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The 55th All India Sr. Divisional Managers' Conference, annual strategy meeting of LIC of India was held in Mumbai from 11th to 13th May 2015. The meeting began with address by chairman and managing directors of LIC of India.
Zonal heads from eight different Zones as well as all operational heads in the rank of ED from corporate office were present in the meeting.
Bajaj Allianz General Insurance has posted a 37 per cent rise in profit after tax to Rs 562 crore for FY15.
The company reported a 16 per cent growth in revenue to Rs 5,305 crore during the year. It reported settled claims worth Rs 962 crore owing to Net Cat losses due to the floods in Jammu and Kashmir and the tropical cyclone Hudhud in eastern India.
United India Insurance Company has reported a profit after Tax of Rs 301 crore in 2014-15. The investment income of the Company for the year stood at Rs 2,126 crore as against Rs 1857 crore in the previous year, an increase of over 14 per cent.
The market value of the company's investment portfolio at the end of the year stood at Rs 25,385 crore and the net worth of the company stood at Rs 5,589 crore as against Rs 5,361 crore at the end of last year, an increase of over 4 per cent.
State Bank of India is ardent to divest further stake in its foreign partner Insurance Australia Group, for which it has already hired consultancy PwC to carry out the valuation process for its general insurance joint venture.
SBI General Insurance's foreign partner Insurance Australia Group (IAG) has roped in Deloitte for the purpose.
"Valuation for SBI General Insurance is being done by two separate firms. While State Bank has roped in PwC, Insurance Australia Group has appointed Deloitte for the purpose," as per the report.
The move comes after the government in March passed the new insurance law that allows 49 percent foreign holding but with management control vested with the local partner. Already a number of foreign companies have agreed to increase their stakes in the ventures here.
State-run Bank of India too had said recently that it was looking at paring its stake in life insurance arm Star-Union Dai-ichi Life Insurance to 30 percent from the present 48 percent. Star Union Dai-ichi Life Insurance is a joint venture between Bank of India (48 percent), Union Bank of India (26 percent) and Dai-ichi Life Insurance (26 percent).
The Bharti group's stake valuation has gone up multiple times in both life and general insurance companies they were operational.
The group is divesting its stake to AXA group, which has already received Foreign Investment Promotion Board (FIPB) approval.
In the general insurance venture, when the issued capital was Rs 162.58 crore, the value of Bharti's stake (77.78 per cent) was Rs 126.45 crore. With the general insurance venture now being valued at about Rs 1,611 crore, the value of its stake is Rs 1,253 crore, which is a jump of almost 10 times from the original value.
Similarly, in life insurance, valuation has increased by almost 21 times.In the life insurance business, where Bharti has 40 per cent stake, there was paid-up capital of Rs 150 crore of which Bharti's stake was Rs 60 crore. Now, with the venture being valued at Rs 3,206 crore, Bharti's stake would be valued at Rs 1,282.4 crore, which is more than 21 times growth.
With the back of a stronger product portfolio and tie-ups with the banks.The LIC is aiming for a 15 per cent growth in first premium income and a 10 per cent rise in the number of policies from the eastern zone in 2015-16.
In 2014-15, the first premium income from the zone was Rs 3,960.36 crore and total number of policies were 26.18 lakh.
"Last year was tough for the LIC because we did not have adequate insurance products in our portfolio and we were adding products that comply with the revised life insurance guidelines of the IRDA. We were also training existing agents and recruiting new ones to sell these new policies," said Hemant Bhargava, east zone manager, LIC.
The LIC, which had 50 policies in its kitty before the changes in regulations, now has around 23 schemes. It is looking to come up with policies in the unit-linked segment this year.
"This year, we have a target of recruiting 36,000 agents with zero termination," Bhargava said.
In the eastern zone, the LIC has 1.45 lakh agents. "One of the big challenges is to motivate around 20,000 non-performing agents and make them more active," he said.
Revival of lapsed policies is another concern for the eastern zone. "We had started a special campaign last year on revival of lapsed policies and were successful in reviving over 5 lakh policies," he said.
The LIC is also tying up with the banks to offer policies under the central government's Pradhan Mantri Jeevan Jyoti Bima Yojana.
"We have signed an MoU with three nationalised banks in the zone - the Uco Bank, the UBI and Allahabad Bank. Pacts have also been signed with the regional rural banks. Given the vast network of these banks, we hope to cover a considerable chunk of the population," Bhargava said.
The Life Insurance Corporation (LIC) has raised stake in state-owned Canara Bank by about 7.7 per cent through preferential allotment of shares. It has also increased its stake in another public sector lender Bank of Baroda (BoB) by buying 4.7 crore shares from the open market.
With the acquisition, the LIC's stake in BoB increased by 2.1 per cent to 11.4 per cent. LIC acquired the stake for a consideration of about Rs 750 crore as per the current price.
These shares were acquired over a period between January 16 and May 25, 2015 from the open market, with acquisition of 4 crore shares for a consideration of Rs 1,520.32 crore, the stake of LIC in Canara Bank has gone up to 14.4 per cent, the lender said in a separate filing on the BSE. Prior to this preferential allotment, LIC was holding 3.46 crore shares or 6.7 per cent in Canara Bank.
Earlier the concept of E Insurance was piloted in paperless form through insurance repositories. However, it did not received a encouraging response and not even 10 per cent of the total number of policies in the industry has been digitized due to both the reluctance of some industry players because of costs involved and the customers, who still prefer physical policy documentation.
Keeping in mind the situation the regulator is mulling on making digitised policies mandatory for insurance with a premium of above Rs 50,000. Industry sources said that revised guidelines on insurance repositories will be brought out by Irdai to make it mandatory for insurance be in electronic format from June-July onward.
Even LIC, has not yet begun to offer e-policies to all its customers. A senior LIC executive explained that the insurer would have to spend several crores of rupees for this initiative, and ultimately it will be the policyholders who will have to bear the costs. "We have not taken it up due to the costs involved. Also, we have not had customers even requesting us for this facility," the executive said.
An Insurance Repository (IR) is a facility to help policy holders buy and keep insurance policies in electronic form, rather than as a paper document. These repositories, like share depositories or mutual fund transfer agencies, would hold electronic records of insurance policies issued to individuals.
Such policies are called "electronic policies", e-policies for short. The government has mandated five companies to act as repositories, include NSDL Database Management Limited, Central Insurance Repository Limited, CAMS Repository Services Limited, SHCIL Projects Limited and Karvy Insurance Repository Limited.
Ways on how to digitize the policy:
- A customer goes to a repository website and enters his/her information. An e-Insurance account is created free of cost (where the insurer pays for these expenses).
- In the new forms, there is a tick-mark option on the policy form for offering a digital policy and e-Insurance account creation.
- An e-Account number is generated for each customer, which is a unique id. Each user can only open one account.
- All KYC related information is fed into the account. When new policy is bought, only e-Insurance account number to be quoted; no separate KYC document needed.
- All future policy details are immediately sent from an insurer to the insurance repository.
- All payments and policy-details can be viewed.
- Agents can also view details of policies that they have sourced on this common platform.
- Premium reminders, renewals, fund-value and other details can be viewed.
- If a customer has any queries, the same e-Insurance account can be used to communicate with the insurer.
After receiving licenses from the Insurance Regulatory and Development Authority of India which has paved the way of the reinsurers to open their operations in India, the Global reinsurers are in the process of setting up their top team with Indian CEOs. Swiss Re, the second largest global reinsurer has appointed Kalpana Sampat, currently the chief - customer service and operations at ICICI Pru as the chief executive officer & managing director of its operations in India.
US-based RGA (Reinsurance Group of America) has appointed Thomas Mathew, former acting chairman and managing director of Life Insurance Corporation as the managing director of its India operations.
Munich Re, the largest global reinsurer, appointed Hitesh Kotak as the new CEO of its India operations. The company has also shifted its India headquarters from Kolkata to Mumbai and sources point out that it is expanding its India team. Joseph Augustine who has been heading the India operations of Catlin will continue in the same position. Other companies like SCOR and Lloyd's will also name new India chief executive officers soon.
The gross direct premium earned by general insurance companies from the motor vehicle industry in the own damage category is likely to reach Rs 38,200 crore mark by the end of 2016-17 from a level of about Rs 17,000 crore as of 2012-13 thereby clocking a compounded annual growth rate (CAGR) of about 22 per cent.
In terms of revenue it is seen that individual agents fetched a gross direct premium worth over Rs 9,200 crore while the brokers generated premium worth about Rs 4,700 crore, as per the study prepared by the Assocham Economic Research Bureau.
Motor is the largest component of general insurance market as the motor business continued to be the largest non-life insurance segment with a share of 47.05 per cent of the total premium underwritten within the country and it reported a growth rate of 22.24 per cent it added.
The Federation of West Bengal Trade Association has demanded that all markets owned by KMC should be covered under insurance. Such a demand came after a devastating fire gutted the entire alupatti in the heritage SS Hogg Market, or New Market recently.
"Poor shop owners at alupatti in New Market not only lost their shops but also their working capital in devastating fire," the publicity committee chairman of the federation, Mahesh Singhania aid.
Religare Enterprises Ltd (Religare) has decided to sell its 44 percent stake in Aegon Religare Life Insurance Company Ltd to Bennett Coleman and Company Ltd (BCCL), one of the joint venture partners. Aegon Religare Life Insurance is a three way joint venture between Religare (44 percent), BCCL (30 percent stake) and Aegon (26 percent).
In a regulatory filing in the BSE, Religare said it has reached a definitive agreement with BCCL which will acquire its stake in the life insurance joint venture. According to Religare, Aegon would increase its stakes in the life insurer from 26 percent to 49 percent.
This transaction is subject to necessary and appropriate regulatory approvals of Insurance Regulatory and Development Authority of India, the Competition Commission of India and the Foreign Investment Promotion Board.
BOI disburses 18 per cent stake in life insurance joint venture to Dai-ichi State-run Bank of India is heading to disburse 18 per cent of its stake in the three-way life insurance arm, Star-Union Dai-ichi Life Insurance, to the Japanese partner to bring down its share to 30 per cent. Star Union Dai-ichi Life is a joint venture between Bank of India (48 per cent), Union Bank of India (26 per cent) and Japanese life insurer Dai-ichi Life (26 per cent).
"We will bring down our stake from 48 per cent to 30 per cent. The valuation process is in progress," Bank of India chairperson and managing director Vijaylaxmi Iyer told after announcing a Rs 56 crore net loss in the March quarter against a net profit of Rs 558 crore a year ago.
It is also believed that Dai-ichi which has 26 per cent stake will increase it to 49 per cent, while Union Bank will retain its stake at 26 per cent. Although no timeline by when the process will get over was reported.
Meanwhile, Edelweiss Tokio Life Insurance also said its foreign partner Tokio Marine will hike stake in the joint venture to 49 per cent.
The top 10 insurance companies hold more than Rs 4.56 lakh crore in Indian equities. Life Insurance Corporation of India (LIC) is the biggest investor in terms of value, and accounts for over 85 per cent of the assets under management by the top 10 players, reveal Prime Database numbers.
This translates into Rs 3.89 lakh crore worth holdings. In ITC, LIC has invested Rs 38,358.66 crore, according to Capitaline data. RIL and SBI account for Rs 26,602.98 crore and Rs 25,783.39 crore, respectively. Its top 10 holdings accounted for Rs 2.02 lakh crore.
The IRDAI in lieu of the backdrop of the recent hike in the upper cap of foreign direct investment in insurance companies from 26 per cent to 49 per cent have decided that no Indian investor will be allowed to hold shares exceeding 10 per cent of the paid-up equity shares in an insurance company.
As per the Transfer of Equity Shares of Insurance Companies Regulations, 2015 which were notified recently, all investors (where there are one or more investors in an insurance company) jointly should not hold more than 25 per cent of the paid-up equity share capital of the insurance company.
Adding to the developments the proposals pertaining to the transfer of shares in insurance companies, the authority further reported that Indian promoters as well as foreign investors to have a minimum lock-in period for infusion of additional capital as a pre-condition for approval.
It will also carry out its own 'due diligence' declaration from a proposed shareholder whether the shares are proposed to be held for his own benefit or as a nominee, whether jointly or severally, or on behalf of others as one of the important measures before approving any deal for transfer of shares of insurance companies.
Therefore no registration of transfer of shares or issue of equity capital of insurance company will result in change in the shareholding even though the transfer the total paid-up holding of the transferee in the shares of the insurance company is exceeds 1 per cent of its paid-up equity capital as per the notifications.
Valuations of insurance companies, tied to banks, are set to plunge, given the new distribution policy pursued by the regulator. Global insurance companies such as Dai-ichi and IAG (Insurance Australia Group) may pay a lower premium to raise their stake in the joint venture with banks.
The IRDA has proposed a mandatory open architecture, where one bank will have to sell products of multiple insurance companies. As per the draft norms, banks will have to sell products of three companies, with one not exceeding 50% of the promoter company over the next four years.
At present, under the corporate agency tie-up, banks sell one life insurance, general insurance and specialised insurance like standalone health insurance. "Fresh valuation could be lower from what IAG had earlier paid," said Bhaskar Sarma, managing director and CEO, SBI General Insurance.
Taking its Corporate Social Responsibility initiative to newer heights, SBI Life Insurance partners with CanKids..KidsCan to aid them in their noble cause of providing cancer affected children an education, thus enabling them to lead a sustainable and meaningful life.
Speaking on the occasion, Mr. Arijit Basu, MD & CEO, SBI Life Insurance said, “SBI Life believes in empowering those who have the courage to fight against the odds. Our initiatives reflect this and we choose to partner with likeminded NGO's and Social Service Associates. Our association with CanKids..KidsCan enables us to provide education support to cancer affected children with the intention of making a difference to their lives."
SBI Life has taken this noble initiative towards providing support to children undergoing treatment for cancer hence supporting their psycho-social development. During the treatment, the child usually loses out on their education and regular school life due to prolonged breaks due to their medical treatment.
This initiative enables the children to undergo schooling while they are undergoing cancer treatment. Support from SBI Life covers school learning materials, worksheets, notebooks, cost of physical educational aids, nutritional support, cost of counselors, transportation to and fro from the residence or dharamshalas or hospitals.
SBI Life is happy to support the education of children undergoing treatment of cancer in CanShala, a special school initiated by CanKids..KidsCan, in association with Municipal Corporation of Greater Mumbai (MCGM). The school is located in close proximity to Mumbai’s three main cancer hospitals: The Tata Memorial Hospital, LMTG Hospital in Sion and BJ Wadia Hospital for Children in Mumbai. The MCGM has offered space and facilities in Jagannath Bhatankar Municipal School, Parel.
SBI Life has adopted 'Child Welfare' as the theme for its CSR initiative. Child Welfare is a social philanthropy venture which focuses on promotion and development of children from the underprivileged and disadvantaged sections of society by addressing their education and healthcare needs.
Throughout the year, SBI Life has extended its support and facilitated programs through a range of educational services to children with a genuine intention to provide education. SBI Life has partnered with various NGOs across India whose objective is aligned to that of SBI Life’s CSR agenda.
Cankids..KidsCan is a family support group enabling children and their families faced with cancer. It’s an independent unit of Indian Cancer Society (ICS), incepted in January 2004 and till date the group has supported over 7,000 children with cancer and their families.
Cankids provides a range of support services to the children and their parents, like medical and financial assistance, guiding through hospital procedures, education of children, emotional and psychological support, counseling, nutritional support, accommodation and other logistical support.
CanShala is the country’s first special school for children with cancer in India with the support of the local municipal government in Mumbai. The school ensures the learning of the children while they are undergoing treatment and mainstreams (Maharashtra Board curriculum) them back into regular schooling after their treatment.
Since the treatment for childhood cancer is long, spanning from six months to three years, the children especially from the lower socio economic background are deprived of any form of education, formal or informal.
They also provide for Individualized Education Plans for children with specific learning difficulties and conduct extracurricular therapeutic activities with the children during the academic year. The entire program; academic, therapeutic and extracurricular is free of cost to these children.
The Regulator is planning to dematerialize the policies with an annual premium of Rs.50,000 for life insurance and Rs.10,000 for motor and health insurance.
The decision has been taken in lieu of the fact that despite running a pilot in June where life insurers had to dematerialize a minimum number of policies for their technical readiness, only around 2.5 lakh e-insurance accounts have been created.
According to COO of SHC
IL Insurance Repository Pandula Sreelakshmi ," The insurance ordinance promulgated by the government in December specified that insurers will have to issue policies above a certain threshold in terms of sum assured and premium in electronic format."
T. S.Vijayan, Chairman (IRDA) adding to the cost factor said that the cost of insurerslying up with repositories is an issue and the regulator is trying to build consensus on it. He said that repositories need to bring down costs if the model has to be accepted by insurers. According to industry sources, smaller repositories which created very few e-insurance accounts have been considering winding up.
G. V. Nageswara Rao, MD & CEO of National Securities Depository said that while multiple repositories promote competition, all the repositories have to recover their cost of investment which is hampered by limited volumes. As per S. V. Ramanan, CEO, CAMS Repository the benefits of having dematerialized insurance accounts will accrue when there is large traction from insurers who are awaiting a clear mandate from the insurance regulator.
In a review meeting which was held on the performance of the public sector insurance companies and the Insurance sector in general it was observed that the department of financial services, Government of India and IRDA have asked the insurers to devise simple low cost products inorder to utilize the Pradhan Mantri Jan Dhan Yojana (PMJDY)extension network to distribute insurance products to reach the common man.
The Meeting was chaired by Hasmukh Adhia, Secretary (Financial Services) and T. S. Vijayan, Chairman (IRDA) and was attended by senior executives of public sector insurance companies.
The insurance sector had come a long way since its opening up in 1999/2000 and the public sector insurance companies had played a notable role and faced up to competition admirably.
The meeting stressed on the need to improve the underwriting performance of the public sector non-life insurers was also stressed along with the need for transparency and the role of information technology in improving customer service.
The sectoral regulator IRDA has asked life insurance companies to submit data for the last four years to the Insurance Information Bureau (IIB) so that it could prepare standardised reports relevant to the industry.
The data should be submitted in the prescribed format from the year 2010-11 to 2013-14 before December 15, 2014, Sriram Taranikanti, Executive Director, IRDA said.
In addition, the insurers would need to submit data for the periods ending September and March of each financial year within a period of one month from the last day of respective month.
It may be noted that the Bureau would also undertake other analytics work including those sought by the Authority and also the insurance industry from time to time,'' the circular said.
From IRDA: It has come to our notice that certain unscrupulous entities/persons have allegedly attempted to cheat the policy holders of some insurance companies by impersonating as representatives/officials/employees of the IRDA of India (IRDAI) Authority.
They have also created fake login ids like “email@example.com” which looks identical to IRDAI’S official domain “www.irda.gov.in”. The modus operandi of fraudster is to send fictitious offers of large sum of money by email by posing as IRDAI official. Such fictitious offers are made in the name ‘IRDA Government’.
“Insurance Control Authority, Delhi” etc. While IRDAI is taking steps to curb such activities, the general public is hereby cautioned not to fall prey to such offers. It is also advised that general public and policyholders, in their own interest, should refrain from responding to such offers in any manner and immediately lodge a complaint with Cyber Crime branch of the Police.
COMMUNICATION WING, IRDAI