June Volume Issue VIII Price Rs INDIA S FIRST by Larkvorhees


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!    June 2006                                                                                   Volume: 1 Issue: VIII                                                                                     1

                                                                  INDIA’S FIRST INSURANCE NEWSPAPER

June 2006                                                       RNI No. DELENG/2005/15654                                                         POSTAL REGISTRATION No. DL(S) - 18/3248/2006-2008

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Health Insurance                                                                           Features of New
                                                                                                                                        Policy                                    We the Agents
                                                 Liability                                 “SARAL”
Scenario In India                                Insurance                                                                              LIC's Amulya Jeevan                       Ritu Nanda
          -Jagendra Kumar                                                                  (Income Tax Return Form)

          Biyani’s Future Group,
            Generali JV soon                                                                     Rural insurance
                                                                                               business to touch $35
              Escolife Bureau                  shareholders if the new entrants

    K     ishore Biyani’s Future Group
          (formerly known as Pantaloon)
                                               can widen the JV’s reach. Sergio
                                               Balbinot, CEO, Generali Group,

                                                                                                  billion by 2010
    and Italy’s largest insurer Generali       said that the partners would soon be
    will set up joint venture life and non-    submitting their application to set up
    life insurance companies. Generali         the two companies to IRDA. The new
    will have a 26% stake in the JV and        company would use a multi-channel
    the balance will be held by Future         distribution strategy including selling
    Group (Pantaloon) and its associates.      through supermarkets in addition to                  Escolife Bureau                    billion. The potential of rural India      in India and nearly 20% of the farmers
    The latter will set up two special         traditional agency force. Generali was
                                                                                           R     ural and semi-urban areas are         is still untapped and according to the     owned kisan credit cards. The 25
    purpose vehicles (SPVs) to invest          already selling through retail chains in                                                paper, this is due to poor distribution,
                                                                                                 expected to overtake urban centres                                               million credit cards offered a huge
    in the insurance businesses and will       Philippines, where 15-20% of sales                                                      large distances and high costs
                                                                                           in generating insurance business. By                                                   data base and opportunity for insurers.
    invest Rs 25 crore in the two SPVs.        happened through such outlets. The                                                      involved. Vast opportunities are thus
                                               175-year old group generated 70%            2010, life insurance business in these                                                 Estimating the prospective Indian
    Generali operates across 40 countries                                                                                              available to the insurers to improve the
                                               of its premium from outside Italy.          areas is expected to touch $20 billion                                                 insurance market by macro-economic
    through 107 companies. It ranks 22                                                                                                 delivery mechanism and tap the vast
                                               In China, the group is the largest          and non-life insurance business $15                                                    variables, the paper reveals that India’s
    in the list of Fortune 500 companies                                                                                               market. The paper says that “Insurance
                                               foreign insurer. According to Kishore       billion.                                                                               life insurance premium as a percentage
    and is the largest corporation in Italy                                                                                            needs to be packaged in such a form
                                               Biyani, CEO, Future Group, the group        According to a paper prepared by                                                       of GDP was 1.8% as against 5.2%
    with an asset base of over Euro 300                                                                                                that it appears as an acceptable
                                               would expand its retail presence to         ASSOCHAM, the overall growth in
    billion. Generali has in other parts                                                                                               investment to the rural people. In the     in the US and 8% in South Korea.
                                               80-90 cities and expected to have           insurance business would also result
    of the world successfully tied-up                                                                                                  near future, insurance will definitely     According to the paper, the penetration
                                               over 200 million customers. “In just        in further consolidation of business in
    with retail groups for distribution                                                                                                be one option that rural Indian is going   level in the corporate sector is already
                                               18 months, we have sold 3.5 lakh of         urban areas. Life insurance business
    of insurance and other financial                                                                                                   to accept.” The paper further said that    high, and hence it will not be a big
                                               our credit cards,” said Biyani. The         there is anticipated to reach $15 billion
    products. Apart from insurance,                                                                                                    there are 124 million rural households
                                                                                           and non-life insurance business $10                                                    growth area in the future.
    Generali has significant presence in       insurance venture would be called

                                                                                            IRDA panel
    real estate and asset management           Future Generali Life Insurance and
    businesses in Europe.                      Future Generali General Insurance,
    The partners may consider additional       respectively.

        Fixing of limits likely in                                                         to formulate
          detariffed scenario                                                               guidelines
            Escolife Bureau                    motor accounts for around 40%. As           for insurers
    W       hen free pricing of select         per the IRDA’s proposal, pricing                      Escolife Bureau

            insurance products becomes         either above or below the 20% limit
                                                                                              RDA has constituted a committee
    the norm in January 2007, fire and         must be justified to the Regulator.
                                                                                              to look into the existing grievance
    engineering risks could be the first       “While the IRDA has suggested fixing
                                                                                           redressal systems in the PSUs. The
    risks to be detariffed. As a result,       upper and lower limits against the
                                                                                           committee will prepare guidelines
    the sources said that industry-wide        tariffed rate, the proposal is yet to be
                                               finalised,” said M Ramadoss, CMD,           for adoption by the insurance
    revenues could fall as much as 40%.
                                               Oriental Insurance Company. He              companies and suggest modifications
    This was because competition in
    the fire and engineering risk cover        also said that while such limits could      to the regulations for protection
    portfolios could drive down premiums.      exist for smaller policies, it would        of policyholders’ interests. Vepa
    At present, IRDA through the Tariff        not be possible for bigger policies as      Kamesam, MD, Institute of Insurance
    Advisory Committee, administers the        they are reinsurance driven. A senior       and Risk Management, will be the
    premium rates in these portfolios. V       IRDA official said the Regulator was        Chairman of the committee. The
    Ramasaamy, Chairman and MD,                awaiting suggestions from insurers          other members of the committee
    National Insurance Company Ltd,            on the issue. Insurers say the IRDA’s       include H C Jain, ED, Life Insurance
    said, “There will be a fall in revenues    suggestion is in line with the industry’s   Corporation of India, Asha Nair,
    if tariffs drop. But how much, it is       fear that price war may result in           Deputy General Manager, New India
    difficult to hazard a guess.” Currently,   crashing of premiums as it happened         Assurance Company Limited and
    about 70% of the non-life insurance        when marine and hull insurance got          Pushpa Girimaji, a consumer activist.
    market, which generates premium            detariffed. Insurers have been making       The committee will submit its report
    of around Rs 18,000 crore, is under        preparations in terms of data collection    within the next three months, an order
    tariff. Among the tariffed businesses,     and training of underwriters.               from IRDA stated.

                         IRDA calls for data on ULIPs
              Escolife Bureau                  generated a large-scale redemption of       the situation before the redemption

    U    LIPs have been a major
         contributor to new business
    premium income of life insurance
                                               ULIPs. IRDA feels that the fear among
                                               retail investors and consequential
                                               redemption pressure can result in a
                                                                                           actually starts. Sources also added
                                                                                           insurers have indicated that they have
                                                                                           already received redemption requests
    companies. According to sources, the       strain on liquidity for insurers. IRDA
    objective of the Regulator is to find                                                  from their policyholders, but not on a
                                               has acted proactively to collect the
    whether the equity market crash has        data so as to have an assessment of         very large scale.

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