IndiaFirst Life to impart Rs 120 cr this quarter

IndiaFirst Life Insurance Company Ltd, a joint venture between Bank of Baroda, Andhra Bank and UK-based Legal & General, would go for a capital infusion of around Rs 120 crore during the current fiscal. The proposed infusion is to support its Financial Planning Centres (FPCs) in various parts of the country and to meet its solvency capital requirements.

After launching its first FPC in Chennai today, P Nandagopal, managing director and chief executive officer, IndiaFirst Life Insurance, said, "There will be a capital infusion of Rs 120 crore in this quarter to meet our solvency capital requirements and to set up the FPCs. With this, our total capital infusion will be around Rs 550 crore.”

So far, it has infused Rs 430 crore in two phases, the first of Rs 300 crore and later Rs 130 crore. The capital infusion would be from the promoter bankers, he added. Click to apply Life Insurance

Bank of Baroda and Andhra Bank hold 44 per cent and 30 per cent of the company’s stake, respectively, while UK-based risk, wealth and investment company Legal & General has 26 per cent stake.

Meanwhile, the company launched its first FPC in Chennai, and plans to set up a total of 12 centers in various major cities in the country in next two to three months.

The centre would offer a range of services including new business application processing, policy servicing request processing, advisor licensing processing, advisor and sales training, claim intimation processing and document collection and record management for business applications.

In the next two to three months, the PFCs would be set up in cities including New Delhi, Mumbai, Bangalore, Hyderabad, Kolkata, Pune, Ahmedabad, Lucknow, Jaipur, Indore and Kochi. Over a period of next four to five years, it plans to set up a total of 100 FPCs across the country.

“These centres are to explain to our customers the pluses and minuses of each product. We will ensure that each of the new customers is aware of the policies before they buy the product,” said Nandagopal.

Life Council charts out 10-yr action plan

As the life insurance sector completes a decade post the opening up of the sector, it is going for a rethink. Life Insurance Council, the official representative body of life insurers, is busy preparing a road map for the next 10 years. Some of the broad areas being covered under the vision document for the industry include code of conduct, governance, profitability, growth, product development, distribution, penetration and innovation.

The document is being prepared by a committee comprising P Nandagopal, managing director and CEO of IndiaFirst Life Insurance, Nageshwar Rao, managing director and CEO of IDBI Federal, and Rajesh Relan, managing director and CEO of Metlife Insurance.

The committee was supposed to submit its report before the council a couple of months ago, a industry source requesting anonymity said.

Talking to FE, SB Mathur, secretary general, Life Insurance Council, said, “The industry has already completed 10 years, and hence, it is time to re-evaluate the industry.”

Though the road map was basically meant for internal consumption of the industry, we may discuss the contents of the report with the insurance regulator, Insurance Regulatory and Development Authority (Irda), Mathur added.

Recently, J Hai Narayan, chairman of Irda, had said that in the next three years insurance companies will see changes in distribution set up, marketing techniques, and channels of distribution and terms of regulatory development.

“The agency model that we see right now has serious deficiencies and that requires to be strengthened. I do not think the agency distribution model is going to last very long,” he said.

He said agency model in the traditional form has vanished in large markets across the world. “I do not see why India will be any exception to that particular development,” the Irda chief added.

He said policy holders will gradually have to pay more for motor, health and other general insurance covers as costs would go up due to companies setting aside higher funds for claim settlements.

“I think the demand and supply position in the non-life industry will be such that prices should harden and I expect to see evidence of that in the course of next few years. And I would like to make it even harder as we go along,” said Hari Narayan. He had said that the non-life insurance companies would need to bring in changes in marketing, pricing and modes of claim settlement to become profitable.

“Because of the requirement of increase in provisioning, there will be a reduction in capacity and because of that there will be a hardening of prices,” he added.

Irda has already proposed to increase provisioning requirement for insurers providing motor insurance covers.

Irda had increased the provisions made for motor pool to 153% of book value for the four years till March.

IndiaFirst Life crosses Rs. 900 cr in new business

IndiaFirst Life Insurance, a joint venture between Bank of Baroda and Andhra Bank along with UK’s leading risk, wealth and investment company Legal & General, on Monday announced that the company had crossed Rs. 900 crore in new business premium in the first 500 days of operations.

“With Rs. 703-crore of new business in 2010-11 and Rs. 200-crore in the 4.5 months of 2009-10, IndiaFirst crossed Rs. 900 crore of total new business in exactly 500 days of commencement of business operations on 16 November, 2009. This is the fastest run rate by any life insurance company in the country,” IndiaFirst Life Insurance managing director & CEO, P Nandagopal said in the financial capital.

IndiaFirst is the fastest to achieve Rs. 100 crore in just 100 days of operations,Rs. 200 crore in 4.5 months of operations, and over Rs. 300 crore in under 9 months from inception, resulting in the highest ever start-up phase productivity in the industry. Know more about life insurance

The company has covered 1.2 million lives during this period. The Total Assets under Management (AUM) with the company at the close of 500 days was Rs. 1,000 crore, Nandagopal said.

Insurance to be available on Cell phones

India First Life Insurance is a joint venture among Bank of Baroda, Andhra Bank and UK-based Legal & General. They stepped late in the insurance sector but have done well in bancassurance model. P Nandagopal is the managing director and CEO of India First Life Insurance.

Business strategy for growth:

· He believes that since they are a new company and have entered late into the insurance, they can start afresh. There strategy will take into account the new regulatory changes right from the start. Their balanced approach will not be affected by the changes in regulation.

· They will be completing one year of operation this month. They boast of R600-700 crore worth of insurance policies sold in the very first year of business

· Their product mix comprises 90% of Ulip and remaining are traditional products. Total assets under management (AUM) is at R1,000 crore, 60% of which was constituted by Ulips.

· While many insurers are reducing the share of Ulips contribution in their growth portfolio, India First Life Insurance plan to continue to focus on Ulip products, rather than non-transparent and highly priced traditional products in future too. As they believe that even the traditional products bear risks.

· They don’t believe in technical differentiation of products but believe in creation of need-based product base. This does not mean that they don’t want sales from saving products rather they want to keep at least 30% of sales from savings products; 15-20% of revenue from health products; 30% from pension schemes and 20% of investment products.

· India First Life Insurance plans to launch three to four products during the next financial year and half of them will be Ulips. They may even launch Ulip-based pension products, (provided Irda liberalizes few of existing pension norms).

· 65% of company funds are invested in equities and remaining in debt.

· Currently, they have 1,200 employees and plan to add 300-400 staff during the next financial year.

· More than 95% of their sales come from bancassurance channels, which are operated through 3,000 branches of Bank of Baroda and Andhra Bank. They are eager to make their presence felt across all 5,000 branches of the two banks in coming three years.

· Their plans include reducing their dependence on bancassurance by two third in three years as well.

· IndiaFirst just launched its digital channel ‘LifeStore’ which is a do-it-yourself site that helps customers complete their insurance requirements online. They are even working towards making policy transactions possible over cell phones in near future.

Third-party agents | Irda tightens norms

Move to contain industry growth, say insurers.
The Insurance Regulatory and Development Authority (Irda) on Wednesday announced firm guidelines on agents servicing third-party policies. It has linked the norms to their past presentation and the number of years of experience.
The regulator on Wednesday said the total amount collected by agents for a given financial year should not exceed 3 times the renewal commission earned in the previous financial year. Also, agents for third-party services should have been in survival for at least two years.
A senior Irda official said there had been complaints of agents procuring business on behalf of other agents. He referred to an incident where an agent in Kerala had disappeared with the money of policyholders.
Irda said, “The insurer should assign this action to agents and corporate agents by allocating only a specified list of the policies, where the services of the agents that procured the business are no longer available to the insurer,”
Insurers outsource cheque pick-up work and premium collection to individual agents and corporate agents. Irda has defined such collection and pick-up by agents who have not procured such business as outsourcing. It asked insurers to look at the credentials of individual agents and corporate agents while outsourcing these.
Insurance companies’ executives said the move would restrict the industry.
P Nandagopal, chief executive officer of India First Life Insurance, says Irda should not get into micro management. “Risk management systems should be put in place and the regulator should not look into micro management. This is restrictive.”
Another executive of a large insurance company said the move was absolutely restrictive and would only bring down the premium collection.
Life Insurance Corporation of India (LIC) would be the most affected.
“This decision has been taken after consulting all parties,” an Irda official added. He said an insurer should remain accountable to the receipts issued by authorized agents or intermediaries. “Where an insurer permits its agent to collect premiums on its behalf, it shall be noted that in such instances, the agent is acting on behalf of the insurer,” said Irda.
It has put up a list of core and non-core activities. Those such as underwriting, product design and all actuarial functions, bank reconciliation and market conduct issues are core. Call centre and outbound calling for registering complaints or answering enquiries, claim processing for overseas medical insurance contracts and tele-marketing is non-core.
Insurers are asked to terminate all existing outsourcing contracts entered into in breaking of these guidelines before June 31, 2011. Irda said it might relax the limit by three more months, on a case to case basis, in respect of the existing contracts.