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).
Thursday, May 24, 2007
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.
Subscribe to:
Posts (Atom)