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eServe Newsletter June 2012
FM to meet chiefs of public sector insurance cos
13-Jun-2012 | Source: PTI
Finance Minister Pranab Mukherjee will review the annual performance of public sector insurance companies on Wednesday in the light of growing pressure on profitability.
The focus of review by the Finance Minister will be to have a business strategy for 2012-13 onwards in a manner that there is a healthy balance between the growth and long-term business sustainability as well as providing accessibility of insurance coverage in unserved areas, an official release said.
During the meeting, widening the coverage under agriculture insurance by bringing in all loanee farmers as well as non-loanee farmers under the ambit of agriculture insurance will also be discussed.
Besides it will focus on business process re-engineering so as to ensure that service delivery, including policy renewals and claim settlement as well as grievance redressal becomes more customer-friendly.
Public sector insurance companies, both in life and non- life segment play an important role not only in providing insurance coverage to people but also a crucial role in nation building exercise by providing funds for infrastructure development.
While LIC holds about 75 percent of the life insurance market in India, the four non-life PSU general insurance companies have about 55 percent of the general insurance market share.
A number of developments in the recent years, especially during 2011-12 such as dismantling of motor pool reserve and shifting to decline pool, losses on account of overseas operations and in reinsurance business due to natural calamity in Japan, Thailand & some other countries, have affected the operating profitability of these companies, especially non-life PSU general insurance companies, it said.
It was also affected by very intense level of competition among the companies affecting prudent underwriting of premiums, it added.
IRDA proposes web enabled facility to ascertain insurance particulars of motor vehicles
18-May-2012 | Source: IRDA
Recently, IRDA had proposed to provide access to data relating to insurance status of motor vehicle to the general public with a view to assist the accident victims.
Insurance Information Bureau (IIB) which acts as insurance data repository of the Authority has been engaged in collecting, collating and compiling inter alia motor insurance data which are useful to the stakeholders.
The said proposal was referred to the General Insurance Council and the feedback from the members of the council has been received and weighed by the Authority. It has been decided by the Authority that on a trial basis (beta version), a link will be provided through the web portal of IIB, to enable victims of motor vehicle accidents who are in need of details of insurance policy of involved vehicle(s) and the insurer concerned, to enable him/his representative to expedite the processing of claim arising out of the accident.
IIB has now provided access to the general public to the insurance status of motor vehicles for FY 2010-11 & 2011-12. The data will be updated regularly on receipt of data from insurance companies. This web-enabled facility has been provided to assist the victims of road accidents to get details of the motor insurance policy number of the involved vehicle(s) and the name/office details of the insurer. The accuracy of information will depend on the quality of data submitted by the insurers to IIB.
The beta version of the facility is being put in place and the insurers have been advised that data submission as required by the IIB be promptly submitted and the time lag of two months reduced so that the insuring public and the victims have a recourse to an web enabled facility for sourcing information required by them for claim purposes.
CCI approves Mitsui's 26% stake in Max New York Life
07-Jun-2012 | Source: PTI
Anti-trust body Competition Commission of India (CCI) has approved 26% stake transfer in Max New York Life Insurance (MNYL) to Japan's Mitsui Sumitomo Insurance Company.
With the stake transfer, the US-based New York Life will exit from the joint venture with Max India.
Max India is the holding company of MNYL which is a joint venture between Max India and New York Life.
"...The assessment of the proposed combination, the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination," CCI said in a notification.
According to the share purchase agreement, Mitsui Sumitomo will acquire 16.63% equity share capital of MNYL from New York Life and 9.37% from Max India.
By way of a separate agreement on April 12, 2012, New York Life has sold its 9.37% shares in MNYL to Max India.
"Subsequent to the proposed combination, New York Life would completely exit from MNYL and Max India and Mitsui Sumitomo would control MNYL with Mitsui having 26% shareholding," it said.
Post combination, the shareholding of other shareholders in MNYL would remain unchanged with Max India being the largest shareholder holding 69.78% of equity capital of MNYL while Axis Bank holds the balance 4%.
Japanese insurance company Mitsui Sumitomo and its subsidiaries is manily engaged in non-life insurance business across the globe. And it is not engaged in life insurance sector in India.
It is present in India through its investment in Cholamandalam-MS General Insurance Company with 26% equity shares and in Cholamandalam-MS Risk Services with 50% share.
Cholamandalam-MS General Insurance is engaged in general insurance business in India and Cholamandalam-MS Risk Services is engaged in risk management and engineering solutions in the fields of safety, health and environment.
As per the existing laws, FDI up to 26% is allowed in the insurance sector under automatic route.
Indian insurance sector has 42 private players in life and general insurance business sharing about 30% of the market share in life insurance and 41% of the market share in general insurance sector.
In 2010-11, the top five companies in India accounted for around 87% of the business. While, LIC is the largest player with about 69.78% market share, the market share of MNYL in life insurance industry is only 1.99%.
Penalties levied on non-life insurance companies in 2010-2011
Source: IRDA Annual report 2010-2011
Reasons for penalties
Cholamandalam General - Failure to comply with file and use guidelines. Failure to comply with the provision of guidelines on licensing of corporate agents
Tata AIG General - Failure to comply with its obligations towards social sector for the year 2006-07
National Insurance - Failure to comply with file and use guidelines as well as non-compliance of Section 3(2) of IRDA (General Insurance– Reinsurance) Regulations, 2000
General Insurance Corporation - Failure to comply with the investment regulations
United India - Failure to comply with file and use guidelines
Oriental Insurance - Failure to comply with file and use guidelines
Bharti Axa General - Violation of stipulation under regulation 2(g) (i) of IRDA (Registration of Indian Insurance Companies) Regulations, 2000