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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.


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