Bajaj Allianz to pay Rs 16.65 lakh compensation to road mishap victim's family

The family members of a businessman, who died in an accident with a rashly driven tractor in 2009, have been awarded a compensation of over Rs 16 lakh by a Motor Accident Claims Tribunal (MACT) here.

The tribunal has directed Bajaj Allianz General Insurance Company Ltd, with which the offending vehicle was insured, to pay Rs 16,65,640 to the wife, two kids and father of Mahinder Babber.

"There is nothing on record to dispel the inference that deceased Mahinder Babber died on account of injuries sustained by him in a road accident which occurred on June 26, 2009 because of rash and negligent driving of vehicle (tractor) being driven by its driver.

"There is nothing on record to indicate any negligence on the part of the deceased," MACT Presiding Officer Arvind Kumar said.

Babber's family told the tribunal that the accident took place on June 26, 2009, when he, along with his three friends, was coming to Delhi in his car from Haridwar.

When they reached Sonali river, a tractor trolley, driven rashly by one Ashok, came at a high speed and hit the car, the family said.

Due to this, 49-year-old Babber suffered fatal injuries and died on the spot.

His family said he was doing business and earning Rs 25,000 per month.

The tractor driver and its owner did not contest the case while the insurance company contended that the accident took place due to Babber's negligence.

The insurance company said the truck driver and owner were liable to pay the compensation amount as the driver was not holding a valid driving licence at the time of accident.

Insurance cos not keen on banks as brokers

While the finance ministry is keen on banks to act as brokers for insurance firms, the lenders themselves do not sound too enthusiastic. In his Budget speech last month, finance minister P Chidambaram had stated that after due permissions from concerned regulators, banks will be allowed to tie up with multiple insurance companies to sell life and general insurance products.

Under the present bancassurance structure, banks are allowed to tie up with only one life and one non-life insurance player, each. Moreover, many leading banks also promote insurance companies of their own, so it would not make sense for them to tie up with another player.“It is an opportunity, but at this point in time, we are not considering the brokerage model because we already have our own insurance firm,” said KVS Manian, group head (consumer banking), Kotak Mahindra Bank.Bankers believe that the current partnership model will always score above a broker model because it has more involvement from the bank and the insurance company.

“We want the insurance company to be answerable to the kind of products being sold to our customers. In a broker model it would not be very effective,” said a senior official from a leading private sector bank.Bankers like M Narendra, chairman and managing director, Indian Overseas Bank, are still waiting for Insurance Regulatory and Development Authority (Irda) to come out with final guidelines on bancassurance, before considering a broker model.Insurance players on the other hand sound pessimistic about banks entering the market as brokers.

The industry, which was under a cloud for charging usurious premiums before the regulator stepped in to lower the charges, now hopes that there won’t be another bout of misselling.

“We are not at a stage in the evolution of insurance companies, where this move can be implemented. Banks which do not completely understand the insurance products may lead to mis-selling,” said a senior official with an insurance company, seeking anonymity.

The insurer also felt that the move may inspire undercutting of business by some private players who may end up paying higher commissions to banks to get more visibility for their products.

Irda’s annual report (2011-12) said maximum complaints in the life insurance sector were related to malpractices and accounted for 34,799 complaints out of 100,770 complaints in unfair business practices. In the non-life sector, maximum complaints were policy related, accounting to 38,076 complaints out of 93,155 complaints in the year.

“In my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products. If you want to sell insurance to India, you must sell simple products and must make it absolutely clear to agents and other officers that they should not mis-sell,” the FM had said last month.

RBI too had shown apprehensions about banks acting as insurance brokers, stating that it may lead to reputational risks. Some private insurers are happy, nevertheless. The move will help them improve the reach of their products in areas which they could have otherwise not been able to touch. The strong presence of public and private sector banks in smaller cities and villages is a big positive they said.

“If this works out, it will promote competition among insurance companies and customers will be given various options to choose from,” said AS Narayanan, chief distribution officer, Bajaj Allianz Life

Public sector insurers to open 1,800 branches in next fiscal

MUMBAI: India's largest insurer Life Insurance Corporation of India (LIC) and four public sector general insurance companies will open around 1,800 branches by the end of the next financial year to cover all Indian villages with a population of over 10,000.

Finance minister P Chidambaram said in his budget speech that state-run insurance companies will open a branch each of life and non-life ventures in towns with a population of 10,000 or more. "All towns in India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company," he said, and set a deadline of March 2014 to achieve this target.

LIC will open 256 offices to cover all towns with a population of 10,000 or more. "These will be one man offices and will not require much capital," said a senior LIC executive who didn't wish to be named.

The country's largest insurer has 2,048 branches and around 2,000 satellite offices. In addition, it has 20,000 premium paying points where investors can enquire, buy a policy, make payment, pay renewal premium and get loan application forms.

New India Assurance launches 'online' platform for products

MUMBAI: New India Assurance on Tuesday launched a portal, which will enable customers to buy policies online. The country's largest general insurer will offer products in motor, health, travel and personal accident space through this portal along with policy renewal facilities, the company said in a release here.

"We are offering products of comprehensive private car and two-wheeler insurance, health insurance, personal accident and overseas mediclaim policy. The customer portal 'online.newindia.co.in' will also allow policy renewals."

The existing customers would also be able to link their policies and track their claims among others. The general insurer also launched 'Anywhere Any Time Renewal' facility through which a customer can renew policy in its 1,500 offices and also online, the release said.

The Government-run firm said it would launch its mobility solutions soon, which will have the facility to take and renew the insurance policies offered by it.

New India Assurance had reported a net profit of Rs 517 crore in the first nine months of the current financial year (April-December).

Number of mutual fund accounts decline in 2012-13

NEW DELHI: The mutual fund industry seems to have lost more than 32 lakh investors, measured in terms of individual accounts or folios, in the first 10 months of the current fiscal, with equity funds accounting for most of the losses.


"The number of folios, have fallen to 4.32 crore at the end of January from 4.64 crore in the previous fiscal (2011-12), translating into a decline of 32.45 lakh new investor accounts," as per the latest data of market regulator Sebi about total investor accounts with the country's 44 fund houses.

Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.

Equity schemes were the biggest losers in terms of folios, losing 40.2 lakh new investor accounts. The total number of folios in equity funds plunged to 3.36 crore at the end of January 2013 from 3.76 crore in the previous fiscal.

Equity folios for over 70 per cent of the industry's total new investor accounts.


Mutual fund industry has been facing consistent equity folio closures in the past few months. Besides, equity schemes have seen outflows for the last eight months, with January witnessing an outflow of Rs 2,501 crore.


The benchmark BSE Sensex has gained over 14 per cent in the current fiscal so far (April-January, 2012-13)

According to market participants, investors have used market rally as an opportunity to exit after booking profits.


"The sharp fall in the number of folios can be attributed to profit booking and various merger scheme in the mutual fund industry among others," Quantum Asset Management Company CEO Jimmy Patel said.

Balanced schemes, which invest in equity and debt category, followed closely and shed 1.11 lakh folios to end at 26.07 lakh in January.

Fund of funds lost 34,000 folios to end January at 1.77 lakh.




In contrast, income or debt oriented schemes, gained 8.11 lakh folios and now have 60.61 lakh folios.




Besides, exchange traded funds have 7.32 lakh investor accounts at the end of January by gaining 1.09 lakh folios.

Budget 2013 has many implications for general insurance sector: G Srinivasan, The New India Assurance CO

NEW DELHI: The Budget has many positive implications for the General Insurance Sector. Banks being allowed at act as Insurance Brokers will increase insurance penetration as the large number of Bank Branches could be leveraged to distribute Insurance Products in a more effective manner, said the CMD of The New India Assurance CO.Commenting on the Union Budget 2013 G Srinivasan said, "Allowing the general insurance companies to open offices in tier-II and below towns without the regulatory approval will speed up opening offices in smaller towns."




The Public Sector General Insurance Companies will ensure that there is an office in all towns upto tier-IV by 31st March 2014. This will facilitate better insurance penetration.




Using KYC norms for Bank for insurance purpose will be a great facility for the customers as it will avoid duplication of efforts. Expanding RSBY Scheme to be expanded to include Rickshaw pullers, taxi-drivers etc, will go a long way in providing health insurance to people of this Country.




Public Sector Insurance Companies will use Adalats in a large manner to dispose of pending Motor TP Claims to bring in faster relief to the accident victims.




The Budget will allow Banking correspondents to sell micro insurance products. This will lead to insurance being available in smaller towns and villages through a large number of Bank correspondents, he said.

Briefly Business: LIC selected as default NPS annuity provider

LIC selected as default NPS annuity provider NEW DELHI: Pension fund regulator PFRDA has chosen state-run LIC as the default annuity service provider for subscribers exiting from New Pension System (NPS) and seeking withdrawal of accumulated pension wealth. AirAsia, Tata JV seeks nod for leasing planes new delhi: Air Asia and Tata Group, which have proposed to set up a domestic airline along with Arun Bhatia of Telestra Tradeplace, have sought approval for renting and leasing of aircraft in their application to the finance ministry.

Jet Airways seeks nod to buy Kingfisher slots Mumbai: With the government withdrawing Kingfisher Airlines’ international flying rights and domestic slots, the Jet Airways has approached the civil aviation ministry to acquire six of the vacant slots, according to company sources. IMG formed to look into coal linkages NEW DELHI: The coal ministry has set up an inter-ministerial group (IMG) to look into coal linkages of power plants having capacity of 16,000 MW, which are at advanced stages of commissioning. HDFC Bank raises $500 mn from abroad MUMBAI: HDFC Bank has successfully sold a $500 million five-year bond at 3 per cent coupon, its lowest yet. The money was raised through its Bahrain branch over the last weekend.

Mediclaim: What you should know before you buy

Health/insurance Medical insurance has come a long way from the simple Mediclaim policy that people used to earlier take primarily for tax benefits. Even from the same insurance company, there are different types of medical policies, offering different features and benefits. To top it all, there are a set of riders which you find hard to understand and choose from. Some of these may seem (and indeed be) overlapping in their features. But what do you need to ensure your basic concerns on medical insurance are taken care of at the lowest possible premium? How do you ensure you arent buying unnecessarily overlapping features? Read on, to understand the basic things you need, the merely good to haves and the unnecessary ones.

Features: The Basic Mediclaim policy is a reimbursement of treatments that require hospitalization - anything where you are admitted for a day or more. For such a disease or accident, it covers all expenses even before and after the actual hospitalization period. For some treatments (like cataract operation) that are nowadays done without needing admission, the Mediclaim is still valid. The minimum age for entry is usually 5 years and the maximum is capped at 60 years but the proposer must be over 18 years. Today, several Medical policies come with additional features and riders thrown in, often only to confuse the customer. But in its simplest form, Mediclaim usually has the following features: It only reimburses expenses or pays for expenses directly to your hospital including charges for doctors & nurses, OT charges, medicines, blood, oxygen, diagnostic materials and x-ray, chemotherapy, radiotherapy, pacemaker, donors expenses towards organ transplant, and so on for 30 days or so (you cannot make a financial income from the process).

 Certain pre hospitalization and post hospitalization charges are reimbursed. They may in addition provide assistance in availing emergency services and local ambulance services. It needs hospitalization for at least a day to become effective. Only a few procedures like cataract are reimbursed without hospitalisation. The Mediclaim is an annual contract that is renewed, and premiums rise as you grow older (since you are more likely to fall sick). Many providers offer cash less mediclaim which means the insured can get treatment without payment of cash at specified hospitals where the insurance company has tie-ups with. They make the payment directly at the hospital subject to specified terms and conditions. Most providers will also spare the medical test for those below 45 years. We would strongly advise taking this policy for every member of your family, including children.

  A Family Floater is simply the same Mediclaim covering all members under a single policy. Typically, it is the spouse with or without children, who can be covered in one scheme. It gives the entire family a total cover, which could be utilized by one or more members falling ill. You could opt for this as a convenient alternative to taking separate policies for each member. Rs. 3 lakh - 5 lakh of medical cover will keep you free from financial anxiety on the medical front. The biggest advantage of a family floater is that the total cover may be used by one or more members of the family through the year. For instance, if there is a Rs. 3 lakh Family Floater taken by husband and wife. If the husband has a bypass surgery, the entire Rs. 3 lakh could be used by him. On the other hand, if they had taken separate policies of Rs.1.5 lakh each, the husband would have had to cough up Rs.1.5 lakh from his pocket towards bypass surgery expenses.

 Important Exclusions: It must not be mistaken that medical insurance gives life cover and nor should mediclaim and life insurance be regarded as substitutes for one another. The person insured needs to live to get the medical reimbursement. The policy becomes valid after 30 days of submitting and diseases contracted within the first 30 days are not covered. Some conditions and treatments that are permanently not covered are Dental treatment except arising out of accident Cosmetic, aesthetic and obesity related treatment Debility and General Run Down Conditions Sexually transmitted diseases, HIV/AIDS Circumcision, Cosmetic surgery, Plastic surgery unless required to treat injury or illness Vaccination and Inoculation Pregnancy and child birth Besides these if the disease or condition is as a result of war, ionizing radiation or nuclear weapon it will be excluded. Treatment outside India, domiciliary treatment (medical treatment at home), experimental or unproven treatment, treatment by natural remedies and expenses on external equipments like contact lenses, cochlear implants etc. is excluded. Certain diseases like Cataract, Hernia, Piles, Sinusitis, etc are not covered for a period, usually one year of taking the policy. Other pre-existing diseases are covered only after a specified number of years (4 years for most insurance companies).
Premium: Health insurance is generally more expensive than life insurance because health care is expensive and the probability of people falling sick is higher than that of people dying. Premium must be paid once a year during renewal of policy. Premium rates vary from insurer to insurer. Factors that determine premium include age of the policy holder, sum insured, term of plan. Short term plans which are meant to give a cover for a few months to a year are a little more expensive than long term plans but if some short term plan gives you better coverage you might want to go with one and keep renewing it. Premiums increase with age as the risk increases too. Premiums may get loaded, i.e. increased, to account for this. Another reason why there could be loading of premium is if you made a huge claim. Most companies charge loading and the product brochure would contain high claim ratio loading table. Reimbursement: The simplest thing to do to eliminate chances of claims refusal is to be honest about your health conditions while applying for a policy. When you claim reimbursement the insurer will get their registered doctor to verify the genuineness of claims and also dig out if you had any traces of the disease before. But as long as you have been truthful in the application form, and as long as your treatments and costs are reasonable for your illness, you should not have an issue getting reimbursed. When claiming for expenses remember to submit every document that may be relevant. Don’t miss out on collecting the discharge summary and all medical documents with the doctors seal/sign before leaving the hospital. Submit doctors prescription along with the bills and ensure that your name along with the doctors seal is not missing on the prescription. Health Insurance Portability: If you already own a

Mediclaim policy and want to switch either the policy or insurance company you can do so by opting for portability according to IRDA norms for non-life insurers. There are over 20 health insurance companies in India. You can find the list in Ready Reckoners section in the Knowledge dropdown in this page. For making the switch-over you must apply for portability at least 45 days prior to renewal for the next year. Portability form and the proposal must be submitted along with relevant documents. Like in mobile phone number portability the new insurance company has the right to refuse to offer a policy to you in which case you will be forced to look to other companies or drop the plan of switching. Portability is most beneficial to those under a group insurance plan wanting to avail the same features in an individual plan with the same company, for instance retirees covered under their employer-provided group insurance.

Final Word: It is important to understand the limitations of a Mediclaim though. It only covers cost of treating an illness. It does not compensate you in case your illness makes you unable to earn. For instance, a disease like cancer can be extremely expensive to treat and it can also make you unable to work for years. For this, we look beyond the Mediclaim to riders like Disability cover and Critical Illness cover. Take the medical cover as a family floater for every member of your family. If you do not have it (or the life insurance cover) yet, take it now! Critical illness and disability covers are good to have. Next time you get a bonus, you can keep aside some of it to start one of these two policies. All other riders and covers often end up duplicating what you already have, and add to your paperwork and headache- you can avoid them all. Finally don’t forget to claim tax exemption u/s 80 D up to Rs. 15,000 on mediclaim premiums paid for yourself, spouse and dependent children. In case you are also paying for parents an additional Rs. 15,000 can be deducted and this can be up to Rs. 20,000 if they are over 65 years. source:Moneycontrol

Irda introduces File and Use procedure for life products

To fast-track the approval mechanism, insurance sector regulator Irda today re-introduced the process of automatic clearance to life insurance products. Irda said in a circular that the process "...requires the insurers to submit a copy of policy document with policy schedule under File and Use application...in respect of all products filed from April 1, 2013 onwards". Irda had dispensed with the submission of policy document under File and Use or automatic clearance procedure in 2007. The regulator said it has re-introduced the approval of policy bond under File and Use procedure as various stakeholders of the life insurance industry approached it on the issue. "Therefore, the Authority would be placing all the terms and conditions of the products approved on its website." At present, Irda approves all insurance products on File and Use basis.

Health plans: Good idea to buy online or offline?

There has been a strong emergence of technical development in India in the recent years along with the use of internet as a powerful tool in our day-to-day life. With an increase in internet penetration in India the new generation of working professionals have become increasingly comfortable with transacting online. The insurance industry is very much a part of this e-commerce growth story with a slew of insurance products being sold online. Apart from life insurance whose online term plans are gaining popularity, mediclaim policies are also getting a strong foothold in the online insurance market. With a move over agent oriented sales, all insurers are offering host of their mediclaim policies to be sold online. Thus customers are foregoing their agent’s services to buy online plans. But is it wise to buy mediclaim policy directly online without involving the agent? The online and offline sales story Health Insurance Plans are generally sold by agents who represent an insurance company. The agent meets with the clients, understands their financial requirement, explains the features of the mediclaim policy and offers the most suited plan to the customer. In the event of hospitalization, the agent facilitates the settlement process. As such the agent remains the sole point of contact between the customer and the insurer and he gets a percentage of the premium generated by him as a commission. This is a traditional offline sale. On the contrary, when buying online, the prospective client views the products offered online, selects the most suited plans and makes payment directly to the insurer via the use of credit or debit cards.

Health insurance: Sooner the better

There are increasing number of people falling prey to lifestyle diseases at a young age. At the same time, the cost of health care is rising exponentially. As a result, paying off healthcare bills is crippling Indian households. Keeping this scenario in mind, investing in a comprehensive health insurance plan to safeguard the interest of the family, has become imperative. It is, however, critical to have a sound understanding of the structure and the benefits of different health insurance products before investing. Health insurance plans can be broadly classified in two categories, namely, indemnity-based and benefits-based. Under an indemnity based plan the insured is paid the entire amount that he spends on medical treatment, provided it is equal to or less than the sum assured. Benefits based plans are mainly critical illness plans under which the insured can claim the entire sum assured for the treatment of a critical illness specified in the policy. Indemnity (typically like a mediclaim) and critical illness plans serve two different purposes, and both must be included in the health insurance portfolio. Investing in mediclaim can prove extremely useful in case of minor ailments such as food poisoning or appendicitis, as all the hospital expenses including tests etc are taken care of by the insurer. However, they become futile in case the insured contracts a critical illness such as cancer which demands much larger expenses over long-term. A critical illness (CI) plan can be extremely beneficial in this case as the lump sum received by the insured can be used to get the illness treated by best professionals.

IRDA allows agents of general insurance companies to sell mediclaim policies

Insurance regulator IRDA today permitted agents of general insurance companies to sell mediclaim products of standalone health insurance companies to help increase the penetration of such products in public. "In order to encourage penetration of health insurance and to spread the message of health insurance across the country, it has also been decided to allow Standalone health insurance companies to avail the services of agents, corporate agents of other life or non-life insurance companies to distribute their products provided such agents," IRDA said in a statement. Such agents, however, need to undergo 25 hours training, it said. IRDA added meanwhile that in terms of this permission, any agent cannot offer his/her services to more than one Standalone Health Insurance Company. "The authority had recognised that health insurance cover is the necessity of the Indian public and hence proposed the same as a separate class of business while granting registration to some insurers to act as Standalone Health Insurance Companies to provide only health insurance products," it said. It is observed that currently the Standalone Health Insurance Companies can utilise the services of Life Insurance Agents after converting them into composite agents, which calls for completion of Certification by them, it said. It has been decided to waive mandated certification for Life Insurance Agents desiring to distribute products of a Standalone Health Insurance Company, the regulator said. However, it said, the standalone health insurers desirous of converting life insurance agents into composite agents to sell their products, should do so after making such agents undergo an internal training programme on health insurance. The training should cover the basics of health insurance, health insurance terminology, and products for a minimum period of 25 hours. It added: "Further, it is clarified that such composite agents shall not be allowed to transfer general part of their license to other non-life insurance company without completing certification."

National Insurance Company to pay family 29 lakh compensation, says MACT

The family of a businesswoman, who was killed after being hit by a rashly driven bus, has been awarded a compensation of over Rs 29 lakh by a Motor Accident Claims Tribunal (MACT) here. The tribunal directed National Insurance Company Ltd, with which the offending bus was insured, to pay Rs 29,38,480 to the husband and two minor children of deceased Zeenat Parveen. "In view of the testimony of prosecution witness 1 (victim's husband) and documents on record, the petitioners have prima facie succeeded in proving that the deceased died due to injuries sustained in this accident caused by the offending vehicle driven by respondent no. 2 (bus driver) in a rash and negligent manner," MACT Presiding Officer Harish Dudani said. Parveen's husband told the tribunal that the accident took place in December 2008 when he and his wife were going to meet some relatives at Shaheen Bagh here on his motorcycle. When they reached sector 24, Noida, the rashly driven offending bus being driven by its driver Rajiv Kumar came at a high speed and hit them from behind. Due to the impact, they fell down and Praveen came under the wheels of the bus. She was taken to a hospital where she was declared brought dead by the doctors, he said. The 38-year-old woman was running her own business in the name of M/s Sharp Industrial Advisory Bureau and was earning Rs 25,000 per month. The bus driver and owner, however, said the accident took place due to negligence of the victim's husband as he was driving the motorcycle at a high speed and was trying to overtake the bus during which he lost control and hit it. The tribunal refused to accept their contention and directed them to pay compensation to the victim's family.

A New Website - InsuranceComplaint.com Launched

InsuranceComplaint.com is a new website - it gives policy holders a public platform to air their experience and grievances during the claim process. Statistical data is compiled on insurance claims - on this website, giving the public an open forum to share their experience with insurance claims and look for professional help also. Each state has a Department of Insurance to manage their insurance market, but they lack the resources to investigate all the complaints thoroughly, and also they cannot investigate insurance companies with unfair practices across the State lines. With this target in mind InsuranceComplaint.com, collects all the statistical data on complaints and then sorts out the data by insurance Companies, brokers, agents, independent adjusting company and the type of cover availed. Armed with this check list they investigate the underwriting, policy holder service, in house claims, and field adjusting, along with sales and marketing. The founders of the website are Peter Nicolas and Michael Grady. Grady is an insurance professional with experience in handling claims and Peter is a policy holder who, went through a nightmare when he lost his house and possessions due to a fire. They know firsthand the issues a policy holder can face during a claims process. According to Grady, "Although seemingly unfair, your policy is just your ticket to the fight, no policy no claim." Mike explains that having an insurance policy does not guarantee a worry free claim. "There are no policy provisions that compel your carrier to educate you of your rights therein. Simply put, if you do not understand how to administer your own claim the carrier is not contractually obligated to do so on your behalf. This is not meant to imply that carriers will not offer you any assistance, but the finer points of adjusting the claim are your responsibility and ignorance is no excuse," he says. "The insurance industry has a powerful lobby that has strong influences at the state and national level," states Grady. An individual policyholder cannot match the power and resources of even the smallest carrier. But now, policyholders can band together and level the playing field. There is power in numbers," says Grady.

Watch Your Weight for Health Insurance

In a survey released by Fidelity Investments and the National Business Group on Health, 15% of employers need employees to undergo biometric screening. In general - employees have to undergo blood tests to screen blood sugar and cholesterol, take their weight and waist measurements. "There are some companies saying, 'gee, we're spending an awful lot on health care, we would like you to do certain things,'" says Adam Stavisky, a Fidelity benefits consultant.3% of the employers said they would cut benefits of employees who did not complete the screenings. Benefit experts feel that it is not wrong to expect workers to fill these criteria as this is part of a routine health check and people can work towards a healthier future, once they know how they fare health wise. "It's something that everybody needs to have for their own sake,". "The people who might claim that they are discriminated against would be the very people you'd want to have a primary care physician, and talking to doctors and nurses." Biometric screenings are soon becoming the mainstay of modern corporate programs; almost 40% of employers want to tie biometric measurements to premiums or health incentives. A third of the companies reward employees for lowering their cholesterol or blood pressure and dropping weight. Critics are worried with the practice of "outcomes-based incentives" as it sums up to insurance underwriting and decreases access to health care, which in turn would defeat the purpose of The Affordable Health Care. . "There's real concern that if people perceive some of the new incentives rules as penalizing people for their health behaviors, then that could actually distance people from accessing health care," says Paul Terry, CEO of Stay Well, an employer wellness company that administers biometric screenings. Employers who want to charge premiums based on biometric tests must also legally allow employees who fail the tests to pay the same amount by providing a doctor's note or enroll themselves in a program to achieve their goal. They can get the same benefits by participating in health programs. Stay Well recommends that companies should reward people for taking the biometric tests and setting realistic targets. "Rather than simply saying hit the outcome or else," Terry says, "Why wouldn't we say to employees, show us some progress that you're moving in the right direction in order to achieve the reward?"

Irda brings back auto clearance process for life products

To fast-track the approval mechanism, insurance sector regulator Irda on Tuesday re-introduced the process of automatic clearance to life insurance products. The Insurance Regulatory and Development Authority (Irda) said in a circular that the process "...requires the insurers to submit a copy of policy document with policy schedule under File and Use application... in respect of all products filed from April 1, 2013 onwards". Irda had dispensed with the submission of policy document under File and Use or automatic clearance procedure in 2007. The regulator said it has re-introduced the approval of policy bond under File and Use procedure after various stakeholders in the life insurance industry approached it on the issue.

Vehicle insurance (also known as auto insurance, GAP insurance, car insurance, or motor insurance)

Vehicle insurance (also known as auto insurance, GAP insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom. The specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions.

Motor insurance premium to go up from April 1: IRDA

Auto: NEW DELHI: Motor Insurance premium is set to become more expensive, with IRDA proposing up to up a two- fold hike in rates from April 1 in view of rising inflation and the history of claim settlement. Charges for the third party insurance cover, as per the IRDA exposure draft, will go up for two-wheelers, passenger cars and commercial vehicles. For passenger cars not exceeding engine capacity of 1,000 cc, the revised third party premium is proposed to be hiked by 85.30 per cent to Rs 1,453 per annum. For two-wheelers exceeding 350 cc, the premium would go up by 108.14 per cent to Rs 1,415. For goods carrying vehicles, excluding three-wheelers, with carriage capacity exceeding 40,000 kg, the premium would go up by 313.45 per cent to Rs 53,832 per annum. The earlier hike which was done in March 2012 was disputed by transporters' association which had fought a legal battle with IRDA and general insurers in the Calcutta High Court. However, after eight months of litigation, the court had passed verdict in favour of the hike. Earlier in 2012, while asking domestic general insurers to hike the provisioning -- capital to be set aside to pay the future claims as it takes years to settle claims under this category -- against the third party motor portfolio, IRDA had assured general insurers that it will allow them to hike the third party motor rates gradually. The Insurance Regulatory and Development Authority (IRDA) had dismantled the third party motor insurance pool from April 1 last year thereby linking premium rate with the prevailing market rate. The sector regulator has asked the stakeholders to submit their comments by March 1 on the issue. source:economicstimes

SBI raises fixed deposit rates by 0.25 per cent

NEW DELHI: State Bank of India (SBI), the largest bank of the country, on Wednesday announced increase in interest rate on fixed deposits by 0.25 per cent on select maturities. Of the total 9 maturity periods for fixed deposits, rates have been revised upwards in 4 categories with maturities of over one year. The new rates would be effective from March 1, SBIBSE 0.68 % said in a statement. With the revision, the interest rate on 1-2 years fixed deposit would go up to 8.75 per cent, from 8.50 per cent. Similarly, term deposit 2-3 years, 3-5 years and 5-10 years would also earn higher interest rate of 8.75 per cent. However, the bank has left interest rate unchanged for deposits less than 1 year. Earlier this month, the bank had cut lending rate by 0.05 per cent, soon after the Reserve Bank cut its key policy rates. After this marginal reduction, SBI's base rate, or the minimum rate of lending, came down to 9.70 per cent from 9.75 per cent effective February 4. In its third quarter policy review on January 29, RBI had lowered key short-term lending rate by 0.25 per cent and also injected Rs 18,000 crore liquidity through similar reduction of Cash Reserve Ratio. The repo rate, at which RBI lends to banks, was eased after a gap of nine months as the central bank fought the stubbornly high inflation through tight money policy, leading to high interest rate regime.

Choose the tenure wisely while investing in Bonds

Investment experts are divided about the fixed income strategy. Some argue that duration-based investing (that is, investing in long-term income funds and gilt funds) will work better in the coming days as these funds, which buy long-term bonds, will benefit from a fall in interest rates and will earn capital appreciation along with the coupon payable. The other group dismisses the theory by highlighting the interest rate risk associated with these funds - if interest rates move up, these funds may see capital losses. They recommend the accrual-based strategy of investing in fixed maturity plans, ultra short-term bond funds and short-term bond funds. These schemes generally buy short-term instruments and prefer to hold them till maturity, which eliminates the interest rate risk. As you can see both these strategies- accrual and duration - have merits, and it would be wise to consider the risk and reward they bring to the table. And also, you have to clearly define your goals and investing personality. "Short-term interest rates — one-year to three-year — are attractive now. You should invest at least half of your portfolio in fixed maturity plans and short-term bond funds. If you can digest volatility, you can invest the rest of your money in duration-based products such as long-term income and gilt funds — since they are expected to do well as rates go down," says Vinod Jain, principal advisor at Jain Investment Planner.

Life insurance companies have to deal with uncertain times: Rajesh Sud

Max Life Insurance’s CEO and MD Rajesh Sud says life insurance companies still have to deal with uncertain times as the regulator has not come out with clear guidelines, which could lead to a muted growth in new premium segment. In an interview with Aftab Ahmed, Sud said if current indication from Irda is to be believed, it would amount to getting approvals for 400-450 products. Excerpts Revenue was up 1% in first half of the year. Do you see any improvement ahead? Revenue generation has two parts — the new premium and the renewal business. If I look at the nine-month number, we were flat or slightly in the negative zone in new sales, but our renewal business segment is growing. Until there are positive news coming for the industry, it would be difficult to see new sales growing too much for the industry. New premium growth has fallen. What is your target for new premium growth? It is hard to take an absolute number. Compared with the industry’s growth figure, we have outperformed in the last three years. We are number-one company for the sixth consecutive year in terms of conservation ratio, which means we have been able to retain our customers. New sales are only one-third of our business, and two-thirds are now from customers renewals. The industry has been affected after Irda tightened the norms. Do you think there is more clarity and relief from the regulator now? We are yet to see the final draft of the product guidelines that Irda has cleared. If the last draft version of the guideline is implemented, it would mean about 400-450 products in the industry may have to go through a change. That is a massive task — first to design the change, get it approved and to train the field staff to implement the change. As we saw in 2010, too little time was given to implement the changes. I don’t think we can call it a relief at this point in time. Do you see a pick up in the business in next fiscal? I feel, the first positive thing would come from regulatory issues getting settled and clarity emerging on that. The other thing we are hopeful is the Union Budget, where we have been arguing the life insurance industry has a very big role to play in mobilising small household savings and putting them to work for long-term investments for the economy. We hope this to get recognised by the finance minister, who will give specific exemption on the personal investment side. Life Insurance is covered under Sec 80(C), where there are so many competing instruments, including government funds and housing loan repayment, which most of us do. All that leaves almost nothing on the table for life insurance to be specifically exempted. What would be your capital requirement in the coming year? At present, we are adequately capitalised. We have R2,127 crore of the capital invested in the business, which runs up to a solvency margin of 551%. That means we have three times more capital than required. We are now profitable and have been generating surplus. Currently, we don’t see requirement of new capital in the company. Bancassurance has been delayed. What is your stand on the issue? We certainly expect more consultation. There are many views. Some companies feel this is the right thing to do and some companies believe banks really are not sellers of long term-savings and protection. They are good sellers of shorter tenure investment products. But what does insurance really stands for: Long-term savings and protection to let banks do would require specialisation and I am not really sure they have the commitment to do that separately. source:financial

Importance of insurance for women

India, over the past two decades since the first wave of economic liberalisation, has seen a great deal of not just economic change but linked societal change as well. This societal change has also remodeled traditional societal models regarding the role of women. More and more women, particularly in the cities, are becoming financially independent and becoming equal if not dominant contributors to the household budget. The truth is that a lot of women are taking their own financial decisions when it comes to savings and investments. Despite this, many women do not consider insurance products and plans with any degree of seriousness. Insurance plans are great instruments for protection and long-term savings and can play a very significant role in achieving long-term goals. Today there are many insurance plans that can help women secure themselves and their loved ones and plan for the future as well. The challenge is where does one start? A great way to start is to make an assessment of your income, assets (savings and investments) and liabilities (loans). One must factor in the number of dependents into any financial calculation. So, how does one go about assessing what sort of insurance plans to consider? Let us start from the beginning. If you have any dependents — aged parents and siblings — then it is imperative to have a term plan in your insurance basket. A term plan is a plan that gives your nominees a certain corpus of money in case of death occurring during the policy period. This ensures that your surviving dependents can live the same lifestyle even in the unfortunate circumstance of your death.

PNB acquires 30% stake in MetLife India

Leading public sector bank Punjab National Bank (PNB) and US-based MetLife India, on Monday, signed a deal wherein the former picked up 30% stake in the insurance company for an undisclosed amount. The new insurance venture has been re-branded as PNB MetLife India Insurance Company Ltd. Finance Minister P Chidambaram, on the occasion of brand launching, said, “For a successful life insurance business, it is important to bring simple products to market that are easy to understand. Also, insurance companies should make sure that there is no mis-selling at any level.” With the change in shareholding pattern, Jammu and Kashmir Bank will hold 5 per cent, Shapoorji Pallonji 17.15 %, Elpro Group 21.46%, while MetLife would continue to hold 26 % cent stake in the joint venture. “Partnering with MetLife will give us access to global products and the risk management expertise of MetLife. The acquisition would make PNB Metlife ninth largest insurance company in India in terms of new business premium,” said K R Kamath, Chairman & Managing Director, Punjab National Bank. Apart from PNB, MetLife India has two other banks, Karnataka Bank and Jammu and Kashmir Bank as their distribution partners. “At present, around 60 per cent of business is coming from bank channels. We expect it to go up over the next few years. Also, it would be significant as the volume of business grows,” said Rajesh Relan, MD and country manager of PNB MetLife India Insurance.

Insurance Employees Association opposes FDI hike in insurance

The North Zone Insurance Employees Association (NZIEA), on Tuesday, strongly opposed Centre's decision to increase foreign direct investment (FDI) in insurance sector to 49 % from existing 26%, protesting that the FDI in the sector will mostly benefit the speculative market and ‘do no good to the country’. Speaking to the reporters, General Secretary of NZIEA, Mr. Anil Kumar Bhatnagar said that the Union Government had recently approved the Insurance Laws (Amendment) Bill, 2008, and it was being proposed to be placed for discussion in the Rajya Sabha. “Parliamentary standing committee headed by former finance minister Yashwant Sinha had unanimously submitted its report on December 13 to the parliament, and the committee had opposed the increase in FDI in the insurance sector,” he added.

EPFO likely to raise interest rate on retirement savings to 8.50% for 2012-2013

NEW DELHI: The retirement savings of over six crore formal sector workers are likely to fetch a dividend of 8.5% for 2012-13 - marking a marginal increase from the 8.25% paid on employees' provident fund (EPF) savings last year. The Central Board of Trustees of the Employees' Provident Fund Organisation (EPFO) is expected to ratify the proposed EPF rate on February 25, after the board's finance and investment committee refused to discuss the proposed rate at its meeting on Friday. Committee members told ET that they told senior PF officials to take the interest rate proposal to the Board since the underlying income estimates were not shared with them prior to the meeting. The panel, however, cleared a proposal to liberalise investment norms for private sector bonds. Though EPFO can invest upto 10% of its fresh inflows into such corporate bonds, it had put onerous restrictions on the companies that can qualify for investments. These conditions include a minimum 26% shareholding by a public sector company — a norm only a handful of firms can meet. The finance committee has agreed to do away with some of the restrictions and allow investments in bonds issued by any company that has a net worth of at least Rs 3,000 crore and has been paying a dividend of at least 15% for the previous five years. The board will now have to take a call on whether a cap must be imposed on the foreign shareholding level of companies whose bonds could be considered for investments. Though EPFO expects to earn a net income of Rs 21,147 crore in 2012-13 on its Rs 263,000 crore corpus of PF savings, it has earmarked Rs 350 crore from this income to update PF accounts for previous years. There are 38 lakh accounts that haven't been updated till 2010-11 . The EPFO has stated that 8.5% is a 'feasible' PF rate for this year as any rate above that would lead to a deficit. source:http://economictimes.indiatimes.com

Settlement delays by EPFO not to affect interest payout

personal/finance NEW DELHI: There's good news for salaried employees who have transferred or closed their old PF accounts in the last three years, but have been wrongly denied interest on their retirement savings from April 2011 till their accounts were settled. The PF office has been asked to ensure that employees are not penalised for its inability to settle accounts in a timely manner. The government had stopped crediting interest on employees' PF accounts from April 1, 2011, if they had been inactive for at least three years. The threat of losing interest, it was argued, may force employees to consolidate their multiple PF accounts from past jobs and transfer them to the account being operated by their present employer. The Employees' Provident Fund Organisation (EPFO) had claimed that 3.04 crore PF accounts with Rs 16,000 crore were 'inoperative'. ET had reported last week that employees who sought to transfer their old PF accounts before that deadline have been denied interest from 2011-12 though their accounts were settled much later. Worse still, employees who were paid due interest till the date of settlement are now receiving demand notices from the PF department seeking a refund of 'inadvertently' credited 'excess' interest. The EPFO board's finance committee, which met on Friday, saw a last-minute addition to its agenda to discuss such 'exceptional' cases. "...If the settlement of a claim is delayed by more than a month after March 31, 2011, the member suffers a loss of interest on his accumulation, corresponding to the delay period. The more the delay, the more is the loss of interest," the EPFO conceded to its finance committee, citing several requests from employees for crediting interest on their claims submitted before the cut-off date. Though EPF scheme mandates all claims and transfer requests to be settled within 30 days, it actually ends up taking much longer as the PF departments' archaic book-keeping system and business processes are unable to cope with the rise in account volumes. The EPFO now administers 8.15 crore member accounts with an underlying corpus of over Rs 5 lakh crore. "The delay of more than 30 days in all cases is attributable on the part of EPFO... (they) have occurred due to various administrative reasons," the board's committee was told, stating that field offices have sought a clarification on whether interest must be credited on inoperative accounts where claims were received prior to March 31, 2011 but settled later. The committee has decided that in all such cases where the 'settlement delay' was not caused by the employee but by EPFO's 'administrative reasons', interest must be paid for the 'delayed period' at the prevailing EPF rate. "We are quite anxious that EPFO fixes this, as such complaints have reached an embarrassing scale," said a member of the committee. "The modalities for ensuring all members get their dues need to be simple so that workers don't have to run from pillar to post to claim the amount they were shortchanged by," he said. The EPFO's board of trustees chaired by labour minister Mallikarjun Kharge is expected to ratify the proposal on February 25, when it will also discuss the EPF rate for 2012-13. The PF office has proposed a rate of 8.5% as 'feasible.' The EPFO had declared a 9.5% interest on deposits in 2010-11, but slashed it by 1.25% in 2011-12 to 8.25%. Incidentally, this year's EPF income calculations don't factor in the interest income on inoperative account balances, though EPFO had claimed that it could be redistributed to active members. source:economicstimes

How to invest in gold and meet your 5-10 % portfolio target

Individual investors are responding "positively" to Reliance My Gold Plan, say mutual fund distributors. The plan allows investors to invest money in it through systematic investment plan (SIP) and get physical gold at the time of redemption . Though experts believe that investors should invest a small part (5-10 %) of their portfolio in gold; they are, however, not unanimous about how to invest. Investors have plenty of options available to them these days. Those who are interested in buying gold in physical form can buy from jewellers, banks or accumulate gold through monthly schemes offered by jewellers . If you want to accumulate paper gold, you can buy exchange traded funds dedicated to gold or open ended gold savings funds. Then there is egold from the National Spot Exchange; and Reliance My Gold Plan, where you can invest regularly but get physical gold at the end of the tenure. "Depending on consumption and investment needs, gold can be bought in either physical form or electronic form," says Amar Pandit, founder & CEO, My Financial Planner. BUYING PHYSICAL GOLD

Travel Insurance for Senior Citizens

Senior citizens are the most unlikely people that would go flying overseas. Most of the time, they are discriminated upon because some travel insurers put an age cap on policyholders. They do not cover people 65 years old and above. This becomes a problem for this age group when traveling. Other insurers that provide coverage, offer higher premiums for this age group. The premiums would often be 60% more than the price of regular travel insurance. This trend is because they view this age group as high risk. Because of their age, they are more prone to illness or accidents when traveling which would make medical expenses higher.

How to Get the Best Out Of Your Travel Insurance

Having the best protection coverage during your trips will not only help you relax but give you that peace of mind that whatever happens your needs will be covered. Before getting your travel insurance, make a checklist of the things that you need to be covered during your trip is handy. This will help you to decide on the best protection you need.

Top tips for visiting the Taj Mahal

A trip to be Agra can be overwhelming but is well worth the effort Often considered to be one of the great wonders of the world, the Taj Mahal attracts hordes of visitors every year to be awed by the majestic monument with its inspiring architecture and intricate designs. But although it's hard to be disappointed by the iconic building, tourists often find that investing in travel insurance and taking a trip to Agra to see the Taj Mahal can be a rather exhausting experience. Indeed, writing for the Telegraph, travel writer Stephen McClarence suggests that a first visit to Agra could easily trigger an attack of "Agra-phobia". He says: "With its notorious sprawl and congestion, this north Indian city has, on the face of it, little to lure visitors." There is no doubt that the noise, traffic, heat and hawkers that you're sure to be met with on arrival to Agra can be a little overwhelming. What's more, when you go into the Taj Mahal itself, you are likely to be met by crowds of tourists. Stephen adds: "With all the bustle and the chatter, all the jostling for photographs and the tour guides blowing whistles to keep their groups together, it can feel more like a market than a mausoleum." However, the Taj Mahal is most definitely an attraction that is not to be missed, and by doing your research and being prepared you can ensure that the experience is as stress-free and enjoyable as possible. Since the heat can get intense during the winter month, it is best to visit this area of India between late October and mid-March when the temperatures aren't so scorching. However, try to avoid Indian holidays such as Diwali, as the site is often packed with tourists at this time. In addition, make the effort to get up early and visit the monument at sunrise. Not only will there be fewer people around at this time, but the early morning light is perfect for catching the Taj Mahal looking its most stunning. "The Taj Mahal has become a victim of its own perfection," Stephen says." But in the right light, it is magical, looming like a mirage through its main gateway. It seems to float, as though painted on gauze: pink at dawn and dusk, dazzling white at noon, pearly silver by moonlight." Travel Insurance

Medical Tourism packages in The New India Assurance

The New India Assurance : - Medical expenses incurred by the insured persons, outside India as a direct result of bodily injuries caused or sickness or disease contracted are covered. Eight Plans available under the policy: PLAN A: For travel to countries excluding USA & Canada for business and holiday limited to USD 50,000. Same as (A-1) above except that benefits stand increased to USD 250000. PLAN B: For travel worldwide including USA & Canada for business and holiday limited to USD 1,00,000. Same as (B-1) above except that benefits stand increased to USD 5,00,000. PLAN C: For travel to countries excluding USA & Canada for employment and studies limited to USD 150,000. PLAN D: For travel worldwide including USA & Canada for employment and studies limited to USD 150,000. PLAN E: For travel worldwide including USA & Canada for corporate frequent travelers limited to USD 1,00,000. Same as (E-1) above except that benefits stand increased to USD 5,00,000. CFT Cover is available for Executives Of Corporate clients and Partners of registered firms annually subject to the duration of any one trip not exceeding 60 days. ADDITIONAL Add-on benefits:-Besides the above additional add-on benefits are available under Business & Holiday and CFT cover(Except Plan C and Plan D) Personal Accident Loss of checked in Baggage Delay of checked in Baggage Loss of passport Personal Liability Premium: Depends on Age-band, Trip-band and Country of visits.Coverage: Initially cover upto 180 days is provided under Business & Holiday Plan .Extension allowed on original policy for further period of 180 days subject to declaration of good health. Top Eligibility Age Limit: 6 months and above upto 70 years. Policy is to be taken prior to departure from India. Travelers over 60 years of age and for those traveling to USA & Canada over 40 years the following Medical reports (from an MD Cardiologist) need to be submitted along with the proposal form: ECG Fasting Blood Sugar or Urine Strip test These reports are required if the travel period exceeds 60 days and above. In case of travellers unable to submit the above Medical reports cover stands restricted to USD 10,000.

IRDA may soon put an end to high NAV products

Distracted over the misleading nature and selling of high NAV (Net Asset Value) -guaranteed life insurance products, the Insurance Regulatory and Development Authority has decided to put an end to such products. These products give an impression that returns offered are linked to market performance. At present, such products account for about 20% of life insurance sector’s new premium income. Speaking on the sidelines of a programme organised by the Institute of Insurance and Risk Management (IIRM) and ICICI Lombard in Hyderabad, J Hari Narayan, chairman, Insurance Regulatory and Development Authority, said, “The high NAV guaranteed products are discouraged in several markets since they result in an easy miscommunication... What is deemed to be highest NAV should not be confused with what is the highest index or how the market is performing. Highest NAV products tend to become debt products in order to maintain the guarantee whereas while marketing such products, the consumer is left with the feeling that it grows along with the value of the market itself. According to the IRDA chairman, total assets under management for the insurance sector, which has posted a healthy growth, is expected to touch 20 lac crore by March 2013 against 18 lac crore a year ago. “When I took charge, the total asset under management was at 8 lac crore. Last year, it was 18 lac crore... and by March it may touch 20 lac crore,” he added. Further he said the new product regime, as and when they come into force with different dates to stagger the implementation, gives time to insurance companies to readjust their processes.

RGESS takes commissions to record highs Mutual fund houses are paying up to 6% commission to distrib

Asset management companies (AMCs) are back to paying dizzyingly high commissions to mutual fund (MF) distributors. Fund houses are paying as much as 6% commission to distributors for selling the newly launched Rajiv Gandhi Equity Saving Scheme (RGESS), prompting one asset manager to describe the situation as a “mad rat race” for customers. As a result, a scheme aimed at encouraging access to equities for newbies could end up hurting them. Large commissions in the not-too-distant past led to widespread mis-selling by segments of the financial industry. And this time, the bulk of the target customers are seen to be outside the larger cities, areas where investor understanding isn’t likely to be any higher. AMCs paying such commissions say they have no option but to do so, and that it’s unfair to regard the payout as excessive. DSP BlackRock Investment Managers Pvt. Ltd has promised 6% commission to a few of its distributors. HDFC Asset Management Co. Ltd has promised about 5.5% to a few of its agents.Mint has reviewed emails sent by the fund houses to some of its distributors, citing the commission structure for RGESS. Some fund managers are appalled. “I have never heard of fund houses paying such high levels of commissions, ever,” said Deepak Chatterjee, managing director of SBI Funds Management Pvt. Ltd. Nilesh Sathe, chief executive officer (CEO) of LIC Nomura Mutual Fund Asset Management Co. Ltd, said, “The commissions paid by some fund houses are indeed very high. It is a mad rat race.” RGESS is a tax-savings instrument that was announced in budget 2012 and formally launched by finance minister P. Chidambaram on 9 February. Five fund houses—DSP BlackRock, IDBI Asset Management Ltd, LIC Nomura, SBI Funds and UTI Asset Management Co. Ltd—launched their RGESS MF schemes that day. More are set to be unveiled. In order to entice the first-time equity investor to invest in the stock market, RGESS provides a tax deduction benefit if the person’s gross total income is less than or equal to Rs.10 lakh and has never invested in shares before through a demat account (or in derivatives). Investors can put up to Rs.50,000 in an RGESS scheme and claim a deduction of 50% on the amount. For instance, on a maximum Rs.50,000, investors can avail a deduction of Rs.25,000 (50% of Rs.50,000). Buoyed by high commissions, some distributors have started to aggressively push RGESS. “Since the scheme has a very narrow definition of who a ‘first-time investor’ is, it’s difficult to find such investors in larger cities,” said Mumbai-based distributor Shashank Joshi. “And if we find him, it’s difficult to convince him to invest in RGESS, given that his income is also below Rs.10 lakh.” Joshi also said that distributors need to be compensated for the added effort of assisting the person to open a demat account. The terms of the scheme mean that a large proportion of customers is likely to be found outside the big cities, which is where the MF business is concentrated. “Typically, there is a large concentration of people who earn less than Rs.10 lakh income annually as you go beyond the larger towns,” said Ajit Menon, head of sales at DSP BlackRock. “Also, in the current avatar, RGESS is a tough product to sell, especially when sold in the tax-savings season which we are currently in; the agent also has high-commission products like insurance schemes that vie for investors’ mind space.” Menon said DSP BlackRock wanted to try and “reach out to as many agents in as many locations as possible”. He also pointed out that equity funds are mandated by law to collect at least Rs.10 crore in the new fund offer (NFO) period, or the scheme had to be shut down and the money returned to investors. To be sure, the burden of paying commissions has shifted largely to AMCs from investors as was the case earlier. In 2009, the capital market regulator abolished entry loads (charges of up to 2.25% that MFs used to collect upfront at investment opening that was eventually passed on to the distributor as commission). Since then, fund houses have been paying upfront commissions largely out of their own pockets and from exit-load collections. But last year, the Securities and Exchange Board of India (Sebi) mandated that AMCs need to plough exit-load collections back into their MF schemes. To compensate for this, it allowed fund houses to charge an extra 20 basis points (bps) from investors, as part of the scheme’s total expense ratio (TER). A basis point is 0.01%. This latest change was part of a plan Sebi unveiled last year permitting fund houses to charge about 50 bps of additional TER to, among other things, increase penetration to areas “beyond the top 15 cities”, also referred to as B15. After Sebi’s move, first-year payouts (upfront charges and first-year trail fees) have gone up by 25-35 bps across equity and long-term bond funds to about 1.75% of the investment amount garnered. Most fund houses have also increased commissions for their equity-linked saving schemes to up to 4.5-5%, up from about 3.5% that they used to pay earlier. B15 charges for the first year have gone up to 3-3.5%. RGESS tops all those structures with commissions that have touched a record high payout by fund houses. Nearly the entire commission on RGESS is paid to the distributor upfront when the money comes in, since investments under the scheme are locked in for three years. Milind Barve, CEO of HDFC Asset Management, contended that the RGESS commission “looks high, but really isn’t. The commission is paid upfront and therefore the figure looks high. It is the usual practice”. The commission figures reviewed by Mint aren’t the same for all agents. A fund house has different commission structures for its various distributors. Though investors don’t pay these commissions over and above what TER mandates (up to 3% of the scheme’s weekly average net assets, every year), fund officials say such high payouts are unhealthy for AMCs. According to the rules, AMCs can amortize, or spread, the high commission costs (the portion that they have absorbed in their own books) over the tenure of the scheme if it’s a closed-end one and, thus, distribute the hit they take in year one. That’s why not everybody’s convinced about the justification for high commissions. “The Indian AMC industry’s business model does not permit us to pay such high commissions,” said Sathe of LIC Nomura. “If one or (a) few AMCs start paying high commissions, the pressure comes on other AMCs to follow suit. Small fund houses are bleeding and the industry is in dire straits.” Chatterjee of SBI Funds allowed that “agents need to be compensated because they work to get inflows”, but said that “commissions need to be paid that the MF business model can legitimately support. Sebi’s stance, over recent years, has been to get away from paying hefty commissions, but what is happening is quite the opposite”. What makes the commissions particularly worrisome is that the scheme is meant for the first-time equity investor. Hefty commissions also leads to mis-selling at times, experts say. Before entry loads were abolished, collections from NFOs used to be 35-45% of the overall collections in equities, according to a Mint analysis that was part of a story published in 2012. After entry loads were abolished, the number of NFOs dropped drastically, to 3-7% between 2008-09 and 2011-12. “RGESS is not just open for those who wish to save tax. Even those investors who do not need to save tax, like the ones who fall in the 30% tax bracket and don’t meet the eligibility criteria, can invest. Ultimately, over-enthusiastic distributors might end up selling RGESS to them, without these investors really coming to know where their money is invested,” said Joshi, the distributor. What’s more: money invested in a closed-end RGESS MF scheme is locked in for three years, irrespective of whether an investor opts for the tax benefits or not. After three years, the money gets redeemed automatically, again, irrespective of whether an investor opts for the tax benefit or not. No wonder then that commissions have hit the roof. source:.livemint

"Overseas Student Travel Insurance" by ICICI, Lombard

ICICI Lombard General Insurance Company Ltd. Is one of India's largest general insurance companies in the private sector -it offers "Overseas Students" a comprehensive health insurance plan. Their Plus Plan covers many features like - maternity care, sports injuries and cancer. Also the Plus Plan can be modified according to university requirements. To provide better service ICICI Lombard has partnered with United Health Care - which is the largest Health carrier in the US. Students can avail cashless treatment and medical emergencies by visiting a United Health Care hospital. ICICI Lombard has more than 500 universities listed under their care. Source-Medindia

Overseas investors bullish on infra debt funds:

Infrastructure debt funds are expected to attract huge investor interest in overseas markets, given a marked improvement in economic sentiments here and a low-interest rate environment abroad, ICICI Bank chief Chanda Kochhar has said.Evolution of infrastructure debt funds (IDFs) as key financing vehicles for the infrastructure sector is also expected to ease the pressure on the banking system, Kochhar told PTI in an interview. "The improvement in sentiment during the last few months and the continued FII flows in both debt and equity lead us to believe that the IDFs will be successful in raising offshore funds," said Kochhar, who was here yesterday for the launch of India Infradebt Ltd, the country's first IDF under NBFC model. Infradebt has been set up with an equity capital of Rs 300 crore (about $55 million) with four major financial institutions as its promoters. While, ICICI group holds the highest stake at 31%, other promoters are Bank of Baroda (30%), Citi (29%) and LIC (10%). The Fund can provide funding to the tune of up to $2 billion after roping in debt investors from India and abroad. On the expected contribution from domestic and foreign investors in the overall targeted size of $2 billion, Kochhar said, "Infradebt is looking to raise half the liabilities from the domestic market and the other half from foreign sources". Asked whether she was optimistic of foreign investors' interest in Infradebt and other such funds despite concerns over the country's widening trade deficit and continuing FDI barriers, Kochhar exuded confidence in success of IDFs in raising offshore funds. "Further, since IDF would be lending to projects which have completed one year of operations after implementation, the risk profile will be substantially lower, thereby attracting huge investor interest. Also, the continued low interest environment in the offshore markets coupled with the ample global liquidity will also support fund raising by IDFs," she said. India has set a target of $1 trillion towards infrastructure spending during the 12th five-year plan period (2012-17). Of this, 50% of the amount is proposed to be invested by the private sector and an estimated $350 billion is expected to come through debt contribution. "While the target ($1 trillion) may appear large, we should remember that a few years ago we would have thought that spending $500 billion would be impossible and we have substantially achieved that level in the 11th plan period. So, I think we need to set aspirational targets and work towards achieving them with the right policy and administrative measures," Kochhar said. When asked whether IDFs can ease the pressure on banking system, which has been the main source of funding for infrastructure sector, Kochhar said, "Worldwide pension funds and insurance companies which have access to long term funds finance most of the infrastructure requirements." "In India, it is the banking sector, which has mostly short term funds which finances the bulk of infrastructure assets. The IDFs are expected to correct this gradually by channelising long term funds from pension funds and insurance companies, both domestic and overseas. Over a period of time, the contribution of IDFs is expected to increase," she added. On the expected role of IDFs in channelising domestic savings and global investments for infrastructure funding, Kochhar said the Finance Minister has put in place an innovative structure in the form of IDFs. "While the concept is new, we are confident that Infradebt and other IDFs will emerge as a new additional channel for funding infrastructure. We believe that an appropriate mix of incentives and the right structuring leading to a low risk operating model, together with strong support from the Government will lead to the success of the IDF NBFC model," she added. Kochhar said that India presents a huge opportunity for physical infrastructure such as power, roads, airports and urban infrastructure. "Thus, infrastructure investments in India would be inherently viable given the demand-supply situation. In recent years we have demonstrated the ability to build infrastructure on a large scale. We need to ensure that there is an appropriate policy and administrative environment to make existing investments fully productive and encourage additional investment. "Funding will be available, especially with the creation of additional funding channels like IDFs to channelise long term resources into the infrastructure sector," she added. NBFC-model IDFs are currently allowed only to invest in Public Private Partnership projects having completed one year of commercial operations. "The existing framework for IDF NBFCs will naturally evolve once there is a track record, but there is another structure of IDFs through the mutual fund route which can fund such projects even today," Kochhar said.

ING to pick head of Belgian operations as new CEO: Paper

insurance group ING will probably nominate Ralph Hamers, currently head of its Belgian business, to succeed Jan Hommen as chief executive, a Dutch newspaper reported on Friday, without citing sources. As recently as last week when ING reported earnings, Hommen - who will turn 70 in April - declined to answer questions about whether he would renew his term or step down. A spokesman for ING on Friday reiterated that it was up to the supervisory board to decide. Hommen has overseen ING's split into separate banking and insurance operations and the sale of several overseas assets after the company was bailed out by the Dutch state in 2008. His term ends later this year unless it is renewed. Hamers, 46, is not on the ING executive board, and has led ING operations in the Netherlands and Romania, and its wholesale banking unit. He will have to shape the post-split ING, and set out a new growth strategy for the bank operations after the insurance divestments, Dutch newspaper Het Financieele Dagblad said. Hamers is expected to be proposed as the new CEO at ING's annual shareholder meeting on May 13, and will probably take the helm during the second half following a handover period, the paper said.

Overseas Health Insurance News: Expats can now make international money transfers through Facebook

Facebook has become well established among expatriates as a convenient way to keep in touch with people back home and all their latest news. Now expats will be able to use the social networking site for a wider purpose as a money transfer service has been integrated into the programme. People living in places abroad will be able to make transfers to those in 125 different countries across the world thanks to this new aspect of the website. UK-based firm Azimo is behind the development, which represents a relatively low-cost way to send money to other parts of the globe. Michael Kent, founder of Azimo, said: "Unlike other areas of financial services, social media is very applicable to remittances. "With more than a billion people around the world using Facebook to keep in touch with friends and family, it seems only natural it should become a channel for sending money." At present the majority of money transfers are conducted through the likes of Western Union and Moneygram, with the market worth as much as US$500 billion (£323 billion) a year. Such organisations take a large fee for the service, which has led to investigations from the World Bank, revealing that a ten per cent charge is the norm in most countries, but can rise to as much as 20 per cent in others. The new Facebook integrated system is therefore likely to be popular with many expats as Azimo says it will be 85 per cent cheaper than what high street banks charge and quicker, with transfers taking an average of 24 hours instead of the standard five days. Mr Kent added: "It’s cheap because it’s online. The main part is having low overheads and fewer people in the value chain." Users can log into Azimo using their Facebook account details and select a contact from their friends list in order to transfer cash to them via whichever account suits them.

RIL raises $800 m in overseas market, thanks to HNIs, insurance firms

MUMBAI, JAN. 30: Oil and gas giant Reliance Industries has raised $800 million through a perpetual bonds issue in the overseas markets to fund its capex plans in its exploration and refinery business. The coupon rate was 5.875 per cent to be paid semi-annually. The issue also comes with a call option wherein the issuer has the option to buy back the bonds at the end of five years. According to RIL officials, HNIs and insurance companies have subscribed to the bond issue, which got bids worth $3 billion. USING RATE SCENARIO The company decided to go ahead with the issue rather than utilise its Rs 82,000 crore cash balance for the quarter ended December 31, 2012, to take advantage of the comparatively cheaper finance available overseas for raising debt. “The interest rates are at historical lows and it is a good time for Reliance to raise long-term money. Besides, the long-term nature of the bond is in line with the long-term assets of the company,’’ RIL’s Chief Financial Officer Alok Agarwal said. “We also wanted to take advantage of reduction of withholding taxes on overseas borrowing,” he added. Last year, the government had reduced the withholding tax on foreign borrowing by Indian companies to 5 per cent from the earlier 20 per cent. The RIL stock closed at Rs 899.05 on Wednesday, up 1.87 per cent, on the BSE.

LIC housing plans to take ECB route to raise 1k cr

HYDERABAD: LIC Housing Finance, promoted by state-run insurance giant LIC, is planning to raise Rs 700- 1,000 crore through external commercial borrowings (ECB), said Chief Executive VK Sharma. Last month, the Reserve Bank of India (RBI) had allowed real estate developers and housing finance companies to raise up to $1 billion through external commercial borrowings in the current fiscal to promote low-cost housing projects.Sharma said a committee comprising senior officials of the company has been formed for the purpose and it is in touch with RBI for charting out the modalities for an ECB issue. "We expect that we will be in that segment, which has been permitted by the RBI. We expect that we will be raising somewhere around Rs 700-1,000 crore. We will apply for that," Sharma said on the sidelines of a property exhibition here. ECBs are considered attractive as cost of raising loans overseas is lower than that in India. Besides, they provide an additional avenue to access large amounts of funds from global financial markets. To a query on when the company would raise the ECBs, Sharma said: "I cannot comment on that. Board resolution is there in place. We have created a committee at company level and they are in touch with RBI." He said LIC Housing finance is expected to complete the institutional placement offer by fiscal end. The qualified institutional placement (QIIP) was delayed due to a variety of reasons, including volatility in the markets, he added. Though he did not mention the exact amount being raised through the QIP, a senior official earlier told PTI that the entity was hoping to raise up to Rs 1,200 crore through the proposed issue of new shares. LIC, which is the promoter of LICHFL, currently holds 40.31% stake in the company. While institutional investors, both foreign and domestic together, hold 41.47% shares in the company, others hold 18.22%. The merchant bankers appointed for the issue include Nomura, Kotak Securities, HSBC, Citigroup and Avendus Securities, the official said. Parent LIC's stake in the company currently stands at 40.31%, which will come down to the 36.54% level after the issue. LICHFL, which is now charging 10.25% interest on home loans, will wait for RBI's policy review slated for January 29 before taking a decision on revising interest rates, Sharma said. Last year, the company disbursed 20,000 crore in loans and this year the target is 25,000 crore, he added.

FE » Story Insurance Bill retains proposal to raise FDI cap to 49%

Despite a parliamentary standing committee’s firm stand against hiking the 26% foreign direct investment cap in insurance, the government has decided to approach Parliament with its original proposal to hike the limit to 49%, considering the sector’s huge capital needs. Sources told FE that the Insurance Bill, listed for consideration and passing in the ongoing Budget session, proposes a composite foreign investment ceiling of 49%. This means the government even negated a compromise formula that came up during informal discussions between the government and the Opposition to carve out a 23% window for equity holding by foreign institutional investors or overseas corporate bodies, while retaining the FDI cap at 26%. Of course, it remains to be seen if the government would be able to get the Bill passed, given that the BJP is unconvinced about the need to raise the FDI cap in insurance. Finance ministry sources told FE that the composite cap of 49% foreign investment (including both FDI and FII components) was retained as the aim now is to get up to 49% FDI in the sector, which needs around $12 billion worth of capital by 2020. “The sector, which is burdened with losses, urgently needs long-term capital for expansion and increasing penetration,” an official said. “We cannot afford any provision restricting FDI to less than 49%, especially when the Indian companies are finding it difficult to raise capital,” the official said. The compromise formula was considered following opposition from members of the parliamentary standing committee on finance, including its chairman and BJP leader Yashwant Sinha, against any move to increase FDI in the sector from the present limit of 26%. In an interview to FE later, Sinha indicated his willingness to discuss the 26% FDI plus 23% FDI formula. What has reaffirmed the government’s conviction regarding its move to permit up to 49% FDI in the sector is the large number of representations it received from foreign investors and insurance companies requesting not to reduce the FDI limit from the proposed 49% in the Insurance Bill, the sources added. These representations said lowering the FDI limit from 49% for a political compromise would complicate matters and adversely affect the ability of the sector to raise long-term foreign capital. The Insurance Regulatory and Development Authority also backed the move to allow 49% FDI. Those who argue that FDI and FII should be separate have concerns over the possibility of a single foreign investor getting a 49% stake in an insurance company, and at the same time two or more Indian entities being in the minority by sharing the remaining 51%. However, Gautam Mehra, executive director, PwC, said, “If you give a 49% stake to foreign investors, they will be more comfortable and will get serious long-term investments.” Currently, even with 26% FDI, the foreign joint venture partners anyway have the ability to control the company through the power to appoint people to key positions such as the chief risk officer and the chief financial officer, he pointed out. The advantage of the composite foreign investment cap over separate boxes for FDI and FII is the flexibility the former offers. According to Securities and Exchange Board of India regulations, each FII cannot hold more than 10% equity in a company and their sub-account cannot own over 5% stake in a company, which in turn forces the need to bring in multiple investors if any insurance company opts for the complicated option of a higher FII component. Mehra added that if the intention is to raise long-term capital, most Indian companies would prefer long-term foreign investment, which is FDI.

Budget 2013: Review needed on levying of service tax on life insurance products, says V Philip, Baja

NEW DELHI: In order to boost life insurance, levying of service tax should be revisited in order to make the product attractive, says V Philip, MD & CEO, Bajaj Allianz Life Insurance, in his pre-budget expectations. "As life insurance contributes 4.1% of GDP and also forms a significant chunk of household savings, levying of service tax should be revisited in order to make the life insurance product attractive," he said. V Philip lists a few recommendations on service tax and income tax related to life insurance products for Union Budget 2013: Service Tax Revise service tax on FMC: One of the issues that have been recommended earlier as well by life insurers is service tax on fund management charges. At present, fund management charges (FMC) are capped at 1.35%. As recommended by IRDA, service tax is charged on this or the actual amount, whichever is higher. This results in unnecessary payment of tax if the actual FMC is less than 1.35%, especially in the current situation where recent guidelines and competition has forced insurers to reduce FMC. Hence, it is recommended that tax should be charged on the actual amount of the FMC. Nil service tax on annuity purchase price: Another aspect where service tax should be re-looked at is on annuity purchase price. For instance, while purchasing an immediate annuity plan, a service tax of 3.09% is charged on the price. Hence, for a customer purchasing annuity worth Rs. 1 cr., the effective purchase price for the customer increases by Rs. 3,09,000, which is a significant amount. Considering the reluctance of people towards planning for their retirement through life insurance, this service tax may act as a further deterrent for customers. Review of reverse charge mechanism: Service tax liability is normally discharged on the provider of the services. In case of Insurance Auxiliary Service it is to be paid by the service receiver (Insurance Company). Under this concept the tax has to be paid on the entire amount without any threshold limit. In case of service provider, threshold level is defined and is currently at Rs. 10 lacs. We feel that a threshold limit of Rs 10 lakh per agent should be considered when the payment is made under the reverse charge by insurance company. Reduce Service Tax rate for Single premium: At present the rate of ST is high in case of 1st year and Single premium payments in case of traditional products. Since the charges/cost for entire life of policy are embedded in the premium and it is equated premium, it is felt that the Service Tax in case of single and 1st year premium should not be at such high rate and it should be same as for year 2. Review of point of taxation: Service Tax is to be paid on the receipt of premium on risk part. In many cases the risk portion cannot be determined before underwriting. It leads to incorrect estimation and deposition and adjustments. It is felt that there should be exemption from point of taxation where the value of service is not identifiable. At policy level it leads to number of adjustments and it is administratively difficult for large volume.

Life insurance industry needs to tackle mis-selling of policies

The life insurance industry continues to face the menace of mis-selling. Even the finance minister publicly admonished insurers on the practice. The industry recorded a degrowth of insurance premium in 2011-12, while insurance penetration slipped to 3.40 from 4.60 in 2009. It is evident that no serious attempt has been made to find a way out. The agent is the main source of business insurance. However, there is no stability in the agency channel. Continuing the trend of attrition of agents, in 2011-12, the number of agents appointed was 7.14 lakh, while termination figures stood at 9.95 lakh. Training of agents has not brought any qualitative improvement in the agency, notwithstanding the huge investment by the industry. If we look at the cost-benefit analysis, the survival rate of agents after three years declines sharply. An agent in the first year spends R1,250, which amounts to R124.50 crore for 9.95 lakh agency terminations in one year. There are other imputed expenses. Assuming the sum of R5,000 on training and maintenance per agent for the same number, the figure works out to R497.50 crore. This is an eye-opener as to the effectiveness of the channel. As per reports, companies thrive on lapses. For example, HDFC Life reported profits of 88.3% due to lapsed policies. This figure for Kotak Life is 80%. The higher the average premium, the greater the lapses. The link is proved by the fact that the average premium of HDFC Life is 54,473, while for Kotak Life, it is 73,762.The so-called 'agent' seems to have become a source of exploitation for his contacts. I have known cases where the policyholder has been misled into investing huge amounts without proper guidance and the companies are unable to provide any relief. Mis-selling has assumed such alarming proportions that HDFC Life served a notice on LIC for its agents leveling allegations of mis-selling against it, while the LIC has come out with advertisements cautioning policyholders from unscrupulous entities offering misleading rewards. The bancassurance channel has been added to the already crowded list of sources of mis-selling. The free-look period expires due to manipulation in delivery of policy with the result that the clients feel cheated. There is an imperative need for the life insurance industry to instil confidence in the minds of the public to fulfil the role of economic prosperity that it enshrines. It needs to be pro-active in identifying and tackling the problems of mis-selling to regain the trust of the people. Following ways could be considered, both by the insurer and the regulator, to check rampant mis-selling. Regulations to proclaim mis-selling as a fraud in tune with the Regulations "Prohibition of Fraudulent and Unfair Trade Practices relating to Security" issued by Sebi for sale of mutual fund schemes; In order to check money laundering and quality of sale, the data of Cibil should be referred to verify or record financial standing of all customers. It should be mandatory after a particular limit; People need to be involved in the sale process. Most clients sign on the dotted line and, later , they rue their fate;Online selling with discounting in premium and selling by cross-mutual support by way of discounts in premium to those having medical insurance and similarly those opting for medical insurance having life insurance will improve quality of sales; The mutual fund industry has been successful in creating awareness about systematic investment plans to spread the cult of investing. Similarly, the insurance industry needs to create better awareness about the ECS facility to ensure regularity in payment of premium; The insurance industry is known to manipulate the number of sales by splitting over a period of time to avoid detection of compliance of regulations. The industry must evolve a mechanism to classify each sale to an individual during the course of one financial year by cross-checking facts; The lapsed policy premium should not be part of the profit and be transferred to a especially created policyholders fund, which can be used to compensate proven cases of frauds; Unit-linked products are highly complex. The switching facility, a well-intended provision, is again beyond the understanding not only of the common people but also for the field force involved in sale of Ulips. Therefore, such products should be sold only to those who have experience in holding shares in a regular demat account of duration of minimum of two years. In fact, Ulips must be marketed only by agents who are qualified to sell MFs. The incentives of foreign jaunts and expensive gifts must stop immediately as it proves to be big source of mis-s-selling;There is also a need to rationalise returns on selling. When an agent sells a life insurance product in making payment of R1 lakh premium, he gets R40,000 and a mere R100 for pension fund product. Obviously, this is temptation to force-sell life insurance, which unfortunately has driven to malpractice of rebating. The banking industry has embarked on an expansion mode by moving to several villages with a population of 2,000 through business correspondents. The insurance industry has no such strategy in hand. It can rope in business correspondents for selling of insurance products in their areas. All deposit accounts in banks and retail loans, which as per RBI figures stand at R6,22,752 crore, should be covered by life insurance. Imagine the sense of relief the family will have on being protected against repayments of housing, consumer durable, credit cards and other loans on death of account holder. The life insurance industry is focused on short-term gains and needs to make a choice for long-term outcomes aimed at satisfying customer needs. This, it can do by employing qualified and educated staff who can come up to the challenges involved. Let not the industry destroy itself by overlooking the challenges.