Friday, April 29, 2011

இன்னும் என்னவெல்லாம் முடியுமோ
அத்தனை கொடுமைகளையும்
செய்து முடியுங்கள்---ஆனால்..
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உங்கள் அராஜகம் என்னை
அச்சுறுத்திவிடாது .

நான் ஒரு போதும் சோர்ந்து விழப்போவதில்லை

என் இறுகி மூடிய கைகளுக்குள்
ஒரு விதை ...ஒரு சின்னஞ்சிறு உயிர் வித்து

அதை நான் பத்திரமாகக் காத்து வைத்துள்ளேன் .

அதை எம் மண்ணில் மீண்டும் விதைப்பேன்

அதுவே என் நம்பிக்கை 

Thursday, April 21, 2011

Braking point: Motor insurance claims drive losses of PSU insurers


New Delhi: Public sector Oriental Insurance Company expects its balance sheet to show a huge jump in underwriting losses in its forthcoming results, due to an over 200% rise in motor insurance claims. Responding to the crisis-like situation, the insurance regulator is expected to drastically revise the premium for the compulsory segment of motor insurance, also known as third-party cover, this month.

The situation has been brought on as under the Motor Vehicles Act, owners of all commercial and passenger vehicles have to get themselves insured against claims for causing injury or damage to others. Own-damage claims are optional under insurance laws. Because third-party cover is a loss-making portfolio, private sector insurance companies avoid taking on premium for only such cover, but a large percentage of old private and commercial vehicles want only this insurance.Oriental and the other three public sector companies have to compulsorily take on such premium. As a result of the huge concentration of third-party cover in their motor insurance portfolio, the companies are bleeding.
For 2008-09, the incurred claims ratio for Oriental was 237.76% for trucks and others. This means that of every Rs 100 the company earned, it paid out Rs 237 towards the third-party claim.
It has to dip into other portfolios to make good the loss. Obviously, the position is unsustainable.

The ratio was 232% for the entire public sector group, whereas it was 72% for the private sector companies. Once the Insurance Regulatory and Development Authority of India (Irda) revises the premium, there will be a sharp rise in third-party motor insurance premium. If the Irda draft guidelines on motor insurance premium rates for third-party liability cover are accepted, insurance premiums on trucks and buses would go up by 80% and for cars and two-wheelers by 10%. Data from Irda's Insurance Information Bureau show that that losses of both public and private sector insurers on their motor third-party insurance portfolio for commercial vehicles are going up consistently. In fact, Irda chief J Harinarayan said at a recent Ficci conference in the capital that general insurance companies have reported a combined loss of about R3,500 crore in the last fiscal on account of motor insurance claims.

He said that a final decision to increase the rates will be taken any time soon. “The liabilities in third-party have been immense and the rates for motor third party insurance must go up substantially. In view of the new liabilities, there must be nothing less than a 100% increase in rates,” says RK Kaul, chairman and managing director, Oriental Insurance. He adds that the Irda exposure draft that has proposed to increase the rates will ease the situation to some extent, but underlined that it was not enough. The Irda exposure draft is currently in the public domain and the authority will decide on the rates soon. While regulations on premiums in the non-life sector were withdrawn in 2007, third-party motor insurance continues to be regulated under the provisions of the Indian Motor Tariff Act.
The increase in rates has been on the cards for some time because of rising claims arising out of road accidents. Kaul explains that third-party motor insurance claims takes years years to mature, sometimes even eight years. “There is no time limit for filing the case as one can file it even five to six years after the accident, and once the case is filed, then it has its own procedures. In fact, motor third-party has always been bleeding the insurance companies portfolio as rates were always less than what they should have been.” To ensure that third-party motor insurance is not disproportionately loaded only a to certain classes of insurers, Irda constituted a motor pool five years ago to share the losses, which is currently running at a deficit.
Commercial vehicle owners have objected to the proposed steep hike in the third-party motor insurance premium and are advocating out-of-court settlements with accident victims.

Life insurers not in any rush for IPOs


New Delhi: It will be at least a year or two before life insurers plan to tap the primary market. They would rather work towards improving valuations since dramatic regulatory changes in the last one year have significantly hit their bottomline.

The regulatory changes have resulted in sharply lower business margins for unit-linked insurance plans and forced insurers to cut commission payouts. This has impacted the product and distribution strategy of life insurers and adversely affected their profitability forcing them to pare their operating expenses.
Amitabh Chaudhry, MD & CEO, HDFC Life says, “We are not in a hurry to go for an IPO. Our shareholders are very clear that we would go for it only at the right time which implies the right valuation that can be sustained based on our business performance.”
Last year, HDFC Standard Life and Reliance Life had evinced interest in raising funds through IPOs as and when the regulator finalised the guidelines for public issues.
The IRDA chairman J Hari Narayan had on Monday said these guidelines would be issued by April end. The life insurance industry has been saddled with high operating losses. According to a Boston Consulting Group report, the cumulative losses for private life insurers are in excess of Rs 16,000 crore in the past one decade with almost 75-80 per cent capital being used for funding operating losses rather than solvency requirement.
Rajesh Sud, CEO & MD, Max New York Life Insurance says, “The life insurance industry is currently going through the process of adapting their business model to suit the new environment created mainly due to change in regulations. Many private life insurance companies that started operations around a decade back are turning profitable. This is a time to consolidate to ensure a sustainable profitable growth. FDI is of critical importance to the sector at this juncture.”
There are 22 private life insurers in India besides state-owned LIC. The insurance regulator is likely to allow only those insurers in operation for at least 10 years with a track record of three successive years of profit to go public. Of the 22 insurers, 10 which have foreign joint venture partners, complete a decade of operation this year.
While ICICI Prudential Life, Kotak Mahindra Life, SBI Life, Met Life, Bajaj Allianz Life, Sahara India Life and Aegon Religare Life have reported profits, just five of them complete a decade of operations in India.
Industry sources said instead of IPOs, life insurers would prefer diluting their stake in favour of their foreign joint venture partners, if the FDI limit is hiked to 49 per cent from current 26 per cent.
G Murlidhar, COO, Kotak Mahindra Old Mutual Life says, “A rather tepid two years on account of global slowdown and regulatory changes in the sector has seen companies focusing on rationalisation and consolidation rather than growth. It will take at least a year for the situation to stabilise and for growth to return to the previous heady levels.”
With large investors like Warren Buffett having expressed interest in buying stake in one of the insurance companies once the FDI in insurance is hiked to 49 per cent, it is more likely that life insurers would explore the FDI route to raise capital rather than going public.

India to be among top 3 life insurance mkts


Mumbai: India's insurance sector, which is witnessing a rapid growth, is likely to touch about USD 400 billion in premium income by 2020, making the country one of the top three life insurance and top 15 non life insurance markets by 2020, according to a report.

"The insurance industry will continue to outpace the rapid economic growth to reach USD 350?400 billion in premium income by 2020 (approximately Rs 17-22 lakh crore), making India among the top three life insurance markets and top 15 non?life insurance markets by 2020," a report by Federation of Indian Chamber of Commerce and Industry (FICCI) and the Boston Consulting Group (BCG) has said.
The total penetration of insurance (premium as percentage of GDP) has increased to 5.2 per cent in 2011 from 2.3 per cent in 2001, said the report titled 'India Insurance ? Turning 10, Going on 20'.

Sunday, April 10, 2011

India should liberalise FDI in insurance, retail: US


New Delhi: The US on Thursday said India should further liberalise its foreign direct investment regime in sectors like insurance and multi-brand retail.

US companies that invest in India would be helped by allowing US firms to operate in some sectors that have so far been difficult for them to operate in (like) insurance,"
USA Economic, Energy and Business Affairs Additional Secretary Jose W Fernandez said.
Speaking at an Indo-American Chamber of Commerce Conference here, he added there are a number of sectors where US investment would be faciltated... multi-brand retail could be one.
At present, 26 per cent FDI is allowed in the insurance sector, while FDI is not permitted in multi-brand retail.
The Insurance Bill, when enacted, would allow raising the FDI cap for the industry to 49 per cent. However, it has been awaiting approval since 2008 as it was delayed by strong Opposition from the Left parties.
The industry ministry is in the process of evaluating the comments, which it has received on its discussion paper on liberalising FDI in multi-brand retail and defence sector.
Talking about Indian and American companies’ partnership in developing clean technology, Fernandez said, "India could be a wonderful place for the US to partner in developing clean technology, solar energy space and wind energy."
He added, a number of US companies are eager to work with Indian companies in this regard.
To attract investment and technological know-how for developing urban infrastructure, Fernandez said India needs to make reforms to increase transparency and predictability in investment climate, to ensure transparent bidding practices in line with global standards and to bring down barriers to trade and investment.
"I think it is one of the consideration (land record and transparent investment climate) that the US company or any company has in mind when it makes investment in India," he said.
He, however said, ...the US would like to be a partner in India's growth and stands ready to help.
The infrastructure sector requires an investment of a whopping $1 trillion in the 12th Plan, beginning next year (2012-17).

US wants India to liberalise FDI in insurance, retail


New Delhi: The US today said India should further liberalise its foreign direct investment regime in sectors like insurance and multi-brand retail.

"...US companies to invest in India would be helped by allowing US firms to operate in some sectors that have so far been difficult for them to operate in (like) insurance," USA Economic, Energy and Business Affairs Additional Secretary Jose W Fernandez said.
Speaking at an Indo-American Chamber of Commerce Conference here, he added there are number of sectors where the US investment would be faciltated... multi-brand retail could be one.
At present, 26 per cent FDI is allowed in the insurance sector, while FDI is not permitted in multi-brand retail.
The Insurance Bill, when enacted, would allow raising the FDI cap for the industry to 49 per cent. However, it has been awaiting approval since 2008 as it was delayed by strong opposition from the Left parties.
The industry ministry is in the process of evaluating the comments, which it has received on its discussion paper on liberalising FDI in multi-brand retail and defence sector.
Talking about Indian and American companies partnership in developing clean technology, Fernandez said, "India could be a wonderful place for the US to partner in developing clean technology, solar energy space and wind energy."
He added, a number of US companies are eager to work withIndian companies in this regard.
To attract investment and technological know-how for developing urban infrastructure, Fernandez said India needs to make reforms to increase transparency and predictability in investment climate, to ensure transparent bidding practices in line with global standards and to bring down barriers to trade and investment.
"I think it is one of the consideration (land record and transparent investment climate) that the US company or any company has in mind when it makes investment in India," he said.
He, however said, ...the US would like to be a partner in India's growth and stands ready to help.
The infrastructure sector requires an investment of a whopping USD 1 trillion in the 12th Plan, beginning next year (2012-17)

LIC posts 35% growth in Apr-Feb


         Public sector insurer Life Insurance Corporation of India (LIC) continued to maintain its market share for the 11-month period ended February 2011.LIC has notched up a total premium of R73,122 crore as against R54,320 crore reported during the same period in the previous financial year, recording a growth of 35%. On the other hand, private sector companies together recorded a meagre growth of 4% during the same period with a total premium of R30,756 crore. The insurance major notched a total premium of R5,986 crore in February 2011 and holds a total market share of 70.39%, according to a latest data.However, the ticket size (calculated on individual non-single premium basis) of LIC stood at R7,597 for the period ended February, the data said.

        Private sector companies together hold a market share of 29.61%. For the month of February 2011 alone the total premium notched up by the 22 companies was estimated to be around R2.891.50 crore, the data maintained.

        In total, life insurance companies together as an industry, reported a healthy growth of 24% for the 11-month period of the current financial year to R103,878 crore when compared with R83,891 crore achieved during the same period in the previous financial year.

        On the private sector side, except companies such as Bajaj Allianz, Reliance Life, Birla Sunlife, Met Life, Aviva, ING Vysya, Future Generali, Bharat Axa Life and Sahara Life, other companies reported a positive growth during the said 11-month period. Among the private sector, SBI Life is leading the pack with a total premium of R5,845.31 crore for the 11-month period ended February 2011 when compared with R5,266 crore achieved during the same period of the previous financial year, witnessing a growth of 11%. The company holds a market share of 5.63% as of February 2011. Next in the line is ICICI Prudential with a total premium of R5,710.54 crore (R4,972.23 crore) with a growth of 14.85% and with a market share of 5.5%.

Insurance firm fined Rs 2 lakh


 Delhi State Consumer Commission has ordered an insurance company to pay over Rs 2 lakh as damages to a man injured in a road mishap involving his Honda City car, dismissing the firm's contention that it was a case of drunken driving.

A bench of Justice Barkat Ali Zaidi and member Kanwal Inder, while upholding the Delhi district consumer forum's order, ordered New India Assurance Company to pay a total compensation of Rs 2,14,528 to vehicle owner Ravi Narang.
Narang had met the accident on national highway near Gurgaon in 2004. The mishap had resulted in injuries to him, besides damages to the car.
The company (Honda) workshop had estimated a loss of over Rs 7 lakh as damages, while Narang had claimed a loss of Rs 3.32 lakh from the insurance company.
The consumer commission asked the insurance firm to pay damages to Narang dismissing its appeal, which contended that he was drunk while driving the car.
The bench noted that none of the purported medical reports of the complainant, placed on record by the insurance firm, contained the name of the injured person or patient.
"Therefore how can it be said that they relate to the complainant. No affidavit has been filed by the doctor to prove these reports in evidence," the bench said.
"For these reasons, it can be safely said that these documents do not help in any manner to substantiate the contention of the appellant (insurance company) that the complainant was driving the vehicle at the time of accident in a drunken state and his case therefore falls under the Exception Clause of the Insurance Agreement," it said.
The company had contended that the 'Exclusion Clause' of the insurance policy stipulated that if the owner of the vehicle is driving vehicle in a drunken state, he is not entitled for insurance claim.

Raise FDI limit to 49% in insurance sector: SMC


New Delhi: Pitching for raising the FDI cap in insurance segment to 49 per cent, financial solution provider firm SMC Global Securities said the move would help the sector become a USD 65 billion industry by 2014.

SMC Global Securities said the current size of the domestic insurance industry is estimated at USD 45 billion.
The firm has urged the UPA government to "initiate serious deliberations" with all it's constituents to increase FDIs limit in insurance sector to 49 per cent from the current level of 26 per cent.
Raising the limit would help the insurance industry grow at a much faster pace as also facilitate larger foreign direct investment, the company's Chairman and Managing Director Mr Subhash Chand Aggarwal said.
"With 26 per cent foreign equity element of FDI's in insurance business, not many foreign players are keen to make a foray in it ever since this industry was opened up for a limited competition way back in 1999," he said.
He said negligible growth was witnessed in the last decade in insurance sector as far as foreign participation is concerned.
"If UPA government is able to garner support from its constituents to hike FDIs limit in insurance sector (at the earliest)...the size of insurance industry would jump up to over USD 65 billion by 2014," Aggarwal said.
A bill to raise the FDI limit in insurance sector from 26 per cent to 49 per cent is awaiting Parliament approval.

US upset with India's insurance laws


WASHINGTON: Foreign partners in the Indian insurance companies operate in an "extremely uncertain" environment due to snake and ladder like laws governing the sector, the US Trade office said. 
While an Insurance Laws (Amendment) Bill is pending with the Standing Committee of Parliament for increasing the foreign investment in insurance joint ventures to 49 per cent, an existing regulation requires that after completing 10 years of operation, overseas investment in such companies would have to be brought back to 26 per cent. 
Several of the insurance joint ventures, includingReliance Life are about to complete 10 years of operations in India. Whereas HDFC Standard Lifehas already completed a decade of business here. 
So, unless this provision is amended, passage of the Insurance Laws (Amendment) Bill allowing foreign equity to 49 per cent would be meaningless. 
The US Trade Office in its 2011 National Trade Estimate Report on Foreign Trade Barriers talks about this paradox in the Indian insurance laws. 
"While the Insurance Regulatory and Development Authority ( IRDA) said it plans to publish a clarification of these regulations, foreign investors continue to operate in an extremely uncertain environment," the US said. 
India first opened its insurance sector for foreign participation of up to 26 per cent in both life and non-life segment in 1999. A bill pertaining to raising FDI ceiling to 49 per cent in the sector is pending before Parliament. 
The Bill, when enacted, would allow raising the FDI cap for the industry to 49 per cent. However, it has been awaiting approval since 2008, as it was delayed by strong opposition from the Left parties during UPA-I government. 
"As with other sectors being considered by the government for greater FDI liberalisation, opposition party lawmakers are concerned that passing the Insurance Bill will result in foreign companies' holdings increasing significantly," the report said. 
Keen to enter the Indian insurance market, legendary investor Warren Buffett had also said during his recent visit to New Delhi that a foreign investment cap of 26 per cent in insurance sector here was a deterrent. 
Buffett's Berkshire Hathaway had recently forayed into the Indian non-life insurance sector as a corporate agent of Bajaj Allianz General. 
In India, besides, state-owned LIC, 22 private companies offer life insurance policies. While the general insurance sector has 21 players, which include four PSUs. 

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Let us fight unitedly against the insurance amendment act 2008 and frustrate the US design

Successful Campaign to Protect LIC


As per the decision  taken in the diamond jubilee year conference of AIIEA which was held in New Delhi in November, a wide campaign was undertaken  by the Insurance corporation employees’ union, Chennai division-I. After the decision to campaign was announced in the divisional executive committee there was widespread enthusiasm  among the comrades of the division.  The divisional executive committee decided to have a short and effective campaign. So the dates were decided as March 11-16, 2011. The campaign material was released by Sri.M.R.Kumar  Zonal Manager In charge, southern zone at a massive gathering of employees, officers, agents, development officers and policy holders on 11.3.2011. The Senior Divisional Manager of Chennai division-I Sri.M.Kannan was present. The Zonal Manager was in all praise of AIIEA for undertaking the campaign. First copy of the phamplet was received by Sri.Sridhara , Branch Manager, Corporation Bank, Anna Salai. The Sr.D.M greeted the meeting and praised the effort of  our union in protecting the LIC. Com.K.Swaminathan., GS,SZIEF greeted the meeting. Com.G.Jayaraman, president of divisional union presided  Com.K. Sridhar, Treasurer welcomed the gathering and Com.S.Ramesh Kumar GS,ICEU proposed vote of thanks. More than one lakh phamplets was distributed in the Chennai division area. 322 comrades participated in the distribution at 17 centres in Chennai after 5.00 p.m. out of which 156 were women comrades. Apart from our comrades around 80 agents also participated in the campaign. Around 30 agents from CBO.6 and around 30 agents from CBO.30 also participated. Officers of the various branches also participated in the campaign. Apart from these all branch units have also distributed the phamplets  during the lunch hour. Apart from these phamplets distribution, two well attended public meetings were held. One meeting was held on 14.3.2011 at Triplicane and campaign closing public meeting was held at MGR Nagar. Many women comrades attended the public meeting along with the general public. Com.S.Ramesh Kumar GS, ICEU, Chennai division-I and Com.L.Palaniappan and leaders from other faternal trade union addressed gatehering at Triplicane. In the MGR nagar meeting Com.G.Jayaraman presided and com.K.Swaminathan GS,SZIEF gave special address and other faternal trade union leaders also addressed. An art troupe of our comrades ComC.M.Kumar and Com.B.S.Ravi kumar performed skit at both the meetings. This campaign was the third such massive campaign undertaken by the ICEU, Chennai Division.I.

S.Ramesh Kumar
General Secretary.
ICEU, Chennai Division.I.