollo Munich's new sales in this category, and is nearing the Rs. 750 million mark in premium.

Leading health insurance company, Apollo Munich Health Insurance's unbelievable, 10 month old product - Optima RESTORE, has won the "Innovation of the Year" award this Sunday at 16th Asia Insurance Industry Award in Kuala Lumpur.

The 16th Asia Insurance Industry Awards 2012 were held by the leading international insurance trade publication - Asia Insurance Review at a glittering ceremony in Kuala Lumpur. The "Innovation of the Year" award, the most

Speaking on this innovation, Mr. Jacob added,"The team at Apollo Munich spent over 17 months conducting lengthy actuarial research and analysis of over 250 existing products, available across the globe, to determine the gaps in the marketplace versus customers' expectations and needs.

A comprehensive market feedback mechanism was created across the top 4 cities of our country to understand the gaps prevalent in the market. Optima Restore is the result of this deep-dive research. Apollo Munich is a company founded on innovation. We have a unique parentage that combines health insurance expertise with health care know how. We are hard at work on our next round of innovations, and this award will spur us on to greater success."

The Insurance Times, Novmebr 2012 31

Legally Speaking

REVIEW OF THE RECENT JUDGMENTS ON NON-LIFE INSURANCE BY THE SUPREME COURT OF INDIA** M. K. DAS* B.A.Hon's & Distinction, B.Ed, M. A., L.L.B., Dip in Cyber Law

Motor TP insurance : Motor vehicles act, 1988 Computation of compensation Concept of future prospective income Application of future prospective income Assessment of future prospective income Eligibility for future prospective income Rule of thumb evolved in Sarla verma's case

Computation of compensation Earlier, computation of compensation payable to the motor accident victims was not only complicated but also cumbersome due to lack of clarity, certainty and consistency in law as well as amongst law courts. Ultimately, the Supreme Court of India, in General Manager, Kerala State Road Transport Corporation vs. Susamma Thomas [1994 (2) SCC 176] laid down some basic criteria for computation of compensation. The same is based on multiplier formula enunciated in the case of Davies v. Powell Duffryn Associated Collieries Ltd., [1942 AC 601] and also prescribed the maximum multiplier that can be applied for such purpose.

Concept of future prospective income Another landmark achievement of the Susamma Thomas's

M.K.Das 32

*The author is a former Advocate, presently working as Law Officer with the New India Assurance Company Ltd. at Mumbai, also a visiting guest faculty to National Insurance Academy, Pune.

He can be contacted by email: mkdas1@gmail.com, ** The views and statements are of the author

The Insurance Times, November 2012

case (supra) is that, it laid down a new and novel concept known as 'future prospective income' for the purpose of computation of compensation. As per the principle "the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand. xxx xxx xxx xxx xxx . It will not be inappropriate to take a reasonably liberal view of the prospects of the future and in estimating the gross income, it will be unreasonable to estimate the loss of dependency on the present actual income xxx." In other words if the deceased person had a more or less stable job it would be appropriate to consider his income at a higher rate than the existing one for the assessment of compensation.

Confusion in the application of future prospective income.

However, due to lack of clarity on its application and estimation, different methods of calculations being adopted and different yardsticks being applied for assessment. To note a few, the Apex Court in Susamma Thomas's case (supra) increased the income by nearly 100%, in Civil Appeal No. 5157 of 1992 between Sarla Dixit vs. Balwant Yadav, the income was increased only by 50% and whereas in Civil Appeal No. 5193 of 1997 between Abati Bezbaruah vs. Dy. Director general, Geological Survey of India, the income was increased by a mere 7%. Due to such divergence view by the Supreme Court of India itself made the concept, confused, perplexed and bewildered leading to dissatisfaction and distrust in the system Rule of thumb to standardize the concept and calculation of future prospective income.

In view of imponderables and uncertainties, The Supreme

Court of India in Civil Appeal No. 3483 of 2008 between Sarla Verma vs. Delhi Transport Corporation laid down a rule of thumb to standardize the concept and calculation of future prospective income. It is held that, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. [Where the annual income is in the taxable range, the words `actual salary' should be read as `actual salary less tax']. The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of deceased is more than 50 years. xxx xxx xxx

of India assailing that they are denied compensation considering the future prospects of the deceased amongst other issues.

Where the deceased was self-employed or was on a fixed salary (without provision for annual increments etc.), the courts will usually take only the actual income at the time of death. A departure there from should be made only in rare and exceptional cases involving special circumstances."

Accordingly, held that the rule of thumb evolved in Sarla Verma (supra) is to be applied to those cases where there was no concrete evidence on record of definite rise in income due to future prospects.

Obviously, the said rule was based on assumption and to avoid uncertainties and inconsistencies in the interpretation of different courts, and to overcome the same.

From the above, it is evident that the concept of future prospective income can be applied in selective cases., The most important deciding factor for its application are two (1) Age and (2) Nature of Job. Accordingly, eligible to receive compensation based on the concept of future prospective income one should have a permanent job where there is scope of growth and should not be above 50. However departure can be made in rare and exceptional cases.

Departure from considering the age factor for the purpose of application of age factor future prospective income, when the victims was above 50 years.

On 4.10.1998, one, V. Rajagopalaiah aged about 53 years old, working as Senior Assistant in Karnataka Electricity Board (hereinafter "KEB") earning around Rs.15,642/- p.m. died in an accident by a Maruti Van bearing registration No. KA05-A-2535, survived by his wife and three sons, who were filed a claim petition under Section 166 of the Motor Vehicles Act, 1988 claiming Rs.20,00,000/- as compensation.

Considering his last drawn gross monthly salary at Rs.15,642/i.e.

Rs.1,87,704/annually, the Tribunal deducted 1/3rd towards personal expenses and applied 11 multiplier. The Tribunal also awarded funeral and transport expenses amounting to Rs.10,000/-, medical expenses prior to death was Rs.6,000 and compensation for loss and affection at Rs.25,000/-.

Accordingly, total compensation awarded was Rs.14,27,496/ - along with interest of 9% p.a.

However, on a cross appeal High Court reduced the award amount to Rs.11,82,000/-.

Being aggrieved, the claimants approached Supreme Court

The Apex Court while referring to the ratio laid down in the Sarla Verma's case held that there should be no addition to income for future prospects where the age of the deceased is more than 50 years is a rule of thumb developed to avoid uncertainties in the outcomes of litigation. However, the Bench held that a departure can be made in rare and exceptional cases involving special circumstances.

Considering the present case is of an `exceptional circumstances' not within the purview of rule of thumb laid down by the Sarla Verma (supra) judgment, the Apex Court held that even though the deceased was above 50 years of age, he shall be entitled to increase in income due to future prospects. Accordingly, considered the income of the deceased at Rs. 20,000/- p.m. for the purpose of computation of compensation.

SCI in Civil Appeal No. 1923-1924 of 2011 between Sri K. R. Madhusudan and others vs. The Administrative Officer and another.

Thus, making it clear that age alone cannot be a detrimental factor for application of future prospective income in rare and exceptional cases. Now the only basic criterion left open to decide whether a person is eligible to get compensation based on future prospective income is limited to the fact whether the deceased had a permanent job?

Departure from considering the job factor for the purpose of application of future prospective income, even when the victims was self employed or a daily wager.

One Swaran Singh aged about 45 years earning around Rs.5,000/- per month by running a milk dairy and doing agriculture, was died in an accident involving a Maruti car.

On an application for compensation by the legal heirs to the deceased, the Tribunal determine the amount of compensation by assuming his income as Rs. 1,500/- per month deducted Rs. 500/- towards personal expenses of the deceased and held that dependency of the appellant and

The Insurance Times, Novmebr 2012 33

other family members would Rs.1,000/Accordingly, applied 11 multiplier to compensation at Rs. 1,32,000/-.

per month. quantify the

On an appeal for enhancement, the High Court being relied upon the judgment of this Court in Sarla Verma v. Delhi Transport Corporation (2009) 6 SCC 121, declined to apply the concept of future prospective income but increased the multiplier to 14 and awarded Rs.1,77,500/- as compensation.

Hence appeal to Supreme Court by way of Special Leave.

The claim was opposed on the ground that the rule of 30 per cent addition in the income of the deceased as laid down in Sarla Verma's case cannot be applied to a case like the present one because the deceased was neither in Government service nor he was a permanent employee of a corporation or company which may have ensured increase in his income from time to time.

He argued that those employed in unorganized sectors cannot be placed at par with Government employees and those employed in agencies/ instrumentalities of the State or private corporations / companies.

However, the Court find it extremely difficult to fathom any rationale for the observation made in paragraph 24 of the judgment in Sarla Verma's case that where the deceased was self-employed or was on a fixed salary without provision for annual increment, etc., the Courts will usually take only the actual income at the time of death and a departure from this rule should be made only in rare and exceptional cases involving special circumstances.

The Court held that, it will be na誰ve to say that the wages or total emoluments/income of a person who is selfemployed or who is employed on a fixed salary without provision for annual increment, etc., would remain the same throughout his life. The rise in the cost of living affects everyone across the board. It does not make any distinction between rich and poor. As a matter of fact, the effect of rise in prices which directly impacts the cost of living is minimal on the rich and maximum on those who are self- employed or who get fixed income/emoluments. They are the worst affected people.

Therefore, they put extra efforts to generate additional income necessary for sustaining their families. The salaries of those employed under the Central and State Governments and their agencies/ instrumentalities have been revised from time to time to provide a cushion against the rising prices and provisions have been made for providing security to the families of the deceased employees. The salaries of those employed in private sectors have also increased manifold.

Till about two decades ago, nobody could have imagined 34

The Insurance Times, November 2012

that salary of Class IV employee of the Government would be in five figures and total emoluments of those in higher echelons of service will cross the figure of rupees one lac.

Although, the wages/income of those employed in unorganized sectors has not registered a corresponding increase and has not kept pace with the increase in the salaries of the Government employees and those employed in private sectors but it cannot be denied that there has been incremental enhancement in the income of those who are self-employed and even those engaged on daily basis, monthly basis or even seasonal basis.

We can take judicial notice of the fact that with a view to meet the challenges posed by high cost of living, the persons falling in the latter category periodically increase the cost of their labour. In this context, it may be useful to give an example of a tailor who earns his livelihood by stitching cloths. If the cost of living increases and the prices of essentials go up, it is but natural for him to increase the cost of his labour. So will be the cases of ordinary skilled and unskilled labour, like, barber, blacksmith, cobbler, mason etc.

Therefore, while making the observations in the last three lines of paragraph 24 of Sarla Verma's judgment, the Court had intended to lay down an absolute rule that there will be no addition in the income of a person who is selfemployed or who is paid fixed wages. Rather, it would be reasonable to say that a person who is self-employed or is engaged on fixed wages will also get 30 per cent increase in his total income over a period of time and if he / she becomes victim of accident then the same formula deserves to be applied for calculating the amount of compensation.

As decided by the Supreme Court of India in Civil appeal No. 3723 of 2012 between Santoshi Devi vs. National Insurance Company Ltd. Point to be noted : 1. Principles relating to calculation of compensation as laid down in the case of Sarla Verma's case is a Rule of Thumb.

2. Deviation to the same is permissible in rare and exceptional cases.

3. A person over the age of 50 can be eligible for compensation based on future prospective income.

4. Even if a person who is self-employed or is engaged on fixed wages will also get 30 per cent increase in his total income over a period of time and if he / she becomes victim of accident for calculating the amount of compensation.

HEALTH INSURANCE IN RURAL INDIA

insurance policies is non-awareness of the Public and Non-paying capacity of the people at large who are poor. At present by and large health insurance is a game of rich people.

Almost all the villages in India are lying untapped from health insurance point of view. There are some rich landlords residing in villages who can afford to pay sufficient premium but they are not being contacted/made aware of health insurance policies.

Nician (K K MITTAL) DEPUTY MANAGER & DP-CUM-PRINCIPAL (RTC) NATIONAL INS.CO.LTD., REGIONAL OFFICE-I, CHANDIGARH

Gandhiji said, "If you want to develop India, you should develop rural people as 80% of the Indian live in Villages". Ironically, so far no serious attempt has been made

by Govt of India for Rural people as regards health insurance.

The scope of Health Insurance in India is very very good. There is potentiality of more than Rs.40,000 crores of premium in the coming 3 - 4 years but at present only tip of an iceberg is being explored. The main reasons for non selling of Health

By and large, villagers are very sincere and god fearing. Mahatma Gandhi said, "If you want an honest man, go to a village. If you want further honest man you should contact an illiterate person". Meaning thereby, a villager would never like to cheat anyone or insurance company whereas rich people ever try to manipulate claims.

There should be a mandatory condition of 10% of premium or 10% number of total policies issued from villages for all the insurers. Whosoever does not fulfil this condition, he (insurer) should be penalized and if any insurer does a remarkable premium of villages, he should be suitably rewarded.

Sometime due to poor service of the insurer, the insured becomes the sufferer.

In this context carrot & stick policies should be implemented. 90% of rural areas premium is lying untapped as Govt of India has not given a serious thought to this insurance. Moreover, claims can't be more than thousands per person. More so, rural insurance will be a service to the Nation.

Mahatma Gandhi said, "If you want to serve India, you should serve the poor rural people". A study by ASSOCHAM on Rural India says that only 8-10 percent of the rural households are covered under life insurance. Similar might be the case with non-life insurance. Sooner this untapped business is explored, better it would be.

Insurance Industry should explore rural insurance by innovative and rural friendly policies as thousands of crores of premium could be harvested from The Insurance Times, Novmebr 2012 35

Rural Insurance. At affordable premium, number of policies should be devised for rural people. There is sufficient potentiality to go for rural insurance if insurers make tie up arrangement with rural banks (bancassurance).

Some policies which are meant for poor people cover preexisting diseases from inception. Insurers have devised number of policies to cater to all section of society e.g. for downtrodden to medium people. Mainly the following policies have been devised by insurance companies (National Insurance): Universal Health Insurance Scheme (floater Sum Insured Rs.30,000/-, covering self + spouse + 3 children).

Micro Suswasthya Insurance Policy Micro Suraksha Insurance Policy Jan Arogya Policy (Premium starts from Rs.70/- , covering S I of Rs.5000/-.

Insurers should take the following steps: 4 All Health Insurance Policies are made public on TV Channel and there should be a "TV Talk" at regular intervals from an insurer.

4 There should be Radio Talks on Health Insurance on various All India Radio Stations.

4 There should be special seminar on Health Insurance Policies in Rural areas.

4 Awareness Camps should be organized in Rural as well as Urban areas so that ordinary people could come to know that these policies exist.

4 There should be meetings in schools and in rural areas and help of Local Panchayats could also be had.

4 There should be some special incentives to those who sell maximum Health Insurance Policies. These incentives could be in the form of Cash Prizes, Special Appreciation Merit Certificate, Trip to a Foreign Country etc.

There should be a special CRM Department to attend to Health Insurance complaints so that immediate justice is given to complainants/their claimants are redressed.

I have devised following 2 policies (submitted to National Insurance H O Kotkata) which if prepared and implemented will go a long way in popularizing Health Insurance as they are meant for poor and down trodden people.

1.

There should be no Exclusion of "Pre-existing Disease".

However, there should be waiting period of 30 days in case of illness.

PREMIUM : 2.

Rs.50/- but there should be no service tax.

GRAMIN SEHAT BIMA POLICY:

APPLICABILITY: The policy will cover any person between age group of 18 to 65 years, irrespective of their occupation, income etc.

BENEFITS AVAILABLE: Section I : Hospitalization due to Illness/Accident upto Rs.5000/- is covered. There should be indoor facility but there should not be any condition of 10 beds.

Section II : Personal Accident cover for individual up to sum insured of Rs.10,000/- with following cover: Death : Rs.10,000/PTD : Rs.10,000/Loss of two limbs : Rs.10,000/Loss of one limb or One eye : Rs.10,000/There should be No Exclusion of "Pre-Existing Disease".

However, there should be waiting period of 10 days in case of illness.

PREMIUM : Rs.50/- but there should be no service tax.

The above two policies, if implemented, can go a long way in popularizing Insurance Industry which will make Health Insurance a profitable segment too.

BPL WELFARE POLICY:-

APPLICABILITY : The Policy will cover any individual BPL (Below Poverty Line) person between age group of 18 to 65 years.

36

BENEFITS AVAILABLE: Section I : Hospitalization due to illness/accident up to Rs.10,000/- is covered. There should be indoor facility but there should not be any condition of 10 beds.

Section 2 : Personal Accident cover for individual up to S I of Rs.25,000/- with following cover Death : Rs.25,000/PTD : Rs.25,000/Loss of two limbs : Rs.25,000/Loss of one limb or one eye : Rs.12,500/-

The Insurance Times, November 2012

The more base of Health Insurance widens the more profitable it will become. There is every reason that Health Insurance will flourish like anything. Only thing is we require WILL & Positive Thinking.

Life Insurance Plan

Dream Life Plan from Birla Sun Life Insurance

life insured while the policy is in effect, the nominee will receive Basic Sum Assured + Fund Value + Enhanced Sum Assured (if any).

This plan offers you: 4 4 4 4

Guaranteed Savings Amount on the date of your choice Whole life cover Choice of Pay Term Enhanced financial security for your loved ones

2.

Enhanced Sum Assured: Based on your needs, you can increase the life cover over and above the Basic Sum Assured by opting for the Enhanced Sum Assured at inception. You can choose any amount of Enhanced Sum Assured, subject to a minimum of Rs. 50,000 and not exceeding Basic Sum Assured.

3.

Whole Life Cover: You enjoy a life cover for your entire life, ensuring financial security for your loved ones.

4.

Surrender Benefit: In case of emergency fund requirements, you can surrender your policy after the completion of five policy years, and receive the Fund Value at that time.

5.

Guaranteed Savings Fund: Starting on your Guaranteed Savings Date chosen by you, all the reference to the Fund Value in the Death Benefit and Surrender Benefits above will be replaced by 'higher of Fund Value or Guaranteed Savings Fund '.

6.

Guaranteed Additions: Your policy enjoys a boost in the form of additional units. For more details on the guaranteed additions, please contact your financial advisors or refer to our brochure.

7.

Partial Withdrawals: You can make unlimited partial withdrawals to meet any financial emergencies any time after 5 complete policy years. The minimum amount of partial withdrawal is Rs. 5,000. There is no maximum limit, but you are required to maintain a minimum Fund Value of Rs. 25,000.

8.

Policy Loans: You can also avail loans on your policy.

How Plan works: 1.

You select the Guaranteed Savings Date that suits your retirement objectives.

2.

You select the Basic Premium you want to pay every year.

3.

4.

You select the number of years you want to pay your premiums, and select your Pay Term from options of 5Pay / 10-Pay / 15-Pay / 20-Pay / To Guaranteed Savings Date.

You will receive Basic Sum Assured which is the minimum death benefit payable on the demise of the life insured. The Basic Sum Assured is automatically determined as your Basic Premium multiplied by: 4 The higher of 10 or the number of years to attain age 70 divided by 2, for entry ages below 45; or 4 The higher of 7 or the number of years to attain age 70 divided by 4, for entry ages 45 and above

5.

You have the option to choose Enhanced Sum Assured to increase the financial security for your loved ones.

This increases your life cover over and above the Basic Sum Assured at a nominal cost.

6.

You have the option to choose from our range of riders to further customise the financial security

Benefits Based on your above choices, you will receive a host of benefits as below: 1. Death Benefit: In case of the unfortunate demise of the

The Insurance Times, Novmebr 2012 37

Life Insurance Plan

Key Features 4 Savings cum insurance plan 4 Wealth creation through compounded reversionary bonuses which get paid at the end of premium payment term or accrual period or on earlier death

Secure Income from Future Generali Life Insurance

4 Receive annual cash backs after premium payment term / accrual period till maturity 4 Maturity benefit of 100% of sum assured plus terminal bonus, if any.

4 Lump sum payment of sum assured along with all accrued bonuses on death during the premium payment term or accrual period 4 Lump sum payment of sum assured along with terminal bonuses, if any, on death after the premium payment term or accrual period before maturity 4 Flexibility to opt for additional riders 4 Tax benefits applicable as per prevailing tax rules How does it work?

4 Choose the amount of sum assured 4 Choose your premium payment period & mode of payment

Death Benefit: On the unfortunate demise of the life assured during the policy term, the following apply: i.

4 Choose the period for which you would like to receive cash back

Death before Risk Commencement Date: In case of the unfortunate demise of the life assured, before the risk commencement date, we will refund the premiums paid under the policy. However the bonuses accrued under the policy are not payable.

Benefits Survival Benefit: 4 At the end of the premium payment term / accrual period, we will pay the bonuses accrued under the policy as a lump sum to you 4 After the premium payment term / accrual period, i.e. during the cash back period, at the end of each policy year, cash back benefit of 5.5% of the sum assured plus the cash bonus, if any, is paid to you till the end of the policy term; provided the policy is in-force.

ii. Death after Risk Commencement Date: a.

4 In case of the unfortunate demise of the life assured during the premium paying term, if the due premiums are not paid and the policy is in auto cover period, the Company will pay the sum assured plus the accrued bonuses to the nominee after deducting all the due-but-unpaid premiums along with applicable interest.

In addition to this, you could also receive cash bonuses, as and when declared. So, go ahead and plan for that foreign trip, daughter’s wedding, new car or retirement home. Your smart investment with us will give you the confidence to follow all your dreams, thereby, realizing your recipe for happiness. b.

Maturity Benefit: 4 If the policy is in-force, then, on the maturity date the policyholder will receive the sum assured plus the terminal bonus, if any, as maturity benefit.

38

The Insurance Times, November 2012

With in Premium Payment Term / Accrual Period 4 In case of the unfortunate demise of the life assured during the premium paying term or the accrual period, provided all the due premiums have been paid, the Company will pay the sum assured plus the accrued bonuses to the nominee.

During Cash Back Period In case of the unfortunate demise of the life assured during the cash back period, provided all due premiums have been paid, the Company will pay 100% of the sum assured + the terminal bonus, if any, to the nominee.

Non-Life Insurance Plan

Accident Protection Plan from Cholamandalam MS General Insuranc

This is an ideal plan providing compensation to individuals against disabilities caused by accidents. This plan provides an option of including spouse & dependent children also.

The policy provides coverage on a worldwide basis.

Definitely a price worth paying for complete peace of mind.

Benefits: This plan known as CAPP provides the following additional benefits in addition to basic coverage for accidental death, PTD and PPD: 4 Weekly Compensation: Compensates for loss of income due to a disability caused by accident.

4 Broken Bones: Fixed compensation in the event of fracture of bones due to an accident.

4 Modification of Residences / Vehicle: In the event of permanent total disability, we reimburse the expenses incurred for modifying residential accommodation or own vehicle.

4 Family Transportation Benefit Covers: Expenses towards transportation of the family member to the location of the insured incase of accidental death / permanent total disability.

4 Fee for Private tuition: Compensation towards the tuition fees if the insured is not able to attend school / college due to an accidental injury.

4 Hospital Daily Cash: Provides a daily allowance for hospitalization due to an accident.

4 Repatriation of Mortal Remains from the accident site to hospital, residence or cremation ground.

Cost of Cremation Ceremony to perform religious ceremonies up to the time of or post-cremation.

What does it cover The basic coverages under this policy are as below: 4 Accidental Death In case of death of the insured due to an accident within the

policy period, the nominee (mentioned in the policy) is compensated with the Sum Insured.

4 Permanent Total Disability In the event of accidental injury, causing the insured Permanent Total Disability and such disability has continued for 12 consecutive months, the company will pay.

4 Permanent Partial Disability In the event of accidental injury, causing the insured Permanent Partial Disability and such disability has continued for 12 consecutive months, the company will pay.

4 Age Limit: Any person between 18 - 69 years can buy the policy.

Dependent children up to 25 years of age can be covered by the policy under family option

What does it not cover This policy does not provide benefits for any death, disability, expense or loss incurred in result of any injury attributable directly or indirectly to the following: 4 Intentionally self-inflicted injury, suicide or any attempt threat while sane or insane 4 War, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, mutiny, military or usurped power, seizure, capture, arrests, restraints and detainment of all kings, princes and people of whatsoever nation condition or quality 4 Participation in naval, military or air force operations whether in the form of military exercises or war games or actual engagement with the enemy with foreign or domestic 4 Loss sustained or contracted in consequence of the insured being under the influence of alcohol or drugs unless administered on the advice of a physician The Insurance Times, Novmebr 2012 39

Non-Life Insurance Plan

Critical Illness Insurance Policy from IFFCO Tokio General Insurance

4 Cost of anesthesia, blood, oxygen, operation theatre, surgical appliances, medicines & drugs, diagnostic materials and X-ray, dialysis, chemotherapy, radiotherapy, pacemaker, artificial limbs etc. and similar expenses

When will the Policy not pay?

Some of the important exclusions under the Policy are as follows: 4 Treatment pertaining to pre-existing diseases.

4 Any medical treatment due to a disease during the first 120 days of commencement of insurance cover.

A

t a time of increasing cost of living, the expenses for medical treatment have gone up substantially.

Particularly if any person contracts a major disease (critical illness), then he/she has to spend a huge sum of money for treatment, which most people can ill afford.

Although you cannot prevent the occurrence of serious ailments and accidents, you can take steps to ensure that the same does not result in financial ruin for you and your family. ITGI's Critical Illness Insurance Policy provides just the right kind of cover for such situations at a very affordable price.

A Complete Protector The standard medical cover available in the market is perceived to be rather expensive for the common man.

Normal hospitalization while also involving a financial strain, can even then be sustained by an average person. but treatment for critical illness, while saving the person's life could cripple him financially.

By paying a fraction of the normal premium required to be paid for a full fledged medical cover, complete protection can be taken through this Policy when it is needed the most. The ailments which are covered under this Policy are cancer, renal failure, coronary artery diseases requiring bypass surgery, major organ transplant, paralytic cerebral stroke as well as accidental injuries resulting in loss of limbs.

Our Policy covers the following heads of expenses, which are normally incurred in the event of a critical illness treatment: 4 Room rent and boarding expenses.

4 Nursing expenses.

40

4 Treatment for ailments arising out of drug addiction or alcoholism.

4 Any attempted self injury or suicide 4 War, nuclear and terrorism risks

What extra benefits can be covered?

At an extra premium, you can cover the following items under your Critical Illness Insurance Policy: 4 Education cover 4 Ambulance charges 4 Cost of travel 4 Cost of supporting items 4 Boarding and lodging expenses

Who can apply for this Policy?

This Policy can be issued to various categories of groups as under: 4 Employers covering their employees including dependants of the employees 4 Pre-identified segment/group where the premium is paid by the State/Central Government.

4 Members of registered service clubs.

Benefits Available

4 Surgeon, anesthetist consultant's fees.

4 Any expense for treatment related to Human T-Cell Lymphotropic Viruses Type II (HTLV-III) or Lymphadinopathy Associated Viruses (LAV) or their mutant derivatives or variations, any syndrome or condition of a similar kind referred to as AIDS

4 Holders of credit cards or other financial cards.

4 Holders of deposit or certificate of Banks/NBFCs. 4 Shareholders of public limited companies, cooperative societies etc.

4 Students/teachers of educational institutions.

and

medical

practitioner/

The Insurance Times, November 2012

4 Members of any other group having common identification or interest.

Insured can't lose out, if company hid facts

Legal Cases Mishap victim's widow gets Rs 7L compensation A road mishap victim's widow has been awarded nearly Rs seven lakh as compensation by a Motor Accident Claims Tribunal (MACT) here.

The tribunal asked United India Insurance Company Ltd, with which the offending vehicle was insured, to pay Rs 6,92,740 to Mamata Devi, wife of 40-year-old Ram Kishore, who lost his life after being hit by a rashly-driven car in 2008.

"In view of eye witness Raju's testimony, I have no reason to disbelieve that Ram Kishore was hit by Wagon R of Gulshan Kumar which was being driven by him rashly and negligently and that Ram Kishore died on being hit by it."

"United India Insurance Company is accordingly directed to deposit the awarded amount of Rs 6,92,740 within 30 days," the tribunal said.

The order came on Mamata's plea that her husband was hit by a rashly-driven Wagon R on May 23, 2008 night when he was returning home from work with his friend.

She had told the court that he was taken to a nearby hospital where he succumbed to his injuries the next day.

During adjudication of the case, offending car's driver Gulshan Kumar had argued that Kishore, a labourer, was hit by a rashly driven motorcycle which had led to his death.

The tribunal, however, denied his argument relying on the testimony of Kishore's friend Raju, who was with him at the time of the accident and had deposed that he had not seen any motorcycle hitting Kishore.

Shauheen Daya and his wife Muneera had a mediclaim policy issued by United India Insurance Co Ltd. The policy was first taken in 1998 and renewed without break.

When the policy was renewed for the period September 19, 2007 to September 17, 2008, the terms and conditions were unilaterally changed by the insurance company. According to the revised conditions, instead of being eligible to a claim up to the sum insured, a ceiling was put to limit the claim up to a maximum amount of Rs.2 lakh for treatment of cardiac and pacemaker surgeries, cancer, brain tumor, hip and knee replacements.

In October 2008, Daya was admitted to Breach Candy Hospital for surgery, during which a pacemaker was inserted.

The expenses incurred were Rs 3,54,400, for which he lodged a claim. Rakhsha TPA, which processed the claim on behalf of the United India Insurance, sanctioned the claim restricting the amount to Rs 2 lakh. The cheque was encashed by Daya. Later, Daya learnt a circular dated February 26, 2009 stipulated that such restriction was not applicable to 'platinum', 'gold' policies and senior citizens.

The circular stated that the Insurance Regulatory Development Authority had prescribed that a policyholder has to be informed about the change in policy terms, after which the insured would have the option to continue under the original terms or accept the revised terms.

Since the insurance company had failed to disclose the change and provide an option to choose between the original and revised terms, Daya alleged deficiency in service. He demanded that the insurance company pay the entire claim amount instead of restricting it to Rs 2 lakh.

Ultimately, Daya approached the South Mumbai District Consumer Forum. Since the policy's terms had been revised in 2007, but the complaint disputing the applicability of those conditions had been filed on August 25, 2011, there was a delay of 707 days in lodging the complaint. Daya applied to the forum to condone the delay. The insurance company argued that if the insured had accepted the settlement of Rs 2 lakh without dispute. Even thereafter, no legal proceedings were initiated within 12 months, as stipulated under the policy, so the insured had waived and lost his right to challenge the settlement. The insurance company also claimed that the circular dated February 26, 2009 was made The Insurance Times, Novmebr 2012 41

applicable for subsequent renewals, whereas Daya's claim was for hospitalization prior to the issuance of the circular.

In view of this, the company claimed that the complaint was time barred and not maintainable. Advocate Anita Marathe arguing for the complaint, contended that Daya had been misled by the insurance company into believing that he was legally entitled to only Rs 2 lakh and he accepted the amount under such misconception. She also argued that the revised terms had been unilaterally foisted on the insured without his knowledge or consent. The sum insured as the original policy was Rs 5 lakh, without imposition of any limits or restrictions, and the insured would definitely not have agreed to the revised terms had such consent been sought.

She argued that insurance is a contract of utmost good faith, which is applicable both to the insured and the insurance company. Yet, in breach of such good faith, the insurance company had suppressed the revised terms and failed to obtain consent of the insured. She said Daya got to know of the circular much later and so the limitation would begin to run from the date when he came to know about the February 2009 circular's existence. Hence, she contended that there was no delay in filing the complaint, if limitation is reckoned from the date of knowledge of the circular. If the delay is computed from the date of claim settlement, then the delay of 707 days must be condoned since it was caused due to suppression of facts by the insurance company.

SS Patil, delivering the order on behalf of the bench along with president SB Dhumal, accepted Marathe's argument that limitation would run from the date when Daya came to know about the circular and as such the complaint had been filed in time. The insurance company was not permitted to benefit from suppression of facts. The complaint was not thrown out on the grounds of limitation and will now be heard on merits.

Rs 442-cr cheating case: Charge sheet against airline, 5 others The CBI has filed a charge sheet in a Delhi court against Paramount Airways Private Ltd, former CMD of Oriental Insurance Co. Ltd and four others for allegedly causing wrongful loss to five PSU banks and the insurance firm against which claims of Rs 442 crore were raised due to payment defaults by the airline.

In the charge sheet filed before special judge Pradeep Chaddah, the CBI said the accused conspired to cheat and cause loss to State Bank of India, Bank of India, Indian Bank, Andhra Bank and IDBI and Oriental Insurance Co Ltd (OICL), a government undertaking, which had to bear claims of Rs 442 crore on default of payment by Paramount Airways to 42

The Insurance Times, November 2012

the banks. The CBI alleged that Chennai-based Paramount Airways had taken credit insurance from Oriental Insurance for its multiple bank guarantees to cover its transactions with state-owned oil companies.

As the airlines defaulted in paying to oil companies under the contract guarantee, the oil companies invoked bank guarantees and the banks in turn raised the claims of Rs 442 crore on OICL, it said.

"The case was registered in July 2011 on complaint against Ramadoss and others for causing wrongful loss to the government of India i.E., OICL and five PSU banks in the content of claims of Rs 442 crore lodged on OICL by the banks on account of default of payment by Paramount Airways to the banks," the CBI said.

Besides the airline, M Ramadoss, the then CMD of OICL; M Thiagrajan, MD of the airline; V Harshvardhan, former deputy general manager of OICL; Niraj Kumar, OICL general manager; and Chandra Shekhar Tandon, DGM of OICL, have also been named as accused in the charge sheet.

The probe agency said that Ramdoss of OICL entered into a criminal conspiracy with Thiagrajan, abused his official position and favoured the Airline in issuance of 220 credit insurance policies during 2005-10.

The credit insurance policies were used in securing multiple bank guarantees from SBI, BoI, Indian Bank, Andhra Bank and IDBI to cover its transactions with PSU oil firms and to meet expenses relating to fuel, aircraft, lease, rent airport charges and others, it said. "On default of Paramount Airways, the oil companies invoked bank guarantees and in turn, the five banks raised claims to the extent of Rs 442 cr on OICL," the agency said.

Even when some officials were reluctant to issue credit policies to Paramount Airways for want of requisite documents, Ramadoss convinced Thiagrajan to give exclusive mandate on aviation insurance to OICL, it said. It said the credit policies were issued to Paramount in absence of proposal form and without seeing the financials and credit requirement of the Airline, without understanding the risks and without it having any re-insurance support and the banks were never roped in while accepting the risk.

"The entire sum insured was in the net of the company's account. Claims were lodged by the banks for Rs 441 cr which was to be absorbed by OICL as no recovery of this amount was possible in absence of re-insurance support (with Paramount)," the charge sheet said.

Secure yourself with personal accident cover (Personal accident insurance cover does not require any prerequisite medical test, making it ideal for people with recent illness.)

Karan Singh

had a promising career in a reputed organisation in Mumbai. One of his prized possessions was an apartment (bank financed) in a posh locality. He also systematically planned investments for the future of life wife and children. Being the only earning member of the family, he had a life insurance policy to take care of his financial responsibilities in case of any unforeseen eventualities.

Life changed completely for Karan and his family a day before Diwali. While rushing home from work, he unfortunately met with an accident, paralyzing his limbs.

Karan was in a state of shock. His monthly income came to a halt. However, the cost of his medication, expenses of the household and EMI of the house loan had to continue. He was unaware of the benefits of a personal accident insurance, as at this point, this cover would have come to his rescue.

Advantages The benefits of having a personal accident insurance are many. Along with the basic cover, it also provides coverage from many unexpected events such as natural disasters, airplane accidents, riots and terrorist attacks.

Personal accident insurance is economical and affordable. If taken by large groups or corporates, general insurance companies offer family or group discounts so that the cover can be provided at an extremely good price. The cover is available for everyone, irrespective of the person's medical condition. It does not require any prerequisite medical test.

It is hence ideal for people who are not eligible for insurance covers due to some recent illness.

They can still get protection against dismemberment or death due to accidental causes. Unlike other covers which are restricted to India, a personal accident cover gives the insured a worldwide coverage in any situation. Once can opt for International covers at a very low premium.

Additional Benefits While availing a personal accident cover, one should opt for a policy which provides additional benefits such as accidental hospitalisation cover, temporary disablement cover, education grant (for dependent children), to name a few.

Now a days, companies also offer the option of customizing the policy depending on specific events. For example, one can opt for a specific adventure sport, which is usually excluded in a personal accident policy and can insure oneself against a risk arising out of an adventure sport activity.

Accordingly, you can choose the risks that are a potential threat to your lifestyle.

Exclusions A personal accident insurance does cover a gamut of situations. It typically does not cover accidents while under the influence of intoxicating liquor or drugs, intentional self injury, suicide or attempted suicide, adventure sport, venereal diseases, nervous or emotional disorder, war and war-like situations professional sports, injury resulting from radio activity or nuclear waste, to name a few. Also pregnancy-related complications are not covered. It is advisable to read the exclusions on the policy document to be sure about the nature of coverage.

Charges Accident insurance policy offers wide coverage which can be customised according to the customer's needs and budget. To negotiate the price it is beneficial to opt for a long-term cover as companies offer heavy discounts (up to 30 percent) on long term policies.

And for any reason, if one chooses to opt for cancellation, he or she can meet appropriate premium refunds (ranging from 75 per cent to 25 percent) depending on the duration of the policy. (BL) The Insurance Times, Novmebr 2012 43

BANKS CAN SELL INSURANCE FROM MORE THAN ONE FIRM

The finance ministry

has allowed banks to sell insurance offered by more than one company, in keeping with finance minister P. Chidambaram's articulated desire to reform the retail finance sector, although the measure comes with the caveat that the lenders will have to set up broking arms before they can do this.

bands to assume any responsibility of risk for their misselling. "This is a very good move. If banks are keen on selling products of more than one company, then they should also accept responsibility for the sale of such products.

It has also made it easier for insurance companies to launch new products, and invest.

Banks are the biggest mis-sellers, but as agents are not responsible for their sales practices," Satwalekar said recently.

Currently, the insurance regulator allows a bank to sell the products of only one insurer under the bancassurance model.

"Now the onus to sell properly would rest on the bank and not on the insurer," said Atanu Sen, managing director and CEO of SBI Life Insurance Co. Ltd.

Apart from the obvious benefit of increasing the number of insured in the country, the move will also make banks more accountable forte policies they sell.

Banks will have to upgrade skills to understand insurance products. They will have to apply for a licence and open a subsidiary to act as a broker. "Reserve Bank of India has been reluctant to allow banks to become brokers because it doesn't want them to contaminate their balance sheet.

So the finance minister will have to ask the regulator to not intervene," said Satwalekar.

Announcing the agreement reached with the Insurance Regulatory and Development Authority (IRDA) at a press briefing recently, Chidambaram said it was desirable for banks to act as brokers and that the fiduciary responsibility of the bank will be to the policyholders.

"This will provide the intended policyholder a bouquet of products from which he / she may chose the appropriate product based on his/her needs and will also prevent misselling," he added.

Though banks have always had the option to set up a broking arm, they have preferred to remain agents (which means the insurance company, and not the bank, is responsible for any mis-selling).

In a report by the committee on bancassurance last year in June, Deepak Satwalekar, a retired chief executive officer (CEO) of HDFC Standard Life Insurance Co. Ltd and a member of the committee, had pointed to the reluctance of 44

The Insurance Times, November 2012

According to Irda's annual report for fiscal 2011, bancassurance accounted for about 30% of the new business collection for private insurers.

The tax department will review issues such as a reduction in service tax on first-year regular premium as well as single premium policies, scrapping service tax on social security insurance schemes and micro-insurance policies, and treating annuity policies on par with subscriptions to the National Pension Scheme.

Chidambaram has asked the department of revenue to finish reviewing the suggestions by 10 October "so that appropriate decisions may be announced shortly thereafter".

A similar meeting with the general insurance sector will soon be scheduled. (Mint)

ULIPS WITH HEALTH BENEFITS ARE A COSTLY AFFAIR Wealth creation plus medical cover

- the new theme of Tata AIA Life Insurance 'Suraksha Kosh' - tries to attract customers with twin covers through a unit linked insurance plan(Ulip) and health benefits. But in its attempt to offer too many things, it ends up being more expensive, even if one were to buy both the covers separately.

The premium of Tata AIA's 'Suraksha Kosh', is Rs.25,000 for a 40 year term. This product will pay a sum assured (SA)of Rs.10 lakh each for death benefit, critical illness and accidental benefit. Additionally, it also offers to pay a sum assured of Rs.3.5 lakh for surgical benefits. In total, it covers an individual for Rs.33.5 lakh provided you pay the stipulated premium every year for 40 continuous years.

Suresh Sadagopan of Ladder 7 Financial Advisory Services says such plans turn out to be expensive instead. "One should rather buy a pure protection plan and a medical policy, which will offer other benefits at a lower cost, too. If one wants to create wealth, investing in Ulips is not the only ways."

One can save as much as up to Rs.10,000, if the benefits are bought separately from specialists. Taking a similar example mentioned above, one has to pay Rs.3,540 towards a life cover (for SA of Rs.30 lakh), Rs.3,052 for accidental benefit (for SA of Rs.25 lakh), Rs.2,809 for critical illness (for SA of Rs.10 lakh) andRs.800for surgical benefits (for SA of Rs.3 lakh).

In total, one pays Rs.10,000 approximately for the same benefits with an equivalent or more sum assured / cover.

There are others such as ICICI Prudential Life Insurance which has a similar product 'ICICI Pru Health Saver' which gives hospitalization benefit as well. Whereas HDFC Life and Kotak Life Insurance are among few other life insurers who

offer similar Ulips but benefits have to be bought in the form of a rider unlike in Tata AIA where the benefits are in-built.

Also,HDFC's 'SL Pro Growth Super II' does not give surgical benefits. Some also offer waiver of premium and hospital cash.

In other words, these are savings and wealth creating plans built on protection products. One has the option to choose from these plans.

That is, death benefit remaining constant in such products, one can choose to combine it by adding one or all of these benefits (surgical, accidental and critical illness). These benefits in Tata AIA are in-built in the product and are not sold separately as riders.

Suresh Mahalingam, managing director, Tata AIA Life, says, "Our new product gives people an opportunity to get the best from their investments on a market-linked platform, without worrying about the risk of death, dismemberment and onslaught of medical exigency like a critical illness."

Experts say, investing in such wealth creating products has its flipside, too. They require a long-term commitment as compared to yearly renewals required in a term and a medical policy. For instance, your Ulip policy gets lapsed, there are chances you will lose out on all the benefits you paid for in the previous years.

However, the new rule now enables policyholders to revive a lapsed Ulip policy within two years from its premium due date.

However, these policies offer a term, which is usually from 15 to 40 years and is available to individuals from the age 18 to 50 years with maximum maturity age of 65. Premium paid under such plans are eligible for tax benefits under Section 80C, 80D and 10(10D) of the Income Tax Act,1961. (BS) The Insurance Times, Novmebr 2012 45

CONSUMERS ARE TAKEN IN BY INSURANCE HARDSELL Corporates may plan their strategies inside their boardrooms, but individuals are hard put to draw up their personal finance plans. They are forced to fall back on generic, macro-level options, such as the provident fund scheme (both public and employer-based).

A case in point is pension products, which are no longer being offered by insurance companies, since the new regulations have made in unviable for these companies to offer such products.

If mis-selling has created problems, that has a lot to do with financial literacy. The OECD (Organisation for Economic Cooperation and Development) defines financial literacy' as a combination of financial awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being,.

Banks responsible The RBI, IRDA, SEBI and PFRDA (Pension Fund Regulatory Development authority) are major stakeholders in the financial literacy programme.

While PF enables an individual to achieve some of his/her financial goals, such' safe havens' are shrinking today.

Individuals are forced to scout for options. Insurance products have played a role here.

But each stakeholder tends to act in isolation. Insurance misselling within bank premises is not controlled by the RBI ) one the ground that it is in no way involved in the selling process). The IRDA is supposed to act in such cases, despite the number of occasions, when insurance is bought under bank pressure.

Let us have a look at the insurance industry. The Government claims that insurance penetration and density at 5.1 per cent in 2010 is a marked improvement from 2.71 per cent in 2001, which would indicate that people have embraced insurance as a mechanism of financial planning.

But the reality is otherwise. Customers are confused, unhappy or downright disgruntled. Why so?

If a bank branch is like a country, then an insurance wing operating out of a bank branch is like a foreign consulate located in that country. A country cannot remain silent on any irregularities in visa issuance by the foreign consulate located within its boundaries.

Consumer Misguided The insurance business is affected by the churning of policies, which means a customer is forced by the agent or the sales personal to surrender his/her existing policy to take a new policy, which benefits the agent or sales personnel but negatively impacts the customer. There have been numerous instances of customers being mis-sold policies which do not address their financial needs.

To try and contain mis-selling and churning, the Insurance Regulatory and Development Authority (IRDA) has been on overdrive, issuing one regulation after the other. However, while this addresses the issue of mis-selling to a limited extent, it has also created a new issue - that of frequently changing regulations.

This has resulted in insurance companies being uncertain about the regulatory environment and curbing products on offer to the customers.

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The Insurance Times, November 2012

The RBI should also note that the fee income of banks is paid by banking customers. It is not because of insurance they visit the bank branch, but because of their banking needs. Owing to the trust reposed by the customers in their banks, they buy insurance inside the bank branch. Allowing mis-selling inside the branch, therefore, smacks of negligence.

Despite the high incidence of mis-selling in bank premises in the case of insurance products driven by commission structures. PFRDA wants NPS adopt more or less the same strategy.

Banking is an unrivalled platform for effective distribution of financial products. Insurance companies, mutual funds, pension funds are competing with each other for entering into tie-ups with banking entities.

However, no single financial product can solve an individual's problems. The regulators concerned should stop acting in isolation. (BL)

INSURANCE LACKING ON MANY FRONTS' The country's chief insurance

regulator recently rapped various aspects of the sector's functioning, saying companies needed to review many things.

He said technology use was lagging, distribution channels needed a re-look and agents did not seem to be paid or motivated enough. Customer satisfaction was not getting enough attention. Persistency on products was unsatisfactory and pensioners were often being taken for granted, declared J. Hari Narayan, chairman of the Insurance Regulatory and Development Authority (IRDA). His officials and he, said the regulatory chief, would be meeting the Union finance minister to discuss various issues, including those on income tax and service tax. Some insurance companies had met the finance minister in the first week of September on various issues such as product design and approval, taxation, investment and micro insurance.

Narayan was speaking at the Global Insurance Summit of the Associated Chambers of Commerce and Industry. He said insurance companies needed to leverage technology the way their banking counterparts had done.

Agents As for agents' attrition, "each year, about 700,000 agents pass out from institutes. However, more than 700,000 agents also drop out every year," he commented. The commissions agents earn are not high enough, he added. Insurance companies spent well on management but agent expenses, a subset of management costs, had not seen a rise. "There is still room for commission to increase," he said.

Customers Hari Narayan also rapped insurance companies on customer satisfaction. "Several players in the industry have worked in more than one regime. My question to them is, though they follow all the stringent minimum guarantee and other stringent rules of insurance in other nations, why is it that

they act surprised while doing business in India? Is it that they are here to make a quick buck?" he questioned. He said none of the projections by these companies were right and they were seen surviving largely on surrender profits. "We must revisit our models to make sure that it conveys some value to the customer," Narayan said.

Bancassurance Narayan said India had adopted a 1:1 system in bancassurance, meaning a bank could cater to the needs of only one insurance company. The Indian Banks' Association had been asking for a system where a tie-up with more than one insurance player was possible but this could not be facilitated, as the regulations did not permit this.

Instead, the IRDA chairman proposed the 1:1 model be applicable to a group of states. "We can shape it such that a bank is able to tie-up with an insurance company for a certain group of states and another insurance company for some other states," he said.

Rural needs The chairman said rural and social obligations need to be fulfilled by insurance companies. He added the regulator had proposed to the Life Insurance Council a structure of having a lead insurer for selling rural products in certain regions.

"We are examining a way to have a lead insurer for each state/geography, so that it would bring greater stability in insurance for these agents," he said.

Products The regulatory chief said insurance regulations on products and their clearances were much milder in India than in developed nations. "Products are not a brand of biscuits," he said, adding the market was not starved for products.

He further said our persistency levels were one of the lowest in the world and adding new products would not be very helpful.

The Insurance Times, Novmebr 2012 47

FEW MEDICAL INSURERS FOR SENIOR

CITIZENS "Madam,

it is good that you have no pre-existing diseases at the age of 65. But you are overweight and will get one soon. We can't sell you a policy." That was the reply from many insurance agents when they were told a senior citizen needed a medical policy.

While most general insurance companies sell medical insurance policies, it remains on paper for senior citizens.

And, despite the fact that the Insurance Regulatory and Development Authority has made it mandatory for companies to sell policies to citizens till (not above) the age of 65.

However, agents, under the garb of inspecting minute details, turn doctors and physicians. Most judge your health condition by weight, height or any other detail.

For instance, Asha Joshi, 69, was denied a health insurance policy (from an agent of a private general insurer) purely because she happens to be over-weight. After taking her basic details like (age, height and weight), the agent told her that she is sure to develop blood pressure or diabetes in the near future, if not today.

Among the agents Business Standard spoke to, only one private sector player was willing to sell a policy to someone over 65. But, only a new policy, the company has launched recently. Also, he insisted that medical cover should be for Rs 10 lakh.

The premium: A whopping Rs 50,199. When he was told that the policy is too expensive, the response, "No one will sell a policy to you at this age. This is a new policy so the company is willing to do so." The agent was right. Most others simply said they will get back.

Even switching a policy is difficult. Most agents say it will be too expensive. On insisting, the reply was, "We will check the insured's history with the previous insurer and get back if we have an option."

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The Insurance Times, November 2012

In case you are looking at a family floater (including parents), the premium goes up depending on the age of the eldest member of the family, in many cases a senior citizen.

Often, companies also refuse to insure those who have been treated for ailments like breast or uterine tumour (benign), saying though curable, these ailments might relapse.

When contacted, a senior official from a private sector general insurance company, said, "Even though the entry age has been increased to 65, most insurers will be hesitant to cover someone above 60 under an individual plan as the health risk increases from 55 and onwards."

Industry players say, general insurers do issue health policies above that age also, but they tend to inspect minute details and pay extra attention while issuing policies to senior citizens. Says another insurer, "Companies make the process of applying for a policy difficult, sometimes for an elderly. They will ask for ten times more tests to be done. If the tests are clear, they may ask for another one for those above 65."

The only solution, it seems, lies with policies in which there are co-payment options. For instance, National Insurance's 'Varishtha Mediclaim' which issues policies to people up to the age of 80 years has a co-payment clause where the insured has to bear 10 per cent of all the admissible claims.

This means, for claims worth Rs 100, the insurance company will pay Rs 90 and the insured will have to pay Rs 10.

Another option is if the insured agrees to bear 20 per cent of the co-payment, then the company will give 10 per cent discount in premium.

Some private players also give this option. The quantum of co-payment can differ from insurer to insurer. For example, Star Health's Red Carpet product has a 50 per cent co-payment on claims made by the insured on its preexisting diseases. (BS)

HOW TO ENSURE HEALTH COVER FOR

EXTENDED FAMILY Many individuals are preparing

for a life without a comprehensive health insurance cover for their family as insurance companies are busy imposing caps, sublimits, co-payment clause, among other things, on corporate grouphealth insurance schemes to cut the mounting losses on these plans. Needless to say, it puts some members of the family, especially elderly parents, at grave risk.

They can salvage the situation in two ways. First, by going for an individual health insurance cover for every member of the family. If money is an issue, they have another option of getting a family floater plan that will cover the entire family.

However, most family floaters restrict the coverage to two adults and two children, which means the elderly parents are likely to be left out again.

Grim scenario, right? Not necessarily. You now have a third option of buying a health insurance plan that will cover not only your parents, but also in-laws, siblings and even cousins. "During customer research, we found out that customers are more concerned about the health of their family members than their own. Also, the joint family system is still quite prevalent in India," says Neeraj Basur, CFO of Max Bupa.

"Our research showed that there was a significant lack of coverage for dependant parents and in-laws, given that group covers rarely insure dependants. We saw this as an opportunity to provide individual covers that could be gifted to an extended family," adds Harshal Shah, director, marketing, Aegon Religare Life. No wonder, the recentlylaunched online defined benefit health plan from Aegon Religare Life has brought parents, in-laws and siblings under the coverage ambit.

Similarly, Oriental General Insurance's family floater allows the holder to include either parents or parents-in-law in the plan. Max Bupa has been promoting its product with cover

for multiple relations as its USP. Oriental General Insurance's family floater allows the holder to include either parents or parents-in-law in the plan.

Max Bupa has been promoting its product with cover for multiple relations as its USP. "These covers look to tap the Indian joint family system where the decision-making is centralised with the head of the family taking a call on behalf of all family members," says Mahavir Chopra, head, ebusiness with insurance portal medimanage.com.

"Newer entrants and standalone health insurers have to bank on innovation to differentiate themselves from the existing general insurers. Such policies serve as a means of achieving this objective," adds Juzer Jawadwala, executive director, Nandi Insurance Broking.

Then, there are companies that have introduced family floaters to address the issue of inadequate sum insured under a single policy.

How do they work?

While the one of chief aims is to get around the challenge of sum insured getting exhausted in a year - particularly, if senior citizens or those with adverse health history are covered under the plan - there are variations in the solutions offered. Apollo Munich and Star Health offer the sum insured restoration feature, where the cover is replenished in a year if the subsequent claim is made by another family member or for an ailment unrelated to the earlier claim.

L&T Insurance reinstates the cover to pay for accidentrelated claims, while Max Bupa's product offers a combination of individual and floater limits. Aegon Religare's policy makes the cover amount available to all policyholders.

Continued on page 52 The Insurance Times, Novmebr 2012 49

Don't get conned: INSURANCE IS NOT INVESTMENT Agents are still misleading consumers by suggesting insurance products are good investments. These definitely are not. Get your life covered but don't hand over your savings.

Say you can save Rs 5,000 a month and you want to do the best you can to protect yourself and grow your savings.

And, your friendly neighbourhood insurance agent suggests that the best course for you is to put all the money into an endowment plan because it will help you save in a disciplined manner and give a significant sum of up to Rs 1213 lakh (sum assured or life cover for the product is Rs 10 lakh) 15 years later.

The emotional pitch: When your son is going for his higher education, you will have substantial savings to meet his demands. Add to that, there is no risk to your capital and the plan will help you save taxes. Many fall for this and very easily. But should you? The answer is NO. The agent is trying to confuse you by combining insurance and investment, and if you take his advice, you will end up with far lower returns than you can get elsewhere. Let us see why.

If you took a term insurance policy which has no investment component, assuming you are a 35-year-old, for a life cover of Rs 10 lakh, you will need to pay only Rs 250 a month, not Rs 5,000 a month! Of course, in a term insurance policy you get back the sum assured only if you die during the period of the policy. But that shouldn’t bother you, because you are paying only Rs 250 a month now, so you still have Rs 4,750 every month that you can invest elsewhere for far better returns.

At the most basic level, you can invest it in debt, equity, gold or real estate. Physical gold and real estate are not good options for someone who wants to invest a fixed sum of money regularly, so let’s just consider debt and equity.

The options here are the public provident fund, fixed 50

The Insurance Times, November 2012

deposits with banks, debt funds and equity funds. The simplest of all these options is, of course, the public provident fund. If you put Rs 4,750 a month (Rs 57,000 a year) in a PPF over 15 years, what you should get at the end of 15 years is Rs 17.61 lakh (at the current rate of 8.60 per cent), completely tax-free. In other words, if you follow the advice of the agent, you will lose Rs 4-5 lakh!

For fixed deposits of up to 10 years, State Bank of India (SBI) now offers an interest rate of 8.75 per cent, which means the maturity amount will Rs 13.18 lakh 10 years hence. By way of comparison, the plan the agent is trying to sell you will get you Rs 10 lakh only after 15 years, not 10! In the case of the fixed deposit with the SBI, though, the invested amount will be tax-free, while the interest income will be added to your income and taxed according to your income slab. But even after taking this tax into account, you will be better off with the fixed deposit, no matter what your income slab.

If you invest in long-term debt funds earning eight per cent a year, you will take away Rs 16.03 lakh after 15 years, while in the case of equity funds earning between 12-15 per cent, you'll take home somewhere between Rs 22.39 lakh and Rs 28.93 lakh in the same time. As you can see, in all these cases, the returns are much higher than for the plan recommended by your agent.

As far as liquidity is concerned, you can withdraw up to half the corpus accumulated in PPF starting from the seventh investment year. In the case of equity fund investments also , you can withdraw the corpus after one year with no tax incidence or exit load. The catch here is that if you are using systematic investment plans (SIPs), you will have to wait for all the SIPs to complete one year. Debt funds are exempt from tax after three years of investments.

If the conclusion is so clear, why do so many people still buy complicated insurance products, and why do the agents

keep selling them? The second question is easier to answer: the agents get a much higher commission for complicated insurance products than for term plans. Today, a traditional insurance product, whether term or endowment, typically earn agents up to 30 per cent of the first year premium, seven-eight per cent of the second year premium and fourfive per cent of the premium during the rest of the policy term. But agents sell investment plans more because the premium amount is far higher in non-term plans than in term plans and, therefore, so is the agent’s commission. (Online term plans fetch agents six per cent only in the first year.)

The are many reasons why consumers go for insurance-cuminvestment products. For one, some think it is much easier to deal with a single product that covers their life and also helps them save. What they don’t realise is that a combined product is a more complex one, and the more complex a financial product is, the worse it is for them.

Some others find it difficult to come to terms with a ‘term plan’ because they want something in return for putting in their money even if they don’t die during the term of the policy. Yet, others buy insurance-cum-investment products because they find the tax savings attractive. There are even investors who keep collecting insurance policies – 10 or 15 of them! – as a means of saving taxes.

But their reasoning is faulty. As Sandeep Shanbhag, chartered accountant and financial planner once explained, “Buying an insurance product only to save taxes would be like meeting a short-term liability with a long-term obligation.

These products are of long-term nature and though you've saved tax this year, you will be paying for it by way of future premiums for many years to come, thus negating the effect of saving taxes.”

Rajesh Kothari of Alfaccurate Advisors also thinks using insurance products for investment is not a good idea , “because you will not go to a restaurant specialising in Chinese food when you want to eat South Indian food.”

Insurance companies, however, have many ways of making their non-term products look attractive. For example, you may have received messages from insurance agents or companies saying “pay only Rs 3,500 a month and get Rs 1 crore after 15 years”. When Business Standard contacted an agency on receiving one such text message, the monthly premium turned out to be Rs 8,000 instead of Rs 3,500, on account of “agent fee, administration fee, fund manager’s fee and other such costs that the company has to bear on behalf of the policyholder,” as helpfully explained by the agent who happened to be from ICICI Prudential Life Insurance.

That takes us to the fundamental problem that all non-term insurance products suffer from: Lack of transparency. If you pay Rs 5,000 a month for an endowment policy, you do not know what part of it is invested and what part is used for risk coverage – or even what part of it is used for commissions! In fact, even the maturity value is not known to investors in many cases. They only know that they will get the sum assured and some bonus – in case you stay invested for at least seven-eight years.

So the next time an agent tries to convince to take an insurance product that is also an investment, say ‘thank you, but I will just take the term plan.’

Countering sales pitch!

Until a year ago, all insurance agents were busy selling UnitLinked Insurance Plans (Ulips) as the God’s gift to savers, despite their comparatively low returns. In reality, Ulips were God’s gift to agents, with their commissions being 100% of the first annual premium! Then, Irda came down hard on these insurance-cum-investment plans and capped agents’ commission on these. One would have thought this would make agents go back to selling insurance covers — the basic term plans. But, they are now focused on selling other complex insurance-cum-investment products like money-back and endowment plans.

The commission rate on these products is no different from that on plain-vanilla term plans — typically, up to 30% of the first-year premium, 7-8% of the second-year premium and 4-5% of the premium during the rest of the policy term.

However, since the premiums for complex products are many times more than those for term plans, agents make much more commission when they sell insurance-cum-investment products. And, they have a whole range of arguments to convince you why you should buy these products. Here’s how you counter their arguments: 4 Pitch one: ‘This is a savings product which can be surrendered after three years for a special value.’

4 Your Question: Why three years? If I put my money in a fixed deposit or other debt instruments, I can exit anytime for a small fee of less than 1%.

4 What you should know: Surrendering an investmentcum-investment policy will lead to significant losses, which the agent may not be eager to tell you.

Surrendering a policy within three years will give you nothing. After three years, you get 30% of the premium paid minus the first-year premium plus partial bonus.

‘Surrender value’ is the term for what a policyholder gets The Insurance Times, Novmebr 2012 51

if he terminates a policy or stops paying the premium before the term ends.

4 Pitch two: You will get assured returns with bonus. Your Question: What will be the rate of return after bonus?

4 What you should know: “Invest in any debt product that gives you higher returns, apart from the liquidity,” says financial planner, Pankaj Mathpal (see the accompanying story). At present, the rate of return insurance-cuminvestment products give is 5.5-6% — much less than even the post-tax returns of many debt instruments. For instance, SBI’s one-year fixed-deposit rate stands at 7.5%. For the person even in the highest income tax bracket, the post-tax return will be 5.25% after taxation of 33% on returns. And, even if you were to just recover the premiums, it is loss because money lying idle in banks would have earned at least 4% interest (savings bank rate).

4 Pitch three: Traditional insurance-cum-investment products are cheap, and no charges are applicable.

4 Question: What will be the outgo from the first five years’ premiums 4 What you should know: Having earned at least 50% of the first year’s premiums as commission in the Ulip regime, insurance agents pitch traditional plans as cheaper. But even 30% of the first year’s premium is high. In comparison, mutual funds charge no fee or commission for investments up to Rs 10,000. Above Rs 10,000, the charge is Rs 100, and that too if the distributor route is opted for. Funds do charge a fund management fee, but that is capped at 2.5%.

There are no charges for investing in bank or company fixed deposits.

4 Pitch four: Returns will be safe, unlike market-linked products.

4 Your Question: Why should I seek safety of returns in an insurance product?

4 What you should know: Any investment advisor worth his salt will tell you what you should seek from an insurance company is risk coverage, and not investment returns (see accompanying story).

4 Pitch five: You can take a loan against this policy to pay the premium 4 Your Question: Why should I do that? Will the loan be cheaper?

4 What you should know: The answer is no. The loan against an insurance policy is 1-2% cheaper than a personal loan, but the rate of return on a traditional plan of 5-6% does not justify it — you will still pay a higher interest than you will earn. Banks will give loans only up to 70% of the total premiums paid. All policies don’t qualify for a loan.

52

The Insurance Times, November 2012

How to ensure.........continued from page 49 "Under our plan, if a family of four buys a policy with a sum assured of 5 lakh, the sum assured will be available to each of the members. That is, the total coverage for the family will amount to 20 lakh annually.

While the premium could be higher relative to regular family floaters, yet it will be cheaper than covering each member separately," says Rajesh Rajput, director, corporate actuarial, Aegon Religare Life.

Do they make sense?

"If your employer has decided to leave out your parents from the group cover, you have two options - either buy individual covers for your parents or opt for a family floater policy that will cover them. The latter holds the edge over individual policies in terms of cost effectiveness," says Jawadwala.

Now, if your family is in the pink of health, you have a lot to gain from family floaters as chances of everyone being hospitalised in a single year are low.

Apart from convenience and cheaper premium, it gives your family access to a larger shared pool, compared to individual covers.

However, the math may not work out in favour of a floater policy if you are covering your parents under the plan, especially if they are senior citizens with a history of ailments.

In such a case, the claims could be multiple and the amount high. If they are hospitalised, their medical expenses could exhaust the entire cover, depriving the rest of the family of the insurance cushion.

Independent covers for each, on the other hand, may be too expensive. In such cases, you can consider these newer plans, if they suit your needs and fit into your budget. Take a close look at the features, premium payable and limitations before taking a call.

Also, if you have deductions under Section 80D on health premium in mind, don't forget that only the member making the payment will be entitled for the same.

Statistics

Non-Life Statistics

(` crore)

GROSS PREMIUM UNDERWRITTEN FOR AND UPTO THE MONTH OF SEPTEMBER, 2012 September

April - September

INSURER

Royal Sundaram Tata-AIG Reliance General IFFCO-Tokio ICICI-lombard Bajaj Allianz HDFC ERGO General Cholamandalam Future Generali Universal Sompo Shriram General Bharti AXA General Raheja QBE SBI General L&T General Star Health & Allied Insurance Apollo MUNICH Max BUPA Religare New India National United India Oriental ECGC AIC PRIVATE TOTAL PUBLIC TOTAL GRAND TOTAL

Growth over the corresponding period of previous year

2012-13

2011-12*

2012-13

2011-12*

109.86 164.66 158.81 272.10 510.00 294.79 291.23 124.90 86.81 43.27 126.79 87.24 2.25 57.70 10.17

120.80 126.43 111.77 154.40 396.61 249.46 131.14 118.48 75.60 42.70 105.83 62.04 1.83 18.54 10.96

751.24 1,085.09 1,041.45 1,284.21 2,860.37 1,915.10 1,263.75 786.75 558.83 247.10 692.94 572.22 14.01 295.86 79.25

712.72 856.85 894.27 1,007.69 2,522.52 1,607.61 903.52 664.65 459.77 182.26 521.65 386.15 9.75 93.92 60.60

5.41 26.64 16.46 27.44 13.39 19.13 39.87 18.37 21.55 35.58 32.84 48.18 43.75 215.00 30.77

64.57 35.22 14.00 1.33 756.76 741.40 740.84 539.03 102.84 722.45 2,455.70 3,603.32 6,059.02

62.71 24.89 15.64 NA 725.65 634.11 655.11 612.91 80.59 320.68 1,829.81 3,029.05 4,858.87

375.41 214.04 77.36 10.44 5,100.19 4,356.36 4,762.31 3,299.19 541.22 1,816.41 14,125.42 19,875.67 34,001.09

605.51 155.02 46.64 NA 4,362.51 3,670.57 3,900.37 3,068.42 454.64 1,459.43 11,691.08 16,915.95 28,607.03

-38.00 38.07 65.88 NA 16.91 18.68 22.10 7.52 19.04 24.46 20.82 17.50 18.86

Note: Compiled on the basis of data submitted by the Insurance companies * Figures revised by insurance companies

Life Statistics Up to the Month of SEPTEMBER, 2012 Insurer

Premium

Sep’12

No.of Policies/ Schemes

Upto Sep’12 Upto Sep’11

Sep’12

Upto Sep’12 Upto Sep’11

(` crore)

No. of lives covered under Group Schemes Sep’12

Upto Sep’12 Upto Sep’11

Private Total Individual Single Premium 194.36 Individual Non-Single Premium 1407.83 Group Single Premium 351.04 Group Non-Single Premium 203.64

962.22 6601.66 2270.74 1786.67

2102.47 6661.54 1877.99 1682.61

36051 545653 109 271

130942 2889838 637 1984

178578 3407585 521 2185

1556414 1423655

6740313 7497549

2884656 10515090

LIC Individual Single Premium 1554.90 Individual Non-Single Premium 1873.95 Group Single Premium 1897.33 Group Non-Single Premium 122.15

5993.77 13331.76 15250.91 765.09

5594.18 9823.81 14980.80 6322.60

163212 2424849 17 2286

798448 12358999 60 10620

908382 12270977 9013 2653

110793 4690197

431247 17012717

9398286 2993181

Grand Total Individual Single Premium 1749.26 Individual Non-Single Premium 3281.78 Group Single Premium 2248.36 Group Non-Single Premium 325.79

6955.98 19933.42 17521.65 2551.76

7696.65 16485.35 16858.79 8005.22

199263 2970502 126 2557

929390 15248837 697 12604

1086960 15678562 9534 4838

1667207 6113852

7171560 24510266

12282942 13508271

The Insurance Times, Novmebr 2012 53

GROSS PREMIUM UNDERWRITTEN FOR AND UPTO THE MONTH OF SEPTEMBER, 2012

54

The Insurance Times, November 2012

(` crore)

Important Insurance Contacts Insurance Regulatory & Development Authority 3rd Floor, Parisrama Bhavan, Basheer Bagh HYDERABAD 500 004 Andhra Pradesh (INIDA) Ph. : (040) 23381100 Fax : (040) 66823334 Email : irda@irda.gov.in Complaints against Non-life Insurance companies: Private Insurers: Shri K.Srinivas, Asst. Director And Public Sector Insurers: Mr.R.Srinivasan, Officer on Special Duty Ph: (040) 23240034 email : nonlifecomplaints@irda.gov.in Complaints against Life Insurance Companies: Mr. Sudipta Bhattacharya Sr Assistant Director Ph.: (040) 66820964/66789768 Ext–251 e-mail : lifecomplaints@irda.gov.in General Insurance Council 5th Floor, Royal Insurance Building, 14, Jamshedji Tata Road Churchgate - Mumbai 400020, India Tel: +91 22 2281 7511 / 12 Fax: +91 22 2281 7515 E-mail : gicouncil@gicouncil.in Life Insurance Council 4th Floor, Jeevan Seva Annexe Building, Santacruz (West) Mumbai Phone : (+91-22) 26103303 / 06 Email: ninad.narwilkar@lifeinscouncil.org

Insurance Institute of India C-46, G Block, Near Dhirubhai Ambani International School, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051.

Tel No. 022-26541154/26541156 Fax No. 022-26541170 Email : lifexams@vsnl.net General Insurance (Public Sector) Association of India (GIPSA) Jeevan Vihar, 3rd Floor, Rear Block, Sansad Marg, New Delhi - 110001 Tel : 011-23744598 Fax : 23744599

Indian Institute of Surveyors & Loss Assessors Registered Office : 5th Floor, Parishram Bhavan Basheerbagh,Hyderabad

Indian Institute of Surveyors & Loss Assessors Administrative Office : 257, Kalindas Udyog Bhawan, Century Bazaar Lane, Worli, Mumbai-400025 Ph: 022 24228571 E-mail : iiisla@hathway.com

Insurance Websites Insurance Regulatory & Development Authority General Insurance Council Life Insurance Council Insurance Ombudsman General Insurance Corporation of India Tariff Advisory Committee The NewIndia Assurance National Insurance Company Oriental Insurance Company United India Insurance Bajaj Allianz General Insurance RoyalSundaram Alliance Insurance ICICI Lombard General Insurance Cholamandalam General Insurance Export Credit Guarantee Corporation of India IFFCO Tokio General Insurance Star Health Alied Insurance Apollo DKV Insurance Reliance General Insurance Tata AIG General Insurance HDFC ERGO General Insurance Future Generali India Insurance Universal Sompo General Insurance Shriram General Insurance Agriculture Insurance Company of India Ltd. Bharti AXA General Insurance India Allianz Bajaj Life Insurance Life Insurance Corporation of India HDFC Standard Life Insurance ING Vysya Life Insurance MaxNewYork Life Insurance Birla Sun Life Insurance ICICI Prudential Life Insurance Aviva Life Insurance SBI Life Insurance Metlife India Insurance Om Kotak Mahindra Life Insurance Reliance Life Insurance Tata AIG Life Insurance Sahara India Life Insurance Shriram Life Insurance Bharti AXA Life Insurance Future Generali India Life Insurance IDBI Fortis Life Insurance Canara HSBC Oriental Bank of Commerce Life Insurance AEGON Religare Life Insurance DLF Pramerica Life Insurance Star Union Dai-ichi Life Insurance IndiaFirst Life Insurance Edelweiss Tokio Life Insurance Risk Management Association of India Million Dollar Round Table Insurance Institute of India Actuarial Society of India National Insurance Academy Institute of Insurance Surveyor & Adjustors

www.irdaindia.org www.gicouncil.in www.lifeinscouncil.org www.ombudsmanindia.org www.gicofindia.com www.tac.org.in www.newindia.co.in www.nationalinsuranceindia.com www.orientalinsurance.nic.in www.uiic.co.in www.bajajallianz.com www.royalsundaram.com www.icicilombard.com www.cholainsurance.com www.ecgc.in www.itgi.co.in www.starhealth.in www.apollodkv.co.in www.reliancegeneral.co.in www.tata-aiggeneral.com www.hdfcergo.com www.futuregenerali.in/Gen_Insurance www.universalsompo.com www.shriramgi.com www.aicofindia.org www.bharti-axagi.co.in www.allianzbajaj.co.in www.licindia.com www.hdfcinsurance.com www.inglife.co.in www.maxnewyorklife.com www.birlasunlife.com www.iciciprulife.com www.avivaindia.com www.sbilife.co.in www.metlifeindia.com www.kotaklifeinsurance.com www.reliancelife.co.in www.tata-aig-life.com www.saharalife.com www.shriramlife.com www.bharti-axalife.com www.futuregenerali.in/Life_Insurance www.idbifortis.com www.canarahsbclife.com www.aegonreligare.com www.dlfpramericalife.com www.sudlife.in www.indiafirstlife.com www.edelweisstokio.in www.prgindia.com/rskmgnt.htm www.mdrt.com www.insuranceinstituteofindia.com www.actuariesindia.org www.niapune.com www.iiisla.org

The Insurance Times, Novmebr 2012 55

Glossary of the Month

Poll Yes No Can’t sa y say

Will FDI bill be passed in the winder session of the parliament?

Results of Poll in our October 2012 Issue Do you think increase in FDI cap will boost investment for the insurance sector

You may send your views to :

Earned premium : Refer : “Premium, earned premium.”

Earthquake : A convulsion of the Earth’s surface produced by volcanic or similar forces within its crust.

(Note : An earthquake could result in serious fire damage or more commonly, extensive shock damage to property, India is lying within a Seismic belt and extensively heavy damage could be caused from such occurances).

Earthquake fire cover : Earthquake fire cover provides protection by loss or damage by fire to the property insured caused by earthquake.

Earthquake shock cover : Covers loss or damage (other than loss or damage by fire) caused by earthquake.

Earthquake fire and shock cover : Provides coverage against loss or damage (including loss or damage by fire) caused by earthquake.

ECU : European currency unit. A notional unit of monetary value used in the European community.

Effective date : The date on which an insurance policy or bond goes into effect and from which time protection is furnished.

Ejusdem generis : Of the same kind.

Elective benefits : Those conditions which may be chosen by the insured in settlement of his claim as alternate to another form of compensation.

Thus in an accident cum sickness policy upon the happening of a certain accidental injury causing temporary total isablement the payment may be for the period of the disability or a lump-sum payment may be elected. The optional benefits.

56

Poll Contest, The Insurance Times 25, Baranashi Ghosh Street, Kolkata - 700 007 Phone : 2269 6035, 2218 4184, 40078428 Fax: 033-22736612, Email: insurance@bimabazaar.com

We have just 10 years to save the world, warn scientists The world has just 10 years to reverse surging greenhouse gas emissions or risk runaway climate change that could make many parts of the planet uninhabitable. The stark warning comes from scientists who are working on the final draft of a new report by the Intergovernmental Panel on Climate Change.

The report, due to be published this week, will draw together the work of thousands of scientists from around the world who have been studying changes in the world's climate and predicting how they might accelerate.

They conclude that unless making rapidly stabilises greenhouse gas emissions and starts reducing them, it will have little chance of keeping global warming within manageable limits. The results could include the destruction of the Amazon rainforest and the Great Barrier Reef, the forced migration of hundreds of millions of people from equatorial regions, and the loss of vast tracts of land under rising seas as the ice caps melt.

In Europe the summers could become

The Insurance Times, November 2012

Yes No Can’t say

70 30 00

Safety

unbearably hot, especially in southern countries such as Greece, Spain and Italy, while Britain and northern Europe would face summer droughts and wet, stormy winters.

"The next 10 years are crucial," said Richard Betts, leader of a research team at the Met Office's Hadley Centre for climate prediction. "In that decade wee have to achieve serious reductions in carbon emissions. After that time the task becomes very much harder." Among the scientists' biggest fears is that rising greenhouse gases and temperatures could soon overwhelm the natural systems that normally keep their levels in check.

About half the 24 billion tons of carbon dioxide generated by human activities each year are absorbed by forests and oceans - a process without which the world might already be several degrees warmer. However, as CO2 levels rise and rising temperatures dry out soils, this process could be reversed with forests pumping out gases in stead of retaining them.