IRDA tightens ULIP norms – Implications and Analysis
IRDA tightens ULIP norms and the following changes are effective from July 01, 2010 – Our Analysis on each of the norms follow,
- Minimum policy term of five years – Overall improvement in quality of business, Long-term positive
- All ULIPs (including pension/annuity products in accumulation phase) to carry sum assured – Render long-term protection element to ULIP (and ULIP-based pension and annuity) contracts, differentiating ULIPs from MFs Read more
Detial of Swarup Committee Report on ULIP + Insurance
AS requested by our readers, here is an excerpt from the recommendations of Swarup Committee’ report for Insurance Sector / ULIP Case.
All retail financial products should go no-load by April 2011. The pension product in the NPS is already no-load. Mutual funds have become no-load with effect from 1 August 2009. Insurance policies need to remove the bias towards selling the policy with the highest commission. Because there are almost three million small agents who will have to adjust to Read more
Life insurance sector growth normalizing + Valuation
The growth of Indian private life insurers normalised to 14% YoY (-33% MoM) in January 2010, post December 2009, when growth had jumped to 59% YoY, ahead of the withdrawal of noncompliant products from January 2010. The industry APE growth was up 3% YoY (-27% MoM).
ICICI’s market share gains sustained (11.1% currently – up 190 bp over the last six months), whereas Bajaj and HDFC witnessed a sharp rise in this month (+127 bp and +94 bp MoM). SBI continued to be the strongest performer, with 27% YTD APE growth, whereas Kotak was the weakest performer (-21% YTD). Read more
15-day free-look period for people to surrender health insurance policy – IRDA
Insurance Regulator, Insurance Regulatory and Development Authority (IRDA) now allowed a policyholder to exit from health insurance with a cover for three years or more within 15 days, which is known as free-look period.
The policyholder can exit or surrender the policy if he is not satisfied with the terms and conditions of the agreement. The regular has mentioned the aforesaid in a circular sent to all insurance companies. Read more
Private companies sales decline and fall
Industry sales grew by 2% YoY (-4% in June, -10% in May), the first time in nine months. This was driven mainly by the 21% YoY growth shown by the state-owned LIC. Private player sales also showed a slowdown in sales contraction (-11% YoY for July
vs -13% for June and -29% for May). Read more
Tata AIG Life – Renewal premium payments through net banking
Private sector life insurance major Tata AIG Life Insurance Company has tied up with Citibank in order to offer its customers payment of renewal premiums through the NEFT mode.
This is first life insurance company in India that would offer its customers options to pay renewal premiums through the net banking facility directly from their bank account held with any NEFT-enabled bank branch in India. The facility will enable faster realisation of funds than the other conventional modes of premium payment. Read more
Bajaj Allianz’s premium collection drops 30% in June quarter
Bajaj Allianz Life Insurance Company has recorded a fall of 30% in fresh premium collection in first quarter of FY 2009-10.
The insurer’s new premium collection stood at Rs 577.66 core at the end of the June quarter, as against Rs 829.24 crore in corresponding period of the last year.
Overall, 21 private sector life insurers have collected first premium of Rs 5,427.67 crore in the first quarter of FY’10 against Rs Read more
General Insurance penetration in India is low
In a joint research paper on Indian Insurance Industry brought out by Assocham, it was revealed that the penetration level of the general insurance business in India is just 0.60% of its GDP, despite posting an annual growth by 16% under this segment.
The low penetration is in comparison with the global average of 2.14%. The business of general insurance in India is worth Rs 300 billion in terms of annual premium.
The paper further states that one of the biggest constraints facing the general insurance business is the lack of reach beyond the cities. While life insurance players are struggling with the quality of insurance advisors, general insurance players face difficulty in getting intermediaries to distribute their products.
The two drivers for growth are increase in the value of underlying assets with rising GDP and personal incomes, as well as the increasing penetration across categories.
India ranks 136th on penetration levels and lags behind China (106), Thailand (87), Russia (86), Brazil (85), Japan (61) and the US (9). The penetration of general insurance in India remains low on account of low consumer preference, largely untapped rural markets and constrained distribution channels”, adds the paper.
ING Life inks deal with e-seva
Private sector life insurance company ING Life India has inked a tie up with e-seva, the citizen services arm of the Andhra Pradesh government for premium collection.
This tie up will provide customers a faster, efficient and accessible method of renewal premium payment.
Presently, the insurer has a network of 259 branches with a presence in 234 cities and towns. Further, the company has a strength of 70,000 advisers that assist customers in offering products that cater to their needs.
In FY 2008-09, ING Life garnered a renewal premium of Rs 750 crore, and has set a target of Rs 1,200 crore in FY 2009-10. The insurer has market share of 1.6% and has no proposal of marketing its products via these e-seva centres..
The tie up will be activated in 21 e-seva centres is spread across the Visakhapatnam district.
SBI Life Maha Anand ULIP – Review
SBI Life has recently launched SBI Life Maha Anand — a unit linked (ULIP), non participating insurance plan. It is an simple and affordable scheme which does not require any medical examination, offers flexibility to increase investments of policyholders through top-ups and liquidity through partial withdrawals.
Under the scheme, a policyholder needs to choose premium amount and policy term. The premium after deduction of premium allocation charges will be invested into funds chosen by policyholder. On maturity accumulated fund value will paid and in case of unfortunate event of death, the nominee will receive higher of fund value or sum assured.
The minimum entry age is 0 years whereas maximum is 55 years. The maximum maturity age is 65 age. The payment mode of premium is yearly, half yearly, quarterly and monthly. The minimum premium amount is Rs 6000 (yearly), Rs 3000 (half yearly), Rs 1500 (quarterly) and Rs 500 (monthly). While the maximum premium amount is Rs 30,000 (yearly), Rs 15,000 (half yearly), Rs 7500 (quarterly) and Rs 2500 (monthly). The policy term under this scheme is 10 years, 15 years and 20 years.
Under the scheme, partial withdrawal is possible only after completion of 5 policy years to meet any sudden or unforeseen expenses. The 3 investment fund options available under the scheme are Equity Fund, Optimiser Fund and Bond Fund.
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