GIC's natural disaster fund to start by Apr 1
The natural catastrophe pool being set by General Insurance Corporation (GIC) for insurance and reinsurance companies in Africa and Asia will have an initial capacity of $500 million. The pool will be functional by April 1, 2010.
GIC Re, the state-owned national reinsurance company, has been entrusted with creating the pool, to be called ‘FAIR Natural Catastrophe Pool’, by a voluntary industry organisation, the Federation of Afro-Asian Insurers and Reinsurers (FAIR). GIC has been given the responsibility to create and manage the pool for members of FAIR.
"We are in talks with members of several countries and will start with 20-30 members. We are looking to make the pool operational by April 1, 2010," said Yogesh Lohiya, chairman and managing director, GIC. He added that each member would have to put in a minimum of $50 million to become a part of the pool. GIC will have 5 per cent stake as the manager of the fund.
The re-insurer is expanding its international footprint by entering into Malaysian and South African markets. It has applied for a branch licence in Malaysia and will later go to Johannesburg. GIC Re has a branch in Dubai and a representative office in Moscow.
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Thursday, February 18, 2010
Tuesday, February 16, 2010
GENERAL INSURERS’ [PUBLIC SECTOR] ASSOCIATION OF INDIA
To,
All check-off Qualified Unions/ Associations of Member Companies
Re : Wage Revision
Please refer to the discussions we had with you in the 5th round held at Kolkata on 22nd December, 2009, at which, on behalf of our Member Companies, we had floated an improved offer of overall 17.5% (including non-core items) revision in the wages with effect from 01.08.2007, (subject to the approval of the Government) along with an organizational agenda aimed at improving the productivity to the requisite level necessary to absorb the impact of the Wage Revision having regard to the statutory limits on the management expenses.
We had requested you to appreciate the offer as also the financial constraints despite which it has been made to you with a view to motivate the employees for contributing further in improving the productivity of the Companies and sought your consent to the same for our approaching the Government for approval thereof and issuance of requisite Notification. While appreciating the improved offer, you had, nevertheless, made certain observations, inter-alia, seeking to explore the possibilities of further improvements, if at all.
Your observations were submitted by us to the Governing Board of GIPSA in its Meeting held on 29th January, 2010. After threadbare deliberations, particularly, looking to the financials of the Member Companies, the Board did not find it possible to further improve the offer made before you in the 5th round as indicated above and desired us to reiterate the same to you.
We would request you to kindly appreciate that this is the maximum the Companies could afford with the given financials and come forward with your consent to the same to enable us to proceed further in the matter.
All check-off Qualified Unions/ Associations of Member Companies
Re : Wage Revision
Please refer to the discussions we had with you in the 5th round held at Kolkata on 22nd December, 2009, at which, on behalf of our Member Companies, we had floated an improved offer of overall 17.5% (including non-core items) revision in the wages with effect from 01.08.2007, (subject to the approval of the Government) along with an organizational agenda aimed at improving the productivity to the requisite level necessary to absorb the impact of the Wage Revision having regard to the statutory limits on the management expenses.
We had requested you to appreciate the offer as also the financial constraints despite which it has been made to you with a view to motivate the employees for contributing further in improving the productivity of the Companies and sought your consent to the same for our approaching the Government for approval thereof and issuance of requisite Notification. While appreciating the improved offer, you had, nevertheless, made certain observations, inter-alia, seeking to explore the possibilities of further improvements, if at all.
Your observations were submitted by us to the Governing Board of GIPSA in its Meeting held on 29th January, 2010. After threadbare deliberations, particularly, looking to the financials of the Member Companies, the Board did not find it possible to further improve the offer made before you in the 5th round as indicated above and desired us to reiterate the same to you.
We would request you to kindly appreciate that this is the maximum the Companies could afford with the given financials and come forward with your consent to the same to enable us to proceed further in the matter.
Friday, February 12, 2010
L&T likely to foray into insurance biz
Larsen & Toubro is likely to start its general insurance business in the first quarter of next fiscal and has got preliminary approval from the Insurance Regulatory & Development Authority (Irda).
Irda member R Kannan told said the insurance watchdog has given its initial R1 approval to L&T and the company would take at least three-four months to start the venture.
"In its board meeting, Irda has given R1 approval to L&T for its general insurance venture," Kanan said. According to L&T senior vice-president (financial services) N Sivaraman, the venture would be operational in the first half of the next fiscal subject to regulatory approval.
The proposed insurance firm would begin operations with paid-up capital between Rs 110 crore and 120 crore, he said, adding, "We expect the share capital to go up to Rs 500 crore in the next 5 years depending on business growth." L&T has already put in place top management for the proposed venture. Joydeep Roy will head L&T General Insurance Company.
There are three stages of approval required for getting a licence for an insurance company. R1 is the preliminary approval wherein the regulator evaluates the promoters. In the second stage (R2), Irda looks into the business model of the company and in the third (R3), at the formation of the company. Besides, Irda also gave R2 approval to health insurance company Max Bupa Health Insurance, Kannan added.
Irda member R Kannan told said the insurance watchdog has given its initial R1 approval to L&T and the company would take at least three-four months to start the venture.
"In its board meeting, Irda has given R1 approval to L&T for its general insurance venture," Kanan said. According to L&T senior vice-president (financial services) N Sivaraman, the venture would be operational in the first half of the next fiscal subject to regulatory approval.
The proposed insurance firm would begin operations with paid-up capital between Rs 110 crore and 120 crore, he said, adding, "We expect the share capital to go up to Rs 500 crore in the next 5 years depending on business growth." L&T has already put in place top management for the proposed venture. Joydeep Roy will head L&T General Insurance Company.
There are three stages of approval required for getting a licence for an insurance company. R1 is the preliminary approval wherein the regulator evaluates the promoters. In the second stage (R2), Irda looks into the business model of the company and in the third (R3), at the formation of the company. Besides, Irda also gave R2 approval to health insurance company Max Bupa Health Insurance, Kannan added.
New India to introduce core insurance solution soon
The New Indian Assurance is in the process of implementing the Core Insurance Solution (CIS) to network its offices and automate its operations.
New India Assurance chairman and managing director M Ramadoss said all the 26 regional offices and 393 divisional offices and 614 branches will be brought under the CIS system very soon.
Ramdoss, who was here on Thursday to preside over the board of directors meeting, said the board has approved the company's third quarter results during which the company has earned a premium income of Rs 7200 crore.
The chairman said all the districts in Orissa would be covered under the the Rashtriy Swasthya Bima Yojana (RSBY) very soon.
"In Orissa, 12 districts have been covered. The remaining 18 districts will be taken up very soon", Ramadoss said. He said an independent cell will be formed in the regional office of the company to oversee the RSBY implementation.
The public sector non-life insurer has so far covered 1.75 lakh BPL families out of the targeted 22 lakh under the RSBY.
The RSBY was launched in 2008 to provide cashless medical facilities to the BPL families. The scheme has been implemented successfully in states of Maharashtra, Gujarat, Himachal Pradesh, Goa and Sikkim.
"The RSBY will create demand for health facilities which in turn would see more investment in the health sector in the country" , the chairman said.
New India Assurance chairman and managing director M Ramadoss said all the 26 regional offices and 393 divisional offices and 614 branches will be brought under the CIS system very soon.
Ramdoss, who was here on Thursday to preside over the board of directors meeting, said the board has approved the company's third quarter results during which the company has earned a premium income of Rs 7200 crore.
The chairman said all the districts in Orissa would be covered under the the Rashtriy Swasthya Bima Yojana (RSBY) very soon.
"In Orissa, 12 districts have been covered. The remaining 18 districts will be taken up very soon", Ramadoss said. He said an independent cell will be formed in the regional office of the company to oversee the RSBY implementation.
The public sector non-life insurer has so far covered 1.75 lakh BPL families out of the targeted 22 lakh under the RSBY.
The RSBY was launched in 2008 to provide cashless medical facilities to the BPL families. The scheme has been implemented successfully in states of Maharashtra, Gujarat, Himachal Pradesh, Goa and Sikkim.
"The RSBY will create demand for health facilities which in turn would see more investment in the health sector in the country" , the chairman said.
Thursday, February 4, 2010
High-loss health, auto covers contribute to PSU insurers' growth
High-loss health, auto covers contribute to PSU insurers' growth
Although PSU insurance companies stepped up growth this year, this was largely contributed by high-loss segments where the payouts exceed the premiums.
The four PSU insurers reported premium growth of 12 per cent for the first nine months of the current financial year. Private sector insurers grew only 8 per cent for the same period.
But highly placed PSU officials, who declined to be quoted, said the stepped up growth was largely from the health and automobile segments. Health insurance contributed to as much as 40 per cent of the PSU insurers' growth during the period. The auto sector contributed about 10 per cent of the growth, though private sector continued to dominate the segment. But it is in motor third party risk covers, especially commercial vehicles, where the public sector growth remained high, the officials said.
The high growth segments for the PSU insurers, the officials said, were not exactly profitable. The losses as measured by the combined ratio remained at about 130 per cent for health risk covers, both retail and group medical covers. The combined ratio is a measure of profitability of the insurance industry's core business. A ratio over 100 per cent implied the business acquisition/administration expenses and claims were well over the premiums earned. In the case of the automobile sector, the combined ratios continue to remain at over 150 per cent, with commercial vehicle third losses at over 200 per cent.
However, the sources said, the claims losses on their respective balance sheets had reduced after the third party pool began operations in 2007. This was because the losses were now being shared between all the general insurers, including private sector, who are also members of the pool. Losses for the PSUs though remain high, since they have the largest market share in the commercial vehicle third party segment sector.
Low loss sectors
The officials said private sector insurers' cautious growth in the high-loss segments stemmed from fears of bleeding capital. But capital constraints for the PSU insurers were also likely to mount this year, the officials said, given the current state of the profitable business — fire and engineering sector. Tariffs in these traditionally low loss sectors are still 80 per cent below the pre-deregulation levels. Besides, with reinsurance negotiations expected to be tied up over the next two weeks, the officials said there was intense resistance within the sector — public and private — against further undercutting risk premiums.
The resistance was also partly on account of the fear of weakening technical reserves. Currently, insurers are expected to have at least 50 per cent of their incremental premiums as provisions for unexpired risks. The sharp fall in tariffs have, in turn, reduced transfers to the technical reserves.
Low profits
Besides, the officials said, this year PSU insurers made reduced profits through sale of investments, unlike the last few years. This year, the officials said, PSU insurers' profits from investment sales were unlikely to exceed Rs 300 crore. PSU insurers had used this route to recapitalise, till last fiscal. Investments are currently recognised in the balance sheets at book value. Sale of the investments and booking profits on the same, however, improved the capitalisation, as the profits were used to bolster their general reserves.
With investment profits unlikely to improve in the coming weeks, PSU insurers sought additional capitalisation measures from the Government for supporting business growth ahead of the Budget on the lines of the banking sector.
Although PSU insurance companies stepped up growth this year, this was largely contributed by high-loss segments where the payouts exceed the premiums.
The four PSU insurers reported premium growth of 12 per cent for the first nine months of the current financial year. Private sector insurers grew only 8 per cent for the same period.
But highly placed PSU officials, who declined to be quoted, said the stepped up growth was largely from the health and automobile segments. Health insurance contributed to as much as 40 per cent of the PSU insurers' growth during the period. The auto sector contributed about 10 per cent of the growth, though private sector continued to dominate the segment. But it is in motor third party risk covers, especially commercial vehicles, where the public sector growth remained high, the officials said.
The high growth segments for the PSU insurers, the officials said, were not exactly profitable. The losses as measured by the combined ratio remained at about 130 per cent for health risk covers, both retail and group medical covers. The combined ratio is a measure of profitability of the insurance industry's core business. A ratio over 100 per cent implied the business acquisition/administration expenses and claims were well over the premiums earned. In the case of the automobile sector, the combined ratios continue to remain at over 150 per cent, with commercial vehicle third losses at over 200 per cent.
However, the sources said, the claims losses on their respective balance sheets had reduced after the third party pool began operations in 2007. This was because the losses were now being shared between all the general insurers, including private sector, who are also members of the pool. Losses for the PSUs though remain high, since they have the largest market share in the commercial vehicle third party segment sector.
Low loss sectors
The officials said private sector insurers' cautious growth in the high-loss segments stemmed from fears of bleeding capital. But capital constraints for the PSU insurers were also likely to mount this year, the officials said, given the current state of the profitable business — fire and engineering sector. Tariffs in these traditionally low loss sectors are still 80 per cent below the pre-deregulation levels. Besides, with reinsurance negotiations expected to be tied up over the next two weeks, the officials said there was intense resistance within the sector — public and private — against further undercutting risk premiums.
The resistance was also partly on account of the fear of weakening technical reserves. Currently, insurers are expected to have at least 50 per cent of their incremental premiums as provisions for unexpired risks. The sharp fall in tariffs have, in turn, reduced transfers to the technical reserves.
Low profits
Besides, the officials said, this year PSU insurers made reduced profits through sale of investments, unlike the last few years. This year, the officials said, PSU insurers' profits from investment sales were unlikely to exceed Rs 300 crore. PSU insurers had used this route to recapitalise, till last fiscal. Investments are currently recognised in the balance sheets at book value. Sale of the investments and booking profits on the same, however, improved the capitalisation, as the profits were used to bolster their general reserves.
With investment profits unlikely to improve in the coming weeks, PSU insurers sought additional capitalisation measures from the Government for supporting business growth ahead of the Budget on the lines of the banking sector.
SBI General core team in place; may begin operations by June
SBI General Insurance has put in place its top management team and is expected to commence operations by June.
The company has appointed Mr R.R. Bele as its Managing Director and CEO. Prior to this, Mr Bele held the position of General Manager with State Bank of India.
Mr Rob Logie, the representative from Insurance Australia Group (IAG), has been appointed as the Deputy CEO.
Joint venture
SBI General Insurance is a 74:26 joint venture between State Bank of India and IAG. SBI had signed the joint venture agreement with IAG in November 2008 for foraying into the general insurance business.
While SBI has invested Rs 111 crore for its 74 per cent equity, IAG brought in Rs 542.10 crore (including share premium) for its stake of 26 per cent
SBI General Insurance has received the final R3 licence from the Insurance Regulatory and Development Authority and is in the process of getting its products approved from the insurance regulator. The company will have its soft launch soon after the products are approved. However, the full launch will only be in June.
Products
“We have filed for 22 products with the regulator. The products will cater both to the corporate and the retail segment”, said Mr Avijit Ghosh, National Underwriting Manager-Corporate and SME, SBI General Insurance.
Health products are not in the initial filings. But they will be a part of the bouquet of products offered by the time the full launch happens in June, Mr Ghosh said, while speaking on the sidelines of an insurance seminar organised by the Asia Insurance Review.
However, the company does not plan to offer liability products in the initial phase.
The company is in the process of setting up its distribution network. It has already opened seven branches in large centres and 13 branches in smaller centres
The company has appointed Mr R.R. Bele as its Managing Director and CEO. Prior to this, Mr Bele held the position of General Manager with State Bank of India.
Mr Rob Logie, the representative from Insurance Australia Group (IAG), has been appointed as the Deputy CEO.
Joint venture
SBI General Insurance is a 74:26 joint venture between State Bank of India and IAG. SBI had signed the joint venture agreement with IAG in November 2008 for foraying into the general insurance business.
While SBI has invested Rs 111 crore for its 74 per cent equity, IAG brought in Rs 542.10 crore (including share premium) for its stake of 26 per cent
SBI General Insurance has received the final R3 licence from the Insurance Regulatory and Development Authority and is in the process of getting its products approved from the insurance regulator. The company will have its soft launch soon after the products are approved. However, the full launch will only be in June.
Products
“We have filed for 22 products with the regulator. The products will cater both to the corporate and the retail segment”, said Mr Avijit Ghosh, National Underwriting Manager-Corporate and SME, SBI General Insurance.
Health products are not in the initial filings. But they will be a part of the bouquet of products offered by the time the full launch happens in June, Mr Ghosh said, while speaking on the sidelines of an insurance seminar organised by the Asia Insurance Review.
However, the company does not plan to offer liability products in the initial phase.
The company is in the process of setting up its distribution network. It has already opened seven branches in large centres and 13 branches in smaller centres
PSU GENERAL INSURANCE COs GEAR UP FOR COMPETITION
The public sector general insurance companies in the country have taken up a restructuring exercise to improve their performance in the wake of stiff competition from private players, according to Mr N.S.R Chandra Prasad, Chairman and Managing Director of the National Insurance Company Ltd.
At a press meet here on Sunday, after participating in the State-level All-India General Insurance Field Workers' Association, he said that by the end of 2008-09 financial year, the general insurance companies had collected premium of Rs 32,000 crore, of which the public sector companies accounted for 60 per cent. The National Insurance Company had collected premium of Rs 4,280 crore.
He said, “After the opening up of the market, the private players have taken away a substantial chunk, but the market is growing and the PSU companies are also registering growth year-on-year. It is estimated that by 2015 the premium income of all general insurance companies in the country will cross Rs 1,00,000 crore.”
General insurance companies, including the National Insurance, have appointed international consultants to improve their performance. Core insurance services would also be introduced, similar to core banking solutions, to improve their performance, he added.
He said the role of development officers in the insurance sector could not be underestimated or undermined. All the PSU general insurance companies were hiring personnel for the past two years and it would continue for two more years. “A thousand officers are being appointed,” he said.
Claim settlement was also good in the PSU companies, he added. On the issue of demands put up by the insurance staff, he said they would be looked into.
At a press meet here on Sunday, after participating in the State-level All-India General Insurance Field Workers' Association, he said that by the end of 2008-09 financial year, the general insurance companies had collected premium of Rs 32,000 crore, of which the public sector companies accounted for 60 per cent. The National Insurance Company had collected premium of Rs 4,280 crore.
He said, “After the opening up of the market, the private players have taken away a substantial chunk, but the market is growing and the PSU companies are also registering growth year-on-year. It is estimated that by 2015 the premium income of all general insurance companies in the country will cross Rs 1,00,000 crore.”
General insurance companies, including the National Insurance, have appointed international consultants to improve their performance. Core insurance services would also be introduced, similar to core banking solutions, to improve their performance, he added.
He said the role of development officers in the insurance sector could not be underestimated or undermined. All the PSU general insurance companies were hiring personnel for the past two years and it would continue for two more years. “A thousand officers are being appointed,” he said.
Claim settlement was also good in the PSU companies, he added. On the issue of demands put up by the insurance staff, he said they would be looked into.
Public sector general insurers outshine their private peers
Public sector general insurance companies seem to be bouncing back under the detariff regime.
The four nationalised general insurance firms have pipped their private-sector counterparts in business premium growth in the first nine months of the current fiscal.
The private general insurance firms saw an almost 42% decline in premium underwritten during April-December 2009, as against the corresponding period of the last year.
The nationalised majors, on the other hand, reported 11% growth in the premium underwritten in the first nine months in 2009-10. During the same period of the last fiscal, they had logged in a growth of 7.6%.
Interestingly, the overall general insurance industry growth of almost 10% in April-December has been largely contributed by the public sector companies, which cumulatively grew by higher 11.37% than the overall market average.
Private biggies like ICICI Lombard General, Bajaj Allianz General and Tata AIG General saw degrowth in the first nine months.
The figures released by the Insurance Regulatory & Development Authority indicate a clear decline in the rate of growth of the nine-month premium for the private sector in 2008-09 and 2009-10.
Some of the private sector players such as Royal Sundaram, Reliance Life and Iffco-Tokio grew 11.43%, 4.58% and 4.61%, respectively in the first nine months.
Cholamandalam grew 13% whereas HDFC Ergo General, which picked up a higher tempo in the last couple of years, has shown significant growth of 183%.
Among the public sector players, United Insurance reported a 19.34% premium growth while New India Assurance grew its business premium by 9% — both on higher bases.
A senior official of United India Insurance told DNA, that there was a continuous trend of growth over the last few years. “But to be honest, 2008-09 was a watershed year for us when we were able to break through and get back the market share which we lost out since the industry was privatised. Moreover, the results of a reengineering exercise that we conducted with the help of the Boston Consulting Group, has paid rich dividends,” the official added.
According to an industry analyst, detariffing has helped the public sector players a lot.
“Having deep pockets, they could afford to discount rates significantly. For some of the private players, however, growth was very fast in the initial years and some of the degrowth at present could be attributed to a conscious decision by them to underwrite better risks,” the analyst said.
Public sector general insurance companies seem to be bouncing back under the detariff regime.
The four nationalised general insurance firms have pipped their private-sector counterparts in business premium growth in the first nine months of the current fiscal.
The private general insurance firms saw an almost 42% decline in premium underwritten during April-December 2009, as against the corresponding period of the last year.
The nationalised majors, on the other hand, reported 11% growth in the premium underwritten in the first nine months in 2009-10. During the same period of the last fiscal, they had logged in a growth of 7.6%.
Interestingly, the overall general insurance industry growth of almost 10% in April-December has been largely contributed by the public sector companies, which cumulatively grew by higher 11.37% than the overall market average.
Private biggies like ICICI Lombard General, Bajaj Allianz General and Tata AIG General saw degrowth in the first nine months.
The figures released by the Insurance Regulatory & Development Authority indicate a clear decline in the rate of growth of the nine-month premium for the private sector in 2008-09 and 2009-10.
Some of the private sector players such as Royal Sundaram, Reliance Life and Iffco-Tokio grew 11.43%, 4.58% and 4.61%, respectively in the first nine months.
Cholamandalam grew 13% whereas HDFC Ergo General, which picked up a higher tempo in the last couple of years, has shown significant growth of 183%.
Among the public sector players, United Insurance reported a 19.34% premium growth while New India Assurance grew its business premium by 9% — both on higher bases.
A senior official of United India Insurance told DNA, that there was a continuous trend of growth over the last few years. “But to be honest, 2008-09 was a watershed year for us when we were able to break through and get back the market share which we lost out since the industry was privatised. Moreover, the results of a reengineering exercise that we conducted with the help of the Boston Consulting Group, has paid rich dividends,” the official added.
According to an industry analyst, detariffing has helped the public sector players a lot.
“Having deep pockets, they could afford to discount rates significantly. For some of the private players, however, growth was very fast in the initial years and some of the degrowth at present could be attributed to a conscious decision by them to underwrite better risks,” the analyst said.
Monday, February 1, 2010
Public sector general insurers outshine their private peers Posted by kjk2709 11:22 AM 0 comments »
Public sector general insurance companies seem to be bouncing back under the detariff regime.The four nationalised general insurance firms have pipped their private-sector counterparts in business premium growth in the first nine months of the current fiscal.The private general insurance firms saw an almost 42% decline in premium underwritten during April-December 2009, as against the corresponding period of the last year.The nationalised majors, on the other hand, reported 11% growth in the premium underwritten in the first nine months in 2009-10. During the same period of the last fiscal, they had logged in a growth of 7.6%.Interestingly, the overall general insurance industry growth of almost 10% in April-December has been largely contributed by the public sector companies, which cumulatively grew by higher 11.37% than the overall market average.Private biggies like ICICI Lombard General, Bajaj Allianz General and Tata AIG General saw degrowth in the first nine months.The figures released by the Insurance Regulatory & Development Authority indicate a clear decline in the rate of growth of the nine-month premium for the private sector in 2008-09 and 2009-10.Some of the private sector players such as Royal Sundaram, Reliance Life and Iffco-Tokio grew 11.43%, 4.58% and 4.61%, respectively in the first nine months.Cholamandalam grew 13% whereas HDFC Ergo General, which picked up a higher tempo in the last couple of years, has shown significant growth of 183%.Among the public sector players, United Insurance reported a 19.34% premium growth while New India Assurance grew its business premium by 9% — both on higher bases.A senior official of United India Insurance told DNA, that there was a continuous trend of growth over the last few years. “But to be honest, 2008-09 was a watershed year for us when we were able to break through and get back the market share which we lost out since the industry was privatised. Moreover, the results of a reengineering exercise that we conducted with the help of the Boston Consulting Group, has paid rich dividends,” the official added.According to an industry analyst, detariffing has helped the public sector players a lot.“Having deep pockets, they could afford to discount rates significantly. For some of the private players, however, growth was very fast in the initial years and some of the degrowth at present could be attributed to a conscious decision by them to underwrite better risks,” the analyst said.
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