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.