ICICI Lombard to tie up with UnitedHealth Group

Indian insurer's policyholders traveling to US will have access to US-based healthcare firm's programmes and services

Through this initiative, ICICI Lombard's 1.6 million policyholders traveling to the US, who are covered by the insurer's Overseas Travel Insurance or Student Overseas Medical Insurance, will have access to the US-based healthcare firm's programmes and services.

Sudhir Menon, head, travel insurance, ICICI Lombard, said, "This partnership is an innovative benefit for Indians, who are increasingly traveling abroad for both occupational and educational purposes."

"We look forward to leveraging the assets of UnitedHealth Group to deliver the best in service and resources to our customers throughout their travels to the United States," he said.

UnitedHealth International CEO Ori Karev said, "Our new partnership with ICICI Lombard is an important step in making access to cross-border health care more seamless for consumers, a model we are exploring in multiple markets."

ICICI Lombard is a 74:26 joint venture between ICICI Bank Ltd, India's second largest bank with $79 billion in assets, and Fairfax Financial Holdings Ltd, a Canada-based financial services provider.

China's insurers look to looser shackles

By Olivia Chung

HONG KONG - China's top insurance regulator, concerned at a slowdown in growth of life insurance premiums, is considering lifting its restriction on interest rates payable to life insurance policies.

Premium growth for China Life Insurance, the mainland's biggest life insurer by premiums, slowed last year to 7%, rising in value to 196.6 billion yuan from 183.8 billion yuan a year earlier. The firm's premium revenue rose 14% in 2006.

The China Insurance Regulatory Commission (CIRC) imposes a 2.5% ceiling on guaranteed interest rates payable to premiums of life insurance policies. The rate compares poorly with the 4.14% rate for one-year savings in banks.

To help boost life insurers' premium income and encourage greater competition among insurers, the CIRC has set liberalization of the interest rate for premiums as a goal for this year, according to a March 14 circular to relevant authorities and insurance companies. Lifting the interest rate restriction would help domestic insurers be more competitive in selling policies, a spokesman of the CIRC said.

"Our aim is to push ahead with market mechanisms to let interest rates be decided by market forces, by improving related regulations and providing support measures," he said.

A long-delayed market-oriented reform for assumed interest rates on life insurance policies will have "a concrete breakthrough" this year, with "a pilot scheme" likely to be introduced. "This will be a big improvement in China's life insurance market and good for the healthy development of the industry," he said. China Life has already been running its own test scheme for about a year, with positive results.

The maximum interest rate life insurers can guarantee on their policies is set by the government. A 2.5% cap on guaranteed rates was introduced in June, 1999, before which most policies promised returns of between 4% and 6.5%.

The 2.5% rate remained attractive bank so long as interest on savings remained less than 2%. That ceased to be the case after October, 2004, when the People's Bank of China (PBoC) raised the rate on one-year deposits to 2.25% from 1.98%, its first rate rise in nine years.

Further increases in the savings interest rate followed as the government sought to curb inflation and restrain economic growth, driving the one-year benchmark deposit rate to 4.14% by the end of 2007 from 2.52% 12 months earlier.

Some consumers in consequence have moved away from life insurance investments. One Shanghai resident, named Cai, was unhappy with the 2.5% guaranteed rates on his policies as he watched the country's stock markets surge in value over the past two years. The 30-year-old last September pulled out what money he could from 20-year life insurance policies he had bought for himself and his wife two years earlier, though payment lapses and the early withdrawal left him with only half his investment.

He then invested the cash in shares, just in time to catch the market peak. The yuan-denominated A-share market has tumbled more than 30% from since October, while Cai's own investment has halved in value.

"We hoped for higher returns than we got on the insurance policies. Now half of my money has gone." If he is to return to insurance polices for their now better returns, "I need to pay for the policies from scratch,'' he said.

The idea of removing interest rate controls on insurance policy premiums was put forward late in 2004, but implementation was delayed as life insurers were unable to guarantee higher investment returns amid the then falling stock market, which did not pick up until the following year.

A senior insurance agent in Beijing said present market conditions are ripe for insurers to collaborate with the government to offer higher interest rates that their policies can carry.

"Since the end of 2005, China's stock markets have been on an upward spiral, boosting insurers' investments in the stock market, so the conditions are in place for the liberalization of assumed interest rates," said she, who asked not to be named.

Chinese life insurers also need to increase the competitiveness of their products in the face of increasing competition from overseas players gaining wider access in keeping with the country's World Trade Organization commitments, she said.

The mainland insurance market has grown at an average 18.2% in the past five years. Insurance assets reached 2.9 trillion yuan (US$4.1 billion) at the end of last year with premiums of 703.6 billion yuan. At the end of 2007, 43 insurers from 15 countries or regions had established a foothold in the mainland insurance industry.

Relaxation of interest rate controls on life insurance policies would not have a negative impact on insurers' sales or profits, according to a BNP Paribas Securities (Asia) Ltd research note.

"China's life insurance market is committed to market-oriented practices," the note said. "The most critical factors behind the business value-added services of Chinese insurers are not promised returns but changes in consumer tastes and the capital market. In fact, more than 90% of life insurance products offering investment value are based on floating interest rates. In other words, if the insurers want to protect their profits, they could reduce the floating interest rates to offset the loss which might be brought by the rise of assumed interest rates."

China Life Insurance last March quietly liberalized assumed interest rates on life insurance policies in some rural areas by offering assumed interest rates at 3.3%. Its pilot scheme was launched in the rural areas of northern Hebei province, central Henan province and coastal Jiangsu province. A company official, who preferred to remain anonymous, said the response to the scheme was positive.

The three branches of China Life Insurance completed their annual premium target of 160 billion yuan in March to September. Of the three provinces, Hebei branch recorded premiums of 200 million yuan in the seven months.

P&O sees higher revenue from motor insurance

KUALA LUMPUR: Pacific & Orient Bhd (P&O) expects to see increased revenue contribution from its traditional motor insurance market as well as from its other markets such as oil and gas, and indemnity.

The motor insurance market was undergoing significant changes and improvement this year including better pricing, chief executive officer Chan Thye Seng said after the company AGM recently.

P&O had a 5% market share in motor insurance, which contributes about 80% to its revenue, Chan said, adding that he expected the market share to improve this year.

Chan said P&O had also made significant inroads in the non-motor insurance market.

P&O posted a pre-tax loss of RM2.35mil on revenue of RM63.08mil for the first quarter ended Dec 31. That compared with a pre-tax profit of RM16.39mil on revenue of RM57.31mil in the previous corresponding period. – Bernama

Your very own insurance cover

Riders allow you to add benefits on to a basic policy, so you can customise it to match your needs

DO YOU remember paying with Lego sets when you were young? Where you could take apart or put together different shapes to form objects you desire. There's a valuable lesson here for investors. Given today's competitive environment, insurance companies are also looking at offering different options to the investor. So you can build your very own insurance plan, perfect to suit your specific needs.
Insurance companies allow this degree of cust o m i s at i o n through a tool called a rider. It's basically an add-on to a plain vanilla policy. Once you buy your basic cover, you can chose to add additional benefits through the riders that will run parallel to the duration of the basic cover. Riders help you add value and enhance your cover to include risks that the basic vanilla policy will not cover.
Riders are available on both traditional as well as unit linked insurance plans. They could be added, amended or deleted from the main policy, any time, subject to risk assessment. The riders are the additional benefits that can be added to the basic old policies, by paying a marginal additional premium. However, you cannot buy riders independently and usually riders come with their own terms and conditions that will be different from the terms of the basic policy. Also, the amount of cover you can buy under the rider is generally a function of the amount of cover you have purchased for the basic cover.
Although, riders sound like the ideal solution for customization, it is important to understand clearly what the terms and conditions are. Sometimes riders are not transparent. Also, the health riders that are available on life insurance products should not be treated as substitutes to a proper health cover since the scope of coverage under the rider may be limited. However, it is important to note that the health riders do allow you the benefit of claiming a tax deduction under section 80D of the Income Tax Act. But, sometimes, riders can prove to be a bit expensive so you really need to weigh the benefits against the total costs.
The most common of riders is the accident and disability benefit. This benefit provides the rider amount to be paid to the family of the person insured in case of death and disability. In case of death after an accident, the family stands to receive the entire amount stipulated in the basic cover as well as the additional amount purchased under the rider. In case of permanent disability after an accident, mostly the premium for the basic cover is waived off to the extent of the rider purchased. In some cases, the companies also pay a percentage of the rider amount over a period of time to offset any financial losses due to the disability.
A critical illness rider covers you if you are diagnosed to have any of the specific illnesses listed. In this instance, the rider covers conditions like heart attack, stroke, cancer, major organ transplants, renal failure, paralysis, and so on. Most companies specify a list of diseases that will be covered and the number of diseases covered will vary from company to company.
In the event of a diagnosis of a critical illness, the sum under the rider is paid to the insured person as a lumpsum. Some companies segregate a surgical assistance benefit from the cover provided under the critical illness rider.
In some cases, insurers are also known to tailor make the critical illness rider for women. Under this, apart from covering the other critcal illnesses, this rider also covers pregnancy complications and a few congenital abnormalities in the infant.
Another rider that can be bought is a waiver of premium. So in case of total and permanent disability due to an accident, all further premiums are waived while the policy benefits continue. An income benefit rider a percentage—usually 10%—of the rider sum assured is paid on annual basis to the policy beneficiary on the death of the person insured.
Given this range of choices, it not only makes sense to shop around before you buy a vanilla cover but also when you consider add-ons or riders. Also, make sure you're getting adequate cover given the costs of what you are buying.

Life insurance market grows 18%

 

Private insurers see first premium rise 82% during April-January period.

The life insurance market grew 18 per cent between April and January this fiscal, but state-owned Life Insurance Corporation of India (LIC) saw a dip in its premium income from the sale of new policies.

Though LIC managed to improve its position in January 2008, thanks to a 110 per cent rise in first premium income, it could not make up for lost ground. January being the start of the busy season also saw private life insurers double their first premium income to nearly Rs 3,522 crore as against Rs 1,734.66 crore in January 2007.    PREMIUM GROWTH First premium income in Rs crore Insurer January Growth (in %) April-January Growth (in %) 2007 2008 2007 2008 LIC 2,866.92 6,028.46 110.20 41,120.71 40,624.04 -1.22 ICICI Prudential 564.71 976.50 72.90 3,514.49 5,792.05 64.80 Bajaj Allianz 365.36 682.14 86.70 2,549.04 4,462.30 75.00 SBI Life 199.11 519.29 160.80 1,389.83 2,874.46 106.80 Private players 1,734.66 3,522.96 103.00 12,359.68 22,503.87 82.00 Source: Irda

The decline in LIC�s new premium income has seen its market share drop from 77 per cent in April-January 2007 to 64 per cent during the first 10 months of the current financial year.

What contributed to the dip? The public sector behemoth did not manage to bag the big-ticket group insurance business as it had managed to do in the past. As a result, its first premium income from this segment fell 9.4 per cent to Rs 6,582 crore during April-January this year.

At the same time, LIC managed to hold its ground in the individual business market and its income from the sale of new policies in this segment were estimated at Rs 34,042 crore during the 10-months ended January 2008, compared with Rs 33,851 crore during April-January 2007.

In contrast, the 16 private players saw their first premium income rise 82 per cent to Rs 22,504 crore, bolstered mainly by an 88 per cent rise in individual business, which touched Rs 20641.41 crore in the first 10 months this year. In the group business space, the private players clocked a 34.2 per cent rise in first premium income, which rose to Rs 1,862 crore.

The LIC management appears hopeful of recovering more lost ground in February and March, the peak season for life insurance sales.

�It�s a dynamic market and there are bound to be variations. In, January and February (the data is yet to be released), we have done well in individual policies. In the last quarter of last year, we had generated Rs 11,000 crore business and we expect more business in the last quarter of this year too,� said A K Sahoo, LIC�s executive director in-charge of marketing.

A senior company executive, while acknowledging the loss of the big annuity and gratuity accounts in group businesses, said LIC intends to focus on regular premium products in individual business.

�Now, individuals have started trusting the private players also with their long-term savings. Better service offered by some of them have also helped,� said a senior executive with a global consulting firm.

"The two parts of the story are indeed the high-base of previous year's growth and LIC's size relative to the private player but that doesn't get us to any of the solution. It is now critical that LIC does even more on customer-centric measures that yield better growth: better customer segmentation and de-averaged sales-force management could well be two important keys to tackling this puzzle," said Nikhil Ojha, managing partner at Monitor India.

 

 

India-growth Story  |   Ways4Forex |  women-of-21stCentury|  Ways2commodities|  Ways2insurance| Ways2trade  |  Ways2Finance  | Ways2fitness |Ways2health 

Gold: Give Yourself The Edge Of Bullion

Forex eBook: Read and Learn

You g|et paid to  read the contents of RupeeMail

 

 

Don’t fall for fancy frills in life covers

A Term Plan is all you need. But the insurance agent who earns more from other products, will try to sell them to you.

Swapnil Pawar Director PARK Financial Advisors

HOW many of you would use a mobile phone predominantly as a calculator? I guess, not many. In fact, you would be wondering if there would be anyone in this world who would answer in the affirmative to this question. Now, if I were to offer a phone without SMS or address book facility, but with a scientific calculator functionality attached, would you still buy it? Not really. Surprisingly, in the world of financial products and services, it is not the case.
Assume the margin for the distributor in selling calculator-enabled mobiles were 10 times that of selling plain vanilla mobiles phones. What would he do in such a case? Most likely, he would only sell phones that had a calculator feature attached — whether or not the customer wanted it. He would wax eloquent about the advanced nature of the calculation facility. Only if a knowledgeable customer insists, would he even show him / her the ‘simple’ phone.
An unwary customer would be subjected to a barrage of ‘features’ and ‘benefits’, without educating her on the real costs extracted by the company and distributor in providing these features. She would be shown unrealistic projections and growth rates of her corpus. The blatant falsehoods in many of these claims would come forth only years later, by which time the agent would have long gone. The main objective of insurance, which is what the plan is meant for, would typically be given a go-by.
Welcome to the world of financial services. We all know that we need life insurance, much as we have now come to need mobile phones. Now, life insurance in itself is a complete product, where the company takes a premium from the customer, and pays a lumpsum to the family in the unfortunate event of the customer’s demise. Almost every single life insurance company has this insurance scheme — called a ‘term plan’. But for the distributor or insurance agent, this is not where the juice is.
The high-margin business for an agent is what is called unit-linked insurance plan or Ulip. Here, investment is the ‘calculator’ of our analogy, the red herring thrown in to confuse the customer. The agent would sell Ulip as a great investment plan, which also provides insurance. Never mind, that it only provides lip service to insurance, just as a phone without SMS or address book would be useless as a mobile phone! Also, never mind that there are better investment plans available in the market (like good standalone scientific calculators) at a much lower price than Ulip.
There is no breach of law here. After all, it is the customer who has the responsibility of reading the fine print and being knowledgeable about various products and associated costs. The distributor would only work to maximise his income; the customer should try and protect her interests. Thus, if she goes to a mobile store (insurance), then might as well buy a simple and effective mobile phone (term insurance policy at competitive rates). It is worth going to the adjacent shop (electronics) to buy the calculator with desired features (the investment plan). An agent who claims to fill both spaces through his product, only ends up filling his own coffers instead, at the cost of the customer.
www.parkfinadvisors.com info@parkfa.com

Budget proposes tax rebate for parents' health insurance

New Delhi (PTI): Individuals paying for the medical health insurance of their parents would be eligible for increased tax rebate, according to a proposal in Budget 2008-09.

An individual tax payer would be allowed an additional deduction of up to Rs 15,000 on any payment made for the health insurance for his or her parents.

"I propose to allow an additional deduction of Rs 15,000 under Section 80D to an individual who pays medical insurance premium for his/her parent or parents," Chidambaram said.

The amendment in this regard would be effective from April 1.

Under the proposed new section, whether the parents are dependent or not, is not a consideration for deciding the deduction.

Further, the government has proposed that if either of the such individual tax payer's parents is a senior citizen, the deduction would be allowed up to Rs 20,000.

According to the proposed norms, the deduction would be in addition to the existing deduction of Rs 1 lakh available to the individual on medical insurance for himself, his spouse and dependent children.