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Wednesday, 30 December 2015

Indian Insurers To Raise 9.6% Of IT Budget In 2016

Most Indian insurance companies expect to increase their IT budgets in 2016, and are expected to spend 140.8 billion rupees on IT products and services – a 9.6 percent increase over 2015, according to Gartner Inc. This forecast includes spending by insurers on internal IT (including personnel), hardware, software, external IT services and telecommunications.

“Our research shows that Indian insurers are prioritizing their technology investments for 2016 into digitalization, and particularly analytics capabilities,” said Derry Finkeldey, research director at Gartner. “They are primarily looking to digital to grow their businesses in the domestic market.”

This is driving continued strong growth in IT services, especially consulting services, and also enterprise software. Spending on IT services is forecast to reach 45.2 billion rupees, which is 32 percent of all insurance IT spending. Enterprise software spending, which includes enterprise resource planning (ERP),supply chain management (SCM), and customer relationship management (CRM), is forecast to grow 22 percent in 2016, to a total of 948 million rupees.

Earlier this year, Gartner predicted that Indian insurance companies are expected to spend 130.4 billion rupees on IT products and services in 2015. The survey also showed the top three technology priorities for Indian insurance CIOs this year are mobility, business intelligence and analytics, and digitalization/digital marketing – in that order,” Finkeldey then stated, “The big story here is around loyalty amongst agents and insurers who are taking a mobile-first strategy in their efforts to foster it.”

While new technologies are providing new revenue opportunities for insurers, there are challenges as well. Many of these companies are still unsure on the use of these technologies effectively. As a result, a recent report by Capgemini suggests that over 70 percent of insurance customers globally are do not have a positive customer experience. The study finds out a majority of these customers  helped bring down overall customer experience ratings around the globe belong to Generation Y.

A survey by ACORD revealed the sector, particularly the life insurers underestimate the disruption coming from future industry conditions - as a result of which they are not prepared to respond to new threats. “Most did not feel that any particular industry trend was reshaping the industry overall, but various ones had significant and moderate impact on the business,” said the researchers.

The report suggests that a combination of big data analytics, sensor technology and communicating networks could allow insurers to anticipate risks and customer demands with far greater precision than ever before. The benefits could include not only keener pricing and sharper customer targeting, but a decisive shift in insurers’ value model from reactive claims payer to preventative risk advisors.


Monday, 28 December 2015

2016 to be a promising year for general insurance - ICICI Lombard

Increased customer awareness, rise in catastrophic events and pro-consumer regulatory changes to drive Health Insurance, while the Motor Insurance industry has exciting times to look forward to reveals ICICI Lombard in its report, " General Insurance: Trends and Outlook for 2016. " The report highlights the key trends to arise out of the Health and Motor Insurance industry for 2015 and its impact on the year ahead and beyond.

Commenting on the report, Mr. Sanjay Datta, Chief- Underwriting, Claims & Reinsurance, ICICI Lombard General Insurance Company Ltd said: ‘As India’s largest private sector general insurance company, it is imperative for us at ICICI Lombard to lead the industry in terms of identifying health and motor insurance trends and this report will help general insurers draw up new initiatives and policies, driven by consumer demand.

The survey has thrown up some interesting facts in terms of health and motor insurance awareness, needs and the impact of various events on customers. Year 2015 has witnessed increase in the general alertness of people with regards to healthcare and insurance primarily owing to awareness led by Government schemes, spurt in catastrophic events and increase in medical inflation including OPD expenses. Customers are now keen to evaluate the credibility of hospitals in terms of association of doctors, hospital’s reputation and treatment facilities; before availing treatment. More and more people are relying on their insurance provider as a source of credible healthcare information for better decision making. 

One key observation to arise from the report was that natural calamities such as floods and cyclones are becoming a regular phenomenon. Incidentally, a vehicle is affected in its entirely during a calamity, unlike in an on-road accident. Certain losses such as hydrostatic lock cases increase dramatically during floods. However, in spite of increased awareness with regards to such losses purchase of add-on covers like Engine Protect and RTI are still minimal.

Given the background, of the 32.9 mn vehicles registered in India (excl. two wheelers), surprisingly, 9.5 mn were uninsured. While two wheelers account for around 70% of all vehicles in India, almost 75% of two-wheelers in India run without insurance - either they have no insurance or their insurance has lapsed. The good news with two-wheeler insurance is one-time premium payment, no hassle of annual renewal and a common NCB for 3 years.

Commenting on the outlook for 2016, Sanjay Datta said, “We believe that the year ahead will be good for the General insurance sector, including for the larger pieces of health and motor insurance. With the expected changes on the policy front and overall strengthening of the macro-economic scenario, the industry is poised to enhance its value proposition across the product and service spectrum. It should be an exciting 2016 for Health and Motor insurance customers.”

Saturday, 26 December 2015

Reality of insurance during 'acts of god'

Motor insurance until recently was a sealed book for Adhik Ravichandran, a Chennai-based filmmaker, but the recent floods have taught him how to read between finely printed lines. From getting a costly tow for his fully submerged Maruti SuzukiBSE 0.66 % Zen Estilo to haggling with the insurer to avert a total loss - the term used for vehicles irrevocably damaged - Ravichandran has learnt the ins and outs of the business.

"The initial estimate has been around 3 lakh. We have been given the option of 'total loss' now, but we are hoping something can be done to get back the car," he said, referring to the cut-off in the insurance policy that qualifies for the largest claim.

"For cars over five years of age, some policies will have a clause that says the final settlement is arrived at through mutual consent between the insured and the insurer. This is where the market value of an old car is taken into account, leading to a bargain," said a top official at United India Insurance who wanted to remain unnamed.

The four public sector insurers - United India Insurance, New India Assurance, National Insurance and Oriental Insurance - have teamed up for the first time to form a "matrix" for quick disposal of claims. This is how it works: Customers, after submitting the claim document, will be offered a fixed amount based on the age of their car, manufacturer, model and extent of water-logging, chassis level to seat to steering wheel to fully submerged. If the customer opts out of the matrix method, the insurance process takes place as usual. First the dealer makes a quotation and starts repairs. The insurer says how much can be covered and the customer pays the rest. The matrix method facilitates speedy settlement but the customer is left to deal with any further repairs or negotiate with the dealer on delivery time on his/her own. Private insurers such as Bajaj Allianz, Cholamandalam MS and Bharati Axa are reportedly working with larger teams to handle claims. They declined to comment when asked about the reason for having to negotiate with those insured.


Monday, 21 December 2015

Undisputed insurance claims to be settled in 4 weeks: Jaitley

Undisputed insurance claims submitted by applicants in the flood-affected districts of Tamil Nadu would be settled in four weeks, Union Finance Minister Arun Jaitley said today.

Talking to reporters after reviewing the relief and rehabilitation works in the flood affected districts of the state with Chief Minister J Jayalalithaa at the State Secretariat here, he said ombudsman would be appointed to settle the claims which have disputes.

He said so far 11,000 applications for claims have been received by insurance companies from IT and others of which 2,000 claims have been settled.

In respect of the remaining 9,000 applications, all the undisputed claims would be settled in four weeks.

''In respect of claims where there is a dispute, an ombudsman will be appointed to look into the dispute and settle the claim in another four weeks' time (eight weeks)'', he added.

Mr Jaitley also announced that banks have been instructed to provide finance without delay for crop loans, educational loans among others, while relaxing the repayment time for those who have also taken loans from banks.


Friday, 18 December 2015

Make health insurance customer friendly, says IRDAI

T S Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDAI), today recommended that health insurance should be driven by the consumer and the community it serves. He said that health insurance is a financing mechanism where in the community pools its funds to be made available to those who need to pay for their medical expenses.

Addressing the eighth FICCI Health Insurance Conference, the annual flagship event on the theme 'Creating Value through Customer Centricity', the IRDAI Chairman said that apart from product innovation, affordability of health insurance is the need of the hour. He suggested that the insurers should work towards increasing the voluntary customer base, from the current eight percent to at least 20 to 25 per cent of India's population in order to increase affordability.

He emphasized that a balance needs to be created between the expectations of the consumer and aspirations of the industry. FICCI Health Insurance Conference has emerged as a public private platform that has brought together the stakeholders from the government and private sector to collectively derive solutions for the challenges and barriers faced by the sector in its growth.

Dr. A Didar Singh, Secretary General, FICCI said that continuous stakeholder collaborations, standardization of processes and transparency in the health insurance sector will lead to satisfied customers.

He mentioned that over the last eight years, FICCI under the patronage of IRDAI has created a successful PPP platform that has suggested guidelines which have been notified by the regulator after due diligence to facilitate ethical and transparent practices.

The industry panel on 'Reacting to the Voice of the Consumer' was cognizant of the consumer issues and assured that the industry is constantly working towards addressing them. They also highlighted that the sector needs zero tolerance at all levels in order to reduce frauds and increase the trust amongst its customers.

The industry recommended that health insurance should be kept out of the purview of service tax since it brings in additional 14.5 percent burden on the customer, hence increasing the out of pocket expenditure.

Monday, 14 December 2015

Chennai floods: Insurers face about Rs 200 cr claims from owners of 8 private jets

General insurance companies are likely to receive claims worth around Rs. 200 crore from the owners of eight corporate jets that have been partly damaged by recent floods in Tamil Nadu.

The affected planes are owned by companies such as Kalyan Jewellers, TVS Motor, SUN TV, Garuda, Jet Airways, and Joy Jets, owned by Kerala-based jeweller Joy Alukas.

This is over and above close to Rs. 3,000 crore claims the industry has received so far from the general public and industries after nearly a month-long floods drowned Chennai and its neighbouring districts in Tamil Nadu, and Puducherry.

Apart from four state-owned non-life insurers, private players like ICICI Lombard, Bajaj Allianz and HDFC Ergo are active in the aviation space. Currently, these insurers are busy assessing losses of the eight aircraft and it may take up to a couple of months to settle those claims.

“Though we have not received any claims from the aviation sector due to the recent Tamil Nadu floods, what I hear from the industry is that claims are likely to come from the owners of eight corporate jets that got partly damaged. According to preliminary reports, the claim may cross Rs. 200 crore,” New India chairman and managing director G Srinivasan told PTI.

“But let me make it clear that normally insurers provide cover for damage of aircraft or third-party liabilities only and they don’t provide any cover for revenue loss incurred due to grounding of planes,” said Srinivasan, who is also the chairman of General Insurance (Public Sector) Association.

“We have received claims worth Rs. 80 crore for five aircraft which have got damaged due to the Chennai floods.

“Besides, two aircraft owned by Jet Airways have also got partly damaged due to the floods as water entered the godown where they had been parked,” he said, adding that two more aircraft of Jet have got partly damaged, but they have already resumed their flight after repair.”

“Surveyors have been deputed to look into it and they are likely to submit their report before us within a week from now,” she said.

“As we have provided insurance cover to hull and machineries of the aircraft only, we are concerned to settle claims under these segments only and we are not bothered about the revenue loss which these companies may have incurred due to their floods,” she added.


Wednesday, 9 December 2015

Tamil Nadu floods to pinch insurance companies the most

The catastrophic loss of property and lives due to the floods in Tamil Nadu could cost insurance companies around Rs.1,500 crore though exact estimates will be known only later.

"The loss due to floods is catastrophic. We have informed our reinsurers. We have received around 800 claims and the initial estimate of the loss is around Rs.500 crore," a senior official of United India Insurance Co. Ltd. told IANS.

The official said the flood loss for the general insurance industry could be around Rs.1,500 crore - "around three times the value of our claims". But if one takes into account the uninsured moveable and immovable properties, then the amount would be several times more.

The heaviest rains in a century battered the districts of Chennai, Kanchipuram, Cuddalore and Thiruvallur over the past month, leaving around 325 people dead and causing widespread destruction.

Most claims lodged with United India are from corporates, industries, shopkeepers, warehouse operators and other organised sector. "The loss claims from the industries are for damage to their stock and raw material, work-in-progress or finished goods," the official said.

"Claims for motor vehicles and other household articles from individuals will take some time to come in as they have to first stablise their home front," he said. Officials of four government-owned companies met to discuss simplication of claims procedure for motor vehicles.

"Most vehicles would need only reconditioning. So based on the kind of damage, the claim payment could be made fast. There need not be any individual vehicle assessment of loss which might delay the settlement," the official said.

"On-account payment will also be made liberally before the final assessment of our liability is estimated." Insurers told IANS that a majority of the flood victims have not insured their homes and its contents against fire, floods, burglary and other risks.

According to United India Insurance official, flood damage to the buildings, doors and windows were also covered under the fire insurance policy normally taken by the housing loan players.

Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) on Monday - nearly a month after the onset of rains and floods - asked insurers to complete loss surveys within 72 hours of intimation. The regulator also said that claims payment or on-account settlements were to be made within 15 days.


Friday, 4 December 2015

Chennai floods: Financial loss may exceed Rs 15,000 crore

Industry body Assocham on Wednesday estimated the financial loss in Chennai floods to exceed Rs 15,000 crore even as insurance companies are anticipating claims of at least Rs 500 crore.

Chennai has been reeling under the impact of one of the worst rainfalls in the city in about 100 years due to which normal lives have been adversely affected. Over 180 people have died so far due to rain, as per reports.

The Associated Chambers of Commerce and Industry of India (Assocham) said the financial loss may exceed Rs 15,000 crore. However, the state government has put the total loss at Rs 8,481 crore.

According to industry sources, insurance companies are anticipating claims of at least Rs 500 crore with motor insurance likely to account for largest amount of claims followed by machinery and production loss.

A senior official from the General Insurance Corporation is said to have informed that the company is receiving estimates from insurers while New India Assurance is said to have received insurance claims worth Rs 35 crore already.

In recent times, insurance companies have been one of the most affected due to natural calamities.

The Tamil Nadu government on Wednesday said 72,119 people were now housed in 432 relief camps set up in the rain-affected Thiruvallur, Kanchipuram and Chennai districts.

The government said relief measures were being taken on war footing and 329,919 food packets have been distributed to the flood-affected people in these three districts.


Monday, 30 November 2015

Insurers offer limited coverage for terror attacks

The world recently woke up to the gruesome news of a terrorist attack in Paris, one of the most visited places on earth. Security and intelligence agencies are not ruling out a similar planned attack in other parts of the world, including on Indian shores. Opting for an insurance plan that covers terrorist attacks looks more relevant now than ever before.

In general insurance, however, a lot of ambiguity persists when it comes to coverage of losses arising out of terror attacks. Most general insurance plans like travel insurance, home insurance, and enterprise insurance have restrictions. Plans that offer terrorism are often selective in their coverage.

Insurers' definition
Insurance companies have a clear definition as to what constitutes an act of terrorism or terrorist attack. 'An act that causes any kind of physical violence where there is a loss of life or property' is deemed as a terrorist attack. Usually, all attacks that are carried out by either individuals or a group of people together to weaken any established government are included in it.


  • While terrorist attacks are covered, most policies exclude biological, chemical or nuclear attacks
  • The scope of coverage for financial loss from terrorist attacks depends on the policy
  • To cover loss or damage to property, one may need to pay an additional premium, as this will be treated as an add-on cover
  • Hospitalisation expenses for terrorist attacks victims are covered by travel and health insurance
  • Most insurers cover terrorism as an add-on cover, only with additional premium payment
Any damage or loss that a person may suffer due to a routine law and order issue may not necessarily come under the definition of a terrorist attack. Some insurance companies consider hijacking of planes, buses, and trains as part of a terrorist attack, while others consider it a law and order problem.

Travel insurance
Most travel insurance plans do not offer coverage for financial losses resulting from terror attacks. Only losses from situations like loss of passport or essential baggage, trip cancellation, medical expenses, repatriation of remains in case of an unfortunate demise, and expenses arising out of an extended stay are covered. Some may cover hijacking but it depends on the plan and the add-ons.

If you knowingly visit places that have a high chance of being targeted by terrorist attacks or terror-related activity, you may not get a claim towards any related loss. Also, the coverage offered by travel insurance plans is strictly restricted to the places on the insured's itinerary. Therefore, if someone takes a detour and is caught in any terrorist-related activity in a city or location not on the itinerary, the person's claim would get rejected.

Never ignore instructions from the officials in the country or city of your visit. If you had been instructed to stay indoors, but deliberately ventured out and are affected by any terrorist-related activity, your claim for any losses suffered would not be entertained.

If you are an avid traveller, it is ideal to opt for a travel insurance plan that offers protection against such volatile situations.

Terrorism cover
As instances of terrorist attacks have been growing, insurance companies have also started offering terrorism insurance as a separate standalone policy. A terrorism pool was developed in India in 2002, which is a combined effort of all general insurance companies. It provided help and cover for the losses caused during the 26/11 attacks in Mumbai.

This policy provides coverage to individuals as well as businesses for potential losses due to acts of terrorism. Any organisation - small or big - can be covered. This is highly recommended for public institutions like schools, colleges, universities, hospitals, hotels, and stadiums.

A standard feature stand-alone terrorism insurance offers is protection against financial losses out of property damage. An extended cover may also include claims for business interruption due to terrorist attacks.

Safeguarding from a terror attack

The best way to keep youself safe from any terror attack is to have adequate protection. Keep a balance between travel, health and personal insurance to make sure you are adequately covered both in India and on foreign soil. It will help you to take a right decision based on the contingency.

Go through the policy documents in detail before signing up, to understand the scope of its coverage, as most plans do not cover risks arising from terrorism. Always choose general insurance policies after evaluating their comprehensiveness.

Source: Business Standard

Friday, 27 November 2015

It is now easier to claim accident insurance if you are RuPay card holder

National Payments Corporation of India (NPCI) has relaxed the time period to claim personal accident insurance under RuPay Classic cards to 90 days from 45 days, with immediate effect.
The card holders will have to carry out at least one banking transaction within 90 days of accident including the accident date, to be eligible for the personal accident cover, the company said in a release today.
The card holders are entitled to a sum insured of Rs 1 lakh under personal accident insurance-death and permanent total disability.
"This extension will provide more flexibility to RuPay Classic card holders including the Pradhan Mantri Jan Dhan Yojana (PMJDY) customers who have been brought under the ambit of mainstream banking", NPCI managing director and CEO A P Hota said.

Tuesday, 24 November 2015

This is how your auto insurance premium is ascertained

Auto insurance is a legal as well as an essential requirement for all vehicle owners. If you have been wondering how car insurance premiums are calculated, here is everything you need to know.

Understanding car insurance

When it comes to offering a protective cover for your car in case of damage, theft or loss, a car insurance policy is your vehicle’s best friend. It also compensates for third party damage caused by careless driving.

There are essentially two types of car insurance plans—comprehensive car insurance and third party insurance. Third party car insurance is mandatory for all vehicles as per law, while comprehensive car insurance is optional for old cars.

Comprehensive car insurance: How the premium breaks up

A comprehensive car insurance plan has two essential components. These include own damage (OD) premium and third party (TP) premium.

Own damage premium: The own damage premium is the part of premium fixed as per the Insured Declared Value (IDV) of your vehicle. The IDV is calculated after taking into account the value of the vehicle after depreciation. The IDV can be increased if the car owner wants a higher level of protection for his vehicle, but the premium in that case would proportionately increase.

Third party premium: Third party premiums are fixed by the insurance regulator and depend on the volume or the cubic capacity of your vehicle. Below are the third party premium rates for vehicles effective from April 1 2015.

Car Volume TP Insurance rates (Rs.) as on April 1, 2015

Factors that affect car insurance premium

1. Insured Declared Value (IDV): Car insurance is a type of indemnity policy where the total compensation is directly linked with the value of your vehicle, based on its age and model. The Insured Declared Value is the maximum amount that you can claim under a policy.

A new car just out of the showroom will have a higher IDV. As your car ages, the IDV takes into account its depreciation value. The IRDA offers a calculation chart for depreciation which is used by insurance companies to arrive at the IDV value for older cars.

Depreciation Percentage to calculate IDV

2. Cubic Capacity: The capacity of your car’s engine is also a factor when it comes to calculating the insurance premium. The higher the cubic capacity (cc) value of your car engine, the higher the premium amount. The Indian Motor Tariff Act has stipulated basic minimum amounts as car insurance premium for vehicles with different cubic capacities.Premium calculations taking into account the cc of your car’s engine are divided into 3 slabs:
• Cars with a cubic capacity less than 1000cc
• Cars with cubic capacity between 1000-1500cc
• Cars with cubic capacity above 1500cc

3. Geographical location: Your geographical location has a say in how much car insurance premium you end up paying. India is divided into 2 zones namely zone A and zone B depending on the risk faced by motorists. Zone A cities have a higher premium than cities in Zone B. Zone A comprises cities like Mumbai, New Delhi, Bangalore, Chennai, Kolkata Ahmedabad, Hyderabad and Pune. Zone B includes the rest of India.

4. Age of the vehicle: The age of the vehicle plays a significant role in determining the final premium amount. With time, as the vehicle depreciates in value, insurance companies offer lower premium as the insurance cover gets reduced proportionally. If your car is more than 5 years old, then the insurance company decides on the cost of your car based on its condition, before determining the final premium amount.

5. No Claim Bonus (NCB): If you do not make an insurance claim for one year, you are eligible to get a No Claim Bonus, which offers you a discount on your premium. By not claiming insurance, you can have a NCB discount of 20% from the second year, which will be deducted from the OD premium. NCB can go up to 65% based on number of claim-free years you ensure, thereby reducing your premium costs substantially.

6. Other factors: There are other additional factors considered for insurance premium calculations. Installation of anti-theft devices, being registered members of some automobile associations, use of CNG or LPG kit are also important factors that insurance companies take into account when calculating the final premium amount for your car.
Insurance premium calculation makes use of all the factors mentioned above to arrive at a final premium amount. Depending on the above, two cars bought at the same time in different locations or with different cubic capacities may have to pay different premiums for insurance.


Friday, 20 November 2015

General insurers stare at Rs 200-crore claims from floods in Tamil Nadu

General insurers are gearing up to settle the claims, which are pegged at over Rs 200 crore so far, from the last week’s devastating floods in Chennai. State-owned general insurers like New India Assurance, United India, National Insurance and Oriental Insurance and private sector players like Bajaj Allianz and ICICI Lombard have already received the claims and expect more of them in coming days.

The floods, which occurred due to heavy rains in Tamil Nadu, have claimed nearly 90 lives so far, most of them reported from Chennai and nearby areas. ”So far, we’ve received about 100 claims worth at Rs 30 crore. We’d be receiving more claims in the next days. But the incident would not be as severe as the Kashmir floods or the Hudhud cyclone losses,” New India Assurance chairman and Managing Director G Srinivasan said. ”No precise information could be given at this stage as claims are still being reported. Losses are likely to be small except in case of high-end cars where repair charges could be higher,” he added.

An official of United India Insurance said they have received 130 claims worth Rs 110 crore so far. The Chennai regional office of National Insurance Company has so far received 131 claims worth Rs 4.16 crore, most of which have come from retail and industrial segments,” its acting CMD Rajesh Aggarwal said. Considering the intensity of the inundation and water logging, motor claims are expected in large numbers. Communication network having collapsed, may be claims have not been lodged so far, he said.

Bajaj Allianz, which is one of the largest insurers of cars and commercial units in Chennai, has received 200 claims as of now. “Till date we’ve received close to 200 claims which largely from motor and properties,” its Managing Director Tapan Singhel said. ”Overall, we feel majority of losses will come from the motor insurance segment. The losses have just started trickling in since the rains have subsided and customers have started assessing and reporting losses. However, we do not expect a considerable rise in the number of claims,” he added.

Oriental Insurance has received 76 claims related to Chennai floods. ”We’ve received 76 claims from mid-sized businesses and retailers estimated at Rs 37 crore as against three losses reported from industrial houses estimated at Rs 30 crore,” head of Chennai region of Oriental Insurance Ajit Kumar said. ICICI Lombard’s underwriting and claims head Sanjay Datta said his company expects more claims to flow in from motor and corporate segments. However, he ruled out any impact on the balance-sheet as the company has transferred a major portion of the risk to reinsurers through obligatory cess.


Monday, 16 November 2015

Paris attacks fallout: Insurers foresee pick up in travel insurance

Insurers and industry-watchers expect a spike in demand for travel insurance in light of terror attacks in Paris last Friday, as international travellers wake up to the possibility of such threats across the globe, including high-sought-after destinations in developed nations.

"The unfortunate incident could prompt travellers to recognise the importance of travel insurance, even when they are travelling to countries where it is not mandatory," said Nikhil Apte, chief product officer, product factory (health insurance), Royal Sundaram Alliance Insurance. Travel insurance is compulsory for obtaining a Schengen visa, which covers 26 European nations, including France. "After the recent terror attacks, travel insurance has become all the more important as it provides you financial cover and peace of mind if you get caught in such volatile situations," said Naval Goel, CEO and founder,, an insurance aggregation portal. Insurance companies make a distinction between war, riots and terrorism. The latter is defined as an act of violence that causes loss of life and property where perpetrators belong to groups that seek to weaken control of established governments.

Similarly, other lines of insurance business - life, health, personal accident and home - too are likely to attract more interest. "Insurance seekers are already evaluating policies on the basis of their comprehensiveness. For instance, several high-end health covers pay for evacuation from primary care centres to hospitals of insured's choice in case of emergencies," said Apte.

Incidents like the one in Paris could prompt rise in insurance purchases and deeper analysis by insurance-seekers. You need read the fine print carefully to understand the scope of coverage and the items that the company will not pay for.

Travel insurance

Many travel insurance policies do cover listed expenses arising out of terror attacks. "All risks like trip cancellation, loss of passport, medical expenses, repatriation of remains etc are covered as part of the regular travel policy even if they result from terrorism," said Sanjay Datta, head, underwriting and claims, ICICI Lombard. Your accommodation expenses will also be reimbursed if you have to extend your stay due to an emergency. Depending on the variant chosen, the company will also pay for your journey back home and visit from a relative on compassionate grounds.

However, you need to go through the policy documents in detail before signing up for one as some companies may not pay for risks emanating from terrorism. For example, Tata-AIG specifically mentions terrorism as exclusion in its travel policy, though it covers flight hijacking. Besides, even in policies that provide insurance against terror, insurers will not admit claims if policyholders visit destinations that are known to be facing such risks or knowingly violate safety regulations. For instance, if a policyholder were to suffer injuries after venturing out despite instructions from Paris authorities to stay indoors, her claim could come under a cloud. "You also need to figure out whether the coverage applies only to a city that is specifically on your itinerary, or also extends to the other cities or to the country as a whole," added Kumar.

Source: Economic Times

Friday, 13 November 2015

Say no to readymade pension plans; say yes to customized retirement plans

Readymade Pension Plans/ Retirement Plans:

The existing pension plans/ retirement plans in India are from the insurance companies. They are available in the form of traditional products or in the form of ULIP schemes.

Indian Traditional Retirement Plan:

The traditional pension plan/retirement plan schemes from Indian insurance companies are expected to deliver only 6% to 7% CAGR as they are allowed to invest only in conservative avenues.

This 6% or 7% is not sufficient to beat inflation.

Indian ULIP Retirement Plan:

The ulip pension/retirement plans have huge front loaded charges. They also have higher regular running expenses and fund management expenses which pulls down the net return. That's why market has rejected these products and they have become failures.

Customized Retirement Planner for India:

As a prudent investor, you should not rely on a single product or scheme for your retirement planning. A comprehensive and customized Indian retirement plan should consist of a bundle of schemes and not a single scheme.

Also you need to avoid schemes which deliver lesser return and schemes with huge charges. You need to select a combination of schemes which as a combination can deliver a decent inflation adjusted returns with low charges.

Schemes for Pre-Retirement Planner in India:

A combination of Term Insurance, Mutual Funds, and PPF will help you in creating a better pre-retirement planner in India.

Term Insurance:

In case of any mishappening to you, your spouse's retired life needs to be secured. This can be protected with adequate term insurance. Online term insurance policies are cheaper by 50% to 60%. So opt for online term insurance instead of an offline term insurance.

Mutual Funds:

Equity mutual funds play a vital role in delivering positive inflation adjusted returns. Short term and Medium term debt funds are better alternatives to fixed deposits as they can deliver better post tax return.


PPF delivers 8.8% tax free return. It has got a lock in of 15 years. One can save upto Rs.1 lac p.a. Safety and its tax free status makes this product a compelling option for an Indian pre-retirement planner.

Schemes for Post-Retirement Planner in India:

A combination of schemes like POMIS, Senior Citizen's Savings Scheme, Bank FD, Mutual Fund MIPs and Debt funds could be considered for creating a post-retirement planner in India.

Creating a Customised Retirement plan

We have discussed enough about why we should have a Customised Retirement Planner in the place of a readymade pension/retirement plan. Let us think about how to create a comprehensive and customized retirement plan.

1. Lifestage:

In this step, as an Indian retirement planner, you need to answer two questions. One is ''How many years from now you are planning to retire?'' and the other one is ''Your Estimation of Post-retirement years''. Studies reveal that the average life expectancy of an Indian is 75 years. But it is advisable to assume 85 years as your life expectancy so as to make sure that you will be covered enough during your post retirement.

2. Expected Retirement Expenses:

Again in this step you need to have an answer or 2 questions. The first one is ''what will be retirement expenses in today's cost of living''. Research reports show that approximately 70% of your current expenses will be your retirement expenses. The second question is ''what would be the expected rate of inflation on these expenses.''

3. Expected Retirement Income:

The first question to be answered is ''What is the expected amount to be received at the time of retirement from schemes like EPF, superannuation, pension commutation, gratuity?''. The second question to be answered would be is ''What is the annual income you expect from the sources like pension schemes, rent, royalty?''.

4. Existing Investments:

''What is the current value of the investments made towards retirement?'' and “What is the expected return from these investments?'' are the questions to be answered in this step.

5. Working out the Retirement Planner:

We are going to work out the retirement planner in this step with the answers from the earlier steps.

a) You need to find out the future value of the retirement expenses with the present value of retirement expenses, number of years to retire, and the inflation assumed.

b) The expected retirement income by way of rent, pension, royalty need to be deducted from the retirement expenses (calculated in the point (a)) to arrive at the net retirement income to be generated from the retirement corpus.

c) Then the retirement corpus needs to be calculated by taking into account the net retirement income (calculated in the point above point), number of retirement years, inflation assumed post-retirement.

d) The retirement benefits like pension commutation, gratuity, superannuation, EPF needs to be deducted from the retirement corpus (calculated in the point (c)) to arrive the net retirement corpus required.

e) The monthly investment required to accumulate this net retirement corpus needs to be calculated taking into account the existing investments, and the rate of return from the investments.

The detailed approach for creating a comprehensive and customized Retirement Planner is well explained in the above five steps.

Role of a Financial Planner in Creating an Retirement Plan

> A professional financial planner will be able to take into account "the rate at which your income grows" to decide the monthly investment towards the retirement corpus.

> Also the financial planner will be able to decide the asset allocation for your portfolio based on the required rate of income to accumulate the net retirement corpus.

> The financial planner will be suggesting you the right mix of schemes for your pre-retirement planner and post retirement planner.

> Also the professional financial planner will be able to tell you the required life insurance coverage and the health insurance coverage and when you need to opt for health insurance coverage.

> Periodical review on the retirement planner has been conducted by the financial planner so as to accommodate the changes and deviation from the original retirement planner.

You can be a ''do it yourself'' retirement planner or ''seeking professional assistance'' Indian retirement planner, the above points will help you in having a happy and peaceful retired life.

Saturday, 7 November 2015

When taking critical illness insurance, opt for multiple cover

Critical illness cover is a benefit policy wherein a lump sum amount is paid on diagnosis of certain diseases as per the insurance cover. Earlier, people used to take life cover fearing premature death and leaving the family to cope without a breadwinner. But due to the modern technology and advancement of treatments, most of the critical illnesses can be treated well and get cured. This requires a huge financial support, for which medical insurance is the only solution for most of the ordinary public.

The importance of critical illness cover is rising due to the substantial increase in the number of patients suffering from illnesses like cancer, heart attack and organ failures. Due to the longer treatment tenure and the cost of non-medical and medical expenses, the critical illness cover is required. The sum insured is paid immediately subject to policy conditions. We get advanced treatment in various hospitals and the expenses, based on the facility provided by the hospitals. In critical illness policy, insurers pay the sum insured in lump sum once the disease is diagnosed, subject to certain survival conditions. So the patient can meet the expenses by this insurance even without a hospitalization. An insured member can utilize the money for treatment of diseases, expense related to lifestyle change based on doctor's advice, alternate medicines in India as well as outside country, organ donor expenses, etc.

It can be either standalone critical policy or rider/ add-on cover linked to a basic life or med claim. There is no difference between these two with regard to claim settlement. The sum insured under critical illness policy will be paid in lump sum irrespective of stand alone or rider/add on.

As far as critical illness is concerned, the sum insured will be paid in lump sum on diagnosis subject to certain survival conditions. Most of the insurance companies are insisting 30 days survival. In these kind of situations, under critical insurance lump sum plan, people may try for different mode of treatments even without hospitalization. For the re-imbursement method, most of the insurers allow only allopathic medical expenses or impose specific conditions that may not be viable for the situation. One should check the policy conditions, and the critical illnesses cover under the policy and sum insured (should be adequate).

Illness is always an uncertain event. It's always better to go for multiple illness cover policy rather than go for one or two diseases. That would also provide the premium advantage.

Most of the life and general insurance companies provide critical illness policies. Reimbursement mode is applicable in standard mediclaim policies.

A few insurance companies are offering women specific critical illness insurance policies. For these products, the premium needs to be checked. It is up to the customer's discretion to opt for them.

It's always better to have a separate critical illness cover policy as it offers lump sum payment. Once the illness is diagnosed, the customer can decide the method or mode of treatment even without hospitalization, or multiple methods. Since the critical illness cover offers lump sum payment, the insured person will have the liberty to meet the medical expenses at his convenience.


Tuesday, 3 November 2015

95% of middle-class Indians do not have enough health insurance

Around 95% of middle-class Indians do not have enough health insurance to cover some of the most common procedures and ailments in the country, according to a report.

Surprisingly, consumers above 45 who are at higher risk of health problems and closer to retirement, are least prepared for emergencies as they are under-insured by an average of 69%, reveals the report.

The study is based on data obtained from 10,000 consumers across eight major cities, aged 25 to 45+ and in the income bracket ranging from Rs 6 to 36 lakh annually.

The report further points pout that it is getting more expensive to treat some of the most commonly occurring diseases in India. Amid an inflationary environment in India for at least a decade, prices four years ago were not exactly low. The fact that they have again risen, by double digits in some cities, is noteworthy.

It is clear that there is room for Indian prices to increase further. We believe that current inflationary trends are likely to continue for the foreseeable future. While it is no surprise that typical treatment costs in the US are sometimes more than 10x what they are in India, that they are more than twice as expensive in countries closer to home such as Malaysia and Thailand, means Indians could soon be paying more.

According to the report, over the last 4 years, premiums of most insurers have increased only once, in 2014, over the previous year, reflecting a CAGR of 2.79% (for sum insured of Rs 2,00,000 and Rs 3,00,000) and 3.29% (for sum insured Rs 5,00,000 and Rs 10,00,00).

Data show some 95% of our users are not adequately insured, with 62% of 10,000 BigDecisions users having less than 50% of required health cover. Consumers above 45 (with higher needs, typically higher incomes and fewer years to retirement) are a high-risk group – they are the least prepared for health emergencies as they are under-insured by an average of 69%. 


Thursday, 29 October 2015

Insurance ombudsman an easy way to settle claims

Like in the case of other ombudsmen, a negligible number of the insured (policy-holders) are aware that a public authority called the Insurance Ombudsman exists in India, according to G. Rajeswara Rao, Insurance Ombudsman for Andhra Pradesh and Telangana and Yanam.

The level of awareness is so low that the ombudsman receives only a few thousands of complaints against the lakhs of claims repudiated every year, he said. The number of such claims rejected by 24 life and 28 non-life insurers in India last year was about four lakh. As the number of petitions submitted to the ombudsman is insignificant, awareness is being spread in different ways.

In 2014-15, 1,274 cases were settled involving an award amount of Rs. 13 crore within three months. In the current year, 595 cases were disposed of in as many months with a total financial award of Rs. 1.55 crore, he said.

Addressing the media here on Wednesday, Mr. Rajeswara Rao said aggrieved individuals who took policies like life insurance, Mediclaim, accident insurance and property insurance in their personal capacities could approach the ombudsman but the amount under dispute should not exceed Rs. 20 lakh.

Before lodging complaints with the ombudsman, the policy-holders should approach the grievance redressing committees of insurers.

The awards given by ombudsman were binding on the insurers but the aggrieved persons could go to a consumer court or other forum if he or she finds the awards unacceptable.

The policy-holders have to approach the ombudsman within a year of repudiation of their claims. Mr. Rajeswara Rao said 17 such insurance ombudsmen were functioning in the country and the Hyderabad centre that has jurisdiction over A.P, T.S and Yanam was adjudged the best last year.

In the first six months of 2015-16, the ombudsman passed 57 awards including 16 against Life Insurance Corporation of India and 10 against Reliance Life Insurance Co. Ltd. Complaints could be made in written form or mailed.

Source: The Hindu

Sunday, 25 October 2015

Benefits of Pension Products Bundled with Insurance to Consumers

It is estimated that the size of India’s elderly population aged 60 and above is expected to increase from 77 million in 2001 to 179 million in 2031and further to 301 million in 2051. Owing to declining birth rates and longer life expectancy, India’s elderly are growing annually at a rate of 3.8% as against the annual average growth rate of 1.8% of the total population. According to a FICCI-KPMG study, pension reforms held the prospect of enlarging the pension market size from Rs 56,100 crore in 2002 to about Rs 4,06,400 crore by 2025. Further,  as per the study, the existing government administered pension schemes cater only to 12% of India’s workforce, and the pension provided under such schemes are inadequate to cover financial needs of the retirees. There was need for constructing a portfolio with some exposure to equities and international markets with stress on low risk and high returns. For a successful regulatory regime, the three corner stones of product, processes and distribution were stressed. With only LIC and few other life insurance companies active currently in the pension segment there is a huge potential for life insurance companies to expand in this segment. Even PFRDA is regulating only the pension fund management and ultimately will have to transfer the corpus to a life insurance company to provide annuities. There is a great demand for annuity service providers. Pension funds, being long term in nature, support infrastructure investments in a big way.

Pension funds carry long term benefit guarantees. For example, a customer buying a Deferred Pension Policy at age 30, retiring at age 58, can pay periodic premiums over the active service in convenient instalments and upon reaching the age of superannuation, say at age 58, can start receiving a periodic annuity. Up to 1/3rd of the corpus (which is the accumulated value) at age 58 is allowed to be commuted (withdrawn as a lump sum) and the balance 2/3rd is invested in the name of the customer to earn a monthly annuity starting from the retirement age.

Since all life insurance companies are required to give a positive interest guarantee, the customer gets a certain amount of guarantee in the corpus build up or in the form of guaranteed annuities.

Upon superannuation, the corpus is utilised to purchase a Single Premium Immediate annuity from the same insurance company. Annuities are payable depending on the options selected by the customer – It can be a Life annuity, payable during the life time of the Customer and stops upon death or it can be an Annuity certain for minimum period of years, say 5 years, 10 years or 15 years after superannuation, continuation of Pension after death of the annuitant, in the name of Spouse till his/her death etc.

Pension products also carry an assured death benefit which is normally in the form of return of premiums.

Advantages of developing Pension products

  • Building a corpus over a period of time rather than in a short period – Pension plans are vehicles to build a corpus over a period of time – the benefits of starting early in life through a pension policy
  • One vehicle for both corpus building and annuities – Pension products provide one window of opportunity to build corpus as well as annuities through a single insurance company
  • Guaranteed returns - The regulator has prescribed that all insurers must guarantee  non-zero returns in all pension products.
  • Tax benefits for pension premiums under Section 80CCC, up to a limit of Rs 1.50 lakhs per annum along with other eligible investments under Section 80C and 80CCD


Saturday, 17 October 2015

Secure ‘study-abroad’ experience with student insurance

Overseas student insurance policies offer wide bouquet of benefits to insurance buyers. These policies not only offer more benefits but also come cheaper as compared to the policies issued overseas.

It’s a proud moment when you secure admission to a coveted course at a foreign university. There is the distinct and indescribable feeling that the world is your oyster and the future is full of immense possibilities. But as the actual visa application process kicks in, and there is talk of purchasing insurance, at home or through the university, you may consider some less delightful possibilities – falling ill while you are far from home, meeting with an accident on foreign soil, losing important documents that support your identity and more... Who, you may wonder, will take care of you and help you when such vulnerabilities strike and you are far from your homeland?

Insurance to the rescue

‘Travel abroad for studies’ forms less than 5% of all the reasons why Indians go overseas. Nevertheless, domestic insurance companies take this segment very seriously and offer a special kind of product to meet its unique needs. If chosen well, this product can cover all the perils you may face as a traveller and those that may confront you as a student living in a foreign land.

Mandated by the law of foreign lands

At one level, health insurance is usually mandatory for those who travel abroad to pursue education. Medical insurance is a must for students, although it can be purchased either from India or in the country of your destination, from the university that you plan to attend.

Insurance beyond health

A student insurance policy from India, on the other hand, offers much more than just financial protection in unexpected accidents and illnesses. If you do your homework thoroughly, you will find policies that cover a range of untoward incidents – medical, travel and non-medical – that could strike while you are studying abroad. With no pre-policy medical check-up required, these plans indemnify medical expenses, in-patient and out-patient care and pre-existing diseases in life threatening medical conditions. They also come with customized features such as extended cover in the country of residence, repatriation of mortal remains and medical evacuation. By way of accident insurance, these policies pay out an accidental death benefit or a permanent partial or permanent total benefit, as the case may be.

Far-sighted features

Appreciating the fact that you are far from home and may encounter some loss of documents or belongings, such policies indemnify loss of passport and loss of checked-in baggage. New-age features like Loss of Laptop/Tablet are also sometimes bundled into the package.

Another interesting feature is sponsor protection, wherein the insurance company indemnifies the balance fees for regular classroom study for your educational course in the event of the death of your sponsor due to an injury, subject to conditions. Trip delays, emergency cash advances, cancer screening, treatment of mental or nervous disorders and alcoholism and drug dependency also form part of student policies, naturally, subject to reasonable conditions.

The extent of the far-sightedness of domestic student policies is apparent from the fact that some indemnify the actual additional expenses (e.g., those borne towards accommodation and a common carrier) that you may incur to return to India in case the university in which you study becomes insolvent. Still more, some student policies even indemnify the legal costs of procuring a bail bond, which is required to be furnished in the event of the arrest or imminent arrest of the insured person by any government or statutory body or authority.

Cost comparisons

With all these incredulous features, it natural to imagine that these policies will come at a considerable cost. Surprisingly, they don’t. With all their appealing features that seem to blend together the best of health, accident, travel insurance, child plans and more, these policies are highly economical in comparison to standard policies that are issued by universities abroad. Now that’s what really qualifies as getting the best coverage for the buck!


Thursday, 15 October 2015

IRDA cautions public not to buy unauthorised insurance policies

Insurance Regulatory and Development Authority(IRDA) today cautioned the public that Allied Trade Masters operating from Prashant Vihar, New Delhi, has not been licensed or granted registration to sell insurance policies of any kind in India.

In a recent statement here, the Insurance Regulatory said, it has been brought to the notice that an entity by name Allied Trade Masters, operating from New Delhi, has been selling motor insurance policies.

In this connection, the Authority cautions the public not to buy insurance policies from Allied Trade Masters.

The Public are informed that the Authority is taking action against the entity and the persons connected with that entity.

IRDA hereby urges the public to remain alert and not to fall prey to frauds and cheating indulged in by the said entity, the statement added.

Source: WebIndia123

Monday, 12 October 2015

Car insurance policy with free roadside assistance

Roadside assistance is an amazing service which takes care of all your roadblocks when you are driving your car. If you have driven a car in India you would know how painful it is to drag your car to the garage or wait for the mechanic to reach you. Considering the dismal road condition in India there is a high probability of a tire puncture or a breakdown.  The large numbers of reckless and untrained drivers make an accident a viable possibility. Wouldn’t it be great if there was someone who would take care of your car in case of a breakdown? If the answer is yes, then roadside assistance is exactly what you are looking for.

Roadside assistance is provided by major car manufacturing companies, insurance companies and stand-alone service providers which offer it as a full-fledged service. However, it needs to be noted that some insurance providers on the market provide this service free of cost. What kinds of services are offered with roadside assistance? Let’s go through the following list to know more:

  • Towing assistance
  • Emergency message relay to friends and family
  • Battery jumpstart
  • Organizing a taxi and hotel accommodation
  • Tire punctures
  • Minor repairs
  • Emergency fuel assistance and much more
Such cutting-edge services are provided along with roadside assistance and they are just a phone call away. Wait! There are other ways to inform your service provider about your car breakdown. For the tech-driven souls there are a few insurance companies such as Reliance General Insurance that offer specialized apps for providing this service. E.g. the Anywhere Assist app.

So, you have the option of calling for help at the click of a few buttons. The phone will automatically fetch your location from the GPS on your mobile.

Hence, ensure you are covered under roadside assistance, so you are never stranded on an unknown location. A car insurance policy with free roadside assistance would do the trick for you.

Source: New Indian Express

Friday, 9 October 2015

Women's insurance market in India likely to grow four-fold by 2030

Women's insurance market in India is expected to result in two to four times growth by 2030, according to a study done by AXA in association with International Finance Corporation (IFC).

The India chapter of the report titled 'SheforShield: Insure Women to Better Protect All', presented by Bharti AXA, was conducted in emerging economy countries of Brazil, China, Colombia, India, Indonesia, Mexico, Morocco, Nigeria, Thailand and Turkey.

It said the Indian women’s insurance market is predicted to be between US 22 billion - 35 billion by 2030, which is two to four times the estimated premium of USD 10 billion spent by women in 2013.

The study lists increase in number of working women in the country, along with 20 per cent growth in their income compared to 2008, among growth drivers for this segment.

Another important factor highlighted by the study, which could contribute to the growth in insurance premiums from women is the increasing number of women entrepreneurs in India.

Source: KNN India

Monday, 5 October 2015

Less than 20% of population covered under health insurance: Report

Despite liberalization of the insurance industry, less than one-fifth of India's population are covered under health insurance. Even among those who have some form of coverage, 67% are covered by public insurance companies, according to National Health Profile 2015, compiled by the Central Bureau of Health Intelligence.

As per the separate chapter on health financing, despite a declining share of the Centre towards public health expenditure has done significantly well to provide insurance cover as compared to the private sector.

Apart from the standard health insurance, around 15.5 crore people are covered under the three Central government-funded health schemes - Central Government Health Scheme, Employees' State Insurance Scheme and Rashtriya Swasthya Bima Yojana.

A low public health spending coupled with poor health insurance penetration is reflected in India's high out-of-pocket expenditure on health. In rural India, almost 80% of the out-of-pocket expenditure is on medicine, whereas in urban areas it is around 75%.


Monday, 28 September 2015

How to exit mis-sold or unwanted Insurance Policies?

An impressive sales pitch laced with exaggerated claims of returns can make anyone fall for the unwanted products or services. Premium amount and market-based returns are still a jargon for a layman, which is why life insurance policies rank top among the most mis-sold policies.

Though policy buyers often get a window in the form of ‘free look-in period’, but there are still many who have lost this window of opportunity as well to exit from the policies.

Here are the ways listed to discontinue such unwanted policies.

Let the policy lapse: Most of the policies, excluding unit-linked investment plans (ULIPs), can be discontinued if the premium payment is stopped within the three years of buying a policy. This is the easiest way to lose a bad policy. However, once the policy lapses, the policy holder has no right to claim sum assured and the risk cover also comes to an end.

Surrendering the policy: Traditional policies can be surrendered if the premium is paid for at least three years. The policy holder is entitled to receive a cash value in lieu of the premiums paid against the policy. For ULIPs, the surrendering of policy is possible only after the completion of five years. Since insurers levy charges on surrender, therefore, it is not always a good option to discontinue a policy.

Converting into Paid-Up Value- Instead of surrendering a policy, policy holders can convert their policies into paid-up policies. The premium paid till the minimum stipulated period, which is three years for traditional policies, will continue to cover risk but for a reduced sum assured. Such an option comes handy for policies, the premium for which has been paid for a considerable higher number of years.

Loan against policy - Another judicious use of mis-sold policies can be through taking a loan against it. One has to take care that the interest on loan does not exceed the return on the policy. Premium payments can be made through such loan, and the policy can be liquidated on maturity. The idea for taking a loan against a policy is that the returns provided by the policies will compensate the interest costs of the loan.


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