Insurance Newsletter – July 07 to 11, 2014

India Infoline News Service | Mumbai |

The FM said that fiscal prudence is of paramount importance and the Budget aims to lay down broad policy indications.

News this week

Insurance FDI raised to 49%—A step in right direction: Insurers says
Finance Minister Arun Jaitley unveiled the Union Budget for 2014-15 in Lok Sabha on Thursday. The FM said that fiscal prudence is of paramount importance and the Budget aims to lay down broad policy indications. Anoop Pabby, Managing Director & CEO, DHFL Pramerica Life Insurance Co, said, “The Union Budget 2014 presented by the Finance Minister, is a positive for the country, and shows some much needed fiscal practicality. The intent of the Finance Minister to strengthen and modernize regulatory framework in financial sector to meet challenges of a complex economy is welcome.

The increase in the FDI cap in insurance from 26% to 49% will bring in the requisite growth capital from foreign promoters and will help deepen penetration of insurance solutions in the Indian rural markets. Pabby further said. Insurance companies such as AEGON Religare Life, Tata AIG General Insurance, Edelweiss Tokio Life, DHFL Pramerica Life and Tata AIG General said enhancing FDI in insurance to 49% is a welcome measure.

According to the insurers, this should help the insurance industry as a whole in terms of augmenting the capital inflows and also better practices from the foreign players, KS Gopalakrishnan, MD & CEO, AEGON Religare Life Insurance, said. KK Mishra, MD and CEO, Tata AIG General Insurance says, “The announcement about 49% in Insurance Sector is a welcome initiative. Once approved, this would encourage foreign investment and will further augment free flow of knowledge and intellectual cross fertilisation, benefiting the insurance sector as a whole; right from product innovation, distribution & in building robust customer service mechanisms.”... Read more

Pending Insurance Laws (Amendment) Bill to be tabled in Parliament soon: FM
Finance Minister Arun Jaitley in his maiden Budget Speech announced that the pending Insurance Laws (Amendment) Bill will immediately be brought for consideration of the Parliament. The Finance Minister said benefits of insurance in India have not reached to a large section of the people as insurance penetration and density are very low. The Finance Minister Shri Jaitley assured that the Government would work addressing this situation in multi-pronged manner with support of all stake holders concerned. Finance Minister also announced that as a part of the legislative initiatives under the financial sector reforms, it is proposed to bridge the regulatory gap under the Prize Chits and Money Circulation Scheme (Banking) Act, 1978. This will facilitate effective regulation of companies and entities which have duped a large number of poor and vulnerable people in the country, the Minister added.

Govt announces several steps to promote FDI in selected sectors: FM
Government has announced several steps to promote Foreign Direct Investment(FDI) selectively in sectors where it helps the larger interest of the Indian economy. Announcing this during his maiden Budget Speech in the Lok Sabha, the Finance Minister Arun Jaitley said that composite cap of foreign exchange is being raised from the existing 26 per cent FDI to 49 per cent in defence manufacturing with full Indian management and control through the FIPB route.

The composite cap in the insurance sector is being increased upto 49 per cent from the current level of 26 per cent with full Indian management and control through the FIPB route. Announcing this, Shri Jaitley said that the insurance sector is investment starved and several sectors of the insurance sector need an expansion.
To encourage development of Smart Cities, requirement of the built up area and capital conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock in... Read more

Several segments of insurance sector need expansion: Magma HDI General   
The Union Finance Minister in his Budget has set the ball rolling for an increase in foreign direct investment limit in the insurance sector to 49 per cent from the current 26 per cent. Finance Minister said, "The Insurance sector is investment starved. Several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route" While, the long-pending Insurance Laws Amendment Bill, 2008, proposes an increase in foreign holding in insurance joint ventures to 49 per cent from the existing 26 per cent with corresponding voting rights, it appears that the Indian Management and Control would mean restriction of voting rights as well... Read more

Increase FDI limit in insurance is a welcome reform: PolicyBazaar.com
The proposal to increase the FDI limit in Insurance from 26% to 49% is a welcome reform. An increase in FDI cap would help boost the confidence of the industry and bring in capital to provide a much needed step forward for the industry to move to the next level in terms of technology and infrastructure. Also from a consumer perspective, better expertise and product innovation will now be available to consumers. The increase in limit under 80C to 1.5 lakh will also incentivize customers to invest more in instruments like Insurance, ELSS, tax saving bonds etc. and would be helpful for these industries. Also, we hope the uniform KYC across the financial sector would help in simplifying the processes from a customer perspective and will help the digital sales medium... Read more

Increased composite cap of FDI in Insurance is a constructive measure: KPMG
Finance Minister Arun Jaitley unveiled Union Budget for 2014-15 speech in Lok Sabha. Addressing the insurace sector, the FM said that the Insurance sector is investment starved and several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49% from the current level of 26%, with full Indian management and control, through the FIPB route. 

Shashwat Sharma, Partner, KPMG in India seemed happy with this decision. He said, “The new government has introduced constructive measures like increasing the composite cap of FDI in the insurance sector to 49 percent. This measure should provide impetus for spurring growth of the insurance industry and enable foreign players to bring in capital required for growing distribution, product suite and strengthening the risk framework. This move may enable existing players to expand their reach in tier-II and tier-III cities.”... Read more

Magma HDI to grow business by 40% in FY15
Magma HDI General Insurance Co Ltd (MHDI), the first general insurance JV to be headquartered in Eastern India has announced its plan for FY 15. The company which earned gross written premium (GWP) of Rs 425 Crore in FY 14, will target to increase business by 40% in FY 15. For the company which started operations in October 2012, FY 14 was the first full year of operations and issued over 3 Lac policies in FY 15 and majorly addressed customers in the semi urban and rural markets, the focus catchment areas for the company.

Addressing the media in Kolkata, Swaraj Krishnan, MD & CEO of Magma HDI said, “Our primary business has been derived from the motor business in the retail sector amounting to 92% of overall business. We hope to break even in FY 17, one of the fastest in the industry” he claimed... Read more

India ranks first in Aegon Retirement Readiness Survey 2014
AEGON Religare Life Insurance (ARLI), released the India report on the AEGON Retirement Readiness Survey 2014 - Changing Face of Retirement. In the 15-country online survey that was carried out jointly by ARLI’s parent company - AEGON and Cicero Consulting, India participated for the very first time and ranked first on the AEGON Retirement Readiness Index (ARRI), ahead of BRIC counterparts - Brazil and China.

The research team developed the AEGON Retirement Readiness Index (ARRI) to better assess how well employees view their level of retirement preparedness. The India Index score of 7 is the highest of all 15 countries surveyed. This means that an ‘average’ or ‘typical’ Indian with online access has only a ‘medium’ level of retirement preparedness. 49% of the Indian employees surveyed, claim to be habitually saving, compared with 38% of the global sample... Read more

Dena Bank, Universal Sompo General partner for loan secure insurance
Dena Bank has entered into a partnership agreement with Universal Sompo General Insurance Company to offer loan secure insurance policy to the bank’s borrowers in retail and SME segments. Loan secure insurance policy is a unique product from Universal Sompo that insures the loan amount of the Dena Bank’s retail and SME borrowers covering areas such as major medical illness, accidental death, permanent total disablement and loss of job. The insurance protection are available for loans in education, auto, home, personal and other loans availed by individual borrowers. Ashwani Kumar, CMD, Dena Bank, said, “It is a very good insurance scheme for both bank and its borrowers to address difficulties in repayment of loans in case of major illness. It is a huge potential for our bank to go out and provide insurance cover to maximum number of existing borrowers to contain NPAs in immediate future”.

“We have an existing borrowers portfolio with an estimated assets Rs 21,000 crore”, Ashwani Kumar said.”... Read more
 

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