Anil Dhirubhai Ambani Group Company Reliance Life Insurance has emerged as the leading private sector insurer in conditions of the number of policies sold in the month of July.
Reliance Life Insurance sold 2, 81,810 policies throughout the month, according to IRDA data.
However, in terms of total premium collections in July, ICICI Prudential was the top private player, mopping up Rs 584 crore, while SBI Life garnered Rs 563 crore and Reliance Life Insurance Rs 296 crore.
Meanwhile, state-owned LIC collected a total premium of Rs 5,690 crore in the same month.
During the first quarter of the current fiscal, Reliance Life sold 4, 93,899 policies as next to 4, 06,699 policies in the parallel period last year.
Among the private life insurance players, ICICI Prudential saw its premium collections from new business grow by 73(%) per cent to Rs 1,987 crore throughout the April-July period, while Reliance Life witnessed a growth of 23(%) per cent in new premium collections to Rs 901 crore for the 4 months ended July, 2010.
SBI Life's premium collections from new business grew to Rs 1,539 crore in April--July, 2010, from Rs 1,398 crore throughout the same period last year.
LIC recorded an over 70(%) per cent increase in new premium collections to Rs 24,430 crore during April--July this year from Rs 14,265 crore a year ago, according to the data.
Overall, the 23 life insurers in the country collectively mopped up Rs 34,249 crore as new first-year premium during the period, a 55(%) per cent increase from Rs 21,996 crore in the year-ago period.
The private sector, comprising 22 life insurers, together accounted for Rs 9,818 crore worth of new business in the April--July period, compared to Rs 7,730 crore a year earlier, a growth of 27(%) per cent.
Monday, August 30, 2010
Wednesday, August 18, 2010
Revival of lapsed policies made easy
Once in a while there comes a time when the payment of premiums becomes difficult thus causing the policy to lapse. Policy lapsation can be dangerous as you or your financial dependants/beneficiaries may not get any benefit, which was the reason for buying the insurance cover in the first place.
You just need to know the reasons behind the policy lapsation and process of revival if ever there is any requirement in future (whatever the reason may be).
Reasons for policy lapse:
-because of carelessness
-because one doesn’t see value in continuing with the policy,
-because of a financial crisis and can’t afford it any longer
Policy will lapse only if you fail to pay your premiums regularly. If something happens to you during this period, the insurance company will honor its commitment and pay you or your beneficiaries, depending upon the type of policy you hold. However, if you stop paying your premium, then the insurance company will no longer be obliged to continue providing an insurance cover on your life. In this situation, your policy is said to have lapsed. The insurer might not provide any monetary benefits (the sum assured under the policy) to you or your beneficiaries if something were to happen to you.
Before your policy lapses, you still have a limited time period during which you can make well on a delayed premium payment. If you are late on your premium payment, the insurer will send you a reminder and give you a grace period within which to pay your premium. This is usually 15 days when you pay your premium monthly and 30 days in all other cases. If you fail to pay the premium even after this grace period, your policy will lapse. The insurer will send you a letter informing you about the same.
Revival: Most traditional policies (like term, whole-life and endowment plans) can be revived, subject to certain criteria that your insurer might impose on you.
Revival can happen at any time, but the conditions for revival might depend upon how long the policy has been lapsed for. Under the insurance laws, if the policy has been in force for at least three years, the insured gets up to two years to revive the policy. Some insurers like LIC have special schemes under which policies can be revived for up to five years from being lapsed.
- If you revive the policy within six months from the date of lapsation, the process might be as simple as paying the overdue premium (and interest) to catch up on the delay on your part.
- If you revive the policy after six months from the date of lapsation, you might be required to pay the overdue premium, penalty fees, as well as interest payment that could be up to 12-18% of the premium payment, depending upon the type of policy and the date of purchase.
At the time of revival, the insurer might impose a lot of conditions or even decline your request for a policy revival if the company is not convinced about the honesty of your application on grounds of suspected fraud or the like. It can be very likely that the insurer will ask you to appear for a medical test before the policy can be revived to ascertain whether you have developed a new medical condition during policy lapse that might expose the insurance company to a high risk in insuring your life.
At the time of revival, usually, full benefits that you or your beneficiaries are eligible for will be reinstated. However, if after revival, the insured commits suicide within one year, the insurer can deny the claim. Similarly, if the insured passes away within two years of the revival, the insurer has the option of conducting an inquiry before they decide to pay the claims to the beneficiaries.
You just need to know the reasons behind the policy lapsation and process of revival if ever there is any requirement in future (whatever the reason may be).
Reasons for policy lapse:
-because of carelessness
-because one doesn’t see value in continuing with the policy,
-because of a financial crisis and can’t afford it any longer
Policy will lapse only if you fail to pay your premiums regularly. If something happens to you during this period, the insurance company will honor its commitment and pay you or your beneficiaries, depending upon the type of policy you hold. However, if you stop paying your premium, then the insurance company will no longer be obliged to continue providing an insurance cover on your life. In this situation, your policy is said to have lapsed. The insurer might not provide any monetary benefits (the sum assured under the policy) to you or your beneficiaries if something were to happen to you.
Before your policy lapses, you still have a limited time period during which you can make well on a delayed premium payment. If you are late on your premium payment, the insurer will send you a reminder and give you a grace period within which to pay your premium. This is usually 15 days when you pay your premium monthly and 30 days in all other cases. If you fail to pay the premium even after this grace period, your policy will lapse. The insurer will send you a letter informing you about the same.
Revival: Most traditional policies (like term, whole-life and endowment plans) can be revived, subject to certain criteria that your insurer might impose on you.
Revival can happen at any time, but the conditions for revival might depend upon how long the policy has been lapsed for. Under the insurance laws, if the policy has been in force for at least three years, the insured gets up to two years to revive the policy. Some insurers like LIC have special schemes under which policies can be revived for up to five years from being lapsed.
- If you revive the policy within six months from the date of lapsation, the process might be as simple as paying the overdue premium (and interest) to catch up on the delay on your part.
- If you revive the policy after six months from the date of lapsation, you might be required to pay the overdue premium, penalty fees, as well as interest payment that could be up to 12-18% of the premium payment, depending upon the type of policy and the date of purchase.
At the time of revival, the insurer might impose a lot of conditions or even decline your request for a policy revival if the company is not convinced about the honesty of your application on grounds of suspected fraud or the like. It can be very likely that the insurer will ask you to appear for a medical test before the policy can be revived to ascertain whether you have developed a new medical condition during policy lapse that might expose the insurance company to a high risk in insuring your life.
At the time of revival, usually, full benefits that you or your beneficiaries are eligible for will be reinstated. However, if after revival, the insured commits suicide within one year, the insurer can deny the claim. Similarly, if the insured passes away within two years of the revival, the insurer has the option of conducting an inquiry before they decide to pay the claims to the beneficiaries.
Tuesday, August 17, 2010
Irda may cap charges on basic policies
After setting stiff norms for unit-linked insurance plans (Ulips), the Insurance Regulatory and Development Authority (Irda) is planning to cap charges on traditional products within three months.
“We will review the situation after September. If insurers try to cover the cost of squeeze in margins (due to new Ulip norms) by levying a higher charge on conventional products, we will cap it,” said a senior Irda official.
Last year, after the market regulator banned entry load on mutual funds, Irda capped overall charges on Ulips from January this year.
The difference between the net and the gross yield was capped at three per cent for products with a tenor of less than 10 years and at 2.25 per cent for those with a tenor of more than 10 years. In the new Ulip guidelines, the regulator capped this difference even during the policy term.
“At present, we are busy clearing Ulips. We will start working on the guidelines within three months of seeing the impact of the cap on Ulips,” the official added.
The regulations allow insurers to pay up to 40 per cent commission on life insurance products, including traditional plans. Insurers with more than 10 years of operation can pay only up to 35 per cent commission on selling both Ulips and conventional products.
Insurance companies are, however, against any price control and micro management by the regulator in conventional policies. “Fundamentally, we are against price control. But the industry also needs to become more responsible while designing products. On participatory products, the regulation is such that 90 per cent profit goes to policyholders and only 10 per cent to shareholders. Given the high protection and other features, there products need not be subject to price control,” said Rajesh Sud managing director and CEO, Max New York Life.
“There is nothing to cap in traditional products. These are a different class of products. There is a well defined premium and investment pattern stipulated by the regulator. They do not have any characteristic of Ulips,” said G V Nageswara Rao managing director and CEO, IDBI Fortis Life Insurance.
“We will review the situation after September. If insurers try to cover the cost of squeeze in margins (due to new Ulip norms) by levying a higher charge on conventional products, we will cap it,” said a senior Irda official.
Last year, after the market regulator banned entry load on mutual funds, Irda capped overall charges on Ulips from January this year.
The difference between the net and the gross yield was capped at three per cent for products with a tenor of less than 10 years and at 2.25 per cent for those with a tenor of more than 10 years. In the new Ulip guidelines, the regulator capped this difference even during the policy term.
“At present, we are busy clearing Ulips. We will start working on the guidelines within three months of seeing the impact of the cap on Ulips,” the official added.
The regulations allow insurers to pay up to 40 per cent commission on life insurance products, including traditional plans. Insurers with more than 10 years of operation can pay only up to 35 per cent commission on selling both Ulips and conventional products.
Insurance companies are, however, against any price control and micro management by the regulator in conventional policies. “Fundamentally, we are against price control. But the industry also needs to become more responsible while designing products. On participatory products, the regulation is such that 90 per cent profit goes to policyholders and only 10 per cent to shareholders. Given the high protection and other features, there products need not be subject to price control,” said Rajesh Sud managing director and CEO, Max New York Life.
“There is nothing to cap in traditional products. These are a different class of products. There is a well defined premium and investment pattern stipulated by the regulator. They do not have any characteristic of Ulips,” said G V Nageswara Rao managing director and CEO, IDBI Fortis Life Insurance.
Saturday, August 14, 2010
Insurance IPOs doubtful till hike in FDI limit
Listing plans of life insurance companies may take longer, with the delay in raising the foreign direct investment (FDI) cap to 49 per cent from the present 26 per cent.
According to a study by HSBC, insurance companies may not go for an initial public offer (IPO) till the FDI limit was raised
“Political winds have changed in recent weeks and the FDI limit increase was not tabled in the monsoon session of Parliament as expected. Indian insurance IPOs are unlikely until the FDI limit is raised, as the foreign partner understandably prefers to raise their stake ‘off market’ first,” the report said.
At present, insurance companies may list only after completing 10 years of operation. HDFC Standard Life will be the first since the sector was opened to complete 10 years, this October, while ICICI Prudential will do so in November. Birla Sun Life will be eligible to tap the public market in January and SBI Life, promoted by the country’s largest bank, can do so by March.
“We do not see the current grey requirement of a 10-year track record as an immovable object… The vast majority of insurers we met seemed keen to do an IPO once regulations permit, owing to a desire to raise capital and/or establish a price discovery mechanism,” the report said.
Foreign partners are interested in increasing their stake from 26 per cent to 49 per cent once the FDI limit is raised. “Then, both the local promoter and the foreign partner would sell down equally in any IPO to meet Sebi’s (the regulator) recently introduced 25 per cent minimum free float,” the report said.
While most insurance companies have agreed to a fair market price at which foreign partners can increase their stake, Allianz has set a price with Bajaj to raise its stake.
Valuations, however, will be subject to negotiation, with each partner appointing an investment bank to hammer out the deal. Most Indian insurers have not disclosed their embedded value (EV) or the valuation of a company in the absence of a standard industry norm. Three insurers — HDFC Standard Life, Max New York Life and Birla Sun Life — have disclosed their EV.
According to a study by HSBC, insurance companies may not go for an initial public offer (IPO) till the FDI limit was raised
“Political winds have changed in recent weeks and the FDI limit increase was not tabled in the monsoon session of Parliament as expected. Indian insurance IPOs are unlikely until the FDI limit is raised, as the foreign partner understandably prefers to raise their stake ‘off market’ first,” the report said.
At present, insurance companies may list only after completing 10 years of operation. HDFC Standard Life will be the first since the sector was opened to complete 10 years, this October, while ICICI Prudential will do so in November. Birla Sun Life will be eligible to tap the public market in January and SBI Life, promoted by the country’s largest bank, can do so by March.
“We do not see the current grey requirement of a 10-year track record as an immovable object… The vast majority of insurers we met seemed keen to do an IPO once regulations permit, owing to a desire to raise capital and/or establish a price discovery mechanism,” the report said.
Foreign partners are interested in increasing their stake from 26 per cent to 49 per cent once the FDI limit is raised. “Then, both the local promoter and the foreign partner would sell down equally in any IPO to meet Sebi’s (the regulator) recently introduced 25 per cent minimum free float,” the report said.
While most insurance companies have agreed to a fair market price at which foreign partners can increase their stake, Allianz has set a price with Bajaj to raise its stake.
Valuations, however, will be subject to negotiation, with each partner appointing an investment bank to hammer out the deal. Most Indian insurers have not disclosed their embedded value (EV) or the valuation of a company in the absence of a standard industry norm. Three insurers — HDFC Standard Life, Max New York Life and Birla Sun Life — have disclosed their EV.
Wednesday, August 11, 2010
IndiaFirst Life Insurance cross 1 lakh policy marker
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, has announced that it has crossed the 1 lakh policies landmark in less than one year, the fastest by any private life insurer.
This was announced by P. Nandagopal, managing director & CEO, IndiaFirst Life Insurance.
The company has achieved the fastest run rate amongst all life insurance companies at the start up phase by crossing the 1 lakh policies landmark within just 9 months of its operations.
“We are indeed happy to receive such an encouraging response from our customers. The achievement of 1 lakh policies in just less than 9 months indicates the potential of our bancassurance model and the value of our product portfolio. We will intensify our efforts to introduce simple and value for money plans backed up by unparalleled service delivery,” said Dr. Nandagopal.
The company targets to collect Rs 700 crore through new business premium by the end of this fiscal year.
IndiaFirst claims to be 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.
Dr. Nandagopal said the company aims at taking its products and services closer to its customers. “As part of our overall expansion plan, we have activated all 4,500 bank branches (Bank of Baroda and Andhra Bank put together) to reach out to our customers across the country,” he said.
Get more information about Life Insurance.
This was announced by P. Nandagopal, managing director & CEO, IndiaFirst Life Insurance.
The company has achieved the fastest run rate amongst all life insurance companies at the start up phase by crossing the 1 lakh policies landmark within just 9 months of its operations.
“We are indeed happy to receive such an encouraging response from our customers. The achievement of 1 lakh policies in just less than 9 months indicates the potential of our bancassurance model and the value of our product portfolio. We will intensify our efforts to introduce simple and value for money plans backed up by unparalleled service delivery,” said Dr. Nandagopal.
The company targets to collect Rs 700 crore through new business premium by the end of this fiscal year.
IndiaFirst claims to be 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.
Dr. Nandagopal said the company aims at taking its products and services closer to its customers. “As part of our overall expansion plan, we have activated all 4,500 bank branches (Bank of Baroda and Andhra Bank put together) to reach out to our customers across the country,” he said.
Get more information about Life Insurance.
Max New York Life launched: “Platinum Protect”
Max New York Life Insurance has brought ‘Platinum Protect’, the newest chronicle of term plan to the fore, and by means of the same, it is increasing product portfolio of risk protection solutions. Max New York Life Insurance happens to be one of the foremost life insurance companies in the realm of India and is attaining laurels increasingly with the passing of each day almost.
It is worthwhile to mention that Max New York Life Insurance, as a result of this term plan, has launched an inimitable aspect of ‘Reduced Insurance Cover’ in the Indian market or the first time. Thanks to the same, it is likely that in longer duration plans of over 20 year policy term, policyholders will be able to take pleasure in continued protection coverage from the 16th year onwards albeit they opted for not to make additional premium payments.
Speaking on the development, Rajesh Sud, CEO and Managing Director, Max New York Life Insurance Company, stated, “India is an underinsured market with low per capita spend on life insurance. People are increasingly becoming aware of the true value of life insurance but need a solution that bridges the gap between their Life’s Economic Value and their propensity to spend on the product. With Platinum Protect, we will not only be able to bring the benefits of life insurance to a larger segment of the market but also ensure adequate protection for them at an affordable price.” The basic purpose of life insurance is protection and Max New York Life Insurance has led the market in the protection space having the highest sum assured multiple in the industry. Our strategy targets moving this further”, added Mr. Sud.
Max New York Life Insurance Company Ltd. is basically a joint venture between Max India Ltd., one of India’s leading multi-business corporations and New York Life International, the international arm of New York Life, a Fortune 100 company.
It is worthwhile to mention that Max New York Life Insurance, as a result of this term plan, has launched an inimitable aspect of ‘Reduced Insurance Cover’ in the Indian market or the first time. Thanks to the same, it is likely that in longer duration plans of over 20 year policy term, policyholders will be able to take pleasure in continued protection coverage from the 16th year onwards albeit they opted for not to make additional premium payments.
Speaking on the development, Rajesh Sud, CEO and Managing Director, Max New York Life Insurance Company, stated, “India is an underinsured market with low per capita spend on life insurance. People are increasingly becoming aware of the true value of life insurance but need a solution that bridges the gap between their Life’s Economic Value and their propensity to spend on the product. With Platinum Protect, we will not only be able to bring the benefits of life insurance to a larger segment of the market but also ensure adequate protection for them at an affordable price.” The basic purpose of life insurance is protection and Max New York Life Insurance has led the market in the protection space having the highest sum assured multiple in the industry. Our strategy targets moving this further”, added Mr. Sud.
Max New York Life Insurance Company Ltd. is basically a joint venture between Max India Ltd., one of India’s leading multi-business corporations and New York Life International, the international arm of New York Life, a Fortune 100 company.
Tuesday, August 10, 2010
Only for the risk-disinclined
Despite Irda’s good moves, insurance policies should be bought for cover, and not for investment.
Those planning to buy unit-linked insurance plans (Ulips) might as well wait for some time. This is because products launched from September 1 will be quite different from the existing ones
This is a crucial phase where the regulator, the Insurance Regulatory and Development Authority (Irda), and insurers are exchanging notes to fine-tune the products. Since June 28, when the first round of guidelines came, more changes have been introduced. Last week, Irda issued another set of clarifications that would change things further.
GUIDELINES
• 4.5 per cent guaranteed return for Ulip pension plan on gross premium till March 2011
• After March 2011, returns will be 50 basis points above the average of reverse repo rate at each quarter-end in the 3-6
per cent range
• Difference between minimum and maximum distribution charges to not be more than 1.5 times
• From 5th year onwards, minimum difference to be given on completed year
• Life cover on top-up premium to be based at the age of payment and not at the entry age
Pension plans
Pension plans will certainly look better. But, only for the risk-averse who have more than Rs 70,000 to invest annually. With a guaranteed return of 4.5 per cent on Ulip pension plans on gross premiums, returns will be higher than the existing savings deposit rate of 3.5 per cent.
But this 4.5 per cent will only be paid till March 11, 2011. After that, the returns will be linked to the reverse repo rate. Policyholders will get 0.5 per cent more than the average reverse repo rate at the end of each quarter. The regulator has asked insurers to give in the range of three-six per cent on pension plans after March 2011.
Since policyholders cannot withdraw money in the interim, liquidity could be an issue. For liquidity seekers, it makes sense to look at fixed deposits. State Bank of India is offering 7.25 per cent on five to eight years and 7.5 per cent on eight to 10 years deposits.
Also, most people already have exposure to the higher paying employee provident fund (8.5 per cent annually) and the public provident fund (8 per cent annually). But returns from these two can get capped as one can invest only up to Rs 70,000 annually. For ones who wish to invest more than this, this option could be good.
Costs
The newly-inserted clause...“the maximum and the minimum charges shall not vary by more than 1.5 times” should come as a relief.
For instance, if one considers a policy that was charging a premium allocation charge (PAC) of 50-60 per cent in the first three years, earlier, the cost in the first year could have been 30 per cent in the first year, 20 in the second and 10 in the third.
Now, because of the formula, the charge will be over five years. So, one could see numbers like these: If an insurer is charging, say, eight per cent in the fifth year, he cannot charge more than 12 per cent in the first year. Accordingly, PAC will be between a 44 and 56 per cent, spread over five years.
Besides the formula and spread over five years, the difference between the net and gross premium has to be maintained – four per cent in the fifth year (for a 10-year policy), 3.75 per cent in the sixth year, and so on.
“The regulator has also clarified that the minimum returns prescribed starting from the 5th policy year will be given on completed years,” said an actuary of a life insurance company.
Where the policyholder could possibly lose out is top-up premiums. In new guidelines, Irda said top-up premiums would be used to purchase an additional cover and not invested entirely. But latest clarifications specify that policyholders will not be allowed to pay top-up premiums in the first five years. After that, top-up premiums will be used to purchase cover, but according to the existing age.
As a result, the mortality rate will come into play. If a person purchases a policy at the age of 30 and starts top-ups at 35, he will have to pay higher mortality fees.
“The new notifications remove all ambiguity. Manufacturers cannot interpret the guidelines in their own ways. Of course, if the policyholder has a very long-term perspective, he should look at insurance.
Otherwise, if you have a horizon less than five years, mutual funds, bank deposits and the likes suit you,” said P Nandagopal, managing director & CEO, IndiFirst Life.
Those planning to buy unit-linked insurance plans (Ulips) might as well wait for some time. This is because products launched from September 1 will be quite different from the existing ones
This is a crucial phase where the regulator, the Insurance Regulatory and Development Authority (Irda), and insurers are exchanging notes to fine-tune the products. Since June 28, when the first round of guidelines came, more changes have been introduced. Last week, Irda issued another set of clarifications that would change things further.
GUIDELINES
• 4.5 per cent guaranteed return for Ulip pension plan on gross premium till March 2011
• After March 2011, returns will be 50 basis points above the average of reverse repo rate at each quarter-end in the 3-6
per cent range
• Difference between minimum and maximum distribution charges to not be more than 1.5 times
• From 5th year onwards, minimum difference to be given on completed year
• Life cover on top-up premium to be based at the age of payment and not at the entry age
Pension plans
Pension plans will certainly look better. But, only for the risk-averse who have more than Rs 70,000 to invest annually. With a guaranteed return of 4.5 per cent on Ulip pension plans on gross premiums, returns will be higher than the existing savings deposit rate of 3.5 per cent.
But this 4.5 per cent will only be paid till March 11, 2011. After that, the returns will be linked to the reverse repo rate. Policyholders will get 0.5 per cent more than the average reverse repo rate at the end of each quarter. The regulator has asked insurers to give in the range of three-six per cent on pension plans after March 2011.
Since policyholders cannot withdraw money in the interim, liquidity could be an issue. For liquidity seekers, it makes sense to look at fixed deposits. State Bank of India is offering 7.25 per cent on five to eight years and 7.5 per cent on eight to 10 years deposits.
Also, most people already have exposure to the higher paying employee provident fund (8.5 per cent annually) and the public provident fund (8 per cent annually). But returns from these two can get capped as one can invest only up to Rs 70,000 annually. For ones who wish to invest more than this, this option could be good.
Costs
The newly-inserted clause...“the maximum and the minimum charges shall not vary by more than 1.5 times” should come as a relief.
For instance, if one considers a policy that was charging a premium allocation charge (PAC) of 50-60 per cent in the first three years, earlier, the cost in the first year could have been 30 per cent in the first year, 20 in the second and 10 in the third.
Now, because of the formula, the charge will be over five years. So, one could see numbers like these: If an insurer is charging, say, eight per cent in the fifth year, he cannot charge more than 12 per cent in the first year. Accordingly, PAC will be between a 44 and 56 per cent, spread over five years.
Besides the formula and spread over five years, the difference between the net and gross premium has to be maintained – four per cent in the fifth year (for a 10-year policy), 3.75 per cent in the sixth year, and so on.
“The regulator has also clarified that the minimum returns prescribed starting from the 5th policy year will be given on completed years,” said an actuary of a life insurance company.
Where the policyholder could possibly lose out is top-up premiums. In new guidelines, Irda said top-up premiums would be used to purchase an additional cover and not invested entirely. But latest clarifications specify that policyholders will not be allowed to pay top-up premiums in the first five years. After that, top-up premiums will be used to purchase cover, but according to the existing age.
As a result, the mortality rate will come into play. If a person purchases a policy at the age of 30 and starts top-ups at 35, he will have to pay higher mortality fees.
“The new notifications remove all ambiguity. Manufacturers cannot interpret the guidelines in their own ways. Of course, if the policyholder has a very long-term perspective, he should look at insurance.
Otherwise, if you have a horizon less than five years, mutual funds, bank deposits and the likes suit you,” said P Nandagopal, managing director & CEO, IndiFirst Life.
Monday, August 9, 2010
Private Life insurers go on to book profit
The controversy over rule of unit-linked insurance plans (Ulips) has had modest impact on the private life insurance industry. Most companies reported profit throughout the first quarter of the financial year on the back of marginal growth or drop in new sales and decrease in expenses.
Birla Sun Life Insurance reported its maiden profit since it started operations in 2001. It registered a net profit of Rs 9 crore during April-June 2010 as against a loss of Rs 111 crore in the parallel quarter last year. The income from new business grew around 8(%) per cent. Private players recorded a 21(%) per cent increase in income from sales of new policies during the quarter.
“The profit has risen mainly because of an increase in renewal premiums by 27(%) per cent, a reduction in the operating expense ratio by two-threee bps (basis points) and an improvement in the product mix, which now includes a larger share of traditional products, reducing the strain of new business,” said Mayank Bhatwal, chief financial officer, Birla Sun Life Insurance.
UPWARD MARCH
Q1 profit/loss of life insurers (Rs cr)
Insurers 2010-11 2009-10
SBI Life 114 39
ICICI Prudential Life# -116 -27
Bajaj Allianz Life 169 68
Birla Sun Life 9 -111
Source: Companies, BSE
# Q1 2010-11 -Before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds
SBI Life, which was at the number one position in new business income throughout the quarter, reported a net profit of Rs 114 crore as against Rs 39 crore in the related quarter last year. Its new business income fell 9(%) per cent. It was renewal premium that helped the insurer show good result.
“Our new income dropped due to group business. There was an overall increase in assets under management under the Ulip portfolio as well as non-Ulip and shareholders portfolios,” said M N Rao managing director and CEO, SBI Life.
Bajaj Allianz Life Insurance registered a net profit of Rs 169 crore compared to Rs 68 crore in the same quarter previous year. Its new business income grew marginally by 4(%) per cent to Rs 603 crore from Rs 578 crore as the company focused on profitability.
ICICI Prudential, the largest private sector player in terms of new business, reported a loss after tax of Rs 116 crore during the quarter, which will be shown as a profit of Rs 119 crore at the end of the year.
The insurer posted a profit of Rs 258 crore previous financial years. ICICI Prudential Life Insurance reported a loss after tax of Rs 116 crore, before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds, which would be transferred at the end of the financial year based on the selected actuary’s recommendation, the bank said.
Though insurance companies have turned profitable, the shareholders of these companies, except SBI Life, will have to wait for a few more quarters for dividends as insurers are yet to wipe out their accumulated losses.
Birla Sun Life Insurance reported its maiden profit since it started operations in 2001. It registered a net profit of Rs 9 crore during April-June 2010 as against a loss of Rs 111 crore in the parallel quarter last year. The income from new business grew around 8(%) per cent. Private players recorded a 21(%) per cent increase in income from sales of new policies during the quarter.
“The profit has risen mainly because of an increase in renewal premiums by 27(%) per cent, a reduction in the operating expense ratio by two-threee bps (basis points) and an improvement in the product mix, which now includes a larger share of traditional products, reducing the strain of new business,” said Mayank Bhatwal, chief financial officer, Birla Sun Life Insurance.
UPWARD MARCH
Q1 profit/loss of life insurers (Rs cr)
Insurers 2010-11 2009-10
SBI Life 114 39
ICICI Prudential Life# -116 -27
Bajaj Allianz Life 169 68
Birla Sun Life 9 -111
Source: Companies, BSE
# Q1 2010-11 -Before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds
SBI Life, which was at the number one position in new business income throughout the quarter, reported a net profit of Rs 114 crore as against Rs 39 crore in the related quarter last year. Its new business income fell 9(%) per cent. It was renewal premium that helped the insurer show good result.
“Our new income dropped due to group business. There was an overall increase in assets under management under the Ulip portfolio as well as non-Ulip and shareholders portfolios,” said M N Rao managing director and CEO, SBI Life.
Bajaj Allianz Life Insurance registered a net profit of Rs 169 crore compared to Rs 68 crore in the same quarter previous year. Its new business income grew marginally by 4(%) per cent to Rs 603 crore from Rs 578 crore as the company focused on profitability.
ICICI Prudential, the largest private sector player in terms of new business, reported a loss after tax of Rs 116 crore during the quarter, which will be shown as a profit of Rs 119 crore at the end of the year.
The insurer posted a profit of Rs 258 crore previous financial years. ICICI Prudential Life Insurance reported a loss after tax of Rs 116 crore, before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds, which would be transferred at the end of the financial year based on the selected actuary’s recommendation, the bank said.
Though insurance companies have turned profitable, the shareholders of these companies, except SBI Life, will have to wait for a few more quarters for dividends as insurers are yet to wipe out their accumulated losses.
Saturday, August 7, 2010
LIC assessment surplus up 11(%) Per Cent
Life Insurance Corporation (LIC) recorded a 10.99(%) per cent rise in survey surplus to Rs 23,478 crore in 2009-10 as compared to Rs 21,152 crore in 2008-09. Valuation surplus is the money offered with LIC for distribution after paying all expenses and taxes. LIC paid Rs 1,029 crore dividend to the government.
The insurance giant’s first-year premium income rose 33.87(%) per cent to Rs 70,891 crore from Rs 52,954 crore in 2008-09
Its total assets under management increased 31.88(%) per cent to Rs 11, 52,057 crore. The premium income rose 18.32(%) per cent to Rs 1,85,985 crore from Rs 1,57,186 crore in 2008-09 while total income went up to Rs 2,98,721 crore, a 49.15(%) per cent increase from 2008-09.
Also, first-year premium collections doubled to Rs 18,740 crore. LIC’s market share inched up to 73.43(%) per cent in the 1st quarter of 2010-11.
LIC Chairman T S Vijayan said the expenditure ratio last financial year was 13.10 (%) per cent as compared to 12.92(%) per cent in the previous year, which was “within prescribed limits” and the lowest in the highly competitive life insurance spaces.
This financial year, the insurer is targeting premium collection of Rs 2, 01,000 crore. In the first quarter of 2010-11, LIC invested Rs 39,000 crore, of which Rs 10,000 crore was in equities.
“We have targeted to invest Rs 2, 00,000 crore across asset classes by the end of this financial year,” said Vijayan. This is higher than the Rs 1, 92,000 crore invested last year. Vijayan, however, said the investment in equities would depend on the premium collected from unit-linked insurance policies (Ulips).
Last year, the share of Ulips in the total premium pie of Rs 1, 85,000 crore was 75(%) per cent and total equity investments stood at Rs 61,000 crore. “If the markets are good, people invest in ULIPs and if interest rates are good, they turn to non-linked policies,” Vijayan said.
The largest insurer has 15 lakh agents and expects a net addition of 20(%) per cent this year. LIC is one of the few insurers paying the least commission to its agents. While the average commission on Ulips is 12-15(%) per cent, LIC pays around 7(%) per cent.
The insurance giant’s first-year premium income rose 33.87(%) per cent to Rs 70,891 crore from Rs 52,954 crore in 2008-09
Its total assets under management increased 31.88(%) per cent to Rs 11, 52,057 crore. The premium income rose 18.32(%) per cent to Rs 1,85,985 crore from Rs 1,57,186 crore in 2008-09 while total income went up to Rs 2,98,721 crore, a 49.15(%) per cent increase from 2008-09.
Also, first-year premium collections doubled to Rs 18,740 crore. LIC’s market share inched up to 73.43(%) per cent in the 1st quarter of 2010-11.
LIC Chairman T S Vijayan said the expenditure ratio last financial year was 13.10 (%) per cent as compared to 12.92(%) per cent in the previous year, which was “within prescribed limits” and the lowest in the highly competitive life insurance spaces.
This financial year, the insurer is targeting premium collection of Rs 2, 01,000 crore. In the first quarter of 2010-11, LIC invested Rs 39,000 crore, of which Rs 10,000 crore was in equities.
“We have targeted to invest Rs 2, 00,000 crore across asset classes by the end of this financial year,” said Vijayan. This is higher than the Rs 1, 92,000 crore invested last year. Vijayan, however, said the investment in equities would depend on the premium collected from unit-linked insurance policies (Ulips).
Last year, the share of Ulips in the total premium pie of Rs 1, 85,000 crore was 75(%) per cent and total equity investments stood at Rs 61,000 crore. “If the markets are good, people invest in ULIPs and if interest rates are good, they turn to non-linked policies,” Vijayan said.
The largest insurer has 15 lakh agents and expects a net addition of 20(%) per cent this year. LIC is one of the few insurers paying the least commission to its agents. While the average commission on Ulips is 12-15(%) per cent, LIC pays around 7(%) per cent.
Thursday, August 5, 2010
Purchasing a policy in India is cheaper
Students going overseas for studies need to have an insurance cover. And the good information is that purchasing the cover in India, if the country or the university allows you to do so, is a cheaper option.
In countries like Canada and New Zealand, universities themselves offer cover to their students. In fact, the cover is integrated in the tuition fees. These universities do not accept insurance purchased by a student in his\her home country. But one can buy an additional cover from India, too.
“The university may not permission that insurance purchased by a student provide coverage in these areas. But, such additional coverage is helpful. For instance, coverage for medical expenses connected to mental disorders may be useful if a student suffers from depression or stress and needs medical aid,” says T A Ramalingam, head-underwriting, Bajaj Allianz General Insurance.
Universities in the US and the UK are more elastic and allow students to buy insurance from their home country, provided it satisfies the requirements of the university. Rasika Iyer, set to travel to the UK this September for her higher education, seems converted by the logic. As she puts it, “After expenses a huge amount for my studies in the UK, a little extra expense to cover medical emergencies seems worth it.”
The policies offered by Indian companies like Tata AIG, Bajaj Allianz and ICICI Lombard are received by most universities in the US. Even if purchasing university insurance is required, students usually prefer to take an additional policy from India.
It makes sense to do so, say financial planners. “A major segment of the insurance offered for students covers medical costs. This is a big benefit if you think how expensive medical treatment is outside India,” says Suresh Sadagopan, a certified financial planner.
“The waiting period at public hospitals can be very long from time to time. When the student cannot afford any delay in treatment, he can use his Indian insurance policy at a private hospital,” says Vinayak Kamath, director, G B Education.
If you have an option to choose between Indian and university policies, purchasing a student insurance policy in India will show to be more cost-effective. It will cost you approximately one-third the amount you will have to pay for the university insurance.
For a sum assured of $100,000 and upwards, a 2-year insurance cover from the university costs Rs 27,000-36,000 ($600-800 per year), at the rate of $1=Rs 45. Indian insurance policies will charge anywhere Rs 7,000-19,000 (between $ 150 and $425) for a related policy.
The university insurance mostly covers only medical expenses, and in certain cases, dental expenses. However, student insurance policies available in India offer certain benefits over and above the medical coverage like:
Study interruption
Say, you meet with an accident and cannot follow your studies further because of medical reasons. In this case, the insurance company will repay the tuition fee paid for that semester.
Sponsor protection
If your parent or guardian who is financing your education expires, the insurance cover will ensure your studies are not broken up. You will be entitled to tuition fees payable up to a certain limit, specified in the policy.
Compassionate visit
In case you get hospitalised for more than 7 consecutive days, the insurance company pays for the return air fare for one of the parents to visit you. Similarly, if either of your parents gets hospitalised in India, your return air fare is enclosed.
Repatriation of remains
If a student dies while studying overseas, expenses incurred for repatriating his leftovers to India will be taken care of by the insurance company.
So, go ahead and choose an insurance product that best suits your needs. It will go a long way in ensuring that you have a smooth sailing during your education years overseas.
In countries like Canada and New Zealand, universities themselves offer cover to their students. In fact, the cover is integrated in the tuition fees. These universities do not accept insurance purchased by a student in his\her home country. But one can buy an additional cover from India, too.
“The university may not permission that insurance purchased by a student provide coverage in these areas. But, such additional coverage is helpful. For instance, coverage for medical expenses connected to mental disorders may be useful if a student suffers from depression or stress and needs medical aid,” says T A Ramalingam, head-underwriting, Bajaj Allianz General Insurance.
Universities in the US and the UK are more elastic and allow students to buy insurance from their home country, provided it satisfies the requirements of the university. Rasika Iyer, set to travel to the UK this September for her higher education, seems converted by the logic. As she puts it, “After expenses a huge amount for my studies in the UK, a little extra expense to cover medical emergencies seems worth it.”
The policies offered by Indian companies like Tata AIG, Bajaj Allianz and ICICI Lombard are received by most universities in the US. Even if purchasing university insurance is required, students usually prefer to take an additional policy from India.
It makes sense to do so, say financial planners. “A major segment of the insurance offered for students covers medical costs. This is a big benefit if you think how expensive medical treatment is outside India,” says Suresh Sadagopan, a certified financial planner.
“The waiting period at public hospitals can be very long from time to time. When the student cannot afford any delay in treatment, he can use his Indian insurance policy at a private hospital,” says Vinayak Kamath, director, G B Education.
If you have an option to choose between Indian and university policies, purchasing a student insurance policy in India will show to be more cost-effective. It will cost you approximately one-third the amount you will have to pay for the university insurance.
For a sum assured of $100,000 and upwards, a 2-year insurance cover from the university costs Rs 27,000-36,000 ($600-800 per year), at the rate of $1=Rs 45. Indian insurance policies will charge anywhere Rs 7,000-19,000 (between $ 150 and $425) for a related policy.
The university insurance mostly covers only medical expenses, and in certain cases, dental expenses. However, student insurance policies available in India offer certain benefits over and above the medical coverage like:
Study interruption
Say, you meet with an accident and cannot follow your studies further because of medical reasons. In this case, the insurance company will repay the tuition fee paid for that semester.
Sponsor protection
If your parent or guardian who is financing your education expires, the insurance cover will ensure your studies are not broken up. You will be entitled to tuition fees payable up to a certain limit, specified in the policy.
Compassionate visit
In case you get hospitalised for more than 7 consecutive days, the insurance company pays for the return air fare for one of the parents to visit you. Similarly, if either of your parents gets hospitalised in India, your return air fare is enclosed.
Repatriation of remains
If a student dies while studying overseas, expenses incurred for repatriating his leftovers to India will be taken care of by the insurance company.
So, go ahead and choose an insurance product that best suits your needs. It will go a long way in ensuring that you have a smooth sailing during your education years overseas.
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