Health covers may cost 20 per cent more

The insurance regulator has cleared a hike in health insurance rates for policies issued by New India Assurance, the country's largest non-life insurer. The new rates are on an average 20% higher than the old ones which were in force from 2007 and will come into effect from next month. The rate hike could trigger similar revisions among other state-owned non-life insurers since New India, being the largest, sets the benchmark for rates.

TOI had reported in its January 26 edition that public sector insurers are set to revise health insurance rates by 20-25%. Announcing the imminent hike, G Srinivasan, chairman, New India Assurance, said, "Our rates have not been revised since 2007. The revision in rates will result in an average increase of around 20% but it will vary from segment to segment." For renewal policies, the new rates will take a bit longer to be applicable as the insurer would have to provide a three-month notice.

At present, for an individual aged up to 35 years in Mumbai, the cost of a Rs 5-lakh health insurance cover is Rs 5,410, which goes up to Rs 6,078 after factoring in service tax. Going by what insurers say, the cost could go up to Rs 7,300 after the hike. But this would vary according to the individual's health profile and location. Premium varies with location because of variations in cost of treatment. Insurers have been complaining that losses in health insurance have been over 120%. Besides raising rates, the state-owned non-life companies are trying to reduce losses in health insurance by floating their own third-party administrator (TPA) — a separate entity that will manage the health insurance business and network with hospitals. According to Srinivasan, the TPA was expected to be incorporates by January next year.

Announcing the results on Wednesday, Srinivasan said that the company has earned a net profit of Rs 843.66 crore — the highest in five years and up almost five times from last year's Rs 179.31 crore. The net worth of the company rose to Rs 7,737.36 crore from Rs 7,057 crore in the previous year. The company trimmed its underwriting losses to Rs 1,800 crore from Rs 2,200 crore following a reduction in claims-to-premium income ratio.

Insurance regulator IRDA probing money laundering allegations against insurers

Insurance regulator IRDA today said it is examining the allegations of money laundering levelled against LIC, Reliance Life, Tata AIA and Birla Sunlife and action will be taken against the guilty at the earliest. "The insurance companies concerned have been asked to file a report on the allegations. The matter is under examination and appropriate action will be taken at the earliest," Insurance Regulatory and Development Authority (IRDA) said in a release. In its expose earlier in the day, Cobrapost has named as many as 23 public and private sector banks and insurance companies for allegedly "running a nation-wide money laundering racket, blatantly violating laws of the land." The four insurance companies which figure in the list are alleged to have violated the 'Know Your Customer' and 'Anti Money Laundering' Guidelines. Responding to Cobrapost allegations, LIC said that it has effective system for compliance of all statutory and regulatory norms, but added that "in case of violation is noticed at any level necessary action will be taken by the Corporation". Reliance Life too denied the allegations saying that it adheres to strict internal controls, processes and best practices and is in full compliance with KYC norms and regulatory framework. It further said: "As part of its ongoing compliance efforts, Reliance Life will continue to examine any specific instances that come to light for appropriate remedial action, if any." Taking a serious note of the expose, Tata AIA said: "We have initiated an internal inquiry into this incident and will take appropriate necessary action... Lapses in judgement and deviations from the rules are dealt with strictly." No response could be obtained from Birla Sunlife.

Private life insurers join hands to fight phony investment fraud

Amid a continuing Sebi probe into a phony investment syndicate active in the national capital region, six private life insurers have joined hands to fight the menace of mis-selling of insurance products through spurious calls made by fraudulent agents. Capital markets regulator Sebi earlier this month unearthed a syndicate of fraudulent gents operating in the national capital, wherein a large number of people could have been defrauded in the name of mutual fund and insurance products purchased by their deceased family members. Sebi widened its probe after preliminary investigations, conducted with the assistance of the Economic Offences Wing of Delhi Police, indicated an organized attempt by several people to defraud the gullible investors.

As Sebi is continuing its probe, six private insurers – Reliance Life Insurance, ICICI Prudential, HDFC Life, Birla Sun Life, SBI Life and Aegon Religare - have formally filed a complaint with the Economic Offences Wing (EOW), seeking its help to act against the spurious callers, sources said. In their complaints with the EOW, the private life insurance companies have sought action against offenders who make spurious calls to customers with false promises on loans or other investment products to dupe them. Their modus operandi typically involves the customers being asked to surrender their existing insurance policies and shift to some new products for better returns. The agents, in the process, earn hefty commissions or at times dupe the investors of their entire investment values.

When contacted, Reliance Life Insurance confirmed the development and said that the insurance companies have given presentations to EOW about the modus operandi of fake callers. As per their presentations, these fraudsters are operating from make-shift call centres in the Delhi NCR. The preliminary investigations by the insurers also found that some of these persons were previously associated with insurance companies, directly or indirectly. Typically, these persons use pre-paid mobile numbers or calling cards to contact gullible investors, while some people operate as field staff to collect documents and cheques. Sensing a large-scale fraud, the insurers and their regulator IRDA have also begun sensitizing the public on the matter though emails and SMSes on a regular basis. According to Reliance Life Insurance CEO Anup Rau, there are strict compliance policy and processes to help identify and act against spurious callers trying to mislead customers.

"We have been regularly alerting our customers through SMS and emails against falling prey to any person or entity making superficial offers of high returns, loans, bonus or gains," he said. In a recent public notice, IRDA also warned customers against fake entities calling on behalf of insurers. The country's biggest insurer, state-run LIC has also warned its customers and the general public about fraudulent agents, through newspapers and other channels

BNP Paribas launches new scheme; capital protection oriented fund

BNP ParibasBSE 3.27 % Mutual Fund has launched a closed end income fund - BNP Paribas Capital Protection Oriented Fund - Series 1 (38 months). The new fund offer is currently open for subscription and closes on April 30. The Structure The investment objective of the scheme is to seek capital protection by investing in fixed income securities maturing on or before the maturity of the scheme and seeking capital appreciation by investing in premium of exchange traded options.

The fund will invest 80-85% in debt instruments that will mature in line with the duration of the fund, with the balance 15-20% to be invested in equities. The equity component of the scheme will be actively managed by taking exposure through exchange traded call options. The investment team will evaluate the prevailing premium levels on the call options with tenure suitable to the scheme. The fixed income component will be passively managed. The fund will invest in "AAA" or A1+ and equivalent rated fixed income securities with maturities in line

with the maturity of the Scheme with an aim to protect capital at the time of maturity. The fund shall not invest in debt instruments issued by companies in the construction, real estate, gems & jewellery, micro finance institutions, hotels, shipping, telecommunication, airlines, biotechnology and refractories and ceramics. The fund expects the equity exposure through call options to help investors achieve superior risk adjusted returns over the tenure of the fund. The minimum investment amount is Rs 5,000 and in multiples of Rs 10 thereafter. After the NFO, the Units of the Scheme will be listed on the NSE, where investors can buy or sell units at market prices.

Why invest? Capital protection fund helps you preserve your capital, and gain a marginal exposure to equities. This has the probability to give you higher risk adjusted returns. Why not invest Since the fund is close ended, liquidity will be very low. In case you wish to sell units, before the end of the tenure you may have to do so at a discount to the NAV

Insuring your home, valuables may be as important as housing loan cover

Disasters, natural or man made, often serve as a rude reminder about buying insurance covers. Tremors in Delhi caused by the recent massive earthquake in Iran and the building collapse in Mumbra, near Mumbai, were two such incidents. Sure, the issue is a bit complex in the latter case, but it shouldn't prevent you from thinking about the importance of buying a home insurance cover. Buying adequate insurance cover for your house, particularly if you have a home loan or keep valuable items at home, is the only solution to keep such unpredictable events from ruining your financial stability. "The requirement of a home insurance was overlooked and understated in India. However, the scenario has changed over a period of time. Today, there are many convenient options available in the market that help one secure not only the property but also their belongings. The youth are also investing in homes, offices, etc, to ensure that all their assets are protected at the time of crisis," says Mukesh Kumar, member of executive management and head, strategy planning, HR and Marketing, HDFC ERGO. Now, most home loan borrowers are familiar with home loan insurance cover, thanks to their lenders and their insurance partners almost forcing them to buy a cover. However, home insurance is quite different. While home loan insurance offers to repay the loan if the policyholder dies before clearing the loan, home insurance comes into play if your property is damaged due to man-made or natural calamities. Such policies offer cover for both the structure as well as the contents in the house. However, you need to specifically ask for the contents cover if you intend to insure your belongings in the house. You only need to fill up the proposal form listing all the items you want to cover while buying the policy. You will have to furnish first information report (FIR), fire brigade report or other details the insurer may ask for at the time of claim settlement. Coverage is extended against damage due to earthquake, fire, lightning, cyclone, bursting or overflowing of water tanks and so on. Some policies also offer additional coverage against terror attacks, burglary and theft, while in some cases these are part of the base cover itself. Policyholders receive compensation for the replacement value of their property and contents inside the house. "So, the sum insured for the building should neither be the cost of acquisition nor the current market value of the house, but today's construction cost because the market value of the building includes cost of land on which the house is built," advises Sanjay Datta, chief, underwriting and claims, ICICI Lombard. Similarly, for household appliances, gadgets, jewellery, furniture and other equipment, ascertain the cost of replacing them. In other words, market value of similar products, minus depreciation (depending on the items) will be the sum insured. "However, the claim amount payable would be the amount required to bring the damaged item to the same condition as it was prior to the damage, subject to the adequacy of the sum insured," he explains. Loss of jewellery and other valuables are covered, subject to the sub-limits or ceilings mentioned in the brochure. For instance, your policy could specify that the valuables cover will not exceed 25% of the total content sum insured or Rs 1 lakh, whichever is lower. Hospitalisation expenses, too, are paid for if you are injured during the incident. Clearly, the utility value of such covers is quite high. In fact, most banks today advise home loan borrowers to buy this cover. Home loan agreements contain a standard clause that requires lenders to insure their house adequately against disasters. However, even otherwise, it is in your interest to get your home insured. Remember, if your house is destroyed during such mishaps, you will be left with no shelter, but the burden of repaying the home loan will continue. "Even if it is not compulsory as per your banks to buy home insurance, it makes sense to opt for one. Else, the borrower will have to bear the losses in the event of damages caused by earthquakes or other natural disasters," says VN Kulkarni, chief counsellor with the Bank of India-backed Abhay Credit Counselling. However, if your bank is keen on selling its insurance partner's policy to you, compare the features with other products in the market before giving your assent. There is very little variance in product features and premium rates, but choose your policy after a careful comparison. For the structure-only cover, the premium could be in the region of Rs 60 per lakh of sum insured. For example, if your sum insured (built up area in sq ft X cost of construction per sq ft) is Rs 20 lakh, you will have to pay an annual premium of Rs 1,200. Lastly, do not forget to go through the list of exclusions or claims that won't be entertained by the insurance company. For instance, your claim will not be admitted if the damage has been caused by natural wear and tear or depreciation. Similarly, you will not be paid if you have deliberately caused harm to your property. Other exclusions include loss due to war, invasion, civil wars, revolution and so on. More importantly, the policy will not come into play if any property or contents are illegally acquired or stored. Also, if you are operating your business from your house, you should not buy this policy, as it is meant only for residential properties. The policy wordings of such covers could also specify a deductible amount — you need to bear this expense out of your own pocket before the insurer chips in with the rest — for certain items.

Insurance cover for overseas students launched by private company

A private general insurance company has launched a policy for Indian students studying abroad or planning to do so. The policy pays for expenses incurred by the immediate family member if they visited the insured student in case of emergency or if the student had to visit them in similar circumstances. The 'Student Suraksha - Student Overseas Travel' policy provides cover against unforeseen expenses such as hospitalisation, accidental death, permanent disablement and dental treatment.

It has additional covers such as personal liability, bail bond, sponsors' protection, study interruption, loss of passport and checked-in baggage loss. It includes worldwide cover for students from 30 days to 2 years without any medical or health check-up requirements

The policy can be bought by an individual between the age of 16 and 35, who is a full-time registered student of an education course outside India. The policy pays the cost incurred in the event of a visit by one immediate family member abroad in case of medical emergency or in a reverse situation.

LIC Scripts New Record: Earns Profit Of Rs 20,000 Cr In FY' 2012-13

The largest insurer of the country, Life Insurance Corporation (LIC) of India has registered a record profit of Rs 20,000 crore (highest in around 7-8 years) in fiscal year 2012-13.

The state-run insurer now aims to invest Rs 2.15 lac crore in the current fiscal out of which 10-15% or Rs 21,500 crore will be in equities.

In an interview with a business channel on Monday, LIC chairman Shri D K Mehrotra said, ““The profit that we booked last year has been the highest in the last almost seven-eight years because we did get good opportunities."

Last month, Shri Mehrotra, who is due to retire next month, had said that the fiscal year 2013-14 should see LIC “having a total investment target of, say, Rs 2.25-2.3 lakh crore."

“Of that, about 10% should go to equity. If something better comes, say, an IPO comes; we should raise it a bit. About Rs 25,000-30,000 crore."

It is widely believed LIC would be in focus once the divestment issues start hitting the market in the coming months. The government has set a target of Rs 40,000 crore by selling partial stake in listed PSUs. In FY 2012-13, LIC participated in seven divestment offerings - Hindustan Copper, NMDC, Oil India, NTPC, Rashtriya Chemicals and Fertilizers (RCF), Nalco, and SAIL.

Shri Mehrotra, however, had denied being labelled the government's 'bailout agency' asserting that all of LIC's investment decisions were based on its own assessment of market conditions and the fundamentals of the company.