Adding to the above, IRDA said that at present, under term plan fixed, contractual amount is given to the policy holder or its nominee only at the time of death / hospitalization of policy holder, else the amount gets lapsed. Without any maturity profit and returns poor people are not inclined to buy the risk cover.  According to statistics there were 14.80 million terms plans sold in previous year ending March 2012 which did not carry any maturity benefits.

Agreeing on the above move by IRDA, Mr. Sudhin Roy Chowdhury, member (life), IRDA said that there is a need for cheap term plan having guaranteed return so as to increase its sales. Further increasing number of chit fund companies and money circulation scheme has also got in the way of expansion of insurance business. He also said that Insurance companies should make stringent laws to ensure that its agents do not get engage in activities of selling unconvinced collective investment schemes.

However, Mr. Shashwat Sharma, Partner – KPMG India, did not agree to the steps proposed by IRDA stating that it will be difficult to implement. He also said that, by bringing this change, IRDA intends to sell only endowment and withdraw term policies and offer homogeneous package covering different benefits.

Adding to the above, he also disclosed the fact that company would also initiate various actions to achieve and surpass its objective of premium collection and grow above the market rate. For this, company has introduced sixteen more micro – insurance products in its health insurance products.

Other measures that company has taken to achieve its target are as under:-

• Planning to appoint 25,000 agents during the year
• To increase its presence in rural, social and micro – insurance sector. For this, company has opened 48 small offices in Tier II and Tier III cities and rural areas.
• To increase its presence in retail business
• Increase presence in overseas operation by opening offices in Qatar, Myanmar and Canada

He also said that company would settle Motor Third party claims through negotiation and reunion.

On the above, Mr. Sudhin Roy Chowdhury, IRDA member, in the Insurance sumit, told the press that the proposal of having an insurance depository and holding of insurance policy in demat paperless form rather than physical form is still in its early period and the blue print of the same is also pending for discussion.

The advantage of this change will be that policy holders can get rid of their physical policy certificates and hold them in electronic mode, however, it will not by compulsory, as in the case of stock market, to hold insurance policies in e-form. A choice will be available to the customer for either holding the policy in physical form or in demat form.

An IRDA official on this said that a separate self-governing body will be formed for ensuring smooth operation of the depository and that they would lay down their own rules and regulations.

In addition to the above, Mr. Roy also suggested that steps should be taken to stop misspelling of insurance products by the company’s agents. Further, he emphasized the need of huge amount of capital in the insurance industry and suggested Foreign Direct Investment as one of the best mode of investment.

A member of IRDA said that Insurance Bill for raising FDI limit from 26% to 49% is expected to get approval in Parliament in the coming session.

DLF Pramerica Life Insurance Company is a joint venture between DLF Limited, a leading real estate Company and Prudential International Insurance Holding Ltd., a subsidiary of a US based financial services provider, Prudential Financial Inc.

According to Mr. Pavan Dhamija, Managing Director and Chief Executive Officer of DLF Pramerica Life Insurance Company, this plan will provide a capital which will help individuals save for their future, to meet the rising cost and maintain their present standard of living, and also at the same time give protection against any unprecedented event.

This plan can be purchased even at the age of 55 or 60 years and will mature at the age of 75 years which is the maximum maturity age. At the time of maturity, the policy holder will get maturity benefit equal to sum as under:-

·         Basic guaranteed amount

·         Accrued revisionary bonus, and

·         Final bonus, if any, which is dependent on the performance of the policy.

The salient feature of this plan is that it allows an individual to continue living independently and in case of the death of the policy holder, the death benefit of this product ensures that family’s financial requirements are taken care of.

New India Assurance Company, a leading insurance company with branches across India and overseas with a network of 1068 offices, 28 Regional offices, 393 Divisional offices and 648 branches posted a net profit of Rs. 843.66 crores i.e 500% jump in profit as compared to previous year and highest in 5 years. Net worth of the company also grew by Rs. 680.36 to the total of Rs. 7,737.36 and also reduced its losses by Rs. 400 crores.

This hike rate by New India Assurance Company will serve as a benchmark for other general insurance companies who may soon follow the suit.

Mr. Srinivasan also added that though average 20% increase in price is announced, actual rate climb will differ from division to division. Also, in case of renewal premium, rate increase will not be applicable immediately as the customers need to be served with three months notice period.

According to him, for a person aged 35 years and residing in Mumbai insurance premium amount will go up to Rs. 7,300 as against the existing of Rs. 6,078. Adding to the above, he clarified that premium amount will be different for person residing in different locations / cities depending upon the cost of treatment.

He also revealed the plan to reduce operational cost, which at present is 120% by forming their own Third Party Administrator (TPA) to handle the health insurance business and association of hospitals. 

Preliminary investigation by SEBI, in association with Economic Offence Wing of Delhi Police, revealed a well thought-out and structured go by group of people to defraud the easy to fleece and innocent investors. Based on this preliminary investigation SEBI expanded its scope of investigation against the menace of misselling of insurance products through false calls. The investigation also revealed that this fraud is created by persons directly or indirectly associated with insurance companies previously.

The above fraud was discovered by SEBI, wherein a group of fraudulent agents   operating in NCR region swindled the customers in the name mutual fund and insurance products by their dead family members. Under this fraud the customers are asked to give up their existing insurance policies and shift to new products yielding higher returns. By doing so agents selling new products gets heavy fee for the same and also at times investors lose their entire investment values. 

Insurance companies including state run Life Insurance Corporation have also come out with an idea of warning the customers through SMS and emails to not to get attracted to this type of calls made by fraudulent agents. 

IRDA has tried to warn all their customers through a public notice against such fake entities and even the Insurance giant, LIC has warned their customers and others against fraudulent companies and fake agents. 

On the positive side, at the time raising concern over low insurance penetration, Mr. Chidambaram appreciated the efforts by Dena Bank and United India Insurance Company for identifying different beneficial avenues for the benefit of the farmers.  He also said that once this mediclaim plan is implemented successfully at a smaller scale, its benefits on larger scale can also be considered.

On the above Mr. Ashwani Kumar Chairman and Managing Director – Dena Bank said that this mediclaim facility is available to the kisan credit card holder of Dena Bank, his spouse and 2 children and this will be under Group Health Insurance Cover.

On this occasion Mr.  Chidambaram tendered the mediclaim policies and identity cards to 6 farmers holding kisan credit card of Dena Bank.

Edelweiss Tokio Life Insurance, a joint venture company between India’s Edelweiss Financial Service and Tokio Marine Holding Inc, Japan, announced the launch of wealth augmentation policy called Single Pay Endowment Assurance Plan. This plan in a non – participating endowment plan.

The salient feature of this product is as under:

• Coverage equal to 10 times the premium amount e.g policy holder can pay a premium of Rs. 40,000 and get a cover for minimum sum assured for Rs. 400,000
• Maximum policy term is 10 years and hence beneficial to customers investing it for long term period and expecting guaranteed returns
• Loan facility available upto 90% of the surrender value
• Benefits under section 80C and 10 (10D) of the Income tax Act

In addition to the above, this product is suitable for customers who have a preference of one time investment with the benefit maximum returns.  

Mr. Milind Kharat, Chairman and Managing Director of United India Insurance Company said that their company has appealed to Agriculture Insurance Company (AIC) to sell crop and weather insurance products in the western region of the country, which is currently facing severe drought situation. Horticulture crops like sweet lime, grapes and mangoes are the worst effected crops due to draught.

At present four public sectors insurance companies sell the crops of AIC offering yield based and weather based crop insurance curriculum under the National Agricultural Insurance Scheme and Weather based insurance scheme. Insurance companies like HDFC Ergo and ICICI Lombard are one of the few private players who are also in this field of insurance.

He also added that at present the company caters to the crop and weather insurance needs of the Southern part of the country. Many insurance companies are also trying to enter into this business in Maharashtra as there is huge potential with Maharashtra being one of the pioneers in the crop and weather insurance space. As per the statistics, this sector is growing at an annualized rate of 25%.

In addition to the above, insurance premium amount is also lower under this segment and the risk involved is huge thereby not attractive to insurance companies. According to data revealed by IRDA, the gross premium underwritten for this segment for the period ending December 2012 is Rs. 832.85 crores out of which Rs. 80.07 crores is attributable to public insurance companies and balance Rs. 752.78 crores is attributable to private companies.

According to Mr. Mukesh Kumar, head strategic planning and marketing, HDFC Ergo General Insurance, said that inspite of de – tariff done the premium rates have not increased. Also the entire marine hull insurance segment is sailing in the rough weather.

According to Mr. Amarnath  Ananthanarayana, Managing Director and Chief Executive Officer of Bharti AXA General Insurance this division of insurance is big coupled with high threat associated with it. He also added that this segment is not profitable as premium amount is less and hence insurance companies are inclined to sell more policies. The average portfolio of marine hull insurance ranges from 1 – 3% of the total portfolio of Indian Insurance Companies.

He further added that action is taken against the guilty both by the banks themselves as well as at RBI level. Deputy Governor of Reserve Bank of India, Mr. H. R. Khan also said that RBI has initiated the action against these banks.

The matter was that the senior personnel of the above banks were indulged in the activities of converting the black money into white by investing the same in the variety of long term investments.  

For the above, ICICI bank suspended its 18 employees while HDFC bank suspended its 20 employees in addition to initiating an audit inquiry.

This proposed move by IRDA is widely accepted by Insurance companies as it will not only help them to do risk based pricing but will also help them to make out policyholders making unjustified claims.

At present this facility is used only by Banks and Non Banking Financial Companies (NBFC) for the purpose of taking lawful decision.

The main reason for this venture is that this proposed agency will act as a ‘consumer rating agency’ as there is no mandatory requirement for insurance companies to consider credit history at the time of issuing policies.

The above mentioned proposed credit rating agency will maintain information on individual claim / credit history and make a score based on creditworthiness of the customers and timely premium payments. Further under this, transparency will improve as insurance companies will get access to important data on individuals to charge premium accordingly.

According to Mr. Arun Thukral, Managing Director – CIBIL, by using credit records, insurance records will be able to differentiate the customers and reduce sub-standard payments by a noteable level. Mr. Mukesh Kumar, head of strategy planning, HDFC Ergo General Insurance Company said that motor insurance premium can be charged based on risk report of the policy holder and not on vehicles profile.

Mr. Yateesh Srivastava, Chief Marketing Officer and Head (Talent) of Aegon Religare Life Insurance Company said that this plan will safeguard the customers against the risk of market volatility as the maturity amount is fixed. This will help the customers to plan their cash flow in advance.

The salient features of this plan are as under:

• Guaranteed return to the customers
•  Accrued bonus from the 1^st year itself
• Extended life insurance coverage beyond premium paying term
• Rider benefit available which will provide extra cover due to accidental death
• Bonus and guarantee payout 40% of the sum assured as maturity benefit at the end of the policy term

Under this plan the minimum sum assured will be Rs. 100,000 and the least premium amount that a customer will have to pay is Rs. 13,033. Further the admission age will be 7 years and can range upto 60 years depending upon the occupancy of the policy and the maturity age of the policy holder will be 75 years.