Private third-party motor cover may cost 39% more

MUMBAI: Come April, you will have to shell out significantly higher premium for third-party motor insurance policy. The Insurance Regulatory and Development Authority (IRDA) has proposed a 38.87% increase in premium for thirdparty motor insurance for private vehicles and a 10% hike for commercial vehicles for the next financial year. Third-party cover is the biggest lossmaking segment for the general insurance industry. The increase in premium has taken into account the number of claims, amount of claims honoured and the amount of claims outstanding. Since it takes many years before the ultimate position of claims paid is known in thirdparty motor insurance, IRDA has moved to address the immature losses. IRDA has now clubbed sub-classes of various cars and effected uniform change in premium rates. "It is therefore proposed that the sub-classes be clubbed together and a single revision be made for the vehicle class as a whole," said M Ramprasad, member, IRDA. "For example, for private cars, the increase would be 38.87% over the previous year's premiums of all its sub-classes." Some sub-classes of private cars such as Mahindra and Tata have traditionally seen higher third-party claims than cars such as Hyundai, said executives. Data compiled by the Insurance Infor-mation Bureau show that average thirdparty motor premium on private cars was Rs6,500 crore a year, while for commercial vehicles like trucks, it was Rs10,278 crore. Third-party motor insurance being the only segment where the tariffs are set by the regulator, IRDA had decided to revise the premium every year, based on the experience and cost inflation index, to reduce the losses for insurers. IRDA has brought in significant changes in the third-party motor segment, which has seen claims ratio of over 200% in the past few years. It had dismantled the third-party motor pool and set up a declined risk pool. Risks that are declined by insurance companies go to this pool, as third-party motor cover is mandatory by law. The size of declined risk pool has shrunk significantly to Rs125 crore from Rs7,000 crore since April 2012. The regulator has therefore selected the underwriting years 2007-08 and 2008-09 as the experience period, during which about 70-75% and 55-60% of claims, respectively, were paid. ISL, which manages all the indices of NSE, was a major beneficiary of the S&P brand and its global reach over the past few years, said market experts. source:economicstimes

Tax cut likely for life insurance sector in upcoming Budget

lifeinsurance/ There is a good news for life insurance policyholders, as the Finance Ministry has given an indication that the ministry is considering a proposal to wave off service tax on first premium and create separate exemption limit for pension schemes in the three-months long upcoming Budget session beginning on Thursday. Besides, the tax authorities are examining whether service tax may be assessed on realisation basis as against the current practice of levying duty on the premium on accrual basis. As present, service tax is paid on dues or receipt of amount, whichever is earlier. However, some of amounts due are never received; similarly amounts received in advance with proposal are not converted into policy. Industry has demanded that service tax liability should be on the basis of receipt of amount and subsequent conversion as premium. Under the existing Income Tax Act, Rs 1 lac income tax deduction is allowed on the premium paid along with other approved investments. The industry is expecting from the ministry to make an announcement in this regard which will benefit the consumers as well as the life insurance industry. According to the sources, various incentives are being considered by the government for boosting life insurance industry including higher incentives for agents selling policies. The Central Board of Direct Taxes is also considering whether the total sum paid for post-retirement medical scheme could be made eligible of income tax deductions. The Finance Minister Mr. Chidambaram has been batting for the need to push savings in financial instruments than in assets like gold. He pronounced such type of assets 'unproductive'. “The spurt in gold imports has aggravated the current account deficit," he said. Concerned over subdued growth in the insurance sector, Finance Minister Mr. Chidambaram had said, “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. source:insuringindia news

Irda bans comparos on aggregator websites

The Insurance Regulatory and Development Authority (Irda) on Monday banned product comparisons put up by insurance aggregators on their portals. “Web aggregators shall not display ratings, rankings, endorsements or bestsellers of insurance products on their website. The content of the websites of the web aggregators shall be unbiased and factual in nature; they shall desist from commenting on insurers or their products in their editorials or at any other location in their websites,” the regulator said in a circular. Web aggregators offer information on various insurance products and price comparison of products of different insurers. The Irda circular also proposes several other stringent guidelines for web aggregators, including restrictions on all kinds of advertisements and sponsored content. It also hits them where it hurts the most — the pocket. Until now, web aggregators earned Rs80-90 per lead from the insurer or broker, irrespective of whether it led to an actual sale. This has been reduced to Rs10 per lead by Irda. Lead refers to information pertaining to a client who has accessed the website and has submitted contact information and shown interest in buying it through the particular web portal. Also, where a lead did convert into actual sale, the aggregator used to get the entire prescribed commission on the product. Now, however, they will take home barely 25% of the prescribed commission. Say the prescribed commission on a product, such as a term insurance plan, is 4% of the first year premium. The new rules mean the aggregator will take home only a quarter of the 4% commission amount, instead of the entire 4% earlier. Alternatively, the insurance company or broker can pay the aggregator a flat fee not exceeding Rs1 lakh per year towards each product displayed by it in the comparison charts of its website. What’s more, while it was not mandatory earlier for a web portal to register with the regulator, the new guidelines emphasise the need for registration with a fee of Rs10,000 for three years. “The guidelines will result in the end of insurance aggregation in India. Under this condition, it does not make any sense for us to function as aggregators in the market anymore,” said Yashish Dahiya, CEO , Policy Bazaar.com. Harsh Roongta, CEO of Apnapaisa.com, couldn’t agree more. “We are not happy with this move. With this, the customers will also find difficulty in opting for the right product of the right company. This will also be more time consuming as the web aggregators will not be allowed to give a comparative illustration.” Amarnath Ananthanarayanan, managing director and CEO, Bharti AXA General Insurance cited another blow from the guidelines. “The current regulation clearly states that the web aggregators will be able to pass on leads to the insurers or brokers. But the customer cannot be closing the policy sale on the web aggregator’s site. Given the Trai (telecom regulator) guidelines on ‘do not call’ list, this will hinder the insurer or broker from being able to sell the policy and the customer from getting the policy of their choice,” he said. Irda had come up with an exposure draft in April this year in a bid to tighten regulation on web aggregators. The current guidelines are in line with those discussion papers. Some feel the move augurs well for the market. “This regulatory action, which aims to ensure that the web aggregators refrain from displaying any biased information is a step in the right direction. But since they will now earn less from a lead, the aggregator business may not be as lucrative as before,” said GV Nageswara Rao, managing director and CEO, IDBI Federal Life Insurance

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.

Coverage Affected By Premiums for Public Health Insurance Read more: Coverage Affected By Premiums

Health Insurance / The coverage effects of expanding eligibility for public health insurance programs to higher income families can be counteracted by requiring individuals to pay a premium for public health insurance coverage.That is the finding of a study by a team of researchers from Georgetown University School of Nursing & Health Studies (NHS), University of California at Los Angeles (UCLA), and Columbia University published today in the journal Health Services Research. "Our findings speak to the importance of not just the availability of insurance coverage, but also the affordability of health insurance coverage in reducing the numbers of uninsured individuals in the U.S.," explains lead author Carole Roan Gresenz, PhD, the Bette Jacobs Endowed Professor in the Department of Health Systems Administration at NHS, which is part of Georgetown University Medical Center. "Looking forward, the study highlights the importance of subsidies for the purchase of health insurance coverage provided for by the Affordable Care Act," says Gresenz, a health economist. Using a simulation model, Gresenz and her research colleagues examine how income eligibility thresholds and premium contribution requirements associated with public health insurance programs affect children's health insurance coverage outcomes. "Our study looked at recent expansions in many states of the Children's Health Insurance Program, or CHIP, a public insurance program for children in families whose income is too high to qualify for Medicaid, but too low to afford purchasing health insurance on their own," she says. Using simulation, Gresenz and her colleagues were able to analyze various combinations of income eligibility thresholds and premium contribution requirements, assessing their impact on the percentage of children who would have no health insurance coverage, public coverage, or private coverage. "We found that if states expand their income eligibility threshold for CHIP—for example, from 200 to 400 percent of the poverty line—but also require more than a modest premium contribution, health insurance coverage outcomes for children are virtually unchanged," Gresenz says. Gresenz notes that many states have implemented premium contribution requirements for public health insurance as a way to reduce "crowd-out," or the movement of children with private health insurance to public coverage when public coverage becomes available. "Our research shows that families are sensitive to these premium costs," adds Gresenz. "To meaningfully affect coverage outcomes, insurance needs not only to be more available, but also more affordable. The subsidies for the purchase of coverage that the Affordable Care Act provides to families with incomes under 400 percent of the poverty line are crucial in realizing health reform's full potential to reduce the number of uninsured in the country," she says. source: Medindia

What insurance do you really need? Find the policies right for you

Having insurance to protect yourself and your belongings is important – but it’s also vital that you get the right cover at the right price. Taking out insurance just for the sake of it, without doing your research and finding the right product for your needs, could be a costly error. If you are looking for insurance, do your homework. Make sure you don’t end up paying way over the odds for too much cover or get a shock when you find your policy doesn’t cover you when you need to make a claim. Here we take a look at travel, home and car insurance, highlighting the details you need to check to ensure you don’t get caught out. Car Although it’s against the law to drive without insurance, around 1.5million people take the risk of hitting the road with no cover.insurance costs – and legally-covered drivers can be left massively out of pocket if they are involved in an accident with them. It can be tempting to seek the cheapest policy, but this too can cost dear. Be wary of upping the voluntary excess to an amount beyond your means and check if there is already a compulsory excess on the policy so you know exactly how much you may have to pay out if you make a claim. Making modifications to vehicles and not telling your insurer Not disclosing convictions for motoring offences or penalty points. 

Car Insurance, says: “Penalty points may come off your licence after three years, but the conviction may not be spent. Failure to declare convictions can invalidate insurance.” Not telling your insurer who will drive the car the most Travel While flight delays and cancelled holidays can be upsetting and inconvenient, it’s the medical side of travel cover that is vital. A quarter of holidaymakers jet off without any cover meaning they may have to fork out huge sums if they get ill.you won’t receive any help if you don’t have your own travel insurance. Travel insurance, says: “There’s a misconception that if travellers have a medical condition that’s in remission or controlled with drugs, they don’t have to declare it. however, they do." Not having cover when you do extreme sports or activities Most insurers won’t pay out if you have an accident while under the influence of drink or drugs Home Home insurance is not a legal requirement. But if you have a mortgage, lenders will want proof you have buildings cover to ensure their investment is protected. 

A quarter of households take the risk of not having insurance – and while that could cost them dearly if they get broken into, have a fire or flood, it is their choice A more worrying issue is an estimated 75% of those with home insurance have either too little cover so could still end up out of pocket, or are paying too much for cover they don’t need. It may sound like an enormous amount but when you check the small print there could be limits on individual items which could mean your most prized possessions are not covered. Not having personal belongings insured outside the home Jewellery that has not been valued recently and is under insured, especially as the price of gold has increased substantially Properties that are not well maintained. For example, roofing and guttering left in disrepair can invalidate a policy. Insurance, says: “Check your home insurance policy annually to make sure you will have all the cover you do need and none that you don’t. “Compare policies, rather than just looking for the cheapest option.”

M/S Darwin Platform Life Insurance and Financial Services

Insurance Regulatory and Development Authority (IRDA) is a regulatory body established by an act of parliament to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. It has come to the notice of IRDA that a company by name M/S Darwin Platform Life Insurance and Finance Company Ltd Financial Services operating from Mumbai, claiming to be a unit of Darwin Platform Group, Netherlands is offering insurance to the public. A public notice in this regard was issued by IRDA on 23rd March 2010 cautioning the general public not to deal with this entity or its representatives since it was not licensed or registered by the IRDA under the provisions of the Insurance Act, 1938 and IRDA Act, 1999. It has recently come to the notice of IRDA that the entity is proclaiming in its website www.darwinplifefin.com that among other activities, they also provide protection and retirement solutions through life insurance. The website further states that Mr. Ajay H Singh is Senior Vice President heading Finance, Insurance and Equity Markets. It is also learnt that the above referred company is claiming to have an office at – B-201/202, Gokul Monarch Co-Op Housing Society, Opp. Avenue Hotel, Thakur Complex, Kandivili (East) Mumbai The Darwin Platform Group, Netherlands has also denied any association with this entity. We would like to reiterate to the general public that this company has not been licensed or registered by the authority to sell insurance in any manner, i.e. as an insurer, an intermediary or as Third Party Administrator (TPA). It is hereby clarified that carrying on insurance business without obtaining the mandatory license or certificate of registration from IRDA in terms of provisions of the Insurance Act, 1938 and the IRDA Act, 1999 amounts to a violation of the said statutes for which appropriate action, civil or criminal under the Insurance Act and IRDA Act may be taken up by the authority against the such entity. In view of the above the general public is hereby cautioned not to deal with or to purchase or subscribe to any of the plans stated to provide life cover/life insurance benefit of the said company or through any person claiming to be its Agent/Advisor/Representative. Any person doing so would be acting at his/her own risk.