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India: Public Liability Insurance is the way to be

Posted on: March 16th, 2023 by hema kashyap No Comments

Public liability insurance provides cover for any personal injury or damage to the third party which can be attributed to the policyholder’s business operations. It covers damage caused to the general public, customers, or sub-contractor within business premises or claims of damage to others’ property involving the business. The aim of public liability insurance is to avoid costly litigations and stop insurmountable losses.

As per the report on Public Liability Insurance in India, India’s economic development and industrial growth will necessitate the pursuit of public liability insurance. This report provides a holistic overview of the rules and regulations governing liability insurance, its operability, and working both for disastrous public tragedies like 1984 Bhopal gas disaster and commercial liability of global organizations.

There is a need for non-life insurers to spread awareness of liability insurance and the inherent risks involved in any business activity. Develop public liability risk covers in line with market expectations and which aspect of the risk can be covered under such insurance. A high degree of focus is required to improve product coverage, claim conditions, and relief options for victims to improve the low penetration of liability insurance in India.
The report proposes • to make public liability insurance mandatory for all businesses and to fast-track justice and compensation for victims of non-industrial accidents

Turkey-Syria earthquake – Insurable losses exceed $ 4 bn

Posted on: March 15th, 2023 by hema kashyap No Comments

A high-intensity earthquake measuring 7.8 on the Richter scale devastated parts of Turkey and Syria on 6th February 2023. More than 33,000 people have died and innumerable losses on the economic front. Not just overall economic losses, it is very difficult to predict the economic losses which could have been covered with insurance, as on ground situation becomes clear. This earthquake has caused an estimated insurable economic loss of more than $ 4 bn, impacting the insurance sector.

Many structures and buildings in the region have been completely destroyed, with a good size of the population residing in temporary shelters or buildings prone to earthquake tremors. The Turkish Catastrophe Insurance Pool (TCIP) covers only residential buildings in the urban region, excluding commercial properties and loss of life.
Despite mandatory earthquake insurance cover, many residential properties are not insured, due to affordability. Presently, around 10.8 mn (53.90%) of about 20 mn residential properties in Turkey are covered for earthquake risk.
With insurable economic losses from the Turkey-Syria earthquake touching $ 4 bn or even more, the reinsurance part of TCIP could provide a little over $ 2 bn protection.

Further, local and international commercial insurers which provide insurance to industrial clients, for damaged factories and infrastructure like airports and ports are also majorly reinsured. The extent of claims is estimated to be insignificant for the global reinsurance market.

IRDAI reinstructs insurers to provide health cover to vulnerable persons

Posted on: March 2nd, 2023 by hema kashyap No Comments

India’s Insurance regulator has instructed all general and health insurers to offer specialized cover for persons with disabilities (PWD), HIV/AIDS patients, and those suffering from mental illness.

A circular dated 27 February 2023 mandates insurers to have a board-approved underwriting policy so that the above-mentioned categories of people are not denied insurance access on account of the above-stated disabilities and/or illnesses.

All general and standalone health insurers must launch and offer such products immediately. Insurers may determine the price of the product in compliance with health insurance regulations, for a renewable policy tenure of 1 year.

This is in response to a Delhi High Court hearing in December 2022 on the plight of affected people to advise insurers about designing and offering insurance products for persons suffering from disabilities, HIV/AIDS, mental illnesses, as well as for transgender people, and submit a status report before 17 March 2023.

Indian Insurance Regulator to launch a platform for Information Exchange to tackle frauds in Insurance

Posted on: February 20th, 2023 by hema kashyap No Comments

The Insurance Information Bureau (IIB) of IRDAI is preparing to go live with ‘Beema Satark’ a B2B platform, to alert the general and standalone health Insurers about fraudulent medical insurance cases. All insurance companies will be able to exchange information and gain from this fraud analytics platform of the Indian general insurance industry. It will start with health insurance claims and add motor insurance claims later.

Insurance frauds are on the rise

As per a survey, about 60% of Indian private insurers think that frauds in the life and health insurance are rising significantly, while a minority of 10% think it increased marginally. This survey of insurance frauds was conducted in July-September 2022, with top level management responsible for compliance in leading private Indian insurers.
Frauds are on the rise owing to a higher level of digitization, post-COVID working from remote, and weakening of controls. Data theft is emerging as a big risk while traditional frauds like collusion between third parties and insurance mis-selling continues.

About 40% of the participants across the life and health insurance segments highlighted Fraud Mitigation as the top most priority for the Board and management.

The survey noted that there is an urgent need for Indian insurers to work pro-actively for Fraud risk management framework. Strategic intervention from top decision-makers to mitigate frauds is essential by reviewing and constantly monitoring the insurer’s operational model.

Natural disasters caused $313 bn economic loss in 2022

Posted on: February 15th, 2023 by hema kashyap No Comments

Natural disasters, many driven by climate change, caused global economic losses of $313 bn in 2022, of which less than half was insured. Losses from natural catastrophes covered by the insurance sector amounted to $132 bn, 57% above the 21st-century average, leaving a global ‘protection gap’ of 58%.

While the number of catastrophic events such as floods and hurricanes rose – at least 421 individual events compared to an average of 396 since 2000, the protection gap was one of the lowest on record. It was relatively low due to the fact that many of the costliest disasters occurred in countries with mature insurance markets such as the US or Europe. In contrast, losses in less-covered regions such as Asia were well below average.

Hurricane Ian, which hit Florida in September 2022, was responsible for 75% of the global insured losses that occurred in the United States. It caused insured damages in a range of $50 and $55 bn from total economic losses of $95 bn. Hurricane Ian is the second most expensive natural disaster that the insurance sector has ever faced.

About 31,300 people died due to natural catastrophe events in 2022, of which about two-thirds were linked to severe heatwaves in Europe between June and July.

In Australia, insured losses linked to floods hit a record high of $4 bn as a weather pattern associated with wet weather called La Niña extended its impact into 2022 causing severe rainfall and flooding across the country.

Similarly, in Pakistan, the monsoon season caused 175% above-average precipitation from July to September.

Property reinsurance pricing rises by up to 20%

Posted on: January 6th, 2023 by hema kashyap No Comments

The property reinsurance pricing on loss free risk and CAT programmes in ASEAN and China varies from +15% to +20% risk adjusted, and even larger increases are seen in Taiwan and Korea, as per the”1st View Market Report” released on 1 January.

The report, outlining market conditions at key reinsurance renewal seasons—1 January, 1 April and 1 July—which are based on the real-time observations, also says that there has been an inconsistent application of deductible increases, primarily imposed on loss impacted placements.

Other findings were:
• A common feature is all peril coverage and wordings in existing hours clause have been largely maintained.
• Hardly ever, shortfall terms have been imposed on proportional and excess of loss contracts.
• Limited changes in proportional placements renewal; commissions changed by low single digits. However, there was limited additional capacity.
• Regional Retro deductibles increased substantially (mostly dropping first layers) and pricing was up across the board, however, access remained to worldwide capacity and coverage.
• Risk covers with existing CAT coverage were renewed with no additional restrictions.
• Pre-paid reinstatements shifted to paid for both risk and CAT contracts.
The January 2023 report indicates the conditions in specific markets in Asia, including:
• Loss participation clauses are now commonly in place – most triggered at 100% loss ratio with cedant participation between 30% and 50%.
• Excess of loss pricing increased and was dependent on loss record.
• Overall, deductibles remained unchanged although some cedants chose to have them increased to manage costs.

IRDAI stops publishing of ‘minimum rates’ in fire reinsurance treaties

Posted on: January 5th, 2023 by hema kashyap No Comments

The IRDAI has advised property insurers and reinsurers to stop including the burning costs rate as published by the Insurance Information Bureau (IIB) in their reinsurance treaties for fire and engineering risks. Starting April 1st, 2023, these costs are not to be embedded as “minimum rates” for risks in reinsurance treaties.

IIB rates are derived by estimating the expected losses for a policy based on previous year’s average, after taking into account claims inflation and change in exposure. As per IRDAI, such prescription by any reinsurer that effectively creates or reinstates a market (price) tariff is not according to the de-tariffed pricing regime presently and is distorting the level playing field intended to be provided by the Authority. The regulator suggests that treaty arrangements where IIB-published burning costs are taken as minimum risk rates does not reflect quality or loss history of individual risk and dissuade risk management along with the loss mitigation investments of insurance buyers.

The IRDAI has been propagating reforms in the non-life insurance sector for the ease of business for Insurers and to ensure choices for buyers/consumers of insurance and develop a free-market regime to foster sensible risk management and loss control.

Corporate agents can now be associated with up to 27 insurers

Posted on: December 17th, 2022 by hema kashyap No Comments

According to new guidelines issued by IRDAI, corporate agents can now be associated with up to 27 insurers – nine each in three branches – life, health, and general insurance. To increase insurance penetration, this step is taken which previously allowed corporate agents to market the products of one insurer from each of the three branches.

In general insurance, the number of insurance products is high and opening to nine insurers is particularly relevant in this kind of insurance. It increases choice. But the restriction on corporate agents in marketing retail and commercial lines of general insurance products for a sum assured not exceeding INR50m ($606,000) per risk continues.

For insurance marketing firms, besides increasing the number of tie-ups, the area of operation has been expanded to the “state” level from the “district” level, increasing the width as well as the depth of operation of Insurance marketing firms in the designated state.

4-7-8 Breathe

Posted on: June 9th, 2021 by hema kashyap No Comments

Breathe In Breathe Out is a phrase that we have heard many times by our friends and family in stressful times. The reason is simple, our breathe holds the powers to ease stress. When we deep breath, it sends a message to the brain to calm down and with that increased heart rate, fast breathing, and high blood pressure decrease making body feel relaxed.

The 4-7-8 breathing technique is a breathing pattern developed by Dr. Andrew Weil. The technique is based on pranayama and it helps practitioners gain control over their breathing.

How to do it?
Sit in a comfortable position and make sure to practice a good posture. Prepare for the practice by resting the tip of your tongue against the roof of your mouth, right behind your top front teeth. You’ll need to keep your tongue in place throughout the practice.

To use the 4-7-8 technique, focus on the following breathing pattern:
• empty the lungs of air
• breathe in quietly through the nose for 4 seconds
• hold the breath for a count of 7 seconds
• exhale forcefully through the mouth, pursing the lips and making a “whoosh” sound, for 8 seconds
• repeat the cycle up to 4 times

Dr. Weil recommends using the technique at least twice a day to start seeing the benefits sooner.
Benefits from consistent practice:
1. Stress Reduction
2. Better Sleep
3. Reduced anxiety
4. Decreased fatigue
5. Improved Digestion
6. Improved blood pressure
7. Improved symptoms related to breathing conditions such as asthma, COPD etc.


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Suez Canal blockage a huge loss event for global reinsurers

Posted on: March 31st, 2021 by hema kashyap No Comments

The blocking of the Suez Canal and the resulting disruption to global shipping is likely to cause a large loss event for the reinsurance industry. It is estimated that losses may easily run into hundreds of millions of euros.

The shipowner’s protection and indemnity club will probably face claims from the owners of the cargo on the Ever Given and of the other ships that are blocked in the Suez Canal for losses related to perishable goods and supply chain disruptions.
In addition, they may face claims from the Suez Canal Authority itself for loss of revenues. According to press reports, more than 300 ships are stuck at either end of the canal.

A large share of those losses will probably be reinsured by a global panel of reinsurers. It will add pressure to global reinsurers’ 1H2021 earnings—earnings that have already been knocked by catastrophe events such as winter storms in the US and flooding in Australia, as well as by additional coronavirus pandemic-related losses.

Last year, global reinsurers reported heavy declines in earnings due to paid claims and claims reserves related to the coronavirus pandemic. However, underlying performance improved due to significant price increases in non-life primary and reinsurance, and their capital positions remained very strong at end-2020. The sequence of catastrophe events in 2021 will put additional strain on commercial insurance and reinsurance markets, pushing prices even higher in an already hardening market.

Optima’s core group has more than 100 man-years of experience in insurance. Our experience has trained us in reading the fine print of insurance policies, understanding it and applying it for the benefit of our clients.

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