New Insurance Product Launched by Future Generali

Future Generali India Life Insurance launched its new product — Secure Income Plan — a mix of traditional endowment with once a year income benefits here.

The Future Generali Secure Income plan was available for customers in the age group of 0 to 60 years and for terms ranging from 15 to 65 years. On completion of the premium payment period, accrued compounded reversionary bonuses are paid.

After the chosen premium payment period, every year 5.5(%) per cent of sum assured was paid as guaranteed annual cash back in addition to cash bonus till the end of the policy term. On maturity, the policyholder would receive the sum assured plus the terminal bonus. The plan could be purchased from a low ticket size of Rs.10, 000 onwards.

The company, which collected premium amount of Rs.168 crore on various products, expects to touch the Rs.600-crore mark by the end of fiscal year. The last quarter would be crucial to give maximum business. About 9 per cent of the business was from rural market, he said.

Speaking to media persons here, Deepak Sood, Managing Director and CEO of the insurance company, said another five new products were planned this year and they were awaiting clearance from the regulatory authorities.

Festivals seek cover under pricey policies

The cloak of security that Navratri and Durga Puja pandals seek is not limited to fortifying the venues with the presence of men and machines. Event organizers are willing to pay a premium of Rs 2 lakh-5 lakh to procure insurance cover worth crores of rupees for the few days that govern their fortunes for the rest of the year.

Bajaj Allianz, which had issued three or four policies during the previous season, has covered 11 venues across India this Navratri. "In fact, we are also covering some small pandals in Mumbai and Thane that have stepped forward to seek insurance," says T A Ramalingam, head, underwriting, Bajaj Allianz General Insurance.

By far, the biggest player in terms of scale, the Sankalp Trust has bought insurance worth Rs 5.80 crore from Future Generali. Of this amount, Rs 4 crore covers losses that arise from the garba event being cancelled due to not just fire, earthquake or even terrorism but also remote reasons such as if the CM or the President passes away and a state of mourning is declared. "Should our artiste Falguni Pathak or the three lead singers meet with a mishap or fall ill and are unable to perform, the losses would be met as well," says Sankalp president Devendra Joshi. "One segment of the policy covers cash in transit, another covers public liability including the safety and welfare of the organisers and visitors."

The Naidu Club's event at Kora Kendra, Borivli, is insured for Rs 3.5 crore, the same as the North Bombay Sarbojanin Durga Puja of Juhu that belongs to the Mukherjees of the Hindi film industry. "We pay a premium of Rs 3 lakh to seek protection against fire, damage and terrorism. This governs our venue, sets, artistes Tushar Sonigra and Nilesh Thakkar as well as musicians and organizers," says Ganesh Naidu. He recalls how two years ago, garba in Mumbai was truncated owing to rain, resulting in heavy losses.

Organisers do not wish to take a chance on anything.

The reason insurance firms offer customized policies becomes apparent when one takes the case of the Juhu Jagruti Trust. "We don't feel the need to seek cover for garba pandal. But we have insurance for cash in transit, that is, the cash collections are covered against robbery on four regular routes," says president Raju Shah.

But insurance does not eschew the need for proper security. Sankalp as well as Naidu Club have fortified their venues with CCTVs, guards and metal detectors. Naidu even relays the feed to the local police station and his own cable network for supplementary monitoring. The document, of course, helps him sleep better knowing that any loss can be reimbursed.

Private insurers see business growing from this month

Private life insurers, which have been seeing a decline in new business since last August when the new unit-linked insurance plan (Ulip) guidelines came into force, are hopeful of posting good numbers from this month.

“September onwards we are expecting a positive trend because the industry has been facing a sluggish growth since August last year and compared to those numbers, we see signs of growth going ahead,” said G N Agarwal, chief actuary, Future Generali Life Insurance Co.

According to a report from JP Morgan on August 26, capital market sluggishness and base effect may favour life insurance business in the coming months.

“Last year there was a steep decline in the business which was the immediate effect of the Ulip regulation. September 2010 witnessed some spillover volumes from August 2010 backlog and thus strong year-on-year growth from October 2011 can be expected,” the report said. Insurers said growth is usually sluggish in July and August as against the last two quarters of the year.

“The new business premium is cyclical. Usually July and August are sluggish, whereas quarters at the end of the year are comparatively larger because most of the companies run incentive plans by then,” says Anisha Motwani, director and chief marketing officer, Max New York Life Insurance Co (MNYL).

Private insurers feel Ulip norms are the main reason for declining annual premium equivalent (APE), or new business premium, of private life insurers to 38% on a year-on-year basis in July.

“Because of the adjustment period and the top markets fluctuating, the insurance market may see an upward trend going forward,” said Motwani of MNYL.

On a month-on-month basis, the new business premium of private life insurers grew 10% in July while the state-owned player, LIC, witnessed 77% growth.

However, the first-year premium collection declined 28.36% in April-June 2011 compared with the corresponding previous period.

Insurers said lower agent commissions on Ulips are a major concern for decline in the new business premium. The industry has been focusing on traditional products to boost sales.

“Industry’s almost 60%-70% business used to come via Ulips. With Ulips contributing so much to our business, it is obvious for the industry to face de-growth,” said Agarwal of Future Generali.

According to a JM Financial
report on life insurance sector dated August 26, all major private life insurers showed a significant decline in new business premium except MNYL, which saw a marginal year-on-year decline of 5%. The report said ICICI Prudential and Reliance Life Insurance were the main losers in market share on APE basis, marking a decline of 6.6% and 4.9%, respectively.

Regulation on pension products:
“The other reason for the fall in new business premium is decline in the pension products after 2010,” said Motwani.

Pension products had lost their sheen post September 2010 due to the regulation, which mandated offering minimum guaranteed returns of 4.5% on all pension and annuity products.

The Insurance Regulatory Development Authority has come up with a draft on pension products earlier this month removing the guaranteed return. Insurers are showing mixed reaction on this.

Insurance agent dropouts rising:
The increasing dropouts of private insurance agents is also a major concern for the industry. A national-level survey has revealed that dropouts are set to rise 25% in the current financial year. Fixed deposit Interest Rates

“Along with the reduced commissions on Ulips, the increase in the dropout rate of insurance agents may be a reason for the business decline. There may be less number of agents, most may be part-time, but unlike before, there is quality in their services because the regulator wanted more productive and serious agents rather than non-serious ones who hampered the industry’s growth,” said SB Mathur, secretary-general at Life Insurance Council, said.