Top Stories
Govt postpones modifications in Insurance Amendment Bill
On 10th May, the union cabinet postponed a decision on modifications to the Insurance Amendment Bill. According to the Cabinet, foreign direct investment (FDI) is already at 26% in Indian insurance companies, therefore is no urgency to increase the investment to 49% and approve the Bill.
Finance minister Pranab Mukherjee said that modifications in the Bill have been postponed because 26% FDI is already permitted. The Bill will be taken up later suggesting that the government may try to build a consensus to increase the FDI limit in the sector to 49%.
Foreign insurers and their domestic partners have been demanding an increase in the FDI limit to 49% to fund business expansion. According to the current regulation, a foreign insurer cannot have more than 26% stake in private insurers in India.
The Standing Committee had rejected the government’s proposal to raise FDI limit to 49% in December 2011. According to the Committee, the increased role of foreign capital may lead to the possibility of exposing the economy to the vulnerabilities of the global market. Also, funds would flow outside India and endanger policyholders’ interest… More
IRDA: Approval process for pension products stopped
According to media reports, IRDA has put pension product approvals on hold due change in some policies. Most insurers filed their pension products with the regulator for approval in December 2011 after the 4.5% minimum guaranteed return clause on pension products was rolled back on insurers’ demand.
The regulator has now written to insurance companies that the approval process has been stopped as it has to take some policy decisions. According to industry experts, if some new changes are made then insurers will have to restructure their product filings and go for fresh approvals which may take another six months.
Govt advises insurers to make action plan for loss making branches
The public sector banks (PSBs) and public sector insurers are governed by their board driven policies. Expansion or closure of branches of these institutions is decided by their board in accordance with the guidelines laid down by the regulator, said Minister of State for Finance, Namo Narain Meena in written reply to Rajya Sabha.
However, the government, as a promoter shareholder, has recently advised PSBs and public sector insurance companies to make an action plan for turnaround of their loss making branches. As regards financial inclusion campaign of government, the banks have been advised to meet all the targets of financial inclusion which remains the priority of the government.
In Focus Stories
IRDA penalises Shriram Life for violation of norms
The Insurance Regulatory and Development Authority (IRDA) has penalised Shriram Life Insurance for irregularities relating to the fees paid to group companies for bringing in referral business and non-brokerage related fees paid to broking firms, among others. IRDA has charged a penalty of Rs. 2.8 million on the company.
Hyderabad-based Shriram Life gets about 80% of its business by cross selling to group company clients. The company has been charged of paying excess fees to group company Shriram Chits for bringing in referral business.
IRDA in its final order on Shriram Life said, “Payment to group companies under different heads without any proper agreements. Not adhered to arm's length transaction principle in various agreements/arrangements/payouts.”… More
NPS subscribers can select annuity service provider
National Pension System (NPS) subscribers now have a choice of six annuity service providers from whom they can select their annuity schemes on exit from the NPS on attaining the age of 60.
According to a PFRDA (Pension Fund Regulatory and Development Authority) press release, sixlife insurers have been approved by IRDA (Insurance and Regulatory Development Authority) for providing annuity services to the NPS subscribers. The six insurers are: Life Insurance Corporation of India, SBI Life Insurance, ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance, Star Union Dai-ichi Life Insurance and Reliance Life Insurance… More
Insurance Bill to enable Lloyd’s entry in India
The revised Insurance Laws (Amendments) Bill proposes to retain foreign direct investment (FDI) limit in insurance sector at 26% from49% proposed earlier. However, the Bill has provision of procedural modification to allow the entry of Lloyd’s—global specialist insurer—in India. Insurance Regulatory and Development Authority (IRDA) will frame it while formulating suitable regulations for the registration of companies.
The modifications would be carried out in relation to China where Lloyd’s works as a company and only such syndicates which have underwriting desks in the country should be allowed to carry on re-insurance business… More
Health insurance forum to bring in drastic changes
The health insurance forum, constituted by Insurance Regulatory and Development Authority (IRDA), is set to bring in drastic changes. It is ready to recommend that the hospital fees charged to the patients with mediclaim policies need to be capped. The fees which hospitals charge would be capped depending on the type of disease and the class of the hospital. This is aimed at reducing medical charges for the insured, as hospitals in India tend to overcharge patients in case of cashless mediclaim policies.
The forum is set up to promote health insurance sector in India. It would help in evolving policies and processes for the sector. The forum is now set to bring in radical changes. For example, it is also planning to cap the rate of increase in premiums at the time of claim renewals. Also, life insurers should issue policies with a minimum period of five years. On portability, the industry is talking about standardising the policy wording, with a strong data-exchange system to control frauds… More
Domestic News
No guidelines issued for insurers & banks to enter referral arrangement
The IRDA has said that it has not issued any guidelines for general insurers to enter referral arrangement with banks. Such arrangement existed for seven years up to 1 July 2010, when IRDA had cancelled this provision.
According to referral arrangement, a bank is allowed to leverage its branch network and refer customers, who want to buy an insurance product to the insurer, for which bank gets a fee from the insurer. On 30January 2003, IRDA issued guidelines on referral arrangements between banks and insurers, but on 14th February, it issued another circular superseding the earlier one. In this circular, IRDA said that revised circular for general insurers will be issued later, but this circular was never issued… More
Measures to improve coverage of agricultural insurance schemes
According to agriculture ministry, all the cultivable lands have not been covered under the crop insurance schemes, as the area coverage depends on the decision of the states in this regard and the choice of non-loanee farmers.
To improve the coverage of area and better terms to the farmers, a Pilot MNAIS (Modified National Agricultural Insurance Scheme) has been approved by central government for implementation in 50 districts… More
DLF plans to sell stake in insurance JV: report
DLF is planning to sell a majority stake in its life insurance joint venture to HCL Group for about Rs. 5 billion, according to reports.
Reports stated that the real-estate company aims to sell 51% in DLF Pramerica Life Insurance Company and use the proceeds to pay a part of its debt. DLF has debt of about $4.2 billion and trying to reduce the burden by selling its non-core assets, reports said.
IFC unveils a universal health insurance plan for Meghalaya
IFC, a member of the World Bank Group, is helping the eastern state of Meghalaya implement a universal health insurance plan to benefit the state’s population of over three million, including those from low- and middle-income households currently without health coverage.
IFC will work jointly with the World Bank to assist the state in designing and implementing the insurance plan, including promoting private sector participation. It will broaden coverage for local families, allowing them to obtain quality healthcare and specialized treatment close to home. The project is also supported by the UK’s Department for International Development.
“Through this first-of-its kind scheme in India, Meghalaya will be able to expand healthcare services to all,” said Donald Wahlang, Commissioner and Secretary of the state’s Department of Health and Family Welfare. “In the long term, it will help address the shortage of trained medical and paramedical staff in the northeast region.” Meghalaya had launched India’s national insurance scheme Rashtriya Swasthya Bima Yojna in 2009, demonstrating a commitment to strengthen health infrastructure in the state… More
Articles
Aviva India reports net profit of Rs. 740 mn in FY11-12
Aviva Life Insurance has reported a net profit of Rs. 740 million in the financial year ended 31 March2011 against Rs. 290 million in FY10-11. This is the second year of declaring profits. Ranked amongst the top 10 private players, Aviva India’s market share increased to 3.2% in FY11-12 from 2.3% in the corresponding period last year,as per IRDA’s report of March 2012… More
SEBI to issue IPO norm for non-life insurer
The SEBI is in advance stage of finalisation for issuing norms to non-life insurers planning to launch an initial public offering (IPO), SEBI chairman UK Sinha said… More
Know more about term plans
People should have adequate insurance cover so that the financial needs of their dependents are taken care of, in case of an unfortunate event of death… More
Global News
61.4% of expatriates have no life or income protection insurance
According to the William Russell customer survey, majority of expatriates are taking the risk of not having any life or income protection insurance in place.
The survey found that 61.4% had no life or income protection insurance and only 32.9% have life and/or income protection insurance. Expatriates are far more likely to insure their health than make financial provision for either their untimely death, or the risk of them being unable to work due to an illness or injury.
The survey was completed by 650 expatriate policyholders from around the world. International Life insurance protection is available to expatriates, and can prove invaluable to families struggling to cope with sorrow. Also, with advances in medicine meaning that more people are living for longer with a serious illness or injury, the need for income protection insurance is now just as important as the need for life insurance cover.