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Insurance Newsletter: 25-29 November, 2013

India Infoline News Service | Mumbai |

IRDA has asked general insurers to charge themselves a 210% provisioning instead of the current 110% for a high risk category of third party motor insurance.

Top Stories

IRDA plans to provide unique identity numbers to hospitals

The IRDA (Insurance Regulatory and Development Authority) has initiated a process to provide unique identity numbers to hospitals.

According to IRDA, the objective is to help identify hospitals and collect information regarding various charges imposed by them on different medical procedures.

Speaking at a summit organised by Indian Merchants Chamber in Mumbai on Monday, IRDA chairman TS Vijayan said that the unique identity number will be integrated with the pin code of the area and the name of hospitals.

“Once this process is over, the next step will be to see what are the charges these hospitals charge on patients for various treatments,” Vijayan added.

IRDA yet to receive insurers’ feedback on ‘use & file’ system

IRDA (Insurance Regulatory and Development Authority) chairman TS Vijayan said the regulator is yet to receive any communication from life insurers and non-life council under the proposed ‘use and file’ method of introducing insurance products.

In the use and file system, insurers first introduce basic insurance products in the market and then file the product for approval to the regulator.
At present, the regulator allows insurers to launch products under the file and use system, which requires them to get approval ahead of a new product being launched.

Vijayan was speaking on the sidelines of an event organised by IRDA for consumer education. The IRDA is yet to issue any formal guidelines for this system.

IRDA increases insurance provisioning to 210%

The Insurance Regulatory and Development Authority (IRDA) has asked general insurance companies to charge themselves a 210% provisioning instead of the current 110% for a high risk category of third party motor insurance risks.

According to a notification issued by IRDA on November 18, a special committee formed by the regulator has recommended the higher ratio for Declined Risk Pool.

The higher provisioning will not increase premium rates for people buying motor insurance but it will raise costs for insurance companies.

Domestic News

Nearly 60% of vehicles in India are uninsured: Justice BN Srikrishna

The pack gathering and annual insurance summit on “Effective Delivery Mechanism for Better Penetration of Insurance in India” at the Hotel Trident in Mumbai on Monday, was all ears as Justice B. N. Srikrishna, Former Judge of the Supreme Court of India, provided some valuable insights in his special address on issues pertaining to the growth of insurance sector.

According to Justice BN Srikrishna, nearly 60 to 70% of vehicles in India are uninsured and these figures are lower in urban areas as compared to rural pockets. He also further elaborated that consumer preference is more towards government companies and this lack of trust on private companies was a major obstacle for greater penetration of insurance in the country at large... Read more

PFRDA has made progress; but lot remains to be done: Takru

Rajiv Takru, Secretary (Financial Services), Ministry of Finance, delivering the Inaugural Address at the 1st CII Pensions Summit on Wednesday organized by CII emphasized the need for greater participation from the private sector to scale up the National Pension System on the foundation of providing safety and value for money for investors.

Commenting on the work by the PFRDA, Mr Takru said that the regulatory body has made progress, however, a lot remained to be done. He expressed hope that with statutory powers vested in the body, post the passage of the PFRDA Bill, the Authority would become an effective regulator and a developmental institution... Read more

Total number of claims at 6.4 million in FY13: IIB

General insurance total claims stood at Rs. 175.89 billion in the motor segment for the financial year ended March 30, 2013, according to Insurance Information Bureau of India (IIB) data.

The total premium from the motor segment was Rs. 284.6 billion for FY13. Private cars accounted for Rs. 75.06 billion out of the total claims, while goods carrying vehicles accounted for Rs 56.26 billion of the claims in motor segment.

The total number of claims stood at 6.4 million compared to total policies of 63.6 million for 2012-13.

NBFCs can invest more than 50% in insurance JVs: RBI

The Reserve Bank of India on Thursday said that non-banking finance companies can invest more than 50% of their total equity in insurance joint ventures with banks.

At present, NBFCs are not allowed to invest more than 50% of their group equity in insurance joint venture with a bank.

“It has been decided that in cases where IRDA issues calls for capital infusion into the Insurance JV company, the Bank may, on a case to case basis, consider need based relaxation of the 50% group limit, the RBI said in a notification... Read more

Learning

Healthcare financing for medical professionals

What does a doctor do if he needs to expand his business or purchase a very expensive medical equipment. Does he take recourse to a home loan, mortgage loan or personal loan or is there a loan which is tailored to meet his professional needs. A number of financial institutions now provide healthcare financing.

If you are a doctor or healthcare professional and looking to expand your business, the article will guide you on the requirements needed to avail of such a loan... Read more

International News

Life reinsurance premiums in advanced markets may shrink in 2014: Swiss Re

Global economic growth will continue to strengthen in 2014, Swiss Re says in its "Global insurance review 2013 and outlook 2014/15". This will support on-going premium growth in the non-life primary market, particularly in emerging markets, with reinsurance premiums following suit.

Global premiums in the life market are expected to grow by around 4% in real terms in 2014 and 2015. However, life reinsurance premiums are expected to continue to decline in advanced markets, while rising by about 6% annually in emerging markets. Alternative capital has increased in recent years, putting pressure on prices and margins, particularly in the US catastrophe business. The alternative funds are expected to maintain a focus on established nat cat markets... Read more

Major gap exists between perception & practice of ethical behavior in financial services

A study released by the Economist Intelligence Unit and sponsored by CFA Institute has shown that although financial services executives overwhelmingly recognize the importance of ethical behavior in the industry, there is still a significant gap between that belief and the industry’s practices. The study, A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services, shows that strengthening culture based around driving integrity and financial knowledge across firms is a priority for the financial services industry.

Despite the importance placed on creating a stronger ethical culture since the financial crisis, a serious disparity still exists when it comes to executives’ recognition that adhering to those higher standards will help earn trust, foster career progress and support financial performance... Read more

Bangkok Insurance ratings placed on credit watch negative: S&P

Standard & Poor's Ratings Services placed its 'A-' financial strength and local currency issuer credit ratings and 'axAA' ASEAN regional scale ratings on Bangkok Insurance Public Co. Ltd. on CreditWatch with negative implications. The ratings are no longer "under criteria observation."

The CreditWatch placement reflects the reassessment of the impact from a hypothetical sovereign foreign currency default in Thailand on the credit profile of Bangkok Insurance. The 'A-' rating on Bangkok Insurance is now higher than the 'BBB+' foreign currency sovereign credit rating on Thailand... Read more


 

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