IRDA has got the ‘Indian Institute of Insurance Surveyors and Loss Assessor’ incorporated on 4th October, 2005 with registered office at Hyderabad. This is on model of the Institutes of Company Secretaries or Chartered Accountants. From three years of its establishment, the institute would be considered for conferment of a chartered status.
The main objects of the Institute , inter alia, are promotion of quality in the profession of surveyors and loss assessors through education and training, introduction of best practices amongst its members, conduct of professional examinations relating to the profession of surveyors and loss assessors, promotion of research and studies in loss control and minimization techniques, development and administration of code of conduct and ethics among the surveyors and loss assessors and ensuring compliance of the same.
Surveyors and loss assessors holding valid licence as well as categorization issued by the IRDA are eligible to become members of the Institute. There are two classes of membership, viz Associate and Fellow.
Showing posts with label Insurance News. Show all posts
Showing posts with label Insurance News. Show all posts
Thursday, May 24, 2007
General insurance industry grew by 20 per cent
General insurance industry grew by 20 per cent in the first five months of 2006-07 due to strong performance by private players. The 12 non-life players collected Rs 10,427 crore in premium during April-August 2006 as compared to Rs 8,668 crore in the corresponding period last year.
Market leader New India's market share has come down from 21.56 per cent a year ago to 20.07 per cent while private player ICICI Lombard's market pie has increased from 8.12 per cent to 12.31 per cent during the same period. At present, the eight private players together have about 35 per cent of the market share.
New India Assurance (NIA) grew business by 11.95 per cent to collect Rs 2,093 crore in premium in April-August this fiscal. NIA was followed by Oriental Insurance Company, which clocked 11.63 per cent growth in business at Rs 1,667 crore and a market share of 15.99 per cent. National Insurance saw a flat growth and collected Rs 1,542 crore in premium and a 14.79 per cent share of the market. United India grew premium income by 7.19 per cent at Rs 1,488 crore and a market pie of 14.27 per cent
Market leader New India's market share has come down from 21.56 per cent a year ago to 20.07 per cent while private player ICICI Lombard's market pie has increased from 8.12 per cent to 12.31 per cent during the same period. At present, the eight private players together have about 35 per cent of the market share.
New India Assurance (NIA) grew business by 11.95 per cent to collect Rs 2,093 crore in premium in April-August this fiscal. NIA was followed by Oriental Insurance Company, which clocked 11.63 per cent growth in business at Rs 1,667 crore and a market share of 15.99 per cent. National Insurance saw a flat growth and collected Rs 1,542 crore in premium and a 14.79 per cent share of the market. United India grew premium income by 7.19 per cent at Rs 1,488 crore and a market pie of 14.27 per cent
Insurance companies to focus on the priority sector
After banks, insurance companies also may be required to voluntarily provide a certain per cent of insurance to the priority sector -- rural poor and other social sectors.
The Minister of State for Finance, speaking at a seminar has asked Insurance companies to come forward for setting targets for this priority sector and they should start with health insurance. The Insurance Regulatory and Development Authority (IRDA) Chairman, also favoured such a mechanism and would soon ask insurance companies to provide insurance to the priority sector on the basis of their years of operation and market share. Even though the scheme would not be mandatory, the companies not providing priority sector insurance coverage might be penalised.
Presently Indian banks have to extend 40 per cent of their total net credit to the priority sector. Financing of Small Scale Industry, Small business, Agricultural Activities and Export activities fall under this category. This is also called directed credit in Indian Banking system. Part of the cost of this concession is borne by RBI by means of refinancing such loans at concessional rate.
Indian government want to ensure that a certain portion of insurance cover goes to the rural and other social sectors to achieve insurance inclusiveness. Objective is also to render health insurance affordable to the poorer sections of the society
The Minister of State for Finance, speaking at a seminar has asked Insurance companies to come forward for setting targets for this priority sector and they should start with health insurance. The Insurance Regulatory and Development Authority (IRDA) Chairman, also favoured such a mechanism and would soon ask insurance companies to provide insurance to the priority sector on the basis of their years of operation and market share. Even though the scheme would not be mandatory, the companies not providing priority sector insurance coverage might be penalised.
Presently Indian banks have to extend 40 per cent of their total net credit to the priority sector. Financing of Small Scale Industry, Small business, Agricultural Activities and Export activities fall under this category. This is also called directed credit in Indian Banking system. Part of the cost of this concession is borne by RBI by means of refinancing such loans at concessional rate.
Indian government want to ensure that a certain portion of insurance cover goes to the rural and other social sectors to achieve insurance inclusiveness. Objective is also to render health insurance affordable to the poorer sections of the society
Underwriting losses of non-life insurance companies to increase
The general insurance industry in India is likely to be de-tariffed from 31st December, 2006 giving insurance companies the freedom to decide their premium rates.
Tariffing is a concept associated with the insurance industry for more than hundred years. Tariffs are laid down rules, conditions, rates etc prescribed by member companies, called tariff companies. This avoids unhealthy competition among the insurance companies. Also, there is no price war within the insurance companies, since tariff regulations put a ban on such practices.
In the absence of tariffing, companies can, charge lower premiums without calculating risk weightage. Hence, such companies can risk the danger of bankruptcy. Thus, tariffs were like a protection for the insuring public, shareholders and employees of the company.
Now, the authorities feel that the non-life insurance market has matured enough, and to grow further, it needs to remove this protection which is hampering the growth.
De-tariffing will enable companies to take their own decisions on premium rates, and to be profitable as well.
However, according to a CRISIL study of 12 public and private sector non-life insurance companies, underwriting losses will increase after de-tariffing.
This is likely to increase competition in profitable business segments such as fire and engineering, translating into lower returns in terms of premium generated from these segments, the report said.
The report also said that returns from severely loss-making segments such as motor third-party insurance are likely to improve, as industry players increase premium rates to cover future expected claims more efficiently than the current practice.
Post de-tariffing, underwriting losses will increase from the current levels as benefits from the increase in motor third-party premium are not expected to be sufficient to completely offset the impact of the reduction of premium levels in the profitable segments, the report added.
Tariffing is a concept associated with the insurance industry for more than hundred years. Tariffs are laid down rules, conditions, rates etc prescribed by member companies, called tariff companies. This avoids unhealthy competition among the insurance companies. Also, there is no price war within the insurance companies, since tariff regulations put a ban on such practices.
In the absence of tariffing, companies can, charge lower premiums without calculating risk weightage. Hence, such companies can risk the danger of bankruptcy. Thus, tariffs were like a protection for the insuring public, shareholders and employees of the company.
Now, the authorities feel that the non-life insurance market has matured enough, and to grow further, it needs to remove this protection which is hampering the growth.
De-tariffing will enable companies to take their own decisions on premium rates, and to be profitable as well.
However, according to a CRISIL study of 12 public and private sector non-life insurance companies, underwriting losses will increase after de-tariffing.
This is likely to increase competition in profitable business segments such as fire and engineering, translating into lower returns in terms of premium generated from these segments, the report said.
The report also said that returns from severely loss-making segments such as motor third-party insurance are likely to improve, as industry players increase premium rates to cover future expected claims more efficiently than the current practice.
Post de-tariffing, underwriting losses will increase from the current levels as benefits from the increase in motor third-party premium are not expected to be sufficient to completely offset the impact of the reduction of premium levels in the profitable segments, the report added.
First venture of Public Sector Banks in the Non-Life Insurance sector
Allahaband Bank, Indian Overseas Bank (IOB), Karnataka Bank (KBL), Dabur Investment Corporation and Sompo Japan Insurance Inc have decided to form a new non-life joint venture insurance company to be called Universal Sompo General Insurance Company Ltd.
The proposed shareholding pattern of the company is Allahabad Bank—30%, IOB—19%, Karnataka Bank—15%, Dabur Investment—10% and Sompo Japan Insurance—26%. A shareholders agreement for the formation of the company has been executed and now company await necessary regulatory approvals.
The three PSU banks have a delivery channel of around 4000 branches across the country. Dabur is one of the major Corporate Houses in the country. Thus, this company will have an All-India distribution network and high degree of credibility. The proposed Company will also leverage the strong product and underwriting skill of Sompo which is second biggest casualty insurer of Japan with experience of de-tariffing in the Japanese Markets.
Sompo is the third Japanese insurance entering the non-life sector in India; the other two include Tokio Fire and Marine (tie-up with Iffco) and Mitsui Sumitomo (with Cholamandalam).
The proposed shareholding pattern of the company is Allahabad Bank—30%, IOB—19%, Karnataka Bank—15%, Dabur Investment—10% and Sompo Japan Insurance—26%. A shareholders agreement for the formation of the company has been executed and now company await necessary regulatory approvals.
The three PSU banks have a delivery channel of around 4000 branches across the country. Dabur is one of the major Corporate Houses in the country. Thus, this company will have an All-India distribution network and high degree of credibility. The proposed Company will also leverage the strong product and underwriting skill of Sompo which is second biggest casualty insurer of Japan with experience of de-tariffing in the Japanese Markets.
Sompo is the third Japanese insurance entering the non-life sector in India; the other two include Tokio Fire and Marine (tie-up with Iffco) and Mitsui Sumitomo (with Cholamandalam).
New entrant in the life insurance segment
IDBI Bank, Federal Bank and Fortis have signed a Joint Venture Agreement to establish a new life insurance company. IDBI Bank will own 48% equity, while Fortis Insurance International and Federal Bank will each own 26%.
Subject to regulatory approval, the three partners expect the new company to be operational by mid-2007. It will promote a full range of life insurance and long-term savings products, including traditional and unit-linked savings plans, and health and disability cover. These will be available on an individual and group basis.
The joint venture will build a multi-channel distribution platform including bancassurance, agency and direct sales. In view of Fortis's global experience in bancassurance and the strengths of the bank partners, the company will use bancassurance as a key distribution strategy.
In July 2006, IRDA has given Bharti AXA Life Insurance Company the go-ahead to enter the life insurance business. Competition is hotting up in the life insurance segment, with the entry of more players. Life Insurance segment has great potential as 80% of the population in India is without life insurance coverage.
Subject to regulatory approval, the three partners expect the new company to be operational by mid-2007. It will promote a full range of life insurance and long-term savings products, including traditional and unit-linked savings plans, and health and disability cover. These will be available on an individual and group basis.
The joint venture will build a multi-channel distribution platform including bancassurance, agency and direct sales. In view of Fortis's global experience in bancassurance and the strengths of the bank partners, the company will use bancassurance as a key distribution strategy.
In July 2006, IRDA has given Bharti AXA Life Insurance Company the go-ahead to enter the life insurance business. Competition is hotting up in the life insurance segment, with the entry of more players. Life Insurance segment has great potential as 80% of the population in India is without life insurance coverage.
IRDA Guidelines for opening of representative/ liaison offices overseas by an Indian insurance company
The Insurance Regulatory and Development Authority (IRDA) has issued a circular in January 2007, specifying the following guidelines for setting up representative/liaison offices abroad:
1. A “Representative/ Liaison Office” would mean a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial/ trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel.
2. All Indian insurance companies registered with IRDA shall seek prior approval of the Authority for opening offices abroad.
3. Indian insurance companies desirous of opening offices overseas shall apply to the Insurance Regulatory and Development Authority.
4. The opening of representative/ liaison offices would be subject to the following requirements:
a. The representative office would function as an extended arm of Indian insurance company and no underwriting will be done outside India or other than in Indian rupees.
b. Though it may be permissible to identify the overseas prospects who could be non-resident Indian through the offices abroad, the completion of the underwriting contracts should be done only in India.
c. No payment of fees by whatever name called would be permitted outside the country for lead generation, etc notwithstanding any relaxation from the FEMA angle. This entire activity would invariably done by accredited Indian staff of the insurers placed in the liaison office or at HeadQuarters in India.
5. IRDA may consider permitting Indian insurance companies to set-up representative offices overseas so long as a. Insurer has a good financial strength (as exhibited in the accounts) and maintains the prescribed solvency requirement of 1.5.
b. Track record on market conduct, regulatory compliances, redressal of complaints, etc. indicates that there are no serious adverse features on the functioning of the company on the record of IRDA.
6. The insurance companies would be required to furnish information to IRDA on the business mobilized through the representative office and a certificate that the expenditure incurred at the overseas centre together with the Indian operation is well within the limits specified.
7. The Indian insurance company shall be required to comply with the Foreign Exchange Management Act, 1999 and any other law in force.
8. The permission for opening of representative/ liaison office overseas by an Indian insurance company registered with IRDA shall be subject to the terms and conditions as may be stipulated by the Authority from time to time.
1. A “Representative/ Liaison Office” would mean a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial/ trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel.
2. All Indian insurance companies registered with IRDA shall seek prior approval of the Authority for opening offices abroad.
3. Indian insurance companies desirous of opening offices overseas shall apply to the Insurance Regulatory and Development Authority.
4. The opening of representative/ liaison offices would be subject to the following requirements:
a. The representative office would function as an extended arm of Indian insurance company and no underwriting will be done outside India or other than in Indian rupees.
b. Though it may be permissible to identify the overseas prospects who could be non-resident Indian through the offices abroad, the completion of the underwriting contracts should be done only in India.
c. No payment of fees by whatever name called would be permitted outside the country for lead generation, etc notwithstanding any relaxation from the FEMA angle. This entire activity would invariably done by accredited Indian staff of the insurers placed in the liaison office or at HeadQuarters in India.
5. IRDA may consider permitting Indian insurance companies to set-up representative offices overseas so long as a. Insurer has a good financial strength (as exhibited in the accounts) and maintains the prescribed solvency requirement of 1.5.
b. Track record on market conduct, regulatory compliances, redressal of complaints, etc. indicates that there are no serious adverse features on the functioning of the company on the record of IRDA.
6. The insurance companies would be required to furnish information to IRDA on the business mobilized through the representative office and a certificate that the expenditure incurred at the overseas centre together with the Indian operation is well within the limits specified.
7. The Indian insurance company shall be required to comply with the Foreign Exchange Management Act, 1999 and any other law in force.
8. The permission for opening of representative/ liaison office overseas by an Indian insurance company registered with IRDA shall be subject to the terms and conditions as may be stipulated by the Authority from time to time.
Canara Bank, OBC, HSBC to set up life insurance company
Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Limited and Oriental Bank of Commerce (OBC) have signed a non-binding Memorandum of Understanding to jointly establish a life insurance company in India. The new company will have exclusive access to the customer bases of both of the Stateowned banks, Canara Bank and OBC, and of HSBC in India. This comprises more than 40 million people and a nationwide network of 3,600 branches. This formidable distribution capability will be used by the company to become a significant player in the country’s rapidly expanding life insurance industry.
Under the proposed agreement, Canara Bank will take a 51 per cent stake in the new company, HSBC a 26 per cent interest and OBC the remaining 23 per cent. The new life insurance company will be capitalised at INR3,250 million (approximately US$73 million), of which HSBC will contribute INR1,770 million (approximately US$40 million), Canara Bank INR1,020 million (approximately US$23 million) and OBC INR460 million (approximately US$10 million). Under the terms of the agreement, HSBC will provide a range of management services, which may include providing executives for senior roles.
Completion of the transaction is subject to various conditions including obtaining regulatory and other approvals and agreeing final terms among the partners.
Life insurance premiums in India grew at an annual rate of 21 per cent in the six years following the opening of the market to private players in 1999, exceeding US$20 billion in 2005. From April to November 2006, new life insurance premiums grew by 155 per cent, according to the business figures released by India’s Insurance Regulatory and Development Authority. However, with a penetration rate of only 2.5 per cent in 2005, India’s nascent life insurance market has considerable long-term growth potential.
Under the proposed agreement, Canara Bank will take a 51 per cent stake in the new company, HSBC a 26 per cent interest and OBC the remaining 23 per cent. The new life insurance company will be capitalised at INR3,250 million (approximately US$73 million), of which HSBC will contribute INR1,770 million (approximately US$40 million), Canara Bank INR1,020 million (approximately US$23 million) and OBC INR460 million (approximately US$10 million). Under the terms of the agreement, HSBC will provide a range of management services, which may include providing executives for senior roles.
Completion of the transaction is subject to various conditions including obtaining regulatory and other approvals and agreeing final terms among the partners.
Life insurance premiums in India grew at an annual rate of 21 per cent in the six years following the opening of the market to private players in 1999, exceeding US$20 billion in 2005. From April to November 2006, new life insurance premiums grew by 155 per cent, according to the business figures released by India’s Insurance Regulatory and Development Authority. However, with a penetration rate of only 2.5 per cent in 2005, India’s nascent life insurance market has considerable long-term growth potential.
IRDA Relaxes Insurance Qualification Clause of the Corporate Agent
Insurance Regulatory and Development Authority (IRDA) had issued new Guidelines for Corporate Agents on 14th July, 2005 which included the Clause 7 that the Chief Insurance Executive, the designated officer and other specified persons who will be employed by the insurance companies should be whole time employees of the applicant. Atleast one of the persons should have insurance qualification to the extent of FFII or AFII or such qualification or experience that IRDA may at its sole discretion, consider adequate.
In December 2005, IRDA clarified that-
i) In so far as issuance of new licenses of Corporate Agents are concerned, there shall be no relaxation whatsoever of the Guidelines dated 14th July, 2005.
ii) However, in case of existing licenses that come up for renewal, the above Clause 7 of the Guidelines will not be enforced till 1st April, 2007 and the renewal will be provisional subject to review by 1st April, 2007.
iii) All other provisions of the Circular dated 14th July, 2005 shall be implemented in toto.
The Authority has received a number of representations from the Insurers seeking extension of above relaxation on the ground that persons with FFII & AFII or equivalent qualifications are still not readily available and CIE or SP are in the process of acquiring the said qualification. Hence, the above relaxation is extended till 1st April, 2008.
In December 2005, IRDA clarified that-
i) In so far as issuance of new licenses of Corporate Agents are concerned, there shall be no relaxation whatsoever of the Guidelines dated 14th July, 2005.
ii) However, in case of existing licenses that come up for renewal, the above Clause 7 of the Guidelines will not be enforced till 1st April, 2007 and the renewal will be provisional subject to review by 1st April, 2007.
iii) All other provisions of the Circular dated 14th July, 2005 shall be implemented in toto.
The Authority has received a number of representations from the Insurers seeking extension of above relaxation on the ground that persons with FFII & AFII or equivalent qualifications are still not readily available and CIE or SP are in the process of acquiring the said qualification. Hence, the above relaxation is extended till 1st April, 2008.
Friday, April 20, 2007
LIC’s new premium income zooms 119%
MUMBAI: Life Insurance Corporation of India (LIC) has ended the year with new business premium of Rs 39,541 crore — an increase of 118.6% over the corresponding period last year. The corporation has also sold a record 3.82 crore policies during the year, with nearly 80 lakh being sold in the last month.
According to a statement issued by the corporation, over a fourth of the premium has come from pension and group scheme business which contributed Rs 11,282 crore to the new business showing a growth of over 188%.
The first premium income, this year, amounted to Rs 39,541 crore as against Rs 18,085 crore during 2005-06. The corporation has surpassed its internal targets for the current fiscal with a budget achievement of 162%.
A geographical analysis of the premium income reveals that north Indians have invested more with the north zone, accounting for the highest growth rate in premium with 201%. The central zone of the corporation, covering Madhya Pradesh and Chattisgarh, shows the highest growth rate in policies with 42.65%.
The eastern zone of the corporation continues to dominate in term of number of policies and still holds the number one position with sales of 79.5 lakh polices followed by the south central zone, covering the Karnataka and Andhra Pradesh, with 67.61 lakh policies. LIC has procured 5.8 lakh of policies under bancassurance and alternate channels showing a growth rate of 97%.
The premium procured under this channel is Rs 664 crore with a growth rate of 88%. LIC’s micro-insurance product, Jeevan Madhur, launched by the President of India in September last year, has succeeded in extending insurance coverage of Rs 110 crore to 80,637 economically under privileged people in the society.
Under LIC’s group insurance portfolio, the number of lives covered grew by 64% and stood at 84 lakh, up from 51 lakh lives of previous fiscal. The new business premium was Rs 11,282 crore, which exceeded last year’s figure by more than Rs 8,000 crore.
According to a statement issued by the corporation, over a fourth of the premium has come from pension and group scheme business which contributed Rs 11,282 crore to the new business showing a growth of over 188%.
The first premium income, this year, amounted to Rs 39,541 crore as against Rs 18,085 crore during 2005-06. The corporation has surpassed its internal targets for the current fiscal with a budget achievement of 162%.
A geographical analysis of the premium income reveals that north Indians have invested more with the north zone, accounting for the highest growth rate in premium with 201%. The central zone of the corporation, covering Madhya Pradesh and Chattisgarh, shows the highest growth rate in policies with 42.65%.
The eastern zone of the corporation continues to dominate in term of number of policies and still holds the number one position with sales of 79.5 lakh polices followed by the south central zone, covering the Karnataka and Andhra Pradesh, with 67.61 lakh policies. LIC has procured 5.8 lakh of policies under bancassurance and alternate channels showing a growth rate of 97%.
The premium procured under this channel is Rs 664 crore with a growth rate of 88%. LIC’s micro-insurance product, Jeevan Madhur, launched by the President of India in September last year, has succeeded in extending insurance coverage of Rs 110 crore to 80,637 economically under privileged people in the society.
Under LIC’s group insurance portfolio, the number of lives covered grew by 64% and stood at 84 lakh, up from 51 lakh lives of previous fiscal. The new business premium was Rs 11,282 crore, which exceeded last year’s figure by more than Rs 8,000 crore.
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