Insurance Newsletter – October 21 to 25, 2013

Gartner analysts discussed the trends in the insurance industry at Gartner Symposium/ITxpo, being held here through October 24.

October 25, 2013 6:06 IST | India Infoline News Service
Top Stories

Insurers to spend Rs. 177bn on IT forecast in 2014: Gartner

Indian insurance companies will spend Rs. 107 billion on IT products and services in 2013, a 16 percent increase from 2012, according to Gartner, Inc. Insurance spending on IT will increase more than 9 percent in 2014 to reach Rs. 117 billion.  This forecast includes spending by insurers on internal IT (including personnel), hardware, software, external IT services and telecommunications.
Gartner analysts discussed the trends in the insurance industry at Gartner Symposium/ITxpo, being held here through October 24. IT services will not only be the biggest spending segment for the insurance industry in 2014, but it will also be the fastest growing at 16.2 percent in 2014... Read more

e-KYC accepted as valid process for verification: IRDA

The Insurance Regulatory and Development Authority (IRDA) said on Monday that the e-KYC (electronic know-your-customer) services operationalised by the Unique Identification Authority of India (UIDAI) will be accepted as valid KYC process for insurance.

Earlier, IRDA had informed insurers that the letter issued by UIDAI containing details of “name, address and Aadhaar number” was considered as officially valid document that may be obtained as part of Customer Identification Procedure, for the purposes of identification.

The UIDAI has operationalized e-KYC services recently. The acceptability of these services for KYC purposes under the Prevention of Money-laundering Rules, was discussed with the Department of Revenue, Ministry of Finance and operational issues were taken up with the insurers... Read more

Govt proposes insurance cover for deposit fraud 

The government on Tuesday proposed compulsory insurance cover for public deposits collected by companies and penalty of up to 18% annual interest for defaulters. The objective is to protect investors from fraudulent money-collection schemes. The companies will make the premium payments for the deposit insurance cover. A penalty of 15% interest rate will be levied annually on those companies which do not provide a deposit insurance to their depositors. Under the deposit insurance scheme, the companies would need to sign a contract to insure the total principal amount as also the promised interest component for the depositors.

Special Stories

NPS subscribers can withdraw full amount on retirement

With the Ministry of Finance approving some changes in rules, the New Pension Scheme (NPS) holders can withdraw the entire fund on retirement if the total amount is Rs 2 lakh or less. “When, on superannuation, a request is received from a subscriber, other than the subscriber under NPS-Lite Swavalamban Scheme, having pension wealth of Rs 2 lakh or less, he/she may opt for withdrawal of total pension wealth,” a notification issued by the Ministry of Finance said.

PFRDA notifies changes in investment norms for pension fund

The PFRDA (Pension Fund Regulatory and Development Authority) on 15 October 2013 has notified changes in the investment guidelines to all pension funds. “Debt securities selected for investments should have a minimum residual maturity period of 3 years from the date of investment by the pension fund,” the PFRDA said in a notification to all pension funds for the government sector. The debt securities must have an investment grade rating from at least two credit rating agencies. Pension funds should undertake their own due diligence of assessment of risk associated with securities before investments, it said. Credit Default Swaps (CDS) on corporate bonds are also eligible derivative instruments, it said.

Domestic News

LIC to hike equity investment in FY14

Life Insurance Corporation of India (LIC) on Thursday said that it has made investments worth Rs. 320 billion in the first half of the current financial year and expects to surpass its initial investment target of Rs. 400 billion in equities by the end of this fiscal.

During the June-September 2013 quarter, LIC increased its shareholding in banks while paring its exposure to the IT and pharma sector. The country's largest insurer invested in various companies including banks such as ICICI Bank, YES Bank and State Bank of India among others.

While in IT and pharma sector, LIC invested in heavyweights like Infosys, Tech Mahindra, HCL Technologies and Lupin among others.

LIC should have nominees on boards of all cos: Govt

Rajiv Takru, secretary, department of financial services, said that Life Insurance Corporation of India should have its nominees on boards of all companies in which it has huge investments to help protect shareholder interests, according to a media report. At present, LIC, which is the India's largest institutional investor, is represented in only 73 of the 123 companies in which it can appoint directors, the report added. LIC is currently working on an analysis of the directors it has nominated in various companies and is set to appoint nominees in about 50 companies where it can occupy board seats.

Shriram General Insurance eyes for acquisition deals in Asia
Private general insurer Shriram General Insurance (SGI) said it is looking for acquisition opportunities in Asia, according to a media report. SGI, along with its South African partner Sanlam, is considering deals in the range of $50 million-$75 million, the report added. SGI, promoted by Shriram Capital, had recently bought Philippines-based Monarch Insurance. SGI is private non-life insurers with a capital base of Rs. 2.58 billion. The company has reported a premium income of Rs. 3.47 billion in the first quarter. The company has also been consistently reporting profits.

Chola MS General Insurance launches Chola Protect–Truck

Cholamandalam MS General Insurance (Chola MS), a joint venture between Rs. 225 billion Murugappa Group and Mitsui Sumitomo Insurance of Japan, on Monday launched Chola Protect for Trucks with 11 add-on covers that offers total protection for trucks. This is the first value added insurance product for truck owners in the country. The company also launched India’s first ‘Emergency Road-Side Service’ for trucks.

The new package product with wide range of add-on covers offers complete protection with features like 100% depreciation waiver, reinstatement value in case of total loss, monetary compensation for loss of key, driving license, registration certificate, permit, payment for road tax, registration and insurance cost. All these features ensure maximum benefit to the customers... Read more

GIC's plans to join Lloyd remain on tenterhooks

General Insurance Corporation of India (GIC Re) plans to be part of specialist insurance market Lloyd’s London in three years is not going to work out unless India opens up the insurance sector further, according to a media report.

Being a part of Lloyd’s would supplement GIC Re vision of becoming a global reinsurer.

However, adding terms and conditions for GIC Re's entry into the Lloyd’s market, Lloyd’s UK said the Indian company can plan to join Lloyd’s only after India allows more foreign investment in the insurance sector, the report added.

NPCI to offer insurance cover for online fraud transactions

National Payments Corporation of India (NPCI) has decided to provide an insurance cover for online fraud transactions, according to a media report.

NPCI will tie up with general insurance companies to offer an insurance policy for such frauds. NPCI has called for a Request For Proposal (RFP), the report added.

The proposed insurance cover would cover both domestic and international transactions, all those done by swiping a card, PIN-based transactions on ATMs or points of sale and e-commerce transactions with two-step authentication.


Get top up plan to enhance your health insurance

Mediclaim policies are useful for minor cases of hospitalisation or surgery. However, they may be insufficient to meet the high costs involved in treatment of ailments like a heart condition, a stroke or an organ transplant. This is where top up plans come into the picture... Read more

International News

People start saving for retirement too late: Swiss Re

Swiss Re's Insurance Report 2013, Connecting generations-protecting generations lays out the concerns people have with insurance and where the opportunities and challenges lie for the industry. Drawing on consumers' own words, the report explores how the long-term insurance industry can improve its services and products and reconnect with the public.

The report also analyses the important role employers, advisers and intermediaries have to play in a changing financial services landscape... Read more

Global Finance names AIG as best overall insurer
Global Finance on Wednesday announced the winners of its 2013 Best Global Insurers awards, drawing on responses from more than 1,200 readers around the world, as well as input from a panel of 13 prominent risk management and financial executives at major companies headquartered in each geographic region of the world. In the global category, AIG was selected as the best overall insurer, as well as the best insurer for property, environmental liability, directors & officers liability, employment practices liability, and cyber risk. Allianz won as best global casualty insurer, as well as for trade credit (Euler Hermes) and crime/fidelity. Lloyd’s was selected as best global political risk insurer, kidnap and ransom, and supply chain/trade disruption. Aon won as the best global insurance broker... Read more

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