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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.

India may soon have regional insurance companies operating only in select locations and regions. In addition, irrespective of where they operate, all new entrants into the insurance industry would have to maintain a minimum capital of INR2 billion (US$31.4 million).

In its proposed amendments to the Registration of Indian Insurance Companies Regulations, the Insurance Regulatory and Development Authority of India (IRDAI) is asking new applicants to specify the city, region or concentration (rural/urban) that they will concentrate on, reported the Business Standard. Senior IRDAI officials said that they would like to have insurers in specific regions. “Prospective applicants need not open branches all across the country. They can have operations only in few cities, or rural or urban centres,” according to an official. At present, all insurers have an all-India presence though most business is generated only from a few cities.

For the regions, the options are north, south, east, west and central. Similarly, insurers can give details of which metropolitan city they wish to operate in, including Mumbai, Delhi, Calcutta or Chennai. Their rural, urban concentration can be pre-determined at the time of application for a licence with the regulator. “Out of the 50 plus insurers, each insurance company is strong only in a few locations and regions. Public-sector insurers have largely been dominating the rural areas. It will be beneficial for policyholders if there are new insurers only looking into specific regions,” said the chief executive of a private life insurer. However, some insiders said that the minimum capital requirement of INR2 billion could be a deterrent for small players entering as regional insurers.

India’s Jackie Chan has proved why no one comes close to what he pulls off, on and off screen. Like Chan, Bollywood star Akshay Kumar does his own movie stunts. And off screen, he leads the personal accident insurance list. He has recently been insured for Rs 35 crore under a personal accident policy purchased by Hari Om Entertainment and Sunshine Pictures for ‘Holiday’, according to an Oriental Insurance executive.

“This is the highest cover taken by a Bollywood star,” said the executive, who did not wish to be named. Unlike Kumar, Bollywood’s highest-paid actors, Shahrukh Khan and Aamir Khan, do not generally seek accident covers in their film contracts. Production houses take a cover of Rs 5-10 lakh for every member of the crew to cover medical expenses towards any shoot-related accident. Some years ago, actress Kangna Ranaut is said to have included a personal accident clause with a Rs 1-crore cover in her contract for ‘Queen’. Kumar’s recent hits include ‘Rowdy Rathore’, ‘Baby’, ‘Khiladi 786’ and ‘Special 26’, which feature him in action-oriented roles. He got hurt in 2013 while shooting the Vipul Shah-directed ‘Holiday’. Kumar has also got a personal accident cover for ‘Airlift’, shooting for which has just begun.

“The production house has taken a cover of approximateely Rs 20 crore as accident cover for Akshay Kumar,” said Sumant Salian, business head, media and entertainment, Alliance Insurance Brokers. The concept of insurance for movie stars is yet to catch on in Bollywood. In Akshay Kumar’s case, it is an exigency — he plunges headlong into risky sequences and insists on not using body doubles, something that has earned him the title, ‘Khiladi Kumar’

Indian Finance minister Arun Jaitley has said that the government is looking to significantly increase the insurance coverage in the country to 40-50% of the population, compared to 20% currently, relying on the low-cost insurance plans launched under social security initiatives earlier this month. This is the first time that the government has set a target for the three social security plans, which includes life insurance (Pradhan Mantri Jeevan Jyoti Bima Yojana), accident cover (Pradhan Mantri Suraksha Bima Yojana), and a pension plan (Atal Pension Yojana), reported the Times of India..

The schemes have attracted more than 76 million subscribers since they were launched on 9 May. The vast majority comprising 58 million opted for the accident insurance policy, while 18 million bought the life cover. As at 20 May, the low-cost pension plan attracted 78,600 takers. Mr Jaitley said that if the schemes have huge acceptability, “then we are going to see how they can be strengthened in future”