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Insurance Newsletter - November 19 to November 23, 2012

India Infoline News Service | Mumbai |

Reliance Life Insurance Company (RLIC), part of Reliance Capital Limited, on Wednesday launched Face-to-Face’ distribution channel to service its orphan customers and provide post-sales service to policyholders.

Top Stories 

Final guidelines on investment limit for insurers soon: Reports

The Insurance Regulatory and Development Authority (IRDA) would release the final guidelines on investment limit for insurers in a few days, according to media reports.
The guidelines would limit the investment limit of insurers in debt instruments at 55%. Currently insurers can invest up to 85%.

Insurers would be allowed to participate in additional financial products like interest rate swaps and equity derivatives. Interest rate swaps are agreements between two parties in which one stream of future interest payments is exchanged for another, based on a specified principal amount.

Insurance regulator has already said that total investment in housing and infrastructure should be at least 15% of the fund for life insurers and 5% for general insurers, the reports concluded.

IRDA to form product-specific committees

The Insurance Regulatory and Development Authority (IRDA) will form product-specific committees which will assist Life Insurance Council, according to media reports.

The move is aimed at resolving life insurance industry issues faster. The new product-specific committees will deal with unit-linked insurance plans (Ulips), variable insurance and traditional plans, and communicate with IRDA as well as the LIC, the reports added.

Each committee would include six members, including CEOs, actuaries and product heads of various life insurers, the reports concluded.

PSU insurers to increase health insurance premiums

Health insurance premiums will rise as public sector insurers are seeking to revise premium rates on their health insurance plans. Among the four PSU insurers—New India Assurance has already filed revised premium rates with IRDA (Insurance Regulatory and Development Authority) and is waiting for it approval, the media reports said.

Premium rates have also been increased on group mediclaim policies. But unlike group policies that are customized products, individual health plans are standard over-the-counter plans and need to be cleared by IRDA, the reports said.

New India Assurance to revise health insurance premium

Domestic News

FM allows LIC to invest up to 30% in companies

The finance ministry has allowed India's largest insurer Life Insurance Corporation of India (LIC) to invest up to 30% in a company against the earlier limit of 10%.
Banking Secretary DK Mittal said that a notification on relaxing investment cap has been issued. LIC had been requesting to invest more than 10% that it is currently allowed because it has a huge reserve of cash.

LIC has a more-than 10% investment in several companies. The finance ministry has finalized the notification whereby LIC can invest up to 30% in a listed company.

LIC, EPFO plan to fully subscribe to AI’s bond sale: Reports

Life insurance major LIC and the Employee Provident Fund Organisation (EPFO) are planning to fully subscribe to the Rs. 74bn bond sale of national carrier Air India, according to media reports.

The bond sale programme will continue to remain open till December 18, the reports added.

The 19-year-old issue has a coupon of 9.08% and will fetch 9.27% for LIC and EPFO on maturity.

LIC sold 2% stake in Maruti Suzuki India

India’s major insurer LIC (Life Insurance Corporation of India) has sold over 2% stake in Maruti Suzuki India over a period of time, thereby reducing its total holding in MSI to around 10%.

LIC sold a total of 58,29,103 shares of the company aggregating 2.018% stake between August 24, 2009 and November 11, 2012 through the open market, Maruti Suzuki India (MSI) said in a filing to BSE.

After the sale, LIC's holding in MSI stands at 10.777%. Before the transaction, LIC held 12.794% stake in MSI, with a total of 3,69,64,231 shares, it added.
The equity share capital of MSI stands at 14.4 billion after the transaction, the company said.

Banks, insurers to remain out of CCI scope: Reports

The finance ministry—in a letter—to the ministry of corporate affairs (MCA) has urged to notify that loss making banks and insurers will not come under the ambit of the Competition Commission of India (CCI). The move is aimed speed up issuance of new banking licences, according to media reports.

In the letter financial services secretary DK Mittal has requested immediate notification to this effect since the banking regulation amendment bill and the competition bill are yet to be passed by Parliament, the reports added… Read more

Karnataka State Health panel works on insurance cover for diabetics

Karnataka State Health Systems Commission is working on legislation on insurance coverage for diabetes patients, according to media reports.

At present, most insurers are reluctant to provide coverage for diabetics, and some of these which offer charge a high premium. The commission took up this issue for discussion at its first meeting held a few days ago… Read more

Reliance Cap to sell 26% in general insurance unit: Reports

Reliance Capital has started talks to sell 26% equity in its general insurance arm—Reliance Life—to a foreign partner, and is open to selling further stake in life insurance and mutual fund units, according to media reports.

No details were provided on the potential deal size for Reliance General Insurance stake sale. Reliance Capital has already sold 26% stake in its mutual funds and life insurance units to Japanese financial services major Nippon Life… Read more

Reliance Life targets double-digit growth in FY13

Private sector insurer Reliance Life said that it expects to achieve double-digit growth in its business by the current fiscal, according to media reports.

Reliance Life, part of Reliance Capital, is targeting a total premium income of Rs. 61 billion in 2012-13. The company expects new business premium of Rs. 23 billion in FY12-13 from Rs. 18.09 billion in the last fiscal. The company estimates its renewal premium to grow to Rs. 38 billion for FY12-13 from Rs. 36.88 billion in 2011-12, the reports added… Read more

Results this week

Max Life Insurance H1 FY 2013 PBT up 6% to Rs. 3.98bn 

Max Life Insurance announced its audited half yearly results for the financial year 2012-13.

The company continued its profitable growth and recorded net profit of Rs. 39.8 billion up 6%, while the gross revenue recorded a marginal increase of 1% to Rs. 29.01 billion.

The company also performed well on other parameters like assets under management that increased by 30% to Rs. 191.84 billion over last year and sum assured that touched Rs. 1.58 trillion, an increase of 7%... Read more

New India Assurance reports net profit of Rs. 20.5 bn in H1 FY13

Public sector general insurer New India Assurance's reported net profit of Rs. 20.5 billion in the first half of the current fiscal compared to Rs. 950 million in the same period of the previous fiscal.

The global premium increased almost 17.5% to Rs. 58.38 billion in the first half of FY13. While domestic premium rose 15% to around Rs. 50 billion, overseas premium increased by 34.14% during H1.

The company aims to cross global premium of Rs. 120 billion this fiscal, adding the focus would be on retail, personal, rural and SME segments in the near future.

New Launches

Reliance Life unveils ‘face-to-face’ distribution channel 

Reliance Life Insurance Company (RLIC), part of Reliance Capital Limited, on Wednesday launched Face-to-Face’ distribution channel to service its orphan customers and provide post-sales service to policyholders.

Face-to-Face is a unique service-based sales platform introduced by Reliance Life Insurance in India, which aims at servicing customers whose agents have become inactive.

The announcement was made by Mr. Malay Ghosh, President and Executive Director, Reliance Life Insurance… Read more

ICICI Lombard launches International Travel Insurance

ICICI Lombard General Insurance Company Ltd., private sector general insurance company, has launched a new travel insurance product “International Travel Insurance”. Keeping in mind the needs of customers, the policy provides overseas medical insurance along with coverage for all trip related risks. It caters to the needs of international travellers and also the insured’s family back home… Read more

Bajaj Allianz Life launches Life Assure

Bajaj Allianz Life Insurance has launched a new ULIP called Life Assure Insurance Plan that offers customers the unique benefit of protection along with financial planning. Life Assure is a unit-linked endowment plan available at a minimum monthly premium of Rs. 1000, which is the lowest in the industry… Read more


Online term plan: Simple & cost-effective way to buy insurance

Claim settlement ratio is the most important aspect of an insurance product. In fact, that is the chief function of a life insurance policy—offering financial protection to the dependents of the policyholder on his or her death… Read more

Know more about home insurance

While buying an online home insurance plan, you need to read the fine print carefully. Make an analysis of what is covered and what is not covered under the policy… Read more

EDLI: Insurance benefit to employees

Employees’ Deposit Linked Insurance scheme provides for a lump sum payment to the insured’s nominated beneficiary in the event of death due to natural causes, illness or accident… Read more

Get roadside assistance cover with motor insurance

Insurers provide various benefits as part of roadside assistance. For instance, towing facility to the nearest garage in case of a breakdown, assistance for changing a flat tire, transport of occupants through a hired cab are some of the most common facilities that motorists look for… Read more

Claiming benefits under EPF & EPS

PF provides various benefits such as pension, loan facility, withdrawal, nomination, etc. However, some of us won’t be aware of the different forms which we need to fill while availing these benefits… Read more
International News

AIG explores joint venture with PICC Group, PICC Life

American International Group, Inc, the People’s Insurance Company (Group) of China Ltd (PICC Group) and PICC Life Insurance Company Ltd (PICC Life) entered into a non-binding term sheet with respect to the proposed establishment of a joint venture insurance agency company between AIG and PICC Life (the joint venture) that plans to distribute life insurance and other insurance products through a specialized agency force on a nationwide basis with a focus on major cities in China and to engage in reinsurance and other related business cooperation… Read more

Risk avoidance drives reinsurers’ investment: Fitch

Fitch Ratings expects reinsurers to continue to abide by their core investment principles in the face of a possibly protracted low-yielding investment environment. Nevertheless, some smaller reinsurers are preferring to keep asset duration to a minimum (of about one year) as they seek to reduce the balance-sheet (solvency) shock which could occur when interest rates rise, while also providing the opportunity to reinvest earlier at higher interest rates, according to a new report… Read more

Swiss Re studies changes to insurance accounting practices

Swiss Re’s latest sigma research publication "Insurance accounting reform: a glass half empty or half full?" takes a fresh look at the long-running debate over upgrading and harmonising insurance accounting practices. A key conclusion is that the proposed accounting reforms can contribute to more meaningful financial reporting in insurance. But they probably need to be complemented with additional metrics that clearly and concisely communicate insurers' underlying economic value to their stakeholders… Read more

ING reaches agreement on amended EC Restructuring Plan

Dutch bank and insurance group ING with the Dutch State has reached an agreement with the European Commission on significant amendments to the 2009 Restructuring Plan. The amendments extend the time horizon and increase the flexibility for the completion of divestments and adjust other commitments in light of the market environment, economic climate and more stringent regulatory requirements.

As part of the agreement, ING has filed a schedule for repayment to the Dutch State of the remaining EUR 3 billion in core Tier 1 securities plus a 50% premium, in four equal tranches in the next three years. A first tranche of EUR 1,125 million will be paid on 26 November 2012… Read more



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