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Almost all insurance policies will be issued in electronic form with effect from 1 October this year, with insurance buyers required to have an e-insurance account (eIA) to buy or renew policies thence.

Most policies, including all motor insurance and overseas travel insurance policies, will only be purchasable in electronic form after September. From filling up the application form to making payments online to the issuance of the policy document, the entire process of buying insurance could soon be paperless. Maintaining and managing policy documents or records across multiple companies will also be done away with, as the policyholder will have access to a single-view platform. “More importantly, customers will no longer be vulnerable to being cheated by fraudsters fabricating and forging policies since digital policies will be authentic,” Mr Easwara Narayanan, Chief Operating Officer, Future Generali India Insurance told The Economic Times.

However, Mr S V Ramanan, CEO, CAMS Repository Services, said: “The response to the e-insurance account has been lukewarm so far. The reason being it’s still not well known in the market. The policyholder trusts the recommendation of the sales person or the insurer, and this hasn’t been their priority at the moment.” Customers will have to open an eIA with any insurance repository to hold the insurance policies in electronic form. Currently, there are five insurance repositories in India. Mr Nilesh Parmar, COO, Edelweiss Tokio Life, said: “In the immediate term, we do see some disruption on account of the mandatory issuance of e-insurance policies for all online customers. Convincing customers of the need to open an eIA account and the actual process of opening this account for the vast majority of customers who don’t have this account yet could lead to some challenges.”

Furthermore, there are still large areas of the country where this may not be possible. Mr Anil Chopra, Group CEO & Director, Bajaj Capital, said: “The extension of this (electronic policies) to small cities and villages and to the policyholders who are not Internet-savvy is challenging.” Mr Narayanan also said: “Companies may have to organise digital signatures, apart from initiating arrangements with repositories for opening electronic insurance accounts. These are not major challenges.”

The process of listing of four public sector general insurance companies will be carried out one by one and a “lot of action” is expected in this arena shortly, a top official has said.

“Modalities are being worked out and I think we should see lots of action on that front in the next few months,” Economic Affairs Secretary Shaktikanta Das said. He was speaking at a business summit, according to the Press Trust of India. In the Budget presented last February, the government announced that the four public-sector general insurance companies would be listed. They are New India Assurance Company, National Insurance Company, Oriental Insurance Company, United India Insurance Company.

Several private-sector insurers are also considering obtaining a listing, either directly or indirectly. Ahead of insurance IPO exercises, IRDAI last week released draft guidelines for listed insurance companies. As of now, no insurer is listed in India.

HDFC ERGO General Insurance has acquired L&T General Insurance, a wholly owned subsidiary of Larsen & Toubro, a move which will turn HDFC ERGO into India’s third biggest private-sector non-life insurer.

he transaction, an all-cash deal, is valued at INR5.51 billion (US$82.5 million), according to filing with the Bombay stock exchange. The deal was sealed last Friday. The acquirer is a 51:49 joint venture between HDFC and ERGO International (part of the Munich Re Group) and the fourth largest private sector general insurer in India before the acquisition. In December last year, ERGO increased its stake in the joint venture from 25.84% to 48.74% at a cost of INR11.22 billion. L&T General Insurance is among the few players operating in the Indian market without a foreign partner.

In 2013, a proposal to merge with Future Generali Insurance fell through. “While a foreign partner was subsequently found, the deal was shelved and so the top management decided it would be better to exit the business,” the Financial Express reported, citing a senior industry executive.

Market consolidation

Mr Deepak Parekh, Chairman of HDFC and HDFC ERGO General Insurance, said: “Considering the importance of scale in the insurance business, consolidation within the insurance industry is inevitable. This transaction marks the beginning of this consolidation phase. The acquisition will help HDFC ERGO further strengthen its presence in the market. The combined size and expertise will result in improved cost efficiencies in the merged entity and benefit policyholders and other stakeholders.” Currently, there are 29 players in the non-life space including four state-owned insurers.

State-owned GIC Re, India’s only local reinsurer, expects a $5-$7.5 million insurance claim in connection with the 12 May crash of an EgyptAir Airbus A320 in the Mediterranean Sea. The claim will relate mainly to passenger liability and damage to the airline.

“We have a 5.5% share (of the total claim) in the Egyptian airline,” a GIC executive told the Economic Times. “For us, the claim will come from two segments—hull and machinery, and passengers’ liability. This could come to $5-$7.5 million.” The flight carried 56 passengers and 10 crew members. Insurance companies are assessing liability claims, which depend on the nationality and profiles of passengers. XL Catlin was the lead underwriter for the ill-fated plane.

Twenty-five to 30 banks will soon start distributing the products of more than one insurer, according to Mr Nilesh Sathe, Member-Life of IRDAI.

Since last month, the insurance regulator has allowed banks to tie up with three life insurers, three general insurers and three standalone health insurers to distribute insurance products. Earlier, banks were allowed to have bancassurance arrangements with one insurer each in the life, non-life and standalone health insurance categories. Insurers, particularly those not owned by banks, are likely to see a major boost in insurance distribution, as a result, reported the Hindu Business Line. On Tuesday, Future Generali Life, which prevously did not have a bancassurance partner, announced a partnership with Saraswat Bank, which has a tie-up with HDFC Life for distribution of life insurance products. Last month, Future Generali Life announced tie-ups with 10 medium and small size banks, aimed towards increasing rural insurance penetration. Through these, the company will focus on its rural insurance and micro insurance portfolios.

Industry experts say that other non-bank-promoted insurers, such as Birla Sun Life, Reliance Life, Bajaj Allianz, Aegon Life and Shriram Life, are also likely to get into similar arrangements with leading banks. Mr Anup Rau, CEO of Reliance Life, said that insurers not promoted by banks are likely to be looked at favourably because there will be no conflict of interest. However, the process will take some time as it is not mandatory for banks to tie up with more than one insurer, he added. At present, most major public and private sector banks, such as State Bank of India (SBI), Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have stakes in insurance companies. Mr Arijit Basu, Managing Director and CEO of SBI Life, said that SBI has opted not to go for three insurance tie-ups. However, he said that in the next three years, the bank may look at multiple insurance partners as it gains more expertise cross-selling insurance products.

Insurers have also begun talks to tie up with recently licensed payments and small finance banks. Mr Tarun Chugh, Managing Director nd CEO of PNB MetLife, said the industry is likely to see the launch of simple over-the-counter products, which can also be bought online with the new payment banks. For example, private-sector life insurer Shriram Life Insurance is looking to expand its base in smaller towns. The company’s Managing Director, Mr Manoj Jain, told Business Standard: “We do not have a bancassurance partner. We realised that we since we missed the bus in tying up with banks earlier, we should look at small finance banks. We have identified two of them. “Shriram Life has taken stakes of around 3% in Ujjivan Financial Services and 5% in Utkarsh Micro Finance. Since they will be getting into multiple corporate agency model to sell insurance products, they will also sell our products. This will give us a level playing field.” he said.

Life insurers in India reported growth of 22.6% in total first-year premium collection to INR1,387 billion (US$21 billion) for the year ended March 2016 as compared to the previous financial year, according to IRDAI data.

Individual non-single premium collection increased by 8.6% for FY2015-16 to INR425 billion, reported Business Today citing the data. State-owned LIC continues to be the leader with a market share of 77%. LIC issued more than 20 million new policies as against 6.2 million policies issued by private-sector insurers for FY2015-16. Its first-year life business grew by 24.7% as against 17.6% for private insurers for the year.

LIC’s total first-year premiums for FY2015-16 stood at INR976.74 billion, including INR201 billion from non-single premium policies. SBI Life, HDFC Life and ICICI Pru Life remained market leaders among the 23 private-sector players with shares of 4.7%, 4.3% and 2.1% in total first-year business.

The general insurance industry has reported premium revenue of INR964 billion (US$14.5 billion), an increase of 14% for the financial year ended 31 March 2016, driven by motor and health insurance segments which are traditionally the largest segments of the industry. .

Data from the General Insurance Council shows that the four government-run general insurers reported premium income of INR477 billion or 49.5% of the total premiums posted by the non-life market. The 18 private-sector insurers reported INR397 billion of premiums, while two specialised operators – Export Credit Guarantee Corporation (ECGC) and Agricultural Insurance Company – netted INR48.3 billion and the five standalone health insurers reported INR41.5 billion.

“We have achieved total premium of INR964 billion in FY16, falling short of our ambitious target of INR1 trillion by a small margin,” General Insurance Council General Secretary R Chandrasekaran said. However, he said that after taking into account inward reinsurance business, the industry would have exceeded the INR1-trillion mark in terms of written premiums.

With diabetes affecting over 100 million or nearly 8% of the Indian population, Mumbai and the Delhi National Capital Region (NCR) lead in the number of diabetes-related health insurance claims in the country, according to a survey. .

Chennai, Bengaluru, Pune, Hyderabad, Kolkata, Coimbatore, Vadodara and Madurai constituted the remaining top 10 cities in terms of diabetes-related claims. These top 10 cities accounted for 62% of total diabetes-related health insurance claims, reported The Economic Times citing data from private-sector insurers. One reason is that the majority of these cities also rank among India’s most populous metropolises. Data from the insurers highlight several diabetes-related trends, particularly in those aged below 25. A report by ICICI Lombard shows that while most of the diabetes-related health insurance claims were previously made by people over the age of 60 years, over the last few years, youths under the age of 25 have also become claimants to such health cover.

Mr Ashish Mehrotra, Managing Director and CEO of Max Bupa Health Insurance, said: “The more serious concern of diabetes is among the below-25 age group, in which we have noticed a 22% increase in claims.” This increase was noted over the last five years. Max Bupa also said that while an average diabetes-related claim it handled amounted to INR53,739 (US$809) in 2014, last year the figure reached INR60,838. Bajaj Allianz General Insurance said it observed a 12.5% rise in the number of claims related to diabetes, with the highest claims being reported from those aged 56-65 years (30%) and 46-55 years (27%). The company also saw 5% of the overall diabetes-related claims coming from those aged below 25. In addition, there has been a 25% rise in the number of diabetes-related claims from the 25-35 age group and a 12% rise in claims from those aged 35-45.

The insurer of the Vivekanda Road flyover in Kolkata that collapsed last Month may not foot the bill for reconstruction if it is found that raw materials of inferior quality were used or there was gross negligence on the part of the contractor. The sum insured with the government-owned United India Insurance under a Contractor All Risk policy is INR1,646.4 million (US$24.7 million). The completion of the construction was already delayed by five years at the time of the crash.

An official of United India Insurance told Times of India that the company’s survey team had already visited the crash site twice but it would take some time to complete the investigation and assess the loss. He also indicated that the company is likely to seek technical help from institutions like IIT-Kharagpur or Jadavpur University, which has expertise in structural engineering. At least 26 people were killed and around 100 injured after about 150 metres of the 2.2 km-long Vivekananda Road flyover collapsed. A Contractor All Risk policy – mandatory for any flyover under construction – was taken out in 2009 by IVRCL which was awarded the flyover construction contract. According to the insurance official, the sum insured for the policy is INR1,646.4 million and the policy expires in November 2016. The initial construction cost for the flyover was INR1,640 million when IVRCL started work in 2009. The policy also has a third-party cover of INR250 million.

Elaborating on exclusions contained in the policy, the United India official added that there are three major exclusions in the Contractor All Risk policy. Insurance is not payable if there is any design defect; if it is found that there is a gross negligence on the part of the contractor and if inferior raw materials are used. “If the investigation reveals that the cement was not up to the mark, we shall not pay the amount for the damage because then it can no longer be called an accident. Then only third-party will be payable, and that too subject to a court award,” the official added. Questions have been raised about the strength of steel used in the pier and the inadequacy of joints in the construction. An inquiry has already been ordered by the West Bengal government to find out the causes of the collapse.

The project started in 2009 with a completion period of about two years. But after 65 months, only two-third of the total 2.2-km length of the flyover was completed, with several revisions of project completion time. The delay appears to be due to changes in the alignment of the bridge’s superstructure and underground utility services, according to a report in The Economic Times. The contractor was later asked to finish the remaining 24% of the project within only seven months.

The insurance regulator IRDAI has received applications from over 40 banks to sell the insurance policies of multiple insurers under new bancassurance rules that took effect from 1 April.

IRDAI Member-Life, Mr Nilesh Sathe, said that the banks include several which have their own insurance subsidiaries, reported Press Trust of India. There had been speculation previously whether banks with insurance subsidiaries would be interested to work with multiple insurers simultaneously, because they might not be keen to sell the products of competing insurers or because of exclusive distribution conditions. Last September, IRDAI announced that it would allow banks to tie up with multiple insurers under an open architecture. Under the new rules, banks can sell policies of up to three insurers in each of the segments— health, life and general. The previous rule allowed banks to form bancassurance arrangements with only one life, one non-life and one standalone health insurer.

Over 60 financial entities court India Post

Meanwhile, several insurance companies and top global financial firms Barclays, Citibank, Deutsche Bank, Western Union, Visa and domestic giants State Bank of India and Punjab National Bank are among over 60 companies that are in the queue to work with the payments bank arm of India Post. Insurers wooing India Post include HDFC Life, ICICI Lombard, ICICI Prudential, Bajaj Allianz, Kotak Life Insurance, Royal Sundaram and PNB Metlife, reported the Times of India. The financial institutions are attracted by the postal network of about 150,000 post offices across the country, including 130,000 in rural areas.

A large-scale modernisation drive has been taking place across these offices, including computerisation and the gradual rollout of banking solutions and ATMs. Telecom and IT minister, Ravi Shankar Prasad, who is also in charge of the Department of Posts, said: “With India Post having got a payments bank licence, there is a scramble to forge partnerships and alliances.” India Posts received in-principle approval from the Reserve Bank of India on 7 September last year for a payments bank to be set up within 18 months. The payments bank is likely to become operational by March 2017, said Mr Prasad.