HDFC Standard Life Insurance asked to pay Rs five lakhChandigarh: Insurance Ombudsman in Chandigarh has asked private insurer HDFC Standard Life Insurance to pay Rs five lakh with interest to an NRI complainant after holding the company responsible for mis-selling a policy.

"An award is passed with a direction to the insurance company to make payment of Rs five lakh with interest at rate of eight per cent from the date of complaint that is March 2, 2010," said Insurance Ombudsman (Chandigarh), Manik Sonawane in his order.

Mis-selling means deliberate, reckless or negligent sale of products or services in circumstances where the contract is either misrepresented, or the product/service is unsuitable for the customer's needs.

The complainant, Satnam Singh Randhawa, who is working as a driver in USA, had said in his complaint filed in 2010 that he bought life insurance policy from HDFC Standard Life Insurance under single premium mode in 2006 during his visit to India.

He said the agent of the company told him that it was a single premium policy but later on it was found that it was a yearly premium policy with Rs five lakh to be paid annually.

Even the company representative acknowledged during the proceedings that the proposal form was not for single premium policy and Rs five lakh was an annual premium under the said policy.

When Randhawa approached HDFC Standard Life Insurance, he was told that only Rs 2.70 lakh was payable which was not acceptable to him.

Complainant also accused the company of not delivering the policy bond despite several reminders.

The company representative was asked to produce the proof of premium reminder and lapse intimation of the policy sent to complainant that could not be produced, Ombudsman found.

"... during the course of hearing by complainant and representative of company, I am of the opinion that it is a clear case of mis-selling of policy.

"The policyholder is only 8th class pass and is working as a driver in USA and is neither adequately literate to know the intricacies of the policy nor he was explained about factual position. There was inordinate delay in communication with the policy holder.

"No sincere efforts were made by the insurance company in a time-bound manner and the case has been dealt quite casually," Ombudsman wrote in his order.

Notably, mis-selling of insurance policies top the list of complaints lodged by aggrieved customers with the Chandigarh Insurance Ombudsman as it is having over 2,000 complaints pending pertaining to life insurance and non-life insurance products.

Will look at picking up SUTTI stakes if asked, says LICMumbai: LIC today said it has not been approached by the government to pick up the latter's stakes in Axis Bank, L&T and ITC, which are currently held by the Special Undertaking of Unit Trust of India (SUUTI), but added if it is so asked, it will definitely look at it.

"As far as LIC is concerned, we have not been approached (to buy the government's stakes in Axis Bank, L&T and ITC). In case they approach us, we will definitely have a look at it," Corporation Chairman Dinesh Kumar Mehrotra told reporters on the sidelines of a capital markets summit organised by industry body Ficci here.

SUUTI, created in 2002 after the then UTI was wound up,

owns strategic stakes in three listed blue-chip entities: ITC (11.54 per cent), Axis Bank (23.58 per cent) and L&T (8.27 per cent).

Besides, SUUTI also owns significant stakes in unlisted firms such as the Stock Holding Corporation, in which it owns 16.96 per cent valued at about Rs 300 crore.

The government is planning to en-cash these holdings which are worth over Rs 40,000 crore, as part of its efforts at meeting the fiscal deficit target by divestment.

The plan is to sell the SUUTI stakes to an SPV. The SPV holding will not pledge shares but will borrow funds by way of negative liens, under which it cannot sell the shares without the permission of lenders and the government.

When asked about the 10 per cent equity exposure cap, Mehrotra said: "The corporation has been approaching the regulators and the finance ministry on this issue for quite some time. I think, both of them have taken it very positively. Hopefully, something should come and we will get some headroom".

LIC, which had bailed the government last March when the follow-on option of ONGC was bombed by picking up almost the entire stake worth over Rs 12,000 crore, plans to invest Rs 2.4 lakh crore this fiscal.

"We propose to invest Rs 2.4 lakh crore this fiscal and have invested Rs 65-70,000 crore so far," Mehrotra said, adding of the total investment, 10-15 per cent constitute pure equity investments out of which it has invested Rs 7,000-8,000 crore as of now.

ING to sell Malaysian insurance unit to AIA

HONG KONG/AMSTERDAM: Pan Asian insurer AIA Group Ltd has agreed to buy ING's Malaysian insurance operations for $1.73 billion in cash, handing the Dutch financial services firm its first deal in a nine-month drive to sell off Asian assets.

The sale of the Malaysian unit is expected to be followed soon by the divestment of ING's Japan, South Korea, Hong Kong and Thailand units, as the bailed-out Dutch financial firm offloads assets to repay 10 billion euros ($12.9 billion) in state aid received during the 2008 financial crisis.

For AIA, the purchase of the Malaysian operations marks its second M&A deal in less than a month, and gives it a leading position in the fast growing Southeast Asian economy.

AIA was spun out of U.S. insurer AIG in 2010 through a $20.5 billion IPO, and Hong Kong-based CEO Mark Tucker has been re-building the business after it lost agents and market share amid AIG's near collapse during the financial crisis.

It's a good deal and they are paying up to buy a good quality business and to expand into a rapidly growing market, said Credit Suisse analyst Arjan van Veen, describing ING's Malaysian business as the jewel in the crown.

AIA said it was paying a multiple of about 1.8 times embedded value for the Malaysian business, compared with AIA's own multiple of 1.5 times. Embedded value is a common measure for insurance companies and includes the present value of future profit from long-term insurance contracts.

This is immediately accretive to earnings. It is cash positive, AIA Chief Executive Mark Tucker told reporters on a conference call on Thursday.

Van Veen estimated the deal would add 5 percent to AIA's earnings per share.

The deal, which confirmed a report by Reuters on Wednesday, marks ING's first sale after it announced plans to auction its Asian insurance operations in January as part of a global asset sell-off programme.

ING originally wanted to sell its entire Asia insurance operation, with a book value of 6.1 billion euros, to one buyer but said it was willing to split up the business if it could raise more money that way.

Today's announcement is the first major step in the divestment of our Asian insurance and investment management businesses and shows that ING continues to make steady progress in the restructuring of our company, said Jan Hommen, chief executive, in a statement.

STRONG DEMAND FOR SOUTHEAST ASIA

ING's Southeast Asian operations attracted bidding interest due to the region's rapid growth potential. Life premiums in Malaysia are forecast to grow at 5.5 percent next year, compared with a world average of 3.7 percent, according to Swiss Re estimates. The race to buy ING's Japan, Hong Kong and much smaller Thailand operations is still on, with Canada's Manulife Financial Corp and Hong Kong business tycoon Richard Li in the running, a source told Reuters earlier.

KB Financial Group is in advanced talks to buy ING's South Korean operations, sources have told Reuters.

AIA said the Malaysian deal, which is subject to regulatory approval, would boost its ranking in Malaysia to No. 1 by total premiums.

It's an excellent strategic fit with AIA and it plays directly to our corporate strengths and priorities, Tucker said. Clearly this is one of Southeast Asia's most attractive growth markets.

The deal would also strengthen AIA's bank distribution channel, an area analysts believe AIA needs to beef up. The acquisition would be funded through internal cash resources and debt financing, AIA said.

AIA also announced a 22 percent rise in its value of new business (VONB) to $300 million and said its VONB margin had increased to 42.6 percent, up 11 percentage points from the same period a year earlier.

Last month, AIA agreed to buy British insurer Aviva Plc's  Sri Lankan operations for $109 million..

ING's Malaysia business sells life, general, and Islamic insurance products and has about 1,200 employees and over 1.6 million customers. ING said it expects a net gain of about 780 million euros from the transaction, which is expected to close in the first quarter 2013.

Complaints: Insurance mis-selling tops

Chandigarh : Mis-selling of insurance policies and delay in claim settlements top the list of 2,341 complaints lodged by aggrieved customers with the Chandigarh Insurance Ombudsman.

"We have received maximum complaints against insurance companies pertaining to mis-selling of insurance products followed by delay in settlement of claims," an official of Insurance Ombudsman said here. Out of pending 1,544 complaints with regard to life insurance, about 80 per cent complaints are against private life insurers, he said.

Chandigarh Insurance Ombudsman has jurisdiction over Punjab, UT Chandigarh, Jammu and Kashmir, Himachal Pradesh and Haryana.

"There are maximum cases in which insurance customers have complained that they had been sold policies by saying that it was single premium 'Fixed Deposit' scheme with high returns.

"But to their utter shock, customers found from the policy (document) that they would now have to pay premium for several years, rather than paying once. Such kind of cases fall in the category of mis-selling," official said.

It also came to notice through complaints that customers were deliberately being denied of the 'free look' period option by unscrupulous agents so that customers were left with no other option than continuing with the policy.

"There is a Free Look period of 15 days given by the insurance companies whereby customer can return the policy within 15 days from the date of receipt of insurance policy," official said.

Delay in settlement claims and non-issuance of insurance documents after payment of premium are other types of complaints which were lodged by customers.

SBI Life told to distribute excess payments to policyholders

New Delhi: Insurance sector regulator IRDA has directed SBI Life Insurance Company to distribute the "wrongful" component of administrative charges it paid as reimbursement of group expenses to commission agents to the members or beneficiaries of the concerned policies.

As per the guidelines, life insurers are not allowed to pay towards management expenses, documentation expenses, profit commission, bulk discount or any other payment to the agent, corporate agent, group organiser or group manager.

SBI Life Insurance had made certain payments towards reimbursement of group administrative expenses to various master policy holders, which were in "violation" of IRDA guidelines and for which it was imposed a penalty of Rs 70 lakh in July, 2011.

"For this purpose (distribution), recalculate the premium chargeable for each member of each Group Insurance Scheme of the Life insurer without taking into consideration 20 per cent of premium that is paid to Master Policy Holders," Insurance Regulatory Authority of India (IRDA) said in its directive.

"Distribute the wrongful administrative charge amongst the respective members/beneficiaries of each Master Policy by way of refund...," it added.

The schemes in question included 'Super Suraksha' policies on home, car and tractor loans.

The regulator said these payments to master policyholders were not in the interest of the general policyholders.

IRDA directed SBI Life to identify the member or beneficiaries for each master policy, against which reimbursement were made towards administrative expenses as a

percentage of premium.

IRDA said the directives should be immediately initiated and be completed within six months.

SBI Life Insurance is a joint venture between State Bank of India and France's BNP Paribas Cardif. SBI owns 74 per cent of the total capital, while the French insurer owns the rest.

IRDA slaps penalty of Rs 76 lakh on Metlife

New Delhi: Insurance regulator IRDA has imposed a penalty of Rs 76 lakh on Met Life India Insurance Company for violation of various regulations, including gaps in policy administration system.

"...I hereby direct the insurer (Met Life) to remit the penalty of Rs 76 lakh, by debiting share holders' account ...," the order signed by IRDA chairman J Harinarayan said.

Among 42 charges against the insurer, one was releated with floating contests for the referral partners and expenses incurred.

IRDA found that "there are 5 instances of such wrong payments" and imposed a penalty of Rs 5 lakh for each instance amounting to Rs 25 lakh.

One charge related with defects in the policy administration system resulting in wrong unitisation of premium in respect of Unit Linked Policies.

On this count, IRDA said: "...the serious gaps in the defective policy admin system are considered as a serious violation impacting the financial interests of policy holders and under powers vested in the provisions of Section 102 of the Act a penalty of Rs 20 lakh is imposed for this violation".

Three PSU insurance firms get new CMDs

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Mumbai: The Central government has effected a top-level reshuffle among the CMDs of public sector insurance companies on Thursday. G Srinivasan, CMD, United India Insurance who has been at the helm of the company for the last four years has been shifted to head the largest general insurance company — New India Assurance.

Srinivasan belongs to New India Assurance and is the senior most CMD among the heads of state-owned general insurers.

Miland Khrat, acting CMD of Agriculture Insurance Company (AIC), will succeed Srinivasan at United India Assurance.

PJ Joseph, general manager, United India Assurance who was earlier shortlisted as a candidate to be promoted to head a general insurer has been posted as the new CMD of AIC.

The government has issued the letters for the new appointments by Thursday evening. It is almost after a year that New India Assurance would function with a full-time chairman and managing director

ICEU Chennai Division-I conference Photos(13.10.2012/14.10.2012