LIC officers strike over wage issue

The Federation of LIC class-I officers' Association has gone on a nation-wide strike on Thursday to protest against non-acceptance of their demands on the wage revision by the management of the Life Insurance Corporation.

Some officials had also gone on a hunger strike on Wednesday in Hyderabad and were forced to end it on police intervention.

"Except Mumbai, the strike has been successful in the rest of the country," claimed R Gunasagar, president of the Federation.

Prominent Congress leader Oscar Fernades is the chairman of the federation. Gunasagar said while the government is insisting 17% rise in the wage, the Federation is demanding the same hike as sixth pay commission.

"Our own management is even refusing to send our demands to the ministry of finance and is insisting that we should accept 17% hike like the banking industry did, That is not clearly acceptable to us," he said.

Gunanasagar said LIC only incurred 2.33% as administrative expenses and pays currently pay Rs 1000 crore as dividend to the government on its Rs five crore investment in 1956.

Gunansagar said the the wage package of employees of the LIC cannot be compared with that of the banking industry as latter has been given pension benifits over the 17% salary hike.

IRDA - SEBI in battle over ULIP’s, Industry expected to grow at 10%

IRDA and SEBI two regulators are locked in a battle regarding management of ULIP, a Unit Linked Insurance Plan. "Ulips globally are managed by insurance regulators and under no circumstance will we let Ulips to be taken over by SEBI," R. Kannan, a member of IRDA said in an interview.
SEBI's argument is that since Ulips generate a return on investment, they are similar to collective investment schemes such as mutual funds, which come under its jurisdiction.
Ulips are the most popular hybrid product as some private insurers reported that as much as 90% of premiums come from Ulips. Ulips accounted for new business premiums worth Rs35, 722 crore in the first nine months of the current fiscal. As a hybrid product with predominant premium investment in equities and bonds the returns on Ulips depend on the market value of the securities which is similar to mutual funds.
India's life insurance industry is expected to grow by around 10 per cent in 2010 over the previous year, mainly by improving efficiency but also by expanding in small towns and villages, as per industry experts. A better planned sales mix of unit linked insurance policies and more traditional endowment & term insurance plans would be a good bet.
In India, the life insurance industry was opened up about a decade ago with the dismantling of LIC's monopoly. The country has 23 life insurers with assets worth Rs10 trillion.

Life insurance employee strength down 34,000

18% reduction in workforce aimed at lowering expenses.
Companies may be back to hiring, but private life insurers saw their employee strength fell nearly 34,000, or 18 per cent, during April-December 2009. The cut was aimed at lowering expenses.
According to data collated by the Life Insurance Council, the number of employees declined to 152,874 at the end of December 2009 from 188,645 a year ago.
However, the number of agents increased by 7.59 per cent to 2.98 million during the period as against 2.77 million at the end of December 2008.
The staff strength fell despite an improvement in sales during the nine months ended December 2009. Income from new policies rose 25 per cent during the period.
Individual companies refused to disclose the number of employees on their payrolls.
"Due to attrition, we saw some reduction in our workforce. The numbers should be marginal since hiring also took place during the period," said Abhijit Gulanikar, chief financial officer, SBI Life.
"Insurers are focusing on profitability and cutting the non-functional workforce. Productivity also went up as the number of employees decreased," said GV Nageswara Rao, managing director and chief executive officer, IDBI Fortis.
"When people do not meet their sales target, they are forced to leave. Last year was a tough one as companies increased their sales target, focusing more on efficiency," added a senior executive of a life insurance company.
Cost reduction, driven by companies such as ICICI Prudential and HDFC Standard Life, was aimed at a quicker break-even. In a recent interview, ICICI Prudential Life Managing Director V Vaidyanathan told Business Standard the company would break-even earlier than the 2012 deadline it had set for itself.
Belt-tightening — which includes relocating offices, renegotiating rentals and even lowering expenses on stationary and electricity — is already showing results in the form of a lower rise in expenses. Operating expenses of 23 life insurers dropped to 10.14 per cent at the end of December 2009 compared to 12.24 per cent for 21 insurers a year ago.
"The drop in expenses was possible due to effective cost-cutting measures adopted by the industry. Companies curtailed operating expenses and rationalised their distribution channels, while managing an increase in total premium," said Life Insurance Council Secretary General SB Mathur.
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Life insurance industry may grow 10 per cent in 2010

India's life insurance industry is expected to grow by around 10 per cent in 2010 over the previous year, mainly by improving efficiency but also by expanding in small towns and villages, industry experts say. They also expect life insurers to rebalance their sales mix — unit linked insurance policies (ULIP) and non-ULIP. "We expect the industry to grow at an average of around 10 per cent. We do expect a slight balancing of portfolios with a shift towards traditional policies with ULIP contribution coming down to 85 per cent from the high 90s," Malay Ghosh, president, Reliance Life Insurance, told IANS.

Intimation to company in writing necessary for insurance claim
An insurance company is not liable for any deficiency of service if a policy holder fails to submit the information about the accident,
damage and claim in writing, a consumer court has held. "The oral approach to the insurance company for appointment of the surveyor and to determine the damages to reimburse has no meaning unless the required information of the accident, damage and claim are submitted in writing," the District Consumer Disputes Redressal Forum (Central) has said. The policy holder, Charanjeet Singh, approached the Forum, seeking insurance claim from New India Assurance Company Limited for his vehicle which suffered damage in an accident. The Forum dismissed the complaint on the ground that no surveyor could be appointed by the company to assess the insurance claim in the absence of claim form and without having any information of the accident. "Without the information of the accident and damage to the vehicle and in the absence of claim form, the company could not have appointed any surveyor to assess the damages," the Forum, comprising President B B Chaudhary, Members M Siddiqui and S R Agrawal, said. The Forum noted that the complainant failed to produce any medical evidence relating to the accident. "Singh's contention is not supported by any medical documentary evidence, which prevented him to approach the insurance company after he met with an accident. The vague plea has got no merit," the Forum said. Singh met with an accident in 2004. He claimed to have received treatment in GTB hospital. His insurance claim for damaged vehicle was repudiated by the company on the ground that they were not informed about it.

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.

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.

Insurance staff demand pay revision
Employees of the National, New India, United and Oriental Insurance Companies who are members of the Joint Action Committee of the employees and officers’ associations on Tuesday staged lunch-hour demonstrations at the United India Insurance Company’s regional office here demanding revision of wages pending since 2007. Leaders of the associations -- Ch. V.B. Sastry, K. Satyakumar, K. Gopalakrishna, Y. Sudhakar Rao, K. Vijayabhaskar Reddy addressed the employees.
IPO Guidelines Within 15 Days: IRDA
New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Frdiay said it would come with initial public offer guidelines for the insurance sector within a fortnight to allow companies to raise funds from the capital market.
Several private sector insurance companies, including Reliance Life, have shown interest in tapping the capital market to augment its resource base: PTI
“IPO guidelines would be issued in the next 15 days,” Insurance Regulatory and Development Authority (IRDA) member R Kannan told PTI.
IRDA, which has been working on the guidelines along with market regulator Securities and Exchange Board of India (Sebi), is likely to come out with a draft for public comments before issuing the final guidelines.
Several private sector insurance companies, including Reliance Life, have shown interest in tapping the capital market to augment its resource base.
The Government had proposed to ease the norms to allow companies to list after five years of operation, instead of the current 10-year norm.
However, Kannan said, “no decision has been taken on reducing the number of years before permitting insurance companies to go public.”
As per the Insurance Act, the promoters having 26% stake can offload equity after 10 years of operation of the company. The legislation also empowers the govenment to reduce the mandatory period.
The IRDA had already notified the disclosure norms, necessary for providing details about the operations and balance sheets on quarterly and yearly basis.
The IPO guidelines will deal with minimum norms that a company must fulfill before hitting the capital market.
The three essential steps for hitting capital market are — norms for correct valuation; disclosure of operating results and profit and loss account; and filing of Draft Red Herring Prospectus (DRHP).
Besides the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies. The general insurance sector has 21 players which include four state-owned companies.
Anil Ambani Group’s life insurance venture Reliance Life expects to tap the capital market with its initial public offer in the first quarter of next fiscal.
Reliance Capital, the holding company of Reliance Life Insurance, is currently waiting for the final regulatory guidelines on the issue from insurance regulator IRDA and the subsequent clearance from the finance ministry, Reliance Capital CEO Sam Ghosh had said.
Reliance Life could be the first life insurance company in the country to come out with an IPO once the guidelines are framed.