Life insurance rates to go up on lifestyle & stress

Life insurance companies may need to raise their premium rates on the basis of a new industry-wide study on mortality to revise 15-year-old data.

New data show that emerging risks from urban lifestyles and the spread of new strains of diseases in congested areas are putting more men and women in the working age at risk. This means while the average life expectancy of Indians has improved dramatically since the 1990s, more younger people in urban areas are falling prey to stress and related diseases. Since they are also the largest segment of people who take out life insurance policies, the premium that insurance companies need to charge them will rise.

This has put the Insurance Regulatory and Development Authority in a fix. If it allows the insurance companies to adopt the new table, the new rates will certainly will have to be brought in.

The mortality table has been prepared for the Indian insurance industry by the Mortality and Morbidity Investigation Centre set up by the Life Insurance Council and the Institute of Actuaries of India. The study was made by noted actuary KP Sharma.

The centre studied data furnished by 15 insurers for three years to come out with the first mortality table after the sector was opened up to private companies. The last mortality table was prepared by the Life Insurance Corporation (LIC) in 1996 and was used by the new players with the regulatory permission.

An improvement in the mortality risks would have benefited the life insurance and pension customers in the country as they would have paid much lower premiums and would have received bigger maturity and death claims. But based on the new report, the mortality risks in India on an average has remained almost same.

For instance, it shows life risks of all females have improved below age 24 and above age 45, but has deteriorated between ages 25 and 44. The maximum deterioration for all females has occurred at the age of 34.

Similarly, the life risks of all males have improved in the age category of 20 to 26 and above age 52, but between 27 and 52 (the productive working years), such risks seem to have increased.

Max New York Life Insurance to use social media for customer connect

With a view to leverage the impact of social networking, leading insurer Max New York Life Insurance is mulling an initiative whereby its customers can connect with the company through SMS to get the complaints resolved. "Social media has become an effective tool to increase networking and business development efforts. To leverage the impact of social networking on businesses, we are planning to start an initiative whereby our customers can just send an SMS and get their grievances resolved," the company's Director and Head (Information Technology), Hitesh Arora, told PTI here today. Max New York Life Insurance, a joint venture between MAX India and New York Life International, plans to launch the initiative in the third quarter (Q3) of FY 12, he said. "We want to use the SMS platform for connecting with our customers. Under the initiative, when a customer sends an SMS, he would get either an SMS or an email from our side informing about the registration of his complaint. An executive will then contact the customer and help him resolve the issues," he explained. The company had, last year, started a similar interactive initiative on Facebook by creating a community titled 'Igenius' for parents to discuss opportunities that would help hone their children's hidden talents, he said. "We have around 2-lakh members including parents and experts in the community who share their experiences as well as information. This platform has also helped us in reaching out to the parents to inform them about our new policies for children, thus generating business for us

IRDA issues new rule on telemarketing

Telecallers of insurance products should be trained according to the syllabus prescribed by the Insurance Regulatory and Development Authority (IRDA) and they should inform clients that the call is being recorded and that the client is free to a voice copy, according to the new guidelines issued by the insurance watchdog.

“The training shall be for duration of not less than 25 hours as per syllabus to be agreed by IRDA in matters related to regulations, disclosures, ethical conduct of business and specific instructions to be complied with while making the calls,” IRDA said.

The new guidelines on telemarketing and distance mode marketing shall come into force from October 1. The hours during which calls are made shall be in agreement with the orders issued by TRAI/DoT from time to time.

In all, instances where a policy is issued without obtaining a proposal in physical form, the insurers should provide a verbal transcript of the voice/electronic record of the queries raised and answers on the basis of which the policy has been underwritten, along with the policy bond, the order said.

“No inconvenience, nuisance or harm shall be caused to the clients in the course of solicitation or thereafter. Full disclosures shall be made to the clients under all modes of distance marketing and the requirements of confidentiality, privacy and non-disclosure shall be complied with,” it said.

Also, insurers shall not solicit ULIPs of non-single premium type for annualized premium exceeding Rs 50,000 over telephonic mode (voice as well as SMS). Single premium ULIPs shall not be solicited for a premium of more than Rs 1, 00,000 over telephonic mode.

The insurance watchdog has also banned selling or soliciting variable insurance product over distance marketing mode.

The records pertaining to every call made and SMS sent by a telemarketer/corporate agent/broker that materialises into a policy shall be transferred to the insurer’s location within 30 days of conclusion of sale. In the case of telephone calls, the records transferred shall be the recordings of the entire conversation.

Insurers/brokers shall monitor the calls live by arranging for listening to at least 1(%) per cent of the calls as they happen.

Insurers shall verify at least 3(%) per cent of the calls leading to sales for compliance with the guidelines, by engaging a team of dedicated employees to listen to the call recordings.

The observations made in the course of verification should be preserved in a retrievable form for a period of not less than three years, IRDA added.

IRDA issues new rule on telemarketing

Telecallers of insurance products should be trained according to the syllabus prescribed by the Insurance Regulatory and Development Authority (IRDA) and they should inform clients that the call is being recorded and that the client is free to a voice copy, according to the new guidelines issued by the insurance watchdog.

“The training shall be for duration of not less than 25 hours as per syllabus to be agreed by IRDA in matters related to regulations, disclosures, ethical conduct of business and specific instructions to be complied with while making the calls,” IRDA said.

The new guidelines on telemarketing and distance mode marketing shall come into force from October 1. The hours during which calls are made shall be in agreement with the orders issued by TRAI/DoT from time to time.

In all, instances where a policy is issued without obtaining a proposal in physical form, the insurers should provide a verbal transcript of the voice/electronic record of the queries raised and answers on the basis of which the policy has been underwritten, along with the policy bond, the order said.

“No inconvenience, nuisance or harm shall be caused to the clients in the course of solicitation or thereafter. Full disclosures shall be made to the clients under all modes of distance marketing and the requirements of confidentiality, privacy and non-disclosure shall be complied with,” it said.

Also, insurers shall not solicit ULIPs of non-single premium type for annualized premium exceeding Rs 50,000 over telephonic mode (voice as well as SMS). Single premium ULIPs shall not be solicited for a premium of more than Rs 1, 00,000 over telephonic mode.

The insurance watchdog has also banned selling or soliciting variable insurance product over distance marketing mode.

The records pertaining to every call made and SMS sent by a telemarketer/corporate agent/broker that materialises into a policy shall be transferred to the insurer’s location within 30 days of conclusion of sale. In the case of telephone calls, the records transferred shall be the recordings of the entire conversation.

Insurers/brokers shall monitor the calls live by arranging for listening to at least 1(%) per cent of the calls as they happen.

Insurers shall verify at least 3(%) per cent of the calls leading to sales for compliance with the guidelines, by engaging a team of dedicated employees to listen to the call recordings.

The observations made in the course of verification should be preserved in a retrievable form for a period of not less than three years, IRDA added.

Mishap claims hit insurers firm

CEOs of non-life insurance companies met with the Insurance Regulatory and Development Authority on the first day of the new fiscal seeking the regulator's intervention to plug losses arising out of compensation claims from accident victims. In the meeting, non-life insurers told the regulator that the government should share losses out of its consolidated fund if the business were to run as a social obligation.

A fortnight before insurance companies closed their books for the financial year; the insurance regulator asked all non-life insurance companies to set aside funds to meet claims from victims of road accidents under the third-party cover. The industry comprising 24 companies was asked to set aside Rs 153 for every Rs 100 that it had collected as premium. This would result in all companies together providing around Rs 3,500 crore. The hit would be taken by each company in proportion to its overall market share which would result in state-owned companies bearing the brunt.

"The first day of the new year is the most important for general insurers since most policies are renewed on this day. But given the overwhelming concern over third-party losses we chose to meet the regulator," said the MD of a non-life company. Several private insurance companies said that they have already informed their shareholders of the need for additional capital either to meet solvency margin requirements or to make good the losses arising out of additional provisions.

The third-party insurance portfolio of insurance companies had been bleeding for over two decades after limits on compensation were removed. Although third-party premium rates have been revised, the increases did not keep pace with the increase in level of compensation. Some years back the IRDA bought time to address the issue by asking insurers to pool all the third-party business into a common fund and share the losses. Insurers were also promised that they premium rates would be increased. Over the years compensation awards rose but premium remained static. This has resulted in a gap in what the motor-third party pool has and the amount that it will have to pay out.

IRDA has told insurers that it will increase rates on third-party insurance with premium for this cover going up by 80% for commercial vehicles. While the new rate card was expected to be implemented from the first day of the fiscal when most renewals take place, The IRDA has not yet announced the tariff.

The government meanwhile has plans to introduce a legislation which will cap the liability of insurance companies. A committee headed by has recommended that compensation for accident victims be capped and the time limit for lodging compensation claims. The legislation, if it is passed in the present form, will prevent future losses.

US disappoint with India's insurance laws

Foreign partners in the Indian insurance companies operate in an "extremely uncertain" environment due to snake and ladder like laws governing the sector, the US Trade office said.

While an Insurance Laws (Amendment) Bill is pending with the Standing Committee of Parliament for increasing the foreign investment in insurance joint ventures to 49(%) per cent, an existing regulation requires that after completing 10 years of operation, overseas investment in such companies would have to be brought back to 26(%) per cent.

Several of the insurance joint ventures, including Reliance Life are about to complete 10 years of operations in India. Whereas HDFC Standard Life has already completed a decade of business here.

So, unless this provision is amended, passage of the Insurance Laws (Amendment) Bill allowing foreign equity to 49(%) per cent would be meaningless.

The US Trade Office in its 2011 National Trade Estimate Report on Foreign Trade Barriers talks about this paradox in the Indian insurance laws.

"While the Insurance Regulatory and Development Authority (IRDA) said it plans to publish a clarification of these regulations, foreign investors continue to operate in an extremely doubtful environment," the US said.

India first opened its insurance sector for foreign participation of up to 26(%) per cent in both life and non-life segment in 1999. A bill pertaining to raising FDI ceiling to 49(%) per cent in the sector is pending before Parliament.

The Bill, when enacted, would allow raising the FDI cap for the industry to 49(%) per cent. However, it has been awaiting approval since 2008, as it was delayed by strong opposition from the Left parties during UPA-I government.

"As with other sectors being considered by the government for greater FDI liberalisation, opposition party lawmakers are concerned that passing the Insurance Bill will result in foreign companies' holdings increasing significantly," the report said.

Keen to enter the Indian insurance market, legendary investor Warren Buffett had also said during his recent visit to New Delhi that a foreign investment cap of 26(%) per cent in insurance sector here was a deterrent.

Buffett's Berkshire Hathaway had recently forayed into the Indian non-life insurance sector as a corporate agent of Bajaj Allianz General.

In India, besides, state-owned LIC, 22 private companies offer life insurance policies. While the general insurance sector has 21 players, which include four PSUs.

Student’s insurance plan to be rework

The state government will rework the scheme for provided that accident insurance meant for school students. School education minister Rajendra Darda expressed dissatisfaction over the existing framework in the state lawmaking assembly on Friday.

Darda was replying to a query raised by Shiv Sena member Dadaji Bhuse during the question hour. Darda said that insurance was given in only 21,488 cases since 2003.

The minister said that the settlement ratio was less considering that the state had paid over Rs 17.96 crore in premium to various insurance companies appointed for the task. The government had tie-ups with Oriental Insurance, National Insurance and United India Assurance for the policy. Darda said that Rs 5.55 crore was paid as premium to Oriental Insurance from 2003 to 2005, another Rs 4.46 crore was paid to Oriental Insurance and National Insurance in the next three years (2005-2008).

An amount of Rs 1.69 crore was also paid to United India Assurance for 2009-10. The state government has been paying a premium towards insurance of school students against accidents under the Rajiv Gandhi Security Insurance policy. Darda announced that the state would bring out a policy where it would provide monetary assistance to students in need. Assembly speaker Dilip Walse-Patil later announced a meeting on the issue.

Policy for senior citizens on the cards: The state government will form a policy for senior citizens, social justice minister Shivajirao Moghe said in the legislative council on Friday. The minister was replying to the non-official resolution moved by MLC Chandrakant Patil, BJP. NCP member Hemant Takle said that senior citizens should be given there was a need for special attention towards senior citizens in the state.

Moghe said, "The state government will make a comprehensive policy for senior citizens."

Mumbai: Stating that bureaucrats were insensitive to housing problems, deputy speaker Vasant Dawkhare called for a holistic view of the problems of police housing in Mumbai