WISH YOU ALL HAPPY AND PROPEROUS NEW YEAR

LIFE IS BEST FOR THOSE WHO WANT TO LIVE IT, 
LIFE IS DIFFICULT FOR THOSE WHO WANT TO ANALYZE IT, 
LIFE IS WORST FOR THOSE WHO WANT TO CRITICIZE IT, 
OUR ATTITUDE DEFINES LIFE... 
ENJOY YOUR LIFE, 
LAUGH SO HARD THAT EVEN SORROW SMILES AT YOU, 
LIVE LIFE SO WELL THAT EVEN DEATH LOVES TO SEE YOU ALIVE, 
FIGHT SO HARD THAT EVEN FATE ACCEPTS ITS DEFEAT... 

TO HAVE A SPECIAL FRIENDSHIP 
IS SUCH A WONDERFUL THING,
JOY, HAPPINESS AND LAUGHTER 
AREN'T ALL THAT IT WILL BRING.

ALONG WITH IT WILL COME SADNESS, 
SORROW AND PAIN,
BUT HAVING SPECIAL FRIENDS 
CAN MAKE YOU SMILE AGAIN.

SPECIAL FRIENDS WILL HUG AND COMFORT YOU 
IN YOUR HOUR OF NEED,
THEY TAKE YOU BY THE HAND AND GUIDE YOU, 
SOMETIMES TAKE THE LEAD.

SOME PEOPLE WON'T BELIEVE IN YOU;
THEY WON'T ENCOURAGE YOU
TO FOLLOW YOUR DREAMS,
BUT YOU MUST ALWAYS BELIEVE IN YOU,
NO MATTER HOW LONG THE JOURNEY
AHEAD SEEMS.

SOME PEOPLE WILL BE JEALOUS OF YOU;
THEIR WORDS WILL BE SHARP AND UNKIND,
BUT YOU MUST CLOSE YOUR EARS
TO SUCH WORDS,
AND NEVER ALLOW THEM TO CHANGE
YOUR DIRECTION OR YOUR MIND.

I'LL ALWAYS BELIEVE IN YOU
AND ENCOURAGE YOU
TO FOLLOW YOUR DREAMS,
AND I'LL TRY MY BEST TO SHOW YOU
THAT THE ROAD IS NEVER
AS LONG AS IT SEEMS.

I'LL ALWAYS CHEER FOR YOU;
MY WORDS WILL BE WARM AND KIND,
BECAUSE I TRULY TREASURE YOU.
YOU OWN A PART OF MY HEART,
AND YOU'RE ALWAYS ON MY MIND.

 NO SHADOW TO DEPRESS YOU

ONLY JOY TO SURROUND YOU

MANY FRIENDS TO LOVE YOU

GOD HIMSELF TO BLESS YOU

THESE ARE MY WISHES FOR YOU

TODAY, TOMARROW ,

AND EVERY DAY TO YOU

SWEET THINGS ARE EASY 2 BUY,
BUT SWEET PEOPLE ARE DIFFICULT TO FIND.
LIFE ENDS WHEN U STOP DREAMING, HOPE ENDS WHEN U STOP BELIEVING, 
LOVE ENDS WHEN U STOP CARING, 
FRIENDSHIP ENDS WHEN U STOP SHARING.
SO SHARE THIS WITH WHOM EVER U CONSIDER A FRIEND. 
TO LOVE WITHOUT CONDITION... ......... .........
TO TALK WITHOUT INTENTION... ......
TO GIVE WITHOUT REASON...... ...... 
AND TO CARE WITHOUT EXPECTATION. ......IS THE HEART OF A TRUE
FRIEND....... 

LIC Jeevan Saral – Review

December 9th, 2009Amar RanuLeave a commentGo to comments

Being a disciplined investor pays off in the long run. For example, those investing in equity mutual funds through Systematic Investment Plans (SIPs) or debt instruments such as post office or bank deposits through recurring plans reap richer benefits in the form of higher growth and returns. However, maturity benefits in these plans remain limited to the returns assumed and to the total instalments paid in case of the unfortunate event of death. 'LIC Jeevan Saral' – an innovative offering by Life Insurance Corporation of India – takes care of this point. The endowment assurance plan provides not only financial protection in terms of death benefit throughout the term but also long-term capital growth. One of the unique features of the scheme is it provides risk coverage to the extent of 250 times the monthly premium. No wonder, it helped LIC win the Golden Peacock Innovative Product/Service Award 2009.

Highlights

LIC Jeevan Saral is tailor-made plan for those looking for periodic savings along with risk cover It offers higher cover, decent return, liquidity, considerable flexibility and tax benefits Policyholders can choose the premium they want to pay

Product highlights/benefits
• An endowment assurance plan that provides death benefit up to 250 times the monthly premium plus loyalty additions, if any
• Flexibility to choose premium amount which will in turn decide maturity sum assured
• Minimum monthly premium of Rs. 250 and Rs. 400 for entry age up to 49 years and 50 years and above, respectively. There is no cap on upper investment limit.
• Option to add Death Accident Benefit rider at a very nominal cost
• Loyalty additions if the policy is in force for a minimum of 10 policy years along with guaranteed maturity benefits
• No surrender penalty after 5 policy years; partial withdrawals allowed
• Premiums are payable yearly, half-yearly, quarterly, or monthly.

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Analysis
LIC Jeevan Saral is a unique investment option which cushions one's investments against the dual risks of death and volatile market conditions and at the same time provides much-needed liquidity. Let us see how this works for a 35-year-old individual.
Suppose the person buys LIC Jeevan Saral policy for an annual premium of Rs. 4,704 for 25 years, with his basic sum assured coming to Rs. 1 lakh. His guaranteed maturity benefit as per LIC benefit illustration will be Rs. 1,35,296, which will further increase to Rs. 2,00,296 and Rs. 3,46,296 if we include loyalty additions and guaranteed maturity benefit at a projected investment rate of return (PIRR) of 6 per cent and 10 per cent, respectively. The net yields at different projected levels are presented in Table 1.

The net yields under LIC Jeevan Saral at the PIRR of 6 per cent and 10 per cent come to 4.16 per cent and 8.05 per cent, respectively.

Equating with other products
Apart from insurance cover, 'Jeevan Saral' provides tax benefits and liquidity, so we will compare it with products like recurring deposits (RDs) by post office/banks or PPF (periodic investments) that offer similar benefits. Table 2 depicts how LIC Jeevan Saral and recurring deposits fare against each other.

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Now, we will turn to Table 3 which analyses the performance of two products, RDs and PPF, in comparison with Jeevan Saral. Here, we have assumed that PPF and RD investments continued for 25 years, i.e., returns reinvested throughout the term.

• In case of Jeevan Saral, a 25-year old with an annual investment of Rs. 4,704 at a projected growth rate of 10 per cent (which may or may not be achievable) will earn a net yield of 8.05 per cent, higher than RD (5.94 per cent) and PPF (8.00 per cent).
• In case of RDs, we have considered investors in the tax bracket of 20 per cent. The returns may come down or go up for those in the 30 per cent or 10 per cent tax bracket.
• For PPF investments, the tax-free return comes to 8 per cent. Nevertheless in terms of death benefit, with its inbuilt risk cover Jeevan Saral scores over the other two.
• If the same individual buys a term plan at a premium of Rs. 4,704 for a period of 25 years, he would get an insurance cover of Rs. 16 lakh. But note that there won't be any maturity benefit, but only death benefit of Rs. 16 lakh.

Tax benefits
• Premium payable for Jeevan Saral and PPF is eligible for tax benefits under Section 80C.
• Maturity proceeds of Jeevan Saral are tax free under Section 10(10D).
• Investments in RDs are not eligible for tax benefits.

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Things to look into
• Returns in LIC Jeevan Saral as shown in Table 3 are calculated at a projected growth rate of 6 per cent and 10 per cent, which may or may not be achievable.
• Loyalty additions or bonuses are not guaranteed.
• RDs or PPF investments do not provide risk cover.

Recommendations
• For whom: Conservative investors willing to put money for a longer period
• Risk: Capital safe, but loyalty benefits linked to market returns
• Investment horizon: 5 -25 years
• Returns: Moderate in line with FDs/PPF at different conditions
• Beats inflation: No, it won't be able to beat inflation at assumed growth rate of 6 per cent
• Tax bracket: Preferable for all tax brackets
• Alternatives: Recurring deposits, PPF (periodic investments), mutual funds (SIPs)

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Summing it up
LIC Jeevan Saral will always remain in demand considering that periodic investment schemes have never been out of fashion for small investors. The other draws would be LIC's proven track record of paying out loyalty bonuses and the decent net return at a projected rate of return of 6 per cent besides the risk cover. However, those looking for a guaranteed return can choose RD or PPF along with a term plan which will provide risk cover at a very nominal premium.

Rel Life plans Rs 50 per month premium insurance cover

COVER FOR ALL Mumbai: Nano seems to be the perfect vehicle for India Inc to reach the 'bottom of the pyramid' of this vast economy. After the Tata car and a planned SIP option in one of Sahara's Mutual Fund schemes, Reliance Life Insurance is now in the process of rolling out a unit-linked insurance plan with premiums as little as Rs 50 per month.      Structured for the rural market and the urban population who mainly live on daily wages, Reliance Jan Samriddhi Plan is a group plan which is being sold through micro-finance institutions (MFIs), NGOs and self-help groups (SHGs). Since it is targeted at those at the lower income level, the life insurer will guarantee returns at the start of the policy. "The guaranteed return will be linked to the yields on government securities at the beginning of the year,'' said Malay Ghosh, president, Reliance Life Insurance. The scheme is part of the insurer's social and rural sector obligations that every insurer has to meet.      Under the Jan Samridhhi scheme, an insurer can pay a premium as low as Rs 50 per month. However, Ghosh said that for a large number of people in India who are daily wage earners, paying Rs 50 at one time could be a difficult proposition. To address this, the MFIs, NGOs and SHGs have devised ways to collect Rs 2 or more everyday from these people. Once the money is collected from the insured group, it will be transferred to the insurance company. Not only is the money guaranteed to the insured, the scheme does not have a surrender penalty. "It is a savings product which has an in-built accident insurance cover,'' Ghosh said.

A Cover For Your Life

FINANCIAL PLANNING As the headline suggests, whole life policies provide life coverage and also offer some returns which make it a better option compared to term policies. But it comes at a higher cost PALL AVI M U L AY ET INTELLIGENCE GROUP  TERM insurance policies are recommended to meet one's insurance needs. However, they are unpopular largely because the periodic premium payments over the life of the policy do not earn any financial return if the policyholder survives through the policy term. Moreover, it is available for specific term ranging from one year to 30 years. This leaves out senior citizens just when the need for financial security is the highest. To address these shortcomings of term insurance policies, the industry has designed Whole Life Insurance.      Whole life insurance combines a term policy with an investment component. Like term policies, it is actually meant to secure financial future of one's family in the absence of the breadwinner. But the similarity ends there. These polices offer life coverage till very old age or even till 100 years unlike term policies which typically cover the working life of the policy holder which ends at 58 or 60 years of age (it differs from policy to policy). Also, along with the sum assured, additional returns are paid to the nominee in case of the death of the policyholder. One more feature that differentiates a whole life policy from a term policy is that it does not lapse even though it remains unclaimed during the policy term. Once the policyholder lives up to the specified age till which the cover is provided, maturity proceeds are paid to him/her.      The maturity proceeds or survival benefits differ from policy to policy. Some policies offer either recurring bonus or terminal bonus or both. Some policies offer guaranteed returns every year. Few companies also provide whole life unit linked plans or whole life with additional benefits. In short, the varieties of whole life insurance policies with various options of premium payment-single, limited period or regular-are made available in the market to attract customers. Such well-catered whole life insurance seems to be a good deal compared to term insurance policies.      But there are no free lunches in this world. The premium for these policies is far higher than for term policies. The premium of any term policy with sum assured of Rs 5 lakh and policy term of 25 years would be around Rs 2,000 per annum for a 30-year-old male. Whole life policies with sum assured of Rs 5 lakh will cost around Rs 11,800 per annum to a policyholder of same age.      In whole life insurance one is paying not only for insurance coverage for an extended period, but also for the investment portion. So the moot question is if the promised return is worth the extra cost?  OPTION I: For example, Mr A, 30-year-old person, purchases LIC's pure whole life insurance policy. He pays an annual premium of Rs 11,852 for life cover of Rs 5 lakh. He is supposed to pay this premium till the age of 80. If Mr A survives till he attains 80, the maturity proceeds will be around Rs 36 lakh (The calculation of maturity proceeds is based on the bonus and additional bonus rates announced for the year 2007-08. However, it keeps changing every year. The bonus rate depends on the duration of the policy and it is higher for longer term policies. Hence the actual realisation at the time of claim settlement or on maturity may differ from the amount mentioned here).  OPTION II: Let's assume a case wherein Mr A uses the same amount, i.e., Rs 11,852 (per annum) to buy term insurance and invest the rest in PPF. The annual premium for the term insurance policy of Rs 5 lakh will be around Rs 2,000 per annum. He invests the rest, i.e., Rs 9,852 in PPF, then the accumulated investment will be around Rs 64 lakh at the age of 80 (adjusted for higher insurance premium in later years). However, he will not avail any life coverage after the age of 65 and has the option of  investing the entire amount, i.e., Rs 11,852, in PPF annually. In an ideal situation Mr A may survive till 80. But in case he dies at the age of 67, his nominee will receive almost Rs 21 lakh as a claim settlement of whole life policy (it is the summation of accumulated bonus and terminal bonus, if any, along with sum assured).      If he had opted for option II the accumulated investment would be around Rs 22 lakh without life cover, higher than the returns earned on whole life policy. Critics of selfinvestment however say that it's tough for individuals to maintain an investment discipline all through their working lives. But this may not be too tough for salaried professionals; they can raise the voluntary contribution to their EPF account by an equivalent proportion.      So it is up to an investor whether to be financially disciplined and earn better returns by purchasing low-cost term life insurance and investing the difference in other investment avenues. Or else go for forced saving through whole life insurance policy to accumulate some money for the heirs with the life coverage till the very old age.  EXTRA COVER  Whole life insurance combines a term policy with an investment component  Unlike term policy it earns some financial returns on the premium paid during the policy term  Premiums are higher than the premium paid for term plans  Various options of premium payment-regular, limited period and single premium-are available  Few companies offer whole life policies with additional benefits like guaranteed survival benefit during policy years. These policies are available with additional riders

Insurance :RBI breather likely for HDFC, ICICI

Control Must Also Be Considered While Deciding Foreign Ownership: RBI Writes To Govt Arun Kumar NEW DELHI  THE RESERVE Bank of India (RBI) has untangled a knot which could have jeopardised the ownership of the insurance business of home loan major HDFC and the country's largest private lender ICICI Bank.      The RBI has told the government that control of a company, not just its ownership, should be taken into account while determining foreign investment, particularly in the financial services sector.      Such an interpretation will mean that investments by ICICI Bank and HDFC, both majority foreign-owned but controlled by Indians, will be regarded as domestic investment. This will enable them to retain their investments in their businesses in insurance, a sector where foreign ownership is capped at 26%.      "More particularly in the financial sector, the concept of control should include qualitative parameters and percentage of resident directors," the RBI wrote in an October 12 letter to the department of industrial policy and promotion (DIPP).      DIPP, an agency in the ministry of commerce and industry, sets foreign investment guidelines.      The RBI also said it wants the government to clearly define terms such as "control," "equity interest" and "beneficially owned" before operationalising the new foreign investment guidelines that were announced in February.      The guidelines said investment through companies owned and controlled by Indians would not count in the calculation of foreign investment. But it also said investments by companies that are majority foreign-owned are counted as foreign investment, putting HDFC and ICICI Bank in a fix. New norms led to confusion over FDI in forbidden sectors  UNDER the new guidelines, all direct and indirect overseas investments were counted as foreign investment, putting the foreign ownership of ICICI Bank at 65% and HDFC at 74%.      ICICI Bank operates a life insurance JV with Prudential of the UK and a general insurance business with Lombard of Canada. HDFC has partnered Standard Life and Germany's ERGO.      The February guidelines have created confusion and led to concerns that it could allow indirect foreign entry into forbidden sectors such as multi-brand retail through layered corporate arrangements where the initial foreign investment is kept below 50%.      "Since the existing sectoral regulations on FDI, including sectoral caps, are not in conformity with the inclusive definition, the same need to be redefined to include all nonresident investments under a single head," the RBI wrote. The central bank is also of the view that a decision on the requests by HDFC and ICICI Bank seeking exemption from the new guidelines may have to be taken after the government clarifies issues so that foreign investment does not travel a circuitous route and enters sectors where it is not allowed.

Road mishaps: Insurance cos pay out Rs 4,000 cr/yr

Mumbai: The high death toll on India's highways is bleeding its insurance firms. This is evident from the fact that public sector general insurance companies have consistently paid out a whopping Rs 4,000 crore every year since 2007 to settle compensation amounts awarded by the Motor Accidents Claims Tribunal (MACT).      It is estimated that the insurance firms had earned a measly Rs 15 lakh in premium from the policy holders on whose behalf it made the payouts. This is because the premium for third party insurance policies is extremely low. For a commercial vehicle, it is not more than Rs 1,500, for private cars it is only Rs 600.      In effect, the public sector insurance firms have dished out a mindboggling Rs 12,000 crore in compensation to road accident victims during the last three financial years. What's more, this is only the tip of the iceberg as companies settle only one lakh cases every year and more than 11 lakh claims are still pending before the MACT. The major portion of the general insurance market is with the public sector, with private firms which are recent entrants,now controlling 40% of the market. Interest on claims hurts insurance companies  Mumbai: Motor insurance firms have been hit hard by the spate of accident claims in recent years. "Road accident cases remain pending before MACT for nearly a decade before the final order comes. The insurance firms then have to pay the principal amount plus interest on it from the day the claim was filed. It is the interest that forms a major portion of the payout and that hurts the companies,'' said Mukesh Thakkar, a senior development officer with New India Assurance. MACT orders interest to be paid at the rate of 9% and it accumulates over the years.      Industry experts said that some of the insurance firms are getting so desperate that they have started hiring private surveyors to approach families of accident victims and convince them to settle cases out of court. "It's a terrible situation for the insurance firms as on one hand the compensation claims are bleeding them and on the other, 70% of vehicle owners don't even buy insurance policies to add to their coffers,''said Mahendra Durve, president of the All India Institute of Insurance Surveyors.      Nearly 40,000 people are killed in road accidents in India every year and one and a half lakh are injured. Most of these cases end up before the MACT which orders insurance firms to make payments under the solatium scheme, introduced by the central government in 1989 to deal with the modalities of payment of compensation to victims of hit-and-run cases.      "There has been a 20% rise in third party claims cases, but the motor insurance premium is not growing. In fact it has come down after the insurance sector has been de-tarrifed this year,'' said a senior insurance official.      A majority of the accidents occur on state highways and involve commercial vehicles. "In the MACT, cases go on for 8 to 10 years on an average with some even taking up to 14 years to be disposed of. Many victims are poor people who cannot afford the lawyers' fees but are forced pay a part of the compensation amount to the advocates who fought their case,'' an official said.      Industry experts say the government will have to take steps to ensure cases for compensation do not get bogged down in the judicial process for years. "Insurance firms simply cannot afford to pay thousands of crores in compensation every year,'' said Durve. "We would like to see a robust judicial infrastructure that disposes of claims quickly, so that the interest component comes down,'' said Thakkar.      The government says it is taking steps to reduce road accidents. It points out that road safety norms are now an integral part of design at the planning stage of all national highways and expressways. The ministry of road transport and highways also claims it is running publicity campaigns, introducing new road furniture and road signs and providing ambulances to state governments to bring down the death toll on the country's highways. MONEY MATTERS

Term Insurance at Best terms

LIC may be the biggest name in insurance, but its policies are pricey. ETIG suggests that private players offer pocket-friendly polices when it comes to pure term insurance plans

PALL AVI M U L AY ET INTELLIGENCE GROU P 

INVESTOR'S Guide has always advised to readers to buy at least one insurance policy. Life is full of uncertainties and risks. So an insurance policy is a must. 
    The primary objective of an insurance policy is to secure the needs of one's family in an unfortunate event of death of the policyholder. So the amount received has to be big enough to enable the dependents to maintain their lifestyle. 
WHY TERM PLANS? 
The rule of thumb in financial planning says that life cover should be worth 6-7 times of your current annual income.If your current annual income is 5 lakh then the insurance policy should provide a cover of Rs 30 lakh. This calls for a pure-risk policy, which offers an extensive cover at minimal cost. Hybridinvestment products, with moiney back option cost several times more for the same amount of risk cover. A term plan is the best option when the purpose is life cover. 
WHICH TERM PLAN? 
The next question is which policy. The first name that comes to mind is LIC. The staterun Life Insurance Corporation of India is the oldest and largest insurer in the country and all its liabilities carry an implicit government backing. But then, there are equally credible players in the private sector. There's no harm in shopping around for the best plan available in the market. 
    While selecting a term policy, one should consider the cost (the amount of premium), the maximum term offered, the additional benefit in terms of different riders and the additional cost to avail these riders. 
    ETIG's analysis of policies offered by LIC and major private players suggests the policies offered by LIC are costlier. LIC loses against its private counterparts on account of high premium, no discount on premium paid and lack of riders. LIC's Anmol Jeevan and Amulya Jeevan are just plain vanilla traditional term insurance policies. 
    As it is commonly known, term plans simply cover the life of the policyholder and do not provide any maturity or survival benefits. The amount of life cover (sum assured) is payable only to the nominee in case of unfortunate demise of the insured during the policy term. Where the insurer survives the policy term, he/she is not entitled to any benefits from the insurance company. The premiums paid throughout the policy term may thus be treated as a cost to cover one's life. So it is better to minimise the cost. 
    LIC charges an annual premium of Rs 9,500 for Rs 25 lakh policy from a 30-year-old person while private players like SBI life, HDFC Standard Life etc, offer similar cover for an annual premium in the range of Rs 6,200-7,500. (See the table.) 
    Private players also offer rebate on premium for female policyholders or for high sum assured. LIC do not discriminate on this count. It has a single premium for all of age groups. 
    The pure term plan in its traditional form offers the benefits only in cases of natural death; the policy is considered null and void if the death is accidental or due to some critical illness, etc. This is one of the major reasons for it being unpopular amongst people. 
    Private insurers address this limitation by offering riders, or additional benefit, along with the policy for an additional fee. 
    The common riders available are accidental death benefit, critical illness benefit, accidental disability/dismemberment benefit, hospital cash benefit, etc. LIC in contrast only offers traditional products without any rider. 
    Despite these better offers from private insurance companies, there is higher demand for LIC's products. It is largely because hassle-free settlement of claims after the unfortunate event of death of the insured, which is very important. It is a fact that LIC has the highest claim ratio over 95% (that is 95 out of 100 claims are settled successfully) for the year ended March 08, which is very much in line with its historical record. Nevertheless, major private players have the claim ratio higher than the industry average, which is noteworthy. 
CONCLUSION 
The moral of the story is that one needs to do a cost benefit analysis before buying life insurance policies and not to go with the tag as the 'market leader' or the 'oldest player'. 
    pallavi.mulay@timesgroup.com 

New rural cover scheme does away with health checks

PEOPLE living in rural parts of the country will soon be able to buy insurance cover without being subject to mandatory health checks, as is the norm for life insurance policies. The department of posts is set to launch an ambitious micro life insurance policy that will not require insurees to disclose their health condition or existing diseases at the time of buying the plan.      The proposed insurance scheme, meant for economically weaker sections and particularly women, will provide a risk cover up to Rs 25,000, said an official in the ministry of communications and information technology. The department aims to cover around one-tenth of Indians and become a major player in the domestic insurance sector by easing out the procedural formalities that precede the purchase of a life insurance policy.      While the new scheme has been designed to be customer-friendly, the postal department will put in place systems and processes to prevent fake claims. For instance, a claimant will have to file a death certificate issued by a government doctor on a deceased's cause of death before claiming the insurance amount, the official said. If the medical report says the insuree was suffering from an ailment that existed prior to the purchase of the policy, the postal department will have the option to reject the claim.      The policy premium will vary according to the age of the insuree and the tenure.      India Post expects to cover around 100 million Indians by the end of 2011 under the scheme. The move is part of India Post's initiative to expand its insurance services and ensure a strong presence in the sector, especially in rural parts of the country, the official added.      Since the launch of the rural postal life insurance scheme in 1995, 8 million lives and a sum of Rs 40,000 crore have been insured under various policies offered by India Post. The department also plans to tweak its investment norms for life insurance policies to pump in a part of daily collections in revenue-generating instruments, including stocks, a move that is likely to begin from October 1, 2009.      With a huge presence in the country through 1.55 lakh post offices, the postal department is slowly developing itself as a centre for offering diversified services such as the National Rural Employment Guarantee Scheme, life insurance and financial solutions to its customers, apart from the mail delivery system.

Norms for insurance IPOs soon

Mumbai: Insurance regulator IRDA will come out with disclosure norms for IPOs to be launched by insurance companies by month-end, its chairman J Hari Narayan said on Friday. "We will be ready with the disclosure norms by the end of this month,'' Narayan said. Insurance companies like Max New York Life and Kotak Insurance are planning to launch IPOs. IRDA thinks proper disclosure norms will make the process transparent and consumers aware of thehealth of the company.      "There are few (insurance) companies which have shown interest for IPOs, and IRDA is working with market regulator Sebi to come out with guidelines,'' Narayan said. The route towards an IPO would have three milestones — finalisation of the red herring prospectus (RHP) requirements, disclosure normsand valuation of insurance companies, he added.      "The first milestone towards IPO will be finalisation of the RHP. The design, structure and disclosure required in consultation with Sebi. The second milestone would be the pattern of disclosure, which IRDA would mandate to insurance companies for IPO,'' he said. "We have worked and standardised it (calculation of valuation). The Indian Institute of Acturial will bring out a guidance note on it. And once the guidance note is ready, we will make it mandatory for the insurance companies,'' Narayan said.      "The disclosure norms are under our jurisdiction and they would be ready by the month, he said. The other milestones may take few more months as there are several other players involved in the process,'' he said.      IRDA also expressed concern over the increasing underwriting losses in the nonlife insurance industry. "Due to increase in competitive pressure post detariffing, underwriting losses in the Indian non-life space is increasing which is not a healthy sign,'' Narayan said. "We do not have actuarial capabilities in non-life industry which is a matter of regulatory concern.'' There is also a shortage of skill-sets with respect to evaluating a product and risk factors before fixing the rate, he said.      Hari Narayan further said that the bancassurance model used to distribute policies by insurance companies in the country is weak at the moment. "We find from observation and examination that the bancassurance model is weak at this point.'' It (bancassurance model) is certainly robust at the time of settlement of credit claims but poor at the time of settlement of claims of personal line products,'' Hari Narayan said. With competition, the fastgrowing insurance industry may witness a consolidation among smaller players, and see the emergence of some big companies, a report said.