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The Indian Home Ministry has written to various ministries asking them to look at insuring critical assets. The insurance cover will help in reinstating the assets immediately after a natural disaster without the government having to arrange for unplanned expenditure. .

The ministries concerned include those overseeing the power, steel, water resources and aviation sectors, among others. At present, most government assets are not covered by insurance. This is because given the high total value, the assets would be uninsurable. Also, the cost of providing cover to iconic structures is high, reported The Economic Times. Given the limitations, the government is not seeking an “all risk” cover but rather insurance to compensate for the cost of reconstruction in the event of a natural disaster. .

“The Home Ministry has recently written to all central ministries asking them to explore the possibility of insuring their critical assets against natural disaster perils,” Mr R Chandrasekaran, Secretary General of the General Insurance Council, told The Economic Times. Some of these assets would include the Parliament building, electrical installations, water pipelines, ports, airports and railways. Many of these assets are large legacy assets which have never been valued. “In most natural disasters in India, the level of claims paid out is very low. This is because most losses are to government assets or to those living below poverty line,” said an insurance official. Sources said that several ministries have drawn up a list of assets and are estimating the cost of reconstruction.

More than 80% of Indians lack medical insurance cover, though there is expected to be increasing reliance on more expensive private healthcare for their medical needs..

Almost 86% of the rural population and 82% of the urban population are not covered by any scheme of health expenditure support, according to a report in the Deccan Herald citing the National Sample Survey Office which polled more than 333,000 people in a recent survey. The government was able to bring only about 12% urban and 13% rural population under its health protection scheme, the Rastriya Swasthya Bima Yojana and similar plans. .

In the absence of health insurance, 75% of people tap into their hard-earned savings while more than 18% borrow. “The private sector provides nearly 80% of outpatient and 60% of inpatient care. But the cost of private-sector health care is unaffordable for most Indians,” said Mr K Srinath Reddy, President of the Public Health Foundation of India. NSSO found that while private health care is four times more expensive than in government-run medical institutions, treatment of specific diseases costs four, five or even 10 times more in private hospitals.

The Competition Commission of India (CCI) has imposed a total penalty of INR6,710.5 million on the four state-owned general insurance companies for manipulating the bidding process initiated by the Kerala government for selecting a service provider for a government-sponsored health insurance scheme. .

The CCI acted following an anonymous complaint it had received against National Insurance, New India Assurance, Oriental Insurance and United India Insurance, alleging violation of the law, which deals with anti-competitive agreements, including bid rigging. A probe was carried out, that concluded that the four companies colluded with each other and manipulated the tendering process .

The insurers were alleged to have formed a cartel and quoted higher premium rates in response to the tender. The bid rigging was said to involve the Rashtriya Swasthya Bima Yojna (RSBY), a government-sponsored health insurance scheme for those living below the poverty line, for the 2010-11, 2011-12 and 2012-13 financial years. When deciding on the penalties, CCI noted that the case related to public procurement for social welfare schemes, the beneficiaries of which were poor families, and this was taken as an aggravating factor. .

CCI said that it would be appropriate to impose a penalty at the rate of 2% of the average turnover of the insurers for the last three financial years based on the financial statements filed by them. A penalty of INR1,628 million was imposed on National Insurance; INR2,510.7 million on New India Assurance, INR1,005.6 million on Oriental Insurance and INR1,566.2 million on United India Insurance. Sources said these insurers will offer their clarifications and appeal against the order.

The government is considering allowing 100% ownership by foreign entities in insurance intermediaries, including brokers, despite opposition from the Insurance Brokers Association of India (IBAI). .

Although caps on foreign investment in insurance intermediaries were not originally envisaged, the insurance regulator has applied the limit applicable to insurance companies to companies across the sector, reported The Times of India. This ceiling for foreign investment in insurers has been increased from 26% to 49% following an amendment to the insurance law in March. The rethink regarding intermediaries by the Insurance Regulatory and Development Authority of India (IRDAI) comes at a time when the government has allowed reinsurance firms to set up 100%-owned units in the form of domestic branches. Several international brokers are keen to follow their clients in India but are not interested in holding minority stakes..

One reason for considering 100% FDI for broking firms is that insurance broking is not a capital-intensive business and most of the work is advisory in nature. Even if the premium is sourced by a multinational broking firm, the policy is issued by a domestic insurance company. Another reason is that a foreign bank can invest up to 100% in an Indian private sector bank. Banks are allowed to distribute insurance products as corporate agents. IBAI has argued that a 100% stake by foreign entities in insurance intermediaries will shift control into the hands of foreign entities. However, foreign players argue that a higher foreign investment limit is required for them to be willing to bring in expertise and connectivity.

General insurance players in India believe that companies in the sector are likely to take a segmented or specialist approach based on their strengths, and offer products accordingly, over the next several years. .

“General insurers will need to specialise over the next 10 years. This will help build expertise especially with more and more online sales happening,” The Economic Times reported, citing Mr KG Krishnamoorthy Rao, Managing Director & CEO of Future Generali General Insurance. For instance, some non-life companies may function online primarily; some may specialise in certain geographical areas or specific products; while others may be boutique companies. .

Whatever the option that might be chosen, however, general insurance players will have to continue selling a few common products mandated by the insurance regulator like third party motor insurance. Industry observers feel that smaller companies or new entrants which adopt a specialist approach would gain market share. Mr Naval Goel, Founder & CEO of PolicyX.com, an insurance comparison portal, said: “Customers are looking for value from insurers, and to offer value companies will have to distinguish themselves. .

.” Many insurers might consider spinning off their health business as a standalone operation, he added. Already, companies like Reliance Capital and Aditya Birla Financial Services Group are exploring the possibility of setting up separate health insurance companies. “General insurance companies in India today try and sell products to all customer segments across all geographies. This would change as they migrate to what they can do best. This specialist approach would also help companies develop a deep understanding of specific fields and bundle their products and services to cater to specific needs. This will help the industry grow,” said Mr Rakesh Jain, CEO of Reliance General Insurance.

Non-life insurance companies in India lose approximately 6% of their revenue annually due to fraud, according to Mr Sanjiv Kumar Dwivedi, Vice President of fraud prevention and loss mitigation at Bajaj Allianz General Insurance. To stem such malpractices, non-life insurers are taking action. .

General insurance companies have been facing several suspicious claims, that include fake hospital bills, exaggerated claims and even fraudulent pathology lab reports, reported Business Standard. Mr KK Mishra, Managing Director and CEO of Tata AIG General Insurance, said that steps are being taken to build up a data bank of hospitals by the insurance industry and the Insurance Information Bureau of India to identify all hospitals across the country. .

He said that with numerous hospitals all across the country charging different rates, there are people who are out to make a quick buck through buying insurance. Mr Mishra said that Tata AIG General Insurance looks into the operating costs in a standard hospital. If an individual presents a much higher bill from an unknown place contrary to what is usually charged, the company will investigate the case. Mr Sanjay Datta, Head of underwriting and claims at ICICI Lombard General Insurance, said that non-life insurers also look carefully at regions where there have been past instances of fraud. “There are several pockets where such instances take place,” he said, adding that the incidence of fraud is higher in health and motor insurance.. .

Claims investigation teams in insurance companies are also getting sophisticated with insurers like Bajaj Allianz hiring forensic specialists and investigators, and medical officers in their teams. A study by the international consulting firm Accenture has found that 24% of respondents think that it is perfectly normal to overstate claim amounts. 11% of people with insurance feel that fabrication is also fine. Almost 92% of the people surveyed claimed they have come across fraud in some form or another. Insurers need improved legislation to combat fraud. Mr Mishra pointed out that currently, the Code of Criminal Procedure does not contain a provision which classifies insurance fraud as a criminal offence. The general insurance industry in India reported total premiums of INR847.15 billion (US$13.4 billion) for the financial year ended 31 March 2015.

Around 30% of people polled in a survey bought home insurance even though 75% of them were aware that home insurance is important, according to Bajaj Allianz General Insurance which carried out the survey. .

Around 1,200 people from major cities like New Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, and Pune, as well as smaller cities like Jaipur, Surat, Nagpur, Jalandhar, Chandigarh, and other towns, took part in the survey last month, reported the Press Trust of India. Of the 1,200 respondents, 60% were home owners while the remaining 40% were property tenants. .

Around 64% of homeowners felt that earthquakes and other natural calamities were the biggest risks their homes were exposed to, followed by fire (28%) and theft/burglary (8%). Among property tenants, 56% believed natural calamities were the biggest threat to their homes. Around 30% of them said that fire was a major risk while 14% cited theft/burglary. Overall, country-wide, home insurance penetration stands at 0.07%.

Hannover Re, the world’s third largest reinsurer, has decided to offer reinsurance cover for the Indian government’s low-cost accidental death and disability scheme, the Pradhan Mantri Suraksha Bima Yojana (PMSBY), to encourage insurance companies to participate in the scheme. .

The global reinsurer is in talks with several Indian insurers for this purpose, Mr Ankur Nijhawan, Managing Director of Hannover Re Risk Management Services India, told the Hindu Business Line. Having a reinsurance cover will encourage more Indian insurance companies to participate in the PMSBY scheme and improve its penetration in India, he said. Currently, state-owned general insurers are taking the lead in promoting PMSBY. .

The scheme offers a renewable one year accidental death-cum-disability cover of INR200,000 (US$3,120) and INR100,000 for partial permanent disability, to all savings bank account-holders in the 18-70 age group at a premium of INR12 a year per subscriber. This scheme is currently delivered through banks, including regional rural banks and co-operative banks. .

Asked about the viability for reinsurance given the low price of the cover, Mr Nijhawan said it would be viable given the size of the market. Hannover Re has also decided to set up a branch in India, its Chairman, Mr Ulrich Wallin, said on a visit to the country earlier this month. At present, foreign reinsurers operate service companies or representative offices in India. The insurance law, as amended in March, allows them to set up a branch.

India’s insurance regulator has asked the industry to make a concerted effort to rectify pricing anomalies by undertaking a scientific analysis of claims, so as to ensure adequate pricing.

Speaking at an insurance seminar earlier this week, Mr Suresh Mathur, Senior Joint Director of the Insurance Regulatory and Development Authority of India (IRDAI), said: ”We would be happy if the industry takes a look at this on its own though we monitor as a regulator.”

“It’s time the industry takes a serious view of the situation and brings a semblance of discipline and grace in the overall functioning of the insurance sector,” he said, according to the Press Trust of India. Insurers should also meet insurance penetration targets and broaden their servicing capabilities, he said.

A health insurance panel has proposed that increases in health premiums each year be linked to the Consumer Price Index-based (CPI) inflation rate and that any increase should be capped at CPI-plus-3%. .

The committee, constituted to examine the health insurance framework in India, tabled the proposal to the Insurance Regulatory and Development Authority of India (IRDAI), reported Business Standard. It said that any increase higher than the proposed cap should require IRDAI’s approval. According to the committee, the use of discount structures as a risk management tool to incentivise customers to actively manage health may be permitted.

At present, once a health product is launched by a general insurance company, the pricing cannot be changed for the next three years. IRDAI constituted the 11-member committee last December 2014, comprising representatives from private-sector and public-sector life and general insurers, apart from members from IRDAI and the General Insurance Council. The panel was tasked to look into products, distribution, financial matters, M&A and policyholders’ interests in the health insurance arena.