Monday, June 30, 2014

IRDA To Launch Pilot Project For Insurance Policy Digitisation

The Insurance Regulatory and Development Authority (IRDA) has decided to launch an Insurance Repository System on a pilot basis to move towards an electronic paperless environment.

According to the insurance watchdog, it will be mandatory for all the life Insurers and insurance repositories to participate in the pilot launch. The pilot project for digitisation of insurance policies would start from July 1 for duration of two months.

The regulator in a statement said, “During the pilot launch, each life insurer shall convert a minimum of 1000 or 5 percent of the existing individual policies (issued in hard form and currently in force) whichever is less for each of the Insurance Repositories (IRs) into electronic form."

This shall be, however, subject to a minimum of 250 policies per IR, IRDA said.

As per the IRDA, during the pilot launch, no insurer can deny any request for electronic policy both for conversion of existing policies and for issuance of new policies from any of the policyholders.

Bajaj Allianz Unveiled All-Inclusive Health Plan

Bajaj Allianz General Insurance, a leading private sector insurance player on Monday said it has launched-Health Care Supreme, an all inclusive health insurance plan that covers all types of treatments.

The insurer, in a statement, has said that this new offering of the company will provide comprehensive cover for maternity, OPD and dental treatments along with other hospitalisation expenses.

Health Care Supreme also covers all types of treatments including ayurveda and homoeopathy including a host of other benefits, the statement said.

The minimum sum insured under the policy is Rs 5 lac and the maximum can be opted up to Rs 50 lac.

Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv Limited (formerly part of Bajaj Auto Ltd.) and Germany's Allianz Group. In the joint venture, Allianz Group holds the maximum permissible limit of 26 % stake, and Bajaj Finserv, the remaining 74 %.


Allahabad HC Orders IRDA To Scrutinise Policies Of SBI Life Insurance

The Allahabad high court, one of the first high courts to be established in India, has directed the Insurance Regulatory and Development Authority (IRDA) to scrutinise each and every policy sold by private sector SBI Life Insurance Company Limited. The court also asked the regulator to discontinue its policies and wind up its business if it detects any regulatory breaches.

The honourable high court pronounced this order hearing a petition filed by one 72-years old Virendra Pal Kapoor, who claimed he had invested Rs. 50,000 in year 2007 in SBI Life's Unit Plus II-Single, a unit-linked plan (ULIP) with an option of limited term of 5-years, on the basic sum assured for life at Rs. 3,12,500 (approximately 6-times of the investment), with a choice of investment in a growth fund. But on maturity, the insurer paid merely Rs. 248 to Mr. Kapoor.

The policy was sold to Mr. Kapoor by an agent on behalf of SBI Life Insurance Company on the basis of certain terms that didn't have necessary regulatory approval.

While the court found that the policy was sold to Kapoor in the premises of SBI Life, and was allegedly misled by an agent in breach of IRDA's norms, the court held an alongside inspection of SBI's directors (who are part of SBI Life's board) necessary to find out if any unlawful gain had been made from sale of such policies.

“The central government will do well to ensure that the investors are not cheated in a manner, as in the present case, in which the entire investment of the senior citizen has been lost on the pretext of the policy being in tune with Irda guidelines", the court said.

SBI Life Insurance is a joint venture between State Bank of India (SBI), country's leading public sector bank and BNP Paribas Cardif, the insurance arm of BNP Paribas of France. SBI holds 74% stake and BNP Paribas Cardif the remaining 26% in the JV.

RBI Permits FPIs, NRIs to Invest Up To 26% In Insurance Sector

The Reserve Bank of India (RBI) on Thursday said foreign investors, including Foreign Portfolio Investors (FPIs) and Non-Resident Indians (NRIs), can invest up to 26 % in insurance sector and allied activities such as-insurance companies, insurance brokers, Third Party Administrators (TPAs), surveyors and loss assessors, through the automatic route. 

“Effective from February 4, foreign investment by way of FDI, investment by Foreign Institutional Investors (FIIs)/ Foreign Portfolio Investors (FPIs) and Non-Resident Indians (NRIs) up to 26 % under the automatic route shall be permitted in the insurance sector," the bank regulator said in a circular released on Thursday. 

In February this year, the government had allowed 26% foreign investment in activities related to insurance like broking, third party administrators and surveyors and allowed FIIs and NRIs to invest in insurers within the stipulated cap. 

In case of insurance companies, the 26% ceiling will include FDI and investments from FIIs and NRIs, said a press note issued by Department Of Industrial Policy and Promotion (DIPP). Earlier, only FDI under the automatic route was allowed in insurance companies.

Tuesday, June 24, 2014

J & K Bank Plans To Sell Its Entire 5% Stake In PNB MetLife

Jammu & Kashmir (J & K) Bank is exploring possibilities to sell its entire 5 % stake in the life insurance joint venture PBN MetLife India Insurance Company, sources said.

PNB MetLife is a joint venture between state-run Punjab National Bank (PNB), US-based MetLife Inc., J & K Bank, M Pallonji and Company, and other private investors. PNB and MetLife Inc. are the majority shareholders in the JV, with 30% and 26% stake, respectively.

Although the pricing has not been finalised yet, the mid-sized bank is expecting to raise about Rs.700 crore from the deal. As per the sources, the bank will use the capital to strengthen its core business, banking.

Majority stakeholders will have the first 'right to refusal' in buying J&K Bank's stake in the JV, said the sources, adding, “If they were not willing, the bank will search for a buyer outside the company."


Govt Considers Raising FDI Cap In Insurance To 49% With Riders

The Modi-led newly formed government is all set to raise the Foreign Direct Investment (FDI) in insurance sector to 49% from existing 26%, with two riders - all companies will have to provide health insurance cover, and voting rights of foreign firms' nominees on boards will be limited to 26%.

The Insurance Law (Amendment) Bill has been pending with the Upper House of the Parliament since year 2008, as the then opposition party BJP had been opposing this, arguing it would expose the sector to global vulnerability.

The government is working on a three-pronged strategy to make health care affordable.“While allowing up to 49 % FDI in insurance, we will mandate insurers to offer health insurance cover. They are willing to do that. Second, we are considering a higher tax exemption on health insurance products. More products and players should be in the market. Third, there should be some regulation of charges levied by private hospitals,“ an official from the ministry said.

The government might follow a gradual approach to raising FDI ceiling in insurance, starting with non-life, health and then life insurance. The minimum paid-up capital for health insurance is Rs 50 crore, unlike Rs 100 crore for other insurance segments.
The government is also planning to bring a mechanism to ensure private hospitals don't overcharge patients.