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The Indian insurance regulator, seeking to protect consumer interests, has made it mandatory for agents to provide full details in a transparent manner when they attempt to persuade policyholders to shift to another life insurance company.

The Insurance Regulatory and Development Authority (IRDA) said in an exposure draft  that “no life insurance agent, insurance intermediary or an insurer is permitted to replace a life insurance policy, except, if it is in the interest of the policyholder”.  The move is also to  discourage intermediaries from persuading customers into lapsing on or surrendering an existing life insurance policy “with the intent of canvassing or soliciting a new life insurance policy on the same life”.

The guidelines envisage the full disclosure and transparency of information to the policyholder to avoid possible misrepresentation as to the financial consequences of replacing an existing life insurance policy, the Press Trust of India reported, citing IRDA.

“It is also envisaged that these guidelines would encourage fair market conduct and fair business practices amongst life insurers and insurance intermediaries,” the regulator added.

The draft said: “Every insurance intermediary or an individual agent would make every reasonable effort to keep in force the existing life insurance policy.”

Replacement, if required, would be subject to certain conditions, including obtaining written consent from the prospect to replace existing policies. There is also a need to obtain the particulars of all existing life insurance contracts of the prospect, and details of those policies that are proposed to be replaced.

Agents also have to notify the existing insurer whose policies are proposed to be replaced along with the particulars of the policies. The agents also have to enclose a copy of the consent of the prospect 15 days prior to submitting new proposal forms, said IRDA. In addition, they have to submit the proposal form to the new insurer whose policies are to replace existing life policies after the expiry of 15 days from the date of notifying the old insurer.

The Japanese and South Korean football teams, the only Asian teams among 32 teams worldwide taking part in the FIFA World Cup tournament in Brazil, have a total insurable value of GBP158 million (US$268 million), according to Lloyd’s.

The Japanese team, which ranks higher in the World FIFA rankings, has a total insurable value of GBP92.8 million, compared to the South Korean team’s GBP65.2 million. The average player value for the Japanese team is GBP4 million compared to GBP2.8 million for the South Korean footballers.

Lloyd’s has predicted that based on insurable value, Germany has the most expensive team competing in the 2014 FIFA World Cup and therefore should come away with the prize in Rio. Its total insurable value is GBP641.2 million.

A snapshot of the research shows that after Germany, the three most expensive teams in terms of insurable value are Spain, England and Brazil in descending order. The total insurable value for the Spanish team is GBP590.1 million; England, GBP550.1 million and Brazil, GBP448.3 million.

Mr Marco Castro from Lloyd’s Brazil said: “It is incredible to see how much some of the teams playing in Rio are worth – the top three, Germany, Spain and England – are worth more than GBP1.7 billion collectively. This is more than the bottom 20 teams combined. The total collective value of all 32 teams is estimated at GBP6.2 billion.

Lloyd’s released the research with the Centre for Economics and Business Research (CEBR) that ranks each team in the FIFA World Cup based on the collective insurable value of each country’s players.
CEBR used players’ wages and endorsement incomes, alongside a collection of additional indicators, to construct an economic model which estimates players’ incomes until retirement. These projections formed the basis for assessing insurable values by player age, playing position and nationality.

The research was supported by Sporting Intelligence, which provided anonymised footballer salary data for each of the 32 teams participating in the 2014 FIFA World Cup, after the finalisation of their 23-man squads.

Lloyd’s has predicted a Germany v Spain final. Spain, which is the defending champion, lost 5-1 to Holland last Friday. However, Spain’s chances of winning the World Cup have not been written off yet. The World Cup competition, which began on 12 June, ends on 13 July.

Health insurers in India are seeking to popularise recharge health option plans in a bid to increase sales.

Under a recharge health plan, if the person insured exhausts his or her total sum insured during a particular year, the plan allows reinstatement of the sum insured. The reinstated plan can be utilised in for a small charge. However, insurers add exceptions to recharge plans like prohibiting policyholders from carrying forward the reinstated sum insured or claiming benefits on account of a previous illness for which the sum insured had been exhausted, reported the Times of India.

“We have introduced the recharge benefit in our newly launched Healthcare Supreme Plan. The advantage for the insured is that he or she has some cover even if the sum insured gets exhausted during a particular year. Otherwise, he or she would have to wait till the next year,” Renuka Kanvinde, associate VP, health insurance, Bajaj Allianz General Insurance said.

Other insurers are making their recharge plans more attractive. Apollo Munich’s Optima Restore benefit launched last year has a multiplier benefit under which the company increases the coverage by 50% the following year and doubles it the year after if customers do not draw on their plans. “Optima Restore has evolved as the fastest growing product in our portfolio, and last year it accounted for about 30% of our total retail book,” Mr Antony Jacob, CEO of Apollo Munich Health Insurance, said.

Insurers state that such plans can turn out to be economical in the face of rising medical inflation which currently stands at 15%.

Cigna TTK Health Insurance has a restoration benefit under all its plans. “Customers looking for sufficient cover at reasonable pricing will go for policies with a recharge option.

“A restore/recharge option makes the health cover more comprehensive especially when you do not have any back up health cover. Persons who can bear some amount of their healthcare costs but are looking to fund the additional risks through an insurance plan will opt for top-up/deductible plans,” Mr Sandeep Patel, Managing Director & CEO of Cigna TTK Health Insurance, said.

The Agriculture Ministry will revamp the crop insurance scheme with focus on increasing crop-based income for farmers rather than insuring them against crop losses.

This means that the government has decided to immediately stop the current crop insurance scheme – the Modified National Agricultural Insurance Scheme, launched only last year. According to official sources, this existing scheme requires the government, farmers and the private companies to pay the money for insurance but the system is too complicated and difficult for the farmers to get an income in case of crop failure, reported Business Standard.

The major issue with the scheme is that farmers get the insurance money if there is a total crop loss. If there is a crop loss for a single farmer getting the money is not feasible most of the time, officials said.”

The existing scheme does not treat an individual farmer as a unit when providing insurance compensation. It treats a village or a group of villages as a unit in the compensation formula and it invariably tends to benefit big and medium farmers.

Officials say that the revamp will focus on simplifying the procedure for farmers to receive the money in the event of the crop failure of a single farmer.  All farmers, including sharecroppers, tenant farmers, farmers enrolled in contract farming, groups of farmers serviced by fertilizer companies, pesticide firms, crop growers, and self help groups are expected  to be eligible for insurance cover. It will be also made available for food crops, oilseeds and annual commercial/ horticultural crops.

Agriculture Minister Radha Mohan Singh said that the change in the crop insurance plan will  take into account the average income of farmers in the last 5-7 years in devising a compensation scheme. The central government will bear the burden of the premium for insurance of average income, said Mr Singh adding: “Farmers will take interest in agriculture only when their investment is guaranteed.

Raising the foreign investment cap in insurance companies from 26% to 49% is inevitable, for the insurance industry to grow, according to the former chairman of the Insurance Regulatory and Development Authority (IRDA), Mr J Hari Narayan.

Mr Hari Narayan, who was appointed as a chairman of IRDA in 2008 and retired from the post in February 2013 after completing his term of five years, said that this is because there will not be enough capital available to fund the expansion of the insurance industry unless the foreign investment cap is raised.

In an interview with the CNBC-TV18 network, he said that there are two other reasons why the ceiling should be raised. He said: “One is, by increasing the FDI levels to 49%, we can straightaway expect an inflow of around US$1-1.5 billion or something of that order, and that will help boost our foreign exchange reserves.”

Secondly, capital of US$1.5 billion would be released from investors who have pumped INR250 billion (US$4.22 billion) worth of investments into the industry. “So that amount of fresh capital will be available in the hands of entrepreneurs who would then invest in various other opportunities which they see is appropriate,” he said.

Dismissing concerns that a foreign investor with a 49% stake could control an insurance company and thus the lifetime savings of a large number of Indians, Mr Hari Narayan said that insurance regulations are very strong in India.

“In the insurance industry, what we really regulate and regulate very closely is the availability of assets to back the entire liability of the insurance companies …This is true for the life industry and is also true for the non-life industry. And not only are the assets fully protected and carefully assessed with regard to the liabilities but in India, we also require insurance companies to maintain a margin of 1.5 times over their liabilities at any and all points of time. So, the question of anybody taking away the assets or going away just does not arise. The question of a Lehman-type collapse happening in the insurance industry just does not arise,” he said.

Speaking at the same interview, Mr Kshitij Jain, Managing Director and CEO of Exide Life Insurance (formerly known as ING Vysya Life), said: “ I think the industry over the last 12 years has attracted over INR330 billion of capital across all the private life insurance companies and I think it is an openly known fact that over the next five to 10 years, the industry requires as much, if not more, in terms of fresh capital to be able to fund its growth and expansion.”

Asked whether foreign players would flood into India when the foreign investment ceiling is raised to 49%, Mr Jain said: “Perhaps not. But in the mid to long-term, we would certainly be in a situation where a lot of foreign insurers should be very keen to invest in this market because over the long-term, our market continues to have very strong fundamentals and continues to be a very attractive space to be in.”

Mr Hari Narayan, noting the level of investment in the insurance industry in India to date already, added: “With regard to new insurance companies coming up, no, I don’t think so, I don’t think there is such an appetite at the moment.”

The Finance Ministry is currently considering an increase in the foreign direct investment ceiling in the insurance sector to 49%, subject to some restrictions including capping the voting rights of foreign shareholders.

The odds of the South Korean football team advancing to the last 16 teams in the World Cup tournament in Brazil currently stand at 55%, higher than the 48% predicted just prior to the same event in South Africa four years ago, according to the local insurance industry.

South Korea’s chances of making it to the quarterfinals and semifinals are forecast at 18% and 13% respectively, also higher than the odds of 16% and 6% laid out in 2010, reported the Chosun Ilbo.

Ahead of large sports events, insurance firms often forecast the likely performances of participating teams and individuals. This is because many businesses take out extra insurance policies to cover additional marketing costs during the events. For example, some businesses offer to provide 500 people with gift certificates worth KRW500,000 (US$489) each if South Korea advances to the quarterfinals.

Insurance companies base their premium rates on probabilities and statistics, with reinsurers usually calculating the probabilities.

Korean Re attributes South Korea’s improved chances in Brazil to the fact that the team has more favourable conditions now than it did four years ago. Statistics have shown that Russia, Belgium and Algeria, which the Korean team will face in the initial group stage, are weaker than its group rivals  four years ago. The 2014 World Cup takes place from 12 June to 13 July.

The non-life insurance sector in India is expected to see a pick-up in growth in gross premiums in the current financial year ending 31 March 2015. Growth is forecast to be 15%, higher than the 12% reported for the financial year ended 31 March 2014.

The market has slowed compared to previous years. For instance, non-life growth was 19% in FY 2012-13 and 23% in FY 2011-12.

“The slowdown was driven by lower economic growth, reduced car sales, and lower hiring by companies which drive the corporate health insurance business. The growth momentum is likely to pick up in the second half of this year since the economic slowdown has bottomed out last year,” Mr Bhargav Dasgupta, managing director and chief executive officer of ICICI Lombard General Insurance, told the Financial Chronicle.

“I expect the growth of the non-life insurance sector to be around 15% in the current year driven by improvement in economic growth,” he added.

A senior official of state-owned Oriental Insurance said: “The non-life sector would grow by 15% in 2014-15 driven purely by health and motor insurance businesses.”

For FY 2013-14, gross premiums collected by all general insurers rose by 12.23% to INR 775.38 billion (US$12.88 billion), according to the Insurance Regulatory and Development Authority (IRDA). The four state-run general insurance companies collected gross premiums of INR 432.92 billion, an increase of 9.86% from a year earlier. The performance gave them a 55.8% share of the non-life market, marginally lower than the 57% market share chalked up for FY 2012-13.

Private-sector insurers saw business growing at a faster rate than for their state-owned rivals. They collected gross premiums of INR 342.46 billion for FY 2013-14, that represented an increase of 15.37% over the previous year.

For FY2013-14, motor insurance accounted for 46% of total gross premiums to remain the largest class of business, followed by health insurance which contributed 26%. Fire and engineering insurance had a 14% share, and was directly affected by the slowdown in the economy, postponement of capital expenditure and new infrastructure projects.

The life insurance industry in India saw an 11.6% rise in new business premiums for the financial year ended 31 March 2014 to INR 1,200 billion (US$20.25 billion), with the country’s only state-owned life insurer reporting a jump in such premiums while private-sector insurers suffered a decline.

The government-owned Life Insurance Corporation of India (LIC), which is also the country’s biggest life insurer, reported an 18% rise in new business premiums to INR901.24 million for the financial year, compared with FY2012-13. Private life insurers witnessed a 4% drop in new premiums to INR295.17 million. LIC increased its market share in first-year premiums by four percentage points to 75.33% in FY2013-14 from 71.36% in FY2012-13.

Lower renewal premium growth and lower product margins due to regulatory changes affected the profitability of some private life insurance companies in FY2013-14, reported the Financial Chronicle citing data from the Insurance Regulatory and Development Authority (IRDA).

The country’s largest private life insurer – ICICI Prudential Life Insurance – reported a 5% growth in net profit  to INR15.67 billion for FY2013-14. Bajaj Allianz Life Insurance saw its profits fall by 20% to INR 10.25 billion for the same financial year while Reliance Life  reported a 6% slide in net profit to INR 3.59 billion.

However, SBI Life Insurance posted a record profit of INR7.4 billion for the financial year ended  31 March 2014, an increase of 19% over the last financial year due to operational efficiency.

Mr Sam Ghosh, group chief executive officer of Reliance Capital, told Financial Chronicle: “The profits are slightly lower than FY13 as surrender profits have declined. Excluding surrender profits, profit before tax rose to INR2 billion in FY14.”

IRDA has revamped rules for unit-linked insurance plans (Ulips), traditional and variable insurance policies. It reduced the high surrender penalties, which had helped life insurers report good profits in previous years. Irda also cut charges and commissions levied on insurance products to improve returns to customers.

Insurance companies in India have raised premiums for hydropower projects across the country after flash floods last June in the northern state of Uttarakhand that led to huge claims.

Insurers like National Insurance, United India Insurance and Oriental Insurance have raised premium rates  for such projects, reported Economic Times citing industry sources. Insurance contracts for most hydroelectric projects are renewed annually during the first quarter of the financial year.

“Last year’s Uttarakhand tragedy has completely changed the risk perception of hydropower plants for insurance companies. In response to tenders of power companies seeking quotation for reinsurance, insurers have asked for double or triple the earlier rates for power projects,” a senior power ministry official told Economic Times. The premium amount varies for each project depending upon factors like its location, size, company’s background and extent of risk coverage.

An executive with National Insurance said that his company was forced to hike premium rates because insuring hydroelectric projects has become riskier. “The projects get damaged every year during the monsoons. But damage claims during last two years have risen sharply. Last year’s Uttarakhand episode has compelled us to change our assessment.”

Uttarakhand sought INR138 billion (US$2.3 billion) from the central government for reconstruction and relief work as a result of the floods which killed around 5,700 people. Insurance losses were estimated at over INR 30 billion.

India’s insurance regulator has been cracking down on insurance companies which highlight their market rankings in advertisements. Insurers have been sent notices by the Insurance Regulatory and Development Authority (IRDA) to remove statements in their ads that made claims about their position in the market with respect to premiums and claim settlements.

The insurance companies have also been advised to follow the code of conduct prescribed by the Advertising Standards Council of India, reported the Business Standard.

IRDA regulations bar insurance companies from producing ads which might be misleading or which make unfair comparisons between companies and their products. The companies have also been advised to follow the code of conduct prescribed by the Advertising Standards Council of India (ASCI).

“No claim of ranking by an insurance company, as regards its position in the insurance market, based on any criteria (like premium income or number of policies or branches or claims settlements etc) is permissible in any of the advertisements,” the regulations stipulate. For instance, an insurer cannot say in its ads that it is the No.1 insurer in the market or settles claims in the quickest time.

A senior executive of a private non-life insurer said: “Though the ads showing the ranking of an insurer may be factually correct, since the ranking is based on data and figures given out by IRDA, the regulator is ensuring that no such rankings are mentioned in public ads. This is to make sure that prospective and current policyholders do not make any false assumptions based on these claims.”

However, the ads can contain ratings given by external agencies. Any claim of rating/award should be based only on those declared by entities which are independent of the insurance company and its affiliates, said IRDA. However, an insurance company and its affiliates should not procure services from such independent entities so as to get a rating/award.

An IRDA official explained that customers might not be fully aware of the exact criteria used by the company in making claims about its rankings. It would thus not be fair to publish such ads in the market.