QUOTE OF THE WEEK

“It is during our darkest moments

that we must focus to see the light.“

Aristotle

INSIDE THE ISSUE

Insurance Industry 2 Insurance Regulation 4 Life Insurance 6 General Insurance 17 Health Insurance 25 Motor Insurance 38 Crop Insurance 39 Survey 44 Insurance cases 45 Pension 46 IRDAI Circular 50 Global News 51

INSUNEWS Weekly e-Newsletter

28th Nov – 4th Dec 2020

Issue No. 2020/48

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INSURANCE TERM FOR THE WEEK

Manuscript certificate of insurance

A nonstandard document for providing evidence of insurance coverages required by the certificate holder in a contract with the insured. Sometimes drafted in an effort to overcome the limitations of a standard certificate of insurance, manuscript certificate of insurance forms are often resisted because they require more information or place greater legal obligations on the party providing the certificate.

INSURANCE INDUSTRY

E-Insurance policy: Benefits of holding an e-insurance policy - Financial Express – 27th November 2020

E-insurance or electronic insurance is an online account that works more or less like a Demat account. With an e-insurance account, you will be able to keep all your insurance policy documents in an electronic format, safely for the future.

All transactions and documents of any of your policies and related information will be stored in just that one place and you will have information regarding your policy commencement dates, maturity status, nominations, address, terms, and conditions in your e-insurance account. Having said that, any time you need anything, you could just download a copy of the same easily.

According to industry experts, there are various benefits of holding an e-insurance policy. For instance, it’s not only convenient, it’s also eco-friendly and cost-efficient, at the same time reduces fraud.

Here are some of the benefits of holding an e-insurance policy; • Buying an insurance policy online eliminates the commission charges for the policyholder that is

associated with an insurance agent. The policyholder, therefore, gets the insurance policy at a low premium. Hence, purchasing an insurance plan online becomes cost-efficient.

• Additionally, the insurance company usually pays for all the costs associated with the conversion of all paper-based policies in the online form, the policyholder does not have to pay any extra charge for the e-insurance policy.

• As a policyholder, having an e-insurance accounts turns convenient as all your needful insurance plans, including your health policies, investment plans, pension plan, etc. will be on a single platform. Any kind of policy that is stored in an e-insurance account, are referred to as e-insurance policies. You will also be able to access these policies whenever and wherever you need it.

• According to experts with e-insurance accounts, the chances of agency fraud have become low. There have been various cases in the past where insurance agents misguide their customers and ask for money and mismanage their funds. Having an e-insurance policy reduces such agency frauds.

• With an e-insurance account, you will also be well informed about all your transactions and management of money. Additionally, as there will be no presence of an insurance agent with the

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e-insurance format policy, all the funds such as premium payment, etc. will be directly transferred to the insurance company.

• Note that, with an e-insurance account all your financial documents remain safe and secure, unlike a paper policy, where the chances of loss and damage are more. Hence, an e-insurance policy saves the policyholder from unnecessary paperwork and safeguards him/her against loss of policy or theft.

• With an e-insurance account, you will not be needed to go through KYC verification all over again, while buying a new policy – unless there is a change in your KYC details. While buying a new policy, you could just mention your e-insurance account number, which will suffice the requirements.

• As all the processes of documentation are in digital form, eliminating the need for physical documentation, this method also turns out to be extremely eco-friendly.

(The writer is Priyadarshini Maji.) TOP

Benefits of cloud computing for the insurance industry - The Economic Times - 30th November 2020

Cloud computing is looked at as a typical tool for optimizing cost and handling variable demand from an infra perspective. While this is true and today it’s ‘table stakes’ for anyone wanting to migrate to cloud from an on-premises environment, in many ways it is also cliché as many organizations miss out on numerous other benefits that cloud offers for their digital transformation journey.

To elaborate on my point of view - while cloud migration is becoming baseline for any and every modern system or digital transformation journey, it is also a great enabler. It enables the digital transformation journey of an insurer by offering a

bunch of out-of-the-box capabilities which can be deployed quickly at scale. These capabilities can be horizontal or vertical. Horizontal capabilities like Artificial Intelligence (AI) and Machine Learning (ML) can be deployed across the insurance value chain and existing systems/process for insurers.

While vertical capabilities like datalake can be setup quickly to enable for instance, the analytics function within an organization and give them a playground for building their models. We have also seen that, while solutions across SaaS, PaaS, IaaS and BPaaS are all relevant and have different use cases for different organizations, our experience is that SaaS has seen the largest use case for pay-per-use, multi-tenancy and external services.

From insurance company’s perspective, while this was true before the Covid-19 pandemic, post Covid, many insurers have realized the need to be digitally efficient and lean on infra footprint at the same time. Cloud native apps/solutions therefore offer the right balance of scale-up for business need with a fast go-to market, cost optimization and base security. Take an example of a desktop as a service model which offered relief during Covid times to enable remote working.

Another aspect that cloud has enabled for insurers is – Experimentation. In the world of Build-Buy-Acquire, cloud offers the right environment to operate and scale fast. Agility in business operations comes from the inherent characteristics of cloud and cloud deployed apps for instance SaaS apps.

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Businesses can make decisions, go wrong and refine at a marginal cost as against any of the prevalent models. In the recent past, insurers have had to launch products in the sandbox environment which was allowed from a regulatory perspective. Cloud has and can act as a great enabler for faster go-to-market for such experiments. In addition, insurers can now use cloud as a sandbox to experiment with process changes, implement external, third-party solutions to work in conjunction with their core systems.

This results in improvement in TAT or accuracy/efficiency of processes. Cloud offers multiple areas of application for insurers, which includes business applications across the insurance value chain from issuance to renewals to claims servicing to engagement for their Customers, Prospects and Partners.

Finally, as the collaboration of existing insurance players with start-ups is increasing and insurers are wanting to disrupt their own value chain by offering solutions for their Customers and Partners, cloud is a great enabler which helps insurance carriers to quickly experiment, deploy and scale new /innovative solutions from the vibrant insurtech ecosystem in India and outside. I believe cloud computing helps us aim higher, deliver at hyper speed, offers flexibility as per business needs and customer preferences. Thus, propelling us into a lean customer centric future.

(The writer is Sourabh Chatterjee.)

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INSURANCE REGULATION

Irdai to ban credit-linked group health insurance – The Times of India – 4th December 2020

Insurance regulator Irdai has proposed a ban on credit-linked group health policies such as critical illness covers that are bundled with home loans. According to industry sources, the products that are pushed to homebuyers are mis-sold as health covers but are not suitable for the customers. Irdai has proposed that all existing credit-linked group health policies be withdrawn by December 31, 2020.

“As the primary purpose of any health cover is to meet the treatment costs or to manage the lifestyle on diagnosis of critical illness, no insurer is permitted to offer any indemnity or benefit-based

credit-linked group health products,” Irdai said in a draft circular. The regulator has, however, made an exception for the sale of personal accident policy.

Many home loan providers bundle a critical illness cover with the home loan. But advisers say that, ideally, critical illness covers should be purchased along with health insurance and not as a standalone cover. Also, premiums on group covers are completely unregulated unlike individual policies, where the regulator ensures the pricing is fair.

In the draft circular, Irdai said that henceforth insurers that wish to offer group insurance should have a board-approved group underwriting policy. “The policy should spell out the manner in which the risks and costs are analysed and factored into the premium cost.

All factors of coverage should be separately analysed and priced,” Irdai said. In the UK, banks have had to make billions of pounds of provisions as compensation for mis-selling of payment protection insurance that was forced upon homebuyers and other small borrowers for commission.Mis-selling by banks in India has largely gone unpunished as it falls in a regulatory grey area. It was only in June 2017 that the

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RBI said customers that have been mis-sold third-party products by banks can approach the banking ombudsman.

(The writer is Mayur Shetty.)

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Health insurance premium hike: Gave approval to change base prices only by 5%, says IRDAI – Moneycontrol – 3rd December 2020

The insurance regulator on December 3 clarified that it has given permission to change health insurance premiums only by 5 percent.

Several customers had complained about close to 30-35 percent increase in their health insurance premiums in FY21. A few reports had attributed this increase to regulatory changes around standardisation leading to this rise.

However, the Insurance Regulatory and Development Authority of India (IRDAI) clarified that non-life and standalone insurers were permitted to change the base premium up to +/- 5

percent of originally approved premium rates in order to comply with the guidelines on standardisation of exclusions as a one-time measure for seamless transition of existing products to ensure viability and sustainability.

IRDAI also said that as on September 30, 2020, out of 388 products, premiums were increased by general and health insurers up to 5 percent of the then prevailing rates only in the case of 55 products.

Customers had also complained that there was a sudden spike in premiums despite no significant claims being made in the previous year. As per insurance regulations, any premium hike in a product category can be implemented only after IRDAI approval.

Premiums are increased if there are large claims in a particular product and also if medical inflation has been on the rise. Hospital charge increases also lead to a premium hike.

The regulatory body clarified that it has cleared revision in premium beyond 5 percent in respect of only five health insurance products of general/health insurers during the year up to November 30.

This, it said, is part of the periodical modification of their respective products, based on the incurred claims experience.

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IRDAI's plan to prohibit use of critical illness policy as collateral for loan may meet GIC's stiff resistance – CNBC – 2nd December 2020

There could be some negative news coming for India's general insurance sector as sources privy to the developments told CNBC-TV18 that the insurance regulator is looking at prohibiting the use of critical illness policies as collateral against housing or vehicle loans.

It's a common practice to have a life insurance or a critical illness policy as a collateral for securing a housing or a vehicle loan from various housing finance companies (HFCs) and non-banking finance companies (NBFCs). The insurance policy acts as a security for the lender as the claims from the policy can be used for repayment of the loan instalments in case the policy holder loses his life.

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Critical illness policies are issued by general insurance companies and they pay the insured individual a lump sum amount if diagnosed with any of the specific illnesses on a predetermined list. Any move from

Insurance Regulatory and Development Authority (IRDAI) to prohibit use of critical illness policies as collateral for securing loans may be negative for the general insurance companies selling these policies as it may impact their sales.

On the other hand, the move may be positive for life insurance companies as the policies sold by them will continue to have the advantage of being able to act a collateral for securing housing or vehicle loans.

It’s this reason why the General Insurance Council (GIC) has expressed its reservation on the

regulators move. Sources in the know told CNBC-TV18 that in a letter written to IRDAI chairman and accessed by CNBC-TV18, GIC has categorically stated that the move to prohibit critical illness policy to be used as collateral for loans is not in the interest of the policy holders.

According to letter written by GIC, critical illness covers are taken by people either to meet the treatment costs or to manage the life style even after diagnosis of a critical illness.

GIC's letter to IRDAI further said it's important to recognise that no sooner a diagnosis happens of a critical illness, the patient usually undergoes shock and most often cannot be in a physical or psychological position to carry out their usual earning activity. In that situation, if the person also has a major loan to repay, the worry he undergoes would be unimaginable and would expedite his impending death.

On the contrary, if he has a critical illness cover of sufficient sum, it helps the person in taking care of the outstanding loan and if there is any balance, it will help him meet his day to day expenses.

Concluding the letter, GIC stated that it is not a good idea to deny the benefit of critical illness cover.

On the argument of critical illness policies being used as collateral and impacting life insurance business, GIC stated that the business of life companies will not get affected in any way as institutions extending credit are not as comprehensively protected by credit linked critical Illness cover as by the life insurance covers, where death by any reason is covered.

(The writer is Yash Jain.)

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LIFE INSURANCE

Term insurance: Why splitting your plan can optimise both cover and cost - The Indian Express – 3rd December 2020

Fear often pushes people to buy insurance. Over the last six to eight months, as the pandemic severely impacted the economy and forced individuals to restrict spending, the insurance sector saw a sharp rise in demand for term insurance plans and premium collections. In October, the first-year premium of private insurers grew 23.56% to Rs 7,227 crore, and that of LIC grew by 36% to Rs 15,548 crore.

Four different announcements on the success of Covid-19 vaccine candidates over the last two weeks have lifted market sentiments and fuelled hope that the virus may be about to be defeated, and life could soon return to normal. Pfizer-BioNTech, Moderna, and Sputnik V have announced an over-90% efficacy

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for their candidates, and Oxford-AstraZeneca has said early results of phase 3 trials show its vaccine to be “highly effective”.

While Covid-19 has increased awareness about insurance, it is important for everyone to understand that it should not require a global pandemic for individuals to be nudged to buy a policy. A term insurance plan is a fundamental requirement and forms the base of an individual’s financial planning, providing cover against the most critical risk — that of life itself.

Who in the family should buy term insurance? The primary earning member of the family must have a term insurance cover. It should be taken as a protection instrument that is able to take care of his/her family’s financial needs after he/she is not around. The key to remember is that anyone who

has a family to take care of, and has liabilities such as a home loan, car loan etc., must have term insurance.

It is also important to note that you should not wait to hit a certain age to buy a term plan. You may do so after you start working, and keep adding to the cover based on additional requirements. Starting early means a lower premium for the same cover. For example, if you are 30 when you buy a Rs 1 crore term plan up to age 70, your annual premium would be around Rs 12,000. The premium for the same plan will be around Rs 21,000 if you buy at age 40, and over Rs 32,000 at age 45.

How much should your insurance cover be? Typically, a term plan should cover all your liabilities and major expected future expenses such as higher education of children, their wedding, and the living expenses for your family. Suppose you have a home loan of Rs 50 lakh, with principal outstanding of Rs 40 lakh; a car loan outstanding of Rs 3 lakh; and you need Rs 20 lakh for your child’s higher education, then your term plan should cover for all this until you turn 60. This should be apart from the cover amount that would provide for your family’s household expenditure needs after you.

One must ideally have term insurance cover until the age of 60, and can have a separate plan to provide for one’s spouse’s financial independence till the age of 70-75. Breaking your term plan into two — one until age 60, and the other until age 70-75 — would not only help you optimise your cover, but also optimise the cost. It is important to note that if you live beyond 60, you won’t be needing the cover against home loan, children’s education and marriage, as you would have already met those goals.

How long should you take the cover for? Ideally, the cover should be for the years when you build and have liabilities and see additions in the family. The term plan should provide cover for the period till your kids complete their education and turn independent, and you have built your retirement corpus that is good enough to sustain you and your spouse’s financial needs for the remainder of your lives. If you think you can do all of that by age 60, you don’t need a term plan beyond 60.

One must not confuse the need for a term plan with the need for health insurance. While term insurance starts to lose relevance after you have met all your liabilities, health insurance becomes more important after retirement, and should be taken for as long as it is available.

It must also be noted that alongside the term plan, retirement planning should also continue — if you have saved optimally for your post-retirement life, you don’t need a term plan beyond 60.

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If you think you need to provide some additional financial cover for your spouse’s financial needs should something happen to you between ages 60 and 70, you can take a separate term plan of a smaller amount that provides cover until 70-75.

How can this optimisation help you save money? Suppose you are 35 now, and are looking for a Rs 1.5 crore term plan till the age of 75 — your premium may come to around Rs 21,000 per annum for the next 40 years, aggregating to Rs 8.4 lakh.

Now, if you take a term plan for Rs 1 crore till the age of 60 and another plan of Rs 50 lakh till the age of 75, you will pay premiums of around Rs 11,000 (25 years; Rs 1 crore) and around Rs 8,000 (40 years; Rs 50 lakh) respectively — adding up to a total premium outgo of around Rs 5.95 lakh.

In both cases, you will get a cover of Rs 1.5 crore till the age of 60. After that, since the need of a term plan is reduced and is limited to some cover for spouse’s needs, by splitting the plans, you reduce your premium outgo significantly post-retirement. Also, since your post-retirement income is limited, and you are in most cases living on your savings, it is important to optimally spend from your limited monthly income.

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How critical illness cover with health insurance differs from that with life insurance - The Economic Times - 1st December 2020

What are critical illness policies? A critical illness insurance cover provides a lump sum benefit to cover the cost of care and treatment arising from specific illnesses and the associated recovery expenses. Further, if you are left with a surplus, you can then use it to pay off debt like loan EMIs. Critical illnesses include cancer, heart/kidney ailments, among others.

A critical illness cover lapses once the payment is made by the insurer. Typically, the lump sum amount is paid to the policyholder post survival period of 30 days after contracting the illness. You can buy more than one critical illness cover and

each of these policies will pay for the critical illness. You can buy a critical illness cover with both life and health policies, here's how.

Critical illness cover with life insurance You can buy a critical illness cover with life insurance either as a standalone cover or as a rider. There are two types of critical illness riders where the premium amount varies accordingly, the two types are:

1. Additional Benefit: The critical illness sum assured is added as an additional cover which means in addition to the base sum assured, the critical illness sum assured will be paid. In this type, the life insurance policy continues with the same sum assured even if the critical illness rider is used.

2. Accelerated Benefit: In this case, the benefit is optionally built-in with the life plan. The critical illness sum assured is reduced from the life insurance sum assured and is paid when a valid claim is made. After this, the life insurance policy continues with the reduced sum assured to the extent of the critical illness cover sum assured.

Standalone critical illness plan When you buy standalone critical illness cover from a life insurer, the term policy will provide financial security to 'your family'. While the standalone critical illness cover will provide 'you' financial security

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against around 50 life threatening health conditions such as cancer, kidney failure, cardiovascular disease, etc.

What you should do Hospitalisation expenses are not covered in case of a life insurance with critical illness cover. You must also compare the costs of critical illness rider versus a standalone CI cover. Experts say that when you buy standalone policy, understand that both cover different risks- the risk of dying and the risk of getting critically ill, where you are alive but need money to get the best treatment. Therefore, one should ideally not mix-up between the death benefit and critical illness as these are independent events.

Critical illness cover with health insurance A critical illness cover works on the defined benefit principle, it is a plan that pays a lump sum (sum insured) if you are diagnosed with a critical ailment as per the coverage. Critical illness covers offered by general insurers also come in the form of standalone policies and riders to base health insurance covers.

Rider or standalone plan? Experts point out that critical illness riders will specify the number of critical diseases covered (usually very limited), lump-sum benefit payable and the waiting and survival period (if applicable). If the insured is diagnosed with a critical illness and gets hospitalised for treatment, then he/she can use both the policies (CI and health cover) to save the overall hospitalisation cost. This means, upon diagnosis, the insured will get the lump-sum payment for treatment through the critical illness cover by the insurer and with the help of the basic health insurance policy, the insured will get the reimbursement of hospitalisation expenses by submitting medical bills to the insurer.

You must also know that standalone critical illness policy can be ported to other insurers, but critical illness rider alone cannot be ported.

How it helps Buying critical illness cover (rider or standalone policy) with a regular health insurance policy provides a pre-defined lump sum for the diagnosed critical illness. In addition, the hospitalisation expenses for treating critical illness are also covered. This ensures full protection even after a diagnosis of critical illness.

CI cover from health or life insurer? Financial planners suggest that given the increase in critical illnesses and the associated high medical expenses even after diagnosis of the illness, people need to opt for standalone critical illness policy over and above the health insurance they have. The critical illness cover ensures that a family’s savings are not eroded due to hospitalisation costs and treatment. So it is advised that you get a standalone CI plan along with a health insurance policy.

While critical illnesses plans seem like the perfect antidote, remember, they are meant to complement your regular health policy, not replace it. Experts also advise that while buying a critical illness cover, you should look for the number of critical illnesses covered since different companies cover different sets of critical Illnesses in their policies.

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Is ₹1 crore term insurance good enough cover? – Live Mint - 1st December 2020

In the case of term insurance, ₹1 crore is quite a popular number these days. But is that enough to ensure that your family is financially secured in case you meet an untimely death?

"It completely depends on your requirements," said Renu Maheswari, certified financial planner and Sebi registered investment adviser, CEO and principal advisor, Finscholarz Wealth Managers

"Sum assured of term insurance policy should be the amount that when invested in a conservative portfolio can take care of all the future goals and expenses of the dependent family," she adds.

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So if that is the case, then how should one decide how much term policy to buy? Maheswari explained, it should be the present value of all future expenses and goals reduced by accumulated wealth.

Now, let's understand this with a more simple example.

Say your unavoidable expenses per month is ₹40,000, i.e. ₹4.8 lakh yearly. Experts recommend, one should have coverage which is at least 10-15 times their annual expense. So, in this case, it should be at least ₹48 lakh.

Next, let's assume you have a housing loan and car loan, and the outstanding amount for the two is ₹55 lakh.

In case, you meet with an untimely death, you want to make sure that your family does not have to go through any financial hardship. Hence, to secure your family's financial future, you want your children to have a kitty of ₹20 lakh for their future education and a retirement corpus of ₹80 lakh for your spouse. Adding all of it, the total amount comes around ₹2 crore.

Now, you have savings and investments of ₹20 lakh that can be readily accessed upon your untimely death. So, if you deduct that amount from ₹2 crore that your family would need upon your untimely demise, it would be around ₹1.8 crore. Under such circumstances, you should opt for a term insurance cover of ₹1.8 crore.

However, that's not the ultimate! "As the wealth increases insurance requirement decreases and not the other way around" Maheswari comments. Otherwise, it will a case of over-insurance.

Owing to the fact that we are making assumptions in the future, it is necessary to understand calculating term insurance in this method is not an exact science or by the book. However, this method is effective to estimate your average term insurance needs.

(The writer is Sanchari Ghosh.)

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Insurers set to launch standard term cover-Saral from January 1. All you need to know - Times Now - 1st December 2020

Life insurance companies are preparing to launch Saral- a standard term policy that has been designed by the regulator, from January 1, 2021, which is expected to trigger a price war among insurers and buyers are likely to get a bargain deal. Post the oubreak of COVID pandemic, demand for term cover has increased as people have understood the importance of term insurance. Although insurers have been wary of selling lower value term covers, the rise in demand for term cover during the pandemic has shifted focus to protection. Here are key thing you need to know about the Saral Jeevan Bima, that is expected to hit the market from January 1.

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1) Insurance Regulatory and Development Authority of India (Irdai) directed all life insurers to start selling the Saral Jeevan Bima from January 1, 2021. This policy will have a standard wording for sum insured so that it wil be easier for buyers and they don't need to check the fine print of the policy.

2) Because of the standard features, distributors will not be having much difficulty in explaining the product to their customers. Also, the regulator does not have to review the plans of each company before approval.

3) Sum assured of Saral Jeevan Bima will range from Rs 5 lakh to Rs 25 lakh. India's middle class is the main target customer of this policy, which is not adiquately covered right now. At present, there are around six crore people filing income tax returns, but only sixty lakh hold term insurance policies, indicating an insurance penetration of 10%.

4) Till now insurers have been competing for the high end of the term market with a sum insured over Rs 25 lakh as the mortality experience in that demography is better and companies can get reinsurance protection. In the very low end, protection comes from government schemes like PM Jeevan Jyoti Bima Yojana. With the launch of Saral Jeevan Bima, the indian middle class is expected to get a good deal on term insurance up to Rs 25 lakh.

5) Leading insurance companies like ICICI Prudential Life Insurance, LIC and Tata AIA Life are all set to launch this product from next month to meet the demand from customers. The Times of India citing N S Kannan, MD & CEO, ICICI Prudential Life Insurance, mentioned in a report that there has been a 70% increase in online search for ‘term insurance’ during the pandemic. “Retail sum insured has gone up by 5-6% during this period. Sum insured is growing ahead of GDP, which is good news for industry,” said Kannan. At the same time, claims have been less than what was expected during the pandemic. “We had created an additional reserve, which did not get used up. This is a bit sad as it is an indication that insurance penetration is low,” he said.

Tata AIA Life CFO & product head Samit Upadhyay told the publication, "We fully support this consumer-centric initiative by the regulator. We are keen to go ahead with it and have accordingly filed our product."

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IRDAI’s Saral cover to heat up term insurance mkt - The Times of India – 1st December 2020

The term protection market in the life insurance industry is set to heat up with insurers readying to launch Saral — a standard term policy that has been designed by the regulator, where insurers are expected to compete on price. In October, the Insurance Regulatory and Development Authority of India (Irdai) directed all life insurers to start selling from January 1, 2021 the Saral Jeevan Bima — a cover with standard wording for sum insured ranging from Rs 5 lakh to Rs 25 lakh. Although insurers have been wary of selling lower value term covers, the rise in demand for term cover during the pandemic has shifted focus to protection.

According to ICICI Prudential Life Insurance MD & CEO N S Kannan, there has been a 70 percent increase in online search for ‘term insurance’ during the pandemic. “Retail sum insured has gone up by 5-6 percent during this period. Sum insured is growing ahead of GDP,

which is good news for industry,” said Kannan. At the same time, claims have been less than what was

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expected during the pandemic. “We had created an additional reserve, which did not get used up. This is a bit sad as it is an indication that insurance penetration is low,” he said.

Besides ICICI Prudential, Life Insurance Corporation and other private companies are working on the product “We fully support this consumer-centric initiative by the regulator. We are keen to go ahead with it and have accordingly filed our product,” said Tata AIA Life CFO & product head Samit Upadhyay.

Hitherto insurers have been competing for the high end of the term market with a sum insured over Rs 25 lakh as the mortality experience in that demography is better and they can get reinsurance protection. In the very low end, protection comes from government schemes like PM Jeevan Jyoti Bima Yojana.

The Irdai push is to cover the missing middle. “There are around six crore people filing income tax returns, while only sixty lakh hold term insurance policies, indicating an insurance penetration of 10 percent,” said Kannan.

The Saral Bima makes it easier for all as buyers need not check the fine print, distributors do not have much explaining to do and the regulator does not have to review the plans of each company.

(The writer is Mayur Shetty.) TOP

Retirement planning: Annuity plans can ensure regular cash flow - Financial Express – 30th November 2020

At a time when interest rates on fixed deposits are falling, getting an assured income for retirees for the rest of their life has become challenging. Purchasing annuity from life insurance companies is certainly one solution they can look at for a regular cash flow after retirement.

An annuity is a guaranteed amount paid for a subscriber’s lifetime. While insurers offer various types of annuity products ranging from pension for life, pension to spouse on the death of the annuitant, there is no provision for surrendering the policy in case of any need for money for any emergency. There are options where the corpus is returned to

the legal heir of the investor only after his death, but this lowers the effective returns.

Annuity plans are suitable for risk-averse investors who do not want to park their retirement savings in equity-related instruments. B Srinivas, head of products, ICICI Prudential Life Insurance Company, says annuity products by life insurance companies are ideal for taking care of retirement needs since they are not vulnerable to factors like market volatility and changes in interest rates. “Annuity products provide guaranteed income for the whole life of the policyholder thereby enabling them to be financially independent in their golden years,” he says.

Sanjay Tiwari, director, strategy, Exide Life Insurance, says it is important to decide on the savings scheme to accumulate the wealth which can be turned into an annuity at a later stage. “Life insurance is an option that offers dual security, for mortality as well as longevity. During the accumulation phase, in case of the unfortunate death of the investor, the family is paid out a lump sum which will be 10 times the annual premium. This tax-free amount can also be converted into an annuity as per the customer’s choice. In case the investor lives through the accumulation phase, he can enjoy the benefits of lifetime income by converting the maturity amount into an annuity,” he says.

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Types of annuity plans Life insurers offer two types of annuity plans—deferred and immediate. In the immediate annuity plan, the investor pays a lumpsum amount to get pension payout at regular intervals like monthly, quarterly, half-yearly. This is suitable for those who have received a lumpsum like gratuity or from Employees’ Provident Fund after retirement or have accumulated a corpus. In deferred annuity plans, an investor accumulates money with the insurance company by investing in a pension plan and then gets pension or regular payouts after retirement. Deferred annuity also offers the customer the option to withdraw one-third of the corpus tax free as a lump sum and convert the remaining two-third into an annuity.

Srinivas says a person in his late 40s or early 50s, the deferred annuity plan is the suggested option. “On the other hand, for a person who is close to retirement, an immediate annuity would be best,” he says.

Similarly, Tiwari recommends that one should start investing for retirement as early as in the 20s. “Starting early doesn’t put much strain on liquidity and eventually results in a huge corpus which can be converted into annuity. Hence, individuals at their early stages of life could consider going for deferred annuity options instead of immediate annuity. However, if someone is not able to regularly save at the early ages, immediate annuity at the time of retirement would be better as it allows one to purchase the plan and start receiving a regular income immediately,” he says.

Lower rates a concern As short-term interest rates are higher than long-term rates, it becomes challenging for insurers to pay higher rates for annuities as they are long-term payments. As long-term bonds are not always available in the market, insurers have to take the risk of reinvesting at low rates. As a result, annuity pricing becomes higher and many investors find the current annuity rates unattractive.

Experts suggest that insurers as well as annuitants can get better benefits if there is some amount of risk-sharing between the insurer and the annuitant. Investors must look at the financial stability of the insurance company and buy annuity products from a trustworthy brand.

(The writer is Saikat Neogi.) TOP

What medical tests are required for term insurance? – Forbes - 28th November 2020

Ever since the outbreak of the COVID-19 pandemic in December 2019, lives of people have changed entirely, and so has the way they think about their future. Almost 51 million people have already come in the grasp of the COVID-19 virus, and the number is rising by thousands every week. Of those, over 1.2 million people have lost their lives to the deadly virus [1]. Even in India, COVID-19 has claimed over 1.25 lakh lives with over 8.5 million recorded infections [2]. The possibility of a second wave is no more just a fear, but is very close to reality with the second wave of the virus already hitting Europe with even more force [3]. Amid all this uncertainty,

there is a hesitation to lead our lives the way we used to before the pandemic. There is also a realisation that maybe we need to learn to live with the virus for a long time to come. This has convinced everyone – from the medical community to governments and individuals that we cannot let our guard down.

While there is nothing that can be done to prevent an unseen adversity from striking, being financially prepared can go a long way towards alleviating the difficulties of those who are left behind. During these unprecedented times, the importance of having the old tried-and-tested backup plan -- a term life insurance -- gains even more prominence. The idea to secure your family’s future, given the health risks

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everyone is under, is of paramount importance. A term life insurance policy would ensure that in case of an unfortunate event, your family’s financial welfare would be taken care of.

Term insurance is the purest form of life insurance. With such a plan, in the unfortunate event of the policyholder’s death, the nominee receives the death benefit, either in lump sum or in instalments, depending on the policy terms and conditions. This enables the family of the deceased to maintain their lifestyle and meet their life goals. It also ensures that they do not have to tap into their accumulated wealth due to the loss of income resulting from the demise of an earning family member. Any easy to use term insurance calculator can help ascertain how much insurance would be adequate to ensure that your family’s life goals are met, even when you are not around.

Effectively, a term insurance plan provides life cover for a nominal premium since it only covers risk and does not provide any maturity benefit. Hence, the premiums are low. In fact, it could be said that an average 25-year-old, non-smoker could purchase the Bajaj Allianz Life Smart Protect Goal, A Non-linked, Non-Participating, Pure Life Term Insurance Plan cover of Rs 1 crore for a policy term of 30 years at just Rs 18 per day*.

Medical tests and term insurance A study by PWC India (June 2020), titled ‘COVID-19: Impact on the Indian insurance industry’ [4], expects that term plans, also called pure life covers, will witness renewed interest. It did, however, observe that people were reluctant to undergo medical tests that are mandatory with some term insurance plans.

What individuals with such concerns may not realise is that undergoing a medical test before purchasing a term policy actually offers significant benefits. These medical tests help the insurer to determine the health quotient of the applicant.

Benefits of taking the medical tests A medical test simply ensures that both you and your insurer are on the same page with respect to the state of your health, at the time when you purchase the policy. Since insurance is based on transparency and good faith, it is best to share all the details of your existing health condition so that when the time comes to make a claim, there is no uncertainty. Failure to disclose your medical history could result in rejection of the claim.

By taking a medical test, you allow your insurer to consider giving you wider coverage, which in turn will help support your family in achieving their life goals in the unfortunate event of you not being around.

Types of tests required When medical tests are mandated before a term policy is issued, they are basic exploratory examinations that ascertain the general level of the person’s wellbeing. These tests usually include routine urine examination and urine cotinine test, blood tests, complete blood count (CBC), lipid profile, liver function test, kidney function test, fasting blood sugar, ECG/TMT/2D echocardiography, abdominal ultrasonography, chest X-Ray and HIV. These are, in fact, the very same tests that are recommended by a general physician who wishes to prescribe a routine full-body check-up on his patients.

Therefore, in a nutshell, taking medical tests before purchasing a term insurance policy becomes a win-win situation for all.

* Above illustration is considering Male aged 25 years | Standard Life | Non-Smoker | Life Cover Variant | Policy term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Annual Premium Payment Mode | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only.

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No Income Tax on life insurance policies of 10 or more years, ICAI recommends Modi govt - Financial Express – 28th November 2020

Income Tax on Life Insurance policies: In its Pre-Budget Memoranda – 2021, the Institute of Chartered Accountants of India (ICAI) has recommended the Union government to make all life insurance policies with a policy term of 10 years or more exempt from tax. The Institute has suggested that the tax exemption on life insurance policies should now be provided based on the policy term and not the premium to sum assured ratio, which is being currently done.

At present, tax exemption under Section 10 (10D) is based on the premium to actual capital sum assured ratio. Because of this, life insurance policies with a

higher premium due to age factor, occupational/lifestyle diseases etc. gets treated as taxable. And, policyholders who need insurance cover are denied tax relief due to higher premiums, ICAI noted.

To provide relief to such policyholders, the ICAI has suggested the government that the “tax exemption should not be linked based on premium to sum assured ratio.”

Instead, “all LIPs with policy term of 10 years or more should be exempt,” ICAI said.

ICAI added that tax exemption based on policy term will help in medium to long term investments.

Treat LIP as a capital asset Currently, any sum received under life insurance policies not exempt under section 10 (10D) are taxable. ICAI says that the deduction of only premium while computing the net income/loss after surrender/withdrawal of policy doesn’t take care of inflation resulting in higher taxability.

To solve this issue, ICAI suggests that life insurance policies should be treated as a capital asset falling within the definition of “property” under Section 2(4) of the Income Tax Act.

“Indexation benefit (for premiums paid) will take care of inflationary impact- resulting in parity with other capital assets,” the Institute said.

For insurance companies The ICAI has also suggested that insurance companies should be allowed to carry forward and set-off unabsorbed business losses for an indefinite preiod. Currently, there is a limit of 8 years for carry forward and set off of business losses. ICAI said that this limit is “not sufficient”.

(The writer is Rajeev Kumar.) TOP

How to select your life insurance policy during coronavirus - The Hans – 27th November 2020

It has now been over a year that the world has been battling a monster that they know little about– the deadly COVID-19 pandemic. Major concerns of how people will recover from the impact of the virus are omnipresent. Other than medical worries, the world has seen huge financial implications caused due to coronavirus. For India, the story remains the same, bleak, with a slight ray of hope. We are a country of 1.38 billion people and are facing and sharing one concern that many other developing nations are, a highly ambiguous financial future with uncertainty at its peak.

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The overall GDP of the nation has dropped; in fact, over the last couple of quarters, it has underperformed. This is an implication of nationwide lockdowns and businesses coming to a standstill. This has rendered millions jobless, fending off lifetime savings. In retrospect, things are getting better, albeit slowly.

"Each of himself and God for all." This saying has never rendered truer than today. Given the financial woes that stare many in the face, we need to take a step back and figure out personal finances to the best of our abilities. That is where investments and insurance come into the fray. The life insurance industry is expected to grow about 13% annually over the next five years. Hence, given that there is a pandemic without a cure doing the rounds, it makes natural sense to consider buying a life insurance policy today. This will not only work towards easing financial stress, but in the short terms will help ease anxiety pertaining to protecting yourself and your family.

There are many insurance companies offering life insurance plans, online term insurance plans and covid insurance schemes. Here is how you should select your life insurance policy during the coronavirus pandemic.

Choose A Covid Insurance Plan That Offers Financial Protection First It is a known fact that this medical crisis has created a world of uncertainty looming over us. However, it has gifted insurance companies a chance to go back to the drawing boards and think about innovation, bettered customer experiences and fundamentally attractive cost structures.

Most players have come out with covid insurance plans that are created to cover expenses that come along with the virus. Those who unfortunately have been hit hard by Covid-19, are expected to spend multiple days in hospitals in normal care and intensive care too.

Hence, given the change in the insurance industry and the medical situation that we are in, let's study some of your insurance options to safeguard your family on a financial level:

Online Term Insurance Plans Online Term insurance plans offer protection to the family of the policyholder for a stipulated term period for which the premium is being paid. In the event of death or total disability of the policyholder (depending on the policy) the family dependent on the policy are paid the sum assured. However, If the policyholder survives the entirety of the policy period, no benefit is paid.

Such an online term insurance cover during these Covid times makes a lot of sense. It is not easy planning such things, but at some point we all need to be less emotionally engaged and more practical. Because of Covid, buying a term insurance plan which doubles up as insurance for covid is a smart option.

Insurance Plans That Protect Loans Loan protection policies are important. There could be situations where there is just one breadwinner in a family that has a home loan or car loan on their shoulders. In such cases insurance plans can help protect your loan/mortgage payments in the event of the death or terminal illness or disability of the head breadwinner. Consumers have the option to choose between two such covid insurance protection plans:

Level Cover These Level Covers are available to protect the policyholder's family for loan/mortgage repayments. This plan works similarly like term plans. In such plans you are guaranteed a sum assured in case of the policyholder's death during the policy term. If the policyholder survives the policy period, no payments are made.

Reducing Cover Reducing cover works like a term plan too. However, here the sum assured reduces over a period of time. Contrary to level covers where a lump sum payment is sanctioned, to the nominee in case of an uncertain event, here the sum assured for reducing covers decreases over time. If the policy holder survives the term insurance period, then the sum assured decreases to zero and no compensations are paid.

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Last Word The fact of the matter is that the coronavirus pandemic is a huge wake-up call for all those who have not considered buying an insurance plan. Life is uncertain, in fact it hasn't been more uncertain that it is currently and hence opting for a suitable insurance plan that covers your loved ones is the need of the hour.

And given that we Indians more often than not need a valid reason for most purchases, the uncertainty surrounding coronavirus is reason enough for us to consider securing our family's financial future in case an unexpected tragedy strikes through a covid insurance.

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GENERAL INSURANCE

Insurers settle 4.79 lakh Corona claims amounting to Rs 4,427 crore – Financial Express – 4th December 2020

General insurance companies continue to witness higher claims arising from the novel coronavirus. As on December 1, non-life insurance companies received claims of Rs 9,499 crore from 6.34 lakh policyholders, according to the General Insurance Council. Insurers have settled 4.79 lakh claims amounting to Rs 4,427 crore.

Market participants said the steady fall in active cases in the past few days and availability of vaccine for Covid-19 would lead to lower claims in coming months.“In the last few days, we have seen more recoveries than the daily new infection cases, which can bring some relief to the non-life insurance

industry in the weeks to come,” said a senior official from a leading private insurance company.

According to the Ministry of Health and Family Welfare, there were 4.22 lakh active cases in India as on December 3, 2020, while 89.73 lakh were discharged. The number of deaths caused by the virus stood at 1.38 lakh. Officials in the industry said the average claim size reported for novel coronavirus is Rs 1.49 lakh for the industry, while the average claims amount settled is around Rs 92,400.

The average claim size, however, differs from one state to another. For example, in Maharashtra, the average claim size for Covid-19 is Rs 1.20 lakh, while it increases to Rs 1.80 lakh in Tamil Nadu and Rs 2.31 lakh in Telangana. Senior officials also said out of total claims received by the industry, Rs 2,666-crore claims came only from Maharashtra, followed by Tamil Nadu, Gujarat and Karnataka.

The insurance industry is expecting an increase in the loss ratio in the health portfolio due to the ongoing pandemic. Insurers expect loss ratio for the retail heath policy to go up from current 65-70% to 80-85%.

The loss ratio is the ratio of claims incurred to earned premiums. So, if the loss ratio is 80%, then insurance companies have received a premium of Rs 100 and have paid claims of Rs 80 to the policyholder.

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Home insurance: Which add-on should you opt for with a home insurance cover? - Financial Express – 3rd December 2020

Opting for add-ons along with what is covered under a home insurance policy, helps policyholders to a great length, depending on their requirements. Add-on covers help policyholders in additional areas where the home insurance policy might not work. Certain things that are not covered with a basic policy, can get covered with add-ons. Hence, before choosing a home insurance add-on, make sure it is applicable to your needs and circumstances and adds value to your home insurance cover.

Subramanyam Brahmajosyula, Head -Underwriting and Reinsurance, SBI General Insurance, says “Key add-ons that Home insurance buyers can look at are

burglary and theft cover that as the name suggests, will cover damage/loss to the policyholder’s house and it’s contents in case of a burglary or theft. The public liability section of the home insurance is a type of insurance that covers the cost of claims made by the public or third party for any damage that happens to them in connection with your house.”

Some of the popular add-ons with home insurance include loss of key, liability cover, burglary and theft, temporary resettlement cover, jewelry cover, electrical or mechanical breakdown cover, loss of rent cover, terrorism cover, etc. Shreeraj Deshpande, Chief Operating Officer, Future Generali India Insurance says, “One should be particular about the sum insured and ensure that all the items are covered. Further, the most important add-on covers that one must include are Fire and Allied perils, STFI, RSMD, EQ, Terrorism, loss of rent, theft, and Burglary, and breakdown.”

Most of these add on covers are generally not covered under a home insurance policy. Note that, to get the add ons, you will have to pay an additional amount over and above your home insurance premium.

Popular home insurance Add-ons and their benefits; Liability cover – Liability covers take care of any third-party liability expenses in case of any event which the policyholder has incurred. This also includes any medical liabilities arising out of injury to domestic help, along with any other third party.

Electrical or Mechanical Breakdown cover – Domestic electronic and electrical appliances are covered under this add-on. The add-on cover takes care of any repair and service which the policyholder has incurred in case of a breakdown of these appliances. Burglary and Theft cover – This add-on protects the policyholder from damage or loss to the household contents and home in the case of burglary and theft.

Jewelry cover – This add-on covers all risks for the policyholder’s Jewellery. This add-on not only covers the jewelry if a loss happens at the policyholder’s home but also outside the home when the policyholder was wearing them.

(The writer is Priyadarshini Maji.)

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Contingency funds are more effective against sudden decline in income - Business Standard – 3rd December 2020

Millions have lost jobs or seen drastic reduction in income since the start of the pandemic. Many people seek financial products that could help them deal with a sudden drop in income. While insurance policies that offer coverage against job/income loss are available, they come with many exclusions and conditions

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attached. Highlighting the need for protection, Sajja Praveen Chowdary, head (motor insurance) and new product lines, PolicyBazaar.com, says: “Middle-class salaried and self-employed people need options to safeguard themselves from sudden financial shocks as they tend to have liabilities, like EMIs.” PolicyBazaar recently set up a separate vertical that offers insurance products that provide protection against job/income loss.

In India, standalone policies covering job/income loss are not available. This feature could be available as part of a policy bought for coverage against critical illness, personal accident, home insurance, health insurance, and so on, or it could be available as a rider that one can buy with some of these policies. One, where a person has lost his job/income due to termination, lay-off or retrenchment; and two, where the person has lost his job/income due to disability or death. The cost of a rider ranges from a few hundred to a few thousand rupees. Most of these policies, however, come with exclusions you need to be aware of. Adhil Shetty, CEO of BankBazaar, says: “In most cases, the income-protection clause is triggered only with the rest of the policy. For instance, a health cover will typically provide income protection only if the policyholder is unable to continue working due to ill-health”. It won’t consider you eligible if job loss happens due to a pre-existing disease.

Sometimes, job loss is defined narrowly. Some plans may cover you only if the job loss resulted from a merger or acquisition. Some won’t cover you if you resigned, faced disciplinary action, were removed due to poor performance or during probation, or retired early. Some policies come with a waiting period of one-three months. Accident-related policies compensate you for job loss only under certain conditions. Shetty says: “Most such policies cover for job loss only if the policyholder has a permanent or partial disability or death.” The benefits from these policies are also often inadequate. Hence, experts suggest it is better to save instead of relying on an insurance cover. Melvyn Joseph, founder, FinVin Financial Planners says: “Once you get a job, your first priority should be to gather an emergency fund.” A single-income family, according to him should have an emergency corpus that will cover at least 12 months of living expenses, plus EMIs, while a double-income family may manage with six months. At the same time, he emphasises that one must have a few essential policies. Joseph says: “Every earning person should have a separate term insurance, family floater health insurance, and a personal accident policy covering all types of disabilities.” The bottom line is that you should not aim to buy an insurance cover just against job or income loss. Buy the key insurance policies mentioned above. If one of them has a job- or income-loss protection feature, avail of it.

(The writer is Bindisha Sarang.)

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Protect your home and vehicle against natural disasters, but mind the exclusions - Live Mint – 2nd December 2020

The year 2020 witnessed floods in Bihar, torrential rains in Maharashtra, Gujarat and Karnataka, and a series of cyclones lashing the eastern ghats of the country. The recent cyclone, Nivar, has also led to property damage in parts of Tamil Nadu and Puducherry. When a natural disaster strikes, comprehensive home and motor insurance policies can come in handy to tackle the losses.

“Only home insurance can protect a person against damages due to fire and other natural disasters. Similarly, a comprehensive motor cover helps protect vehicles during calamities," said Indraneel

Chatterjee, co-founder and principal officer, Renewbuy.com, an online insurance aggregator.

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We tell you the major risks that home and vehicle insurance cover, key exclusions and the add-ons to consider.

Home insurance The most common risks included in a home insurance policy are fire, damage caused by weather like flood, earthquake or cyclone as well as theft and burglary.

“Evaluate all the risks your house is prone to or might face in the future. Look out for all the probabilities and then decide the house’s coverage after calculating all the factors," said Subramanyam Brahmajosyula, head, underwriting and reinsurance, SBI General Insurance Co. Ltd.

Consider the exclusions. The most common exclusions in home insurance products are debris removal and the consequential or indirect loss caused to the property.

If you have an independent house, choose a cover that will pay for the entire cost of reconstruction. Evaluate the options available to arrive at a suitable sum insured. For an apartment or a flat, the sum insured can be decided on an agreed value basis, meaning the loss will be settled on a fixed value agreed with the insurer earlier.

“Add-on insurance can be taken to cover riot, strike and malicious damage, loss of rent as well as breakdown of appliances," said Shreeraj Deshpande, chief operating officer, Future Generali India Insurance Co. Ltd. Some policies also include accidental hospitalization—with daily cash allowance—and a pet cover.

According to experts, it is better to buy a householder’s package policy, as it offers comprehensive coverage. Keep in mind that add-ons may increase the premium that you have to pay.

“Also, check for options to purchase a long-term cover for three or five years where you may get a discount in premiums," said Brahmajosyula.

Motor Insurance In motor insurance, a third party (TP) cover is mandatory for vehicles plying on roads, which protects the owner of the vehicle from legal liability arising due to an accident—it may be injury or death of the third party or third-party property damage. Moreover, individuals have to mandatorily buy a cover which pays ₹15 lakh if the owner of the car dies in an accident.

TP cover, however, does not offer protection against damages caused by natural calamities. An own damage cover, which is optional for car owners, pays for expenses of repairs when a vehicle gets damaged due to natural calamities or accidents, and pays the full insured declared value (IDV), which is the value the insurer will pay if your vehicle is totally damaged or stolen.

“Vehicle IDV is pre-defined by the regulator on a yearly depreciation basis. However, policyholders can increase it up to 20% and decrease by 10%, depending upon the vehicle’s current ex-showroom price. Mind that increasing IDV can raise the premium as well," said Chatterjee.

A key exclusion in a motor insurance policy is a compulsory deductible component, which is a part of the claim that an insured has to pay out of his or her pocket. The company may also deduct the depreciation amount on the parts replaced. Other exclusions that are not covered are mechanical damages to engine and all other parts and damages due to wear and tear.

Depreciation reimbursement, engine protection, and roadside assistance as some of the add-ons you can opt for.

Research properly before buying a home or vehicle insurance policy.

(The writer is Abhinav Kaul.)

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Gadget insurance sees high traction – The Times of India - 2nd December 2020

With an increase in purchase of expensive gadgets, insurers are seeing a higher traction with a 20 percent rise in ticket size of policies sold.

Kunal Mahipal, CEO, Onsitego, which offers extended warranty, damage protection, said “We have seen a 20 percent rise in the ticket size of insurance products since June, 2020. The average ticket size of insurance premium collection stands between Rs 1,500 – 2,500. In device protection services, top categories include smartphones, TVs and laptops. Annual Maintenance Contract (AMC) for air conditioners and water purifiers have seen good traction this year as part of our B2C strategy.”

Gadget insurance is a protection plan where you get protection against accidental damages, water or fluid damage, theft, burglary and fire damage. Gadgets insurance like cell phones, laptops, digital cameras, computers etc. In case, gadget gets stolen, damaged, etc. insurance companies would compensate for the loss, which differs from policy to policy.

In cases of total loss or theft, the residual value after deducting depreciation will be paid to the customer.

“On the biggest festive day - Dhanteras – we recorded a 140 percent growth and acquired 13,000 customers. We have seen a 55 percent volume growth in Tier 2 & Tier 3, driven by the expansion achieved by our retail partners,” Mahipal said.

Most of our volume comes from metros and Tier I cities, but we have also seen a lot of traction from Tier II and Tier III cities in Madhya Pradesh, Rajasthan, and Tamil Nadu,” he added.

Onstiego said it has witnessed improved sales and shoppers from Tier 2 and Tier 3 cities, at the back of growing higher penetration by e-Commerce companies.

Acko General Insurance, which offers a mobile phone insurance cover and an extended warranty cover for selected gadgets, said it has seen a 20-25 percent increase in ticket size of premium collection, driven by a 50 percent increase in the sales in premium mobile phones this year. Its senior VP, Anupam Dey said “We charge about 4-5 percent of the mobile phone price as the insurance premium. The average ticket size has gone up, as we saw the majority of customers upgraded their mobile phones, laptops, etc as they indulged in work from home. Have seen a 30 percent increase in sales of gadget insurance covers between January-October, 2020, as compared to the same period last year.” Acko General Insurance company sells over a million gadget insurance covers annually. “We have seen a 30 percent growth in the premium segment (above Rs 25,000) this year. This could be attributed to more people upgrading to their first smartphones or upgrading to a better model to meet the demands of increased online usage and needs,” Dey said.

(The writer is Mamtha Asokan.)

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FDI in non-life insurance sector slips marginally to ₹509 crore in FY20 – Live Mint - 1st December 2020

Foreign direct investment (FDI) in the general insurance sector slipped marginally to ₹509.07 crore in FY 2019-20 from the previous year, latest data by the General Insurance Council (GIC) showed. In FY2018-19, FDI in the non-life insurance space was recorded at ₹516.61 crore.

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Since the opening up of the insurance market in 2000, the non-life sector attracted a total FDI of ₹4,721.68 crore as on March 2020. It was ₹4,212.61 crore at the end of March 2019.

There are 33 general insurance players, including four public sector insurers, six standalone health insurers and two state-owned specialised companies -- Export Credit Guarantee Corporation of India and

Agriculture Insurance Company of India Limited (AIC).

It is to be noted that FDI limit in the insurance sector has been hiked to 49% from earlier level of 26%.

The insurance sector was opened for private players in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%.

New India Assurance and GIC Re were listed on stock exchanges while ICICI Lombard from the private sector went public in 2017.

The sector has also seen consolidation in the last few years. The latest being the merger of Bharti AXA General with ICICI Lombard. The proposed deal got in-principle approval from the Insurance Regulatory and Development Authority of India (Irdai) last week.

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Insurers’ underwriting losses rise to Rs 22,859 crore; three PSU players among worst hit - The Indian Express – 1st December 2020

The total underwriting losses of the insurance industry have surged by 4.4 per cent to Rs 22,859 crore in 2019-20, compared to the previous financial year, according to statistics compiled by GI Council, the official representative body of all domestic general insurers.

While state-owned New India Assurance contributed the highest net profit of Rs 1,418 crore, the sector — comprising 32 players — has been saddled with total losses of Rs 1,402 crore in FY2019-20.

This is primarily because the other three PSU general insurers — United India Insurance (UII), National Insurance Company (NIC) and Oriental

Insurance Company (OIC) — have dragged down the financials of the sector with their huge underwriting losses during the period. “Motor, crop and health segments seem to have contributed to the underwriting losses,” said an insurance source. Underwriting loss occurs when claims are higher than the premium income of the insurance company. The industry had made a net profit of Rs 683 crore in fiscal 2018-19 as compared to a net profit of Rs 6,909 crore in 2017-18. The three PSU general insurers, with their large underwriting losses of Rs 14,443 crore, together have been responsible for the overall losses of over Rs 7,118 crore in FY 2019-20.

NIC, with a combined ratio of 160.8 per cent and underwriting losses of Rs 5,759 crore, has suffered losses of Rs 4,108 crore, while OIC (141 per cent, Rs 4,197 crore) and UII (132 per cent, Rs 4,487 crore) have been hit with losses of Rs 1,524 crore and Rs 1,486 crore, respectively, in 2019-20.

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Out of 20 private sector general insurers excluding the stand-alone health insurers, 11 players, led by ICICI Lombard General Insurance (with a net profit of Rs 1,194 crore) have succeeded in ending the year with some profitability, while out of six exclusive health insurers only two have made net profit during 2019-20.

Two-year old insurtech Acko General Insurance has witnessed the highest combined ratio (CR) of almost 210 per cent in the industry. It has been followed by other newcomers like Edelweiss (CR of 193 per cent) and Sachin Bansal-owned Navi General Insurance (CR 165 per cent). Shriram General Insurance, with 91 per cent, SBI General Insurance (93.5 per cent), Universal Sompo (96.5 per cent), Care Insurance (98.4 per cent) StarHealth Insurance (93 per cent) have earned the distinction of having low combined ratio in the industry.

There are very few companies (excluding Care) which have seen underwriting profits in FY 2019-20. Combined ratio is the most important profitability parameter of a general insurance company and a combined ratio below 100 per cent means the company is making underwriting profit. While the three public sector general insurers have been burdened with high combined ratios due to legacy issues, the new entrants’ higher combined ratio can be attributed to their high business expenses and low premium and investment income in the initial years, analysts said.

The top three private sector general insurers, ICICI Lombard General Insurance (CR of 100.4 per cent and underwriting losses Rs 105.16 crore), Bajaj Allianz General Insurance (100.8 per cent, Rs 10.90 crore) and HDFC Ergo General Insurance (102.60 per cent, Rs 177 crore) have seen negative CRs and underwriting losses in 2019-20.

(The writer is George Mathew.)

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Home Insurance: Know all about inclusions and exclusions under a home insurance policy - Financial Express - 30th November 2020

There are various options available while choosing a home insurance policy. For instance, home insurance for owners, housing society insurance and home insurance for tenants. Hence, depending on the type of your home, you can opt for a home insurance policy.

Having said so, there are mainly two different products available in India – Home Structure Protection and Home Content Protection. One where house structure can be covered against possible damages and another where along with structure contents kept in the house can also be covered. Rakesh Jain, CEO, Reliance General

Insurance Company, says, “To suit the varied needs of every individual customer, leading insurers offer a wide range of home insurance policies. Home insurance provides coverage to a house and its contents against loss or damage caused by man-made such as theft, burglary, strike, riot, terrorism, etc. and natural calamities such as flood, storm, landslide, etc.”

The structure protection plan covers the structure of your house from any kinds of dangers and risks. In addition to this, the policy also protects any permanent fixtures within the house. It provides comprehensive coverage against fire, flood and inundation, storm, hurricane, earthquake, explosion, riot/strike.

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On the other hand, the Content Protection plan covers all your personal property including jewellery, furniture and electrical goods are protected against risks such as fire, theft, flood, etc. It protects the insured in case of burglary and house-breaking, Jewellery and valuables against accident or misfortune, chain snatching is covered even outside the home. Subramanyam Brahmajosyula, Head of Underwriting and Reinsurance, SBI General Insurance, says, “A good home insurance plan ideally is the one which covers the risks faced to your house and its contents.”

What are the inclusion and exclusions under home insurance? Brahmajosyula, of SBI General Insurance, says “Home insurance is often underestimated by most but is an important contingency plan to have in place. Even tenant can cover their valuables and household items kept at home.”

Home insurance plans provide comprehensive coverage against loss or damage to personal property such as jewellery, furniture, electrical goods, personal accident and others caused by natural/man-made calamities. Most common risks include fire damage, smoke damage, damage caused by weather-flood/storm/inundation, earthquake, theft or burglary, vandalism, and damage caused by a vehicle.

Most common exclusions in-home products are debris removal cost above specific limit, consequential or indirect loss, volcanic eruptions. Jain, of Reliance General Insurance, says “One should note that some of the major exclusions include Damage caused by war, invasion, the destruction caused by due to volcanic eruptions, Radioactive toxic, explosives or other hazardous properties of any explosive nuclear assembly or nuclear component, Loss, destruction or damage caused to the insured property by pollution or contamination, cracking, scratching or breakage of valuables or glass during transit, theft during or after the occurrence of any insured peril.”

(The writer is Priyadarshini Maji.) TOP

PSU general insurers told to improve their financial health - The Telegraph – 30th November 2020

The finance ministry has asked public sector general insurance firms, especially National Insurance, Oriental Insurance and United India Insurance, to rationalise branches and cut down avoidable expenses to improve their financial health, sources said.

Earlier this year, the Union cabinet decided to halt the merger process of three state-owned general insurance companies because of the weak financial positions of these three companies. Instead, the government approved a fund infusion of Rs 12,450 crore to meet the regulatory parameters.

The finance ministry has asked these companies to cut the flab by rationalising branches and rein in other avoidable expenses such as guest house, sources said. Besides, sources said, they have been asked to expand their business through the digital medium. As part of the capital infusion exercise, the government also approved raising the authorised share capital of National Insurance Company Ltd (NICL) to Rs 7,500 crore and that of United India Insurance Company Ltd (UIICL) and Oriental Insurance Company Ltd (OICL) to Rs 5,000 crore each.

The Rs 12,450-crore capital infusion approved by the cabinet in July includes Rs 2,500 crore provided to these companies in 2019-20. During this year, the government infused Rs 3,475 crore while announcing an infusion of the balance Rs 6,475 crore in one or more tranches. The government in budget 2020-21

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had made a provision of Rs 6,950 crore for capital infusion in these three insurance companies in order to maintain the requisite minimum solvency ratio.

Three PSU general insurers, with their large underwriting losses of Rs 14,443 crore, together have been responsible for the overall losses of over Rs 7,118 crore in 2019-20. NICL, with a combined ratio of 160.8 per cent and underwriting losses of Rs 5,759 crore, has suffered losses of Rs 4,108 crore, while Oriental Insurance and United India Insurance have been hit with losses of Rs 1,524 crore and Rs 1,486 crore, respectively, in 2019-20.

However, New India Assurance, the only exception out of the four public sector general insurers, posted a profit of Rs 1,418 crore in 2019-20. Meanwhile, the Insurance Regulatory and Development Authority of India (Irdai) on Friday gave in-principle approval to the merger of Bharti AXA General with ICICI Lombard.

ICICI Lombard is progressing applications for the receipt of requisite approvals from other concerned regulators for the transaction, the insurance company said in a regulatory filing. Upon closing of the proposed transaction, the consolidated entity will have a market share of about 8.7 per cent on a pro forma basis in the non-life business, it added.

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HEALTH INSURANCE

India: Mandatory medicals for COVID-19-affected policy buyers – Asia Insurance Review

Post COVID-19 the financial and medical underwriting of life insurance in India is likely to become tighter with some restrictions in place.

Medical check-ups may be mandatory to ensure that none of the vital organs are impacted. COVID-19 could have long-term effects and clarity is still required over its post-illness impacts. A new COVID-19 questionnaire has also been introduced as an additional piece of documentation for life insurance buyers.

India First Life Insurance MD and CEO R Vishakha told Moneycontrol.com, “Insurers will want to do fully-fledged medical check-ups. In terms of

financial criteria, earlier, for lower sums assured, we would rely on self-declaration of income. Now, we would want to see income proofs.” Ms Vishakha said, “You want to be very sure because the underlying risk that insurance companies have to watch out for is anti-selection. We need to make sure we are insuring probabilities, not certainties.”

“It has become one of those dreaded diseases because of the unpredictability. So, if a person has had COVID-19, it would be prudent on the part of insurers to carry out medical check-ups to find out whether there is any impact on the individual’s health. So, the risk of insuring someone who is already affected by COVID-19 needs to be carefully evaluated and provided for,” said Ms Vishakha.

Speaking about increase in premiums post COVID-19 Ms Vishakha said, “Even before COVID-19, many reinsurers had increased premiums due to adverse mortality experience. There has been no further revision post March and April. Having said that, insurance premiums will depend on the mortality experience. We need to wait and watch.”

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Rising premiums may hit health insurance growth – The Times of India – 4th December 2020

The record growth seen by health insurance segments risks tapering off with reducing affordability. The growth in health insurance has been largely due to increase in premium as there has been a steady increase in average premium per policy in recent years, according to insurance consulting firm Milliman.

Health insurance premium has more than doubled from Rs 24,448 crore in FY15 to Rs 51,636 crore in FY20. According to Irdai’s annual report, the number of people covered under health insurance shrunk from 48.2 crore in FY18 to 47.2 in FY19. The numbers for FY20 have not yet been released. Between FY16 and FY19 when the total premium

rose 86 percent, the average premium per person rose 40 percent.

In the current fiscal too, health insurance has been the fastest-growing segment. This is also because many insurance companies have revised their premium tables.

According to Joanne Buckle, the lead consultant in Milliman’ healthcare practice, the challenge is to make the health insurance business sustainable in the backdrop of high medical inflation. She adds that growth tends to level off when the average premium keeps increasing year-on-year.

In India, another reason for the premium to rise this year is an effort by the regulator to make health insurance more comprehensive by standardising the exclusions. While this has made the coverage more inclusive, the trade-off has been on reduced affordability. Policyholders have seen their premium bills rise in double digits for the same sum insured.

According to Buckle, if the insurance cover is not comprehensive enough, it would mean that policyholders pay out of their pocket for some claims. Insurers should rather control the cost of claims to ensure that the business growth is sustainable.

Non-life companies do not have much headroom to reduce cost of cover as most of them are already experiencing a combined ratio of over 100. A combined ratio is the ratio of claims, commission, and operating costs to the premium. Post-Covid, the health segment has grown by more than 15 percent between April and September 2020 compared to the year-ago period. Most major players registered a healthy growth.

(The writer is Mayur Shetty.)

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How to choose the best health insurance that can protect you from high cancer treatment costs - News Patrolling – 3rd December 2020

When we hear the word Cancer, all of us freeze. That’s because for the longest time, cancer was a fatal disease. Once diagnosed with it, people invariably succumbed to it. But over the last few decades, massive leaps have been made in the treatment of Cancer. Today, many Cancers are fully treatable, if diagnosed early. Advances in treatment have meant that people can recover and resume normal lives even after Cancer treatments.

According to a recent report by ICMR, cancer cases in India are expected to touch 15 lakhs by 2025. Hence, it is important to be prepared to tackle it. With medical costs increasing rapidly and

treatments for illnesses like cancer demanding surgery, radiation and chemotherapy, or a combination of all, the treatment expenses can be very high.

Staying prepared – Prevention and Protection Make healthier choices – a healthy diet, sound sleep and regular exercise form the basis for a stress-free and healthy mind. A few lifestyle choices like tobacco and alcohol consumption have also been correlated with increasing the risk of cancer.

Tests and screenings – early diagnosis of cancer makes the treatment easy and leads to full recovery. Hence, regular health check-ups and screenings can help detect the early stages of cancer, if any. An annual screening after the age of 40 in women (like mammography, pap smear, ultrasound) and the age of 55 in men (PSA ultrasound for men, apart from some tumour markers) can be helpful.

Choosing your health insurance wisely Higher sum insured: It is always better to be prepared with adequate cover for any medical expenses. There are multiple covers available with different combinations in the market that provide the most suitable coverage for your needs. For instance, If you are living in a metro city, the cost of treatment will be higher as compared to the treatment cost in smaller towns. So, it is important to choose a sum insured that can cover at least 1.25 times the average cancer treatment. The cost of treatment will vary with the type of cancer detected. But coverage of INR 5-7 lakhs is the minimum one must have. In case you are planning to buy a family floater policy, then increase the above-expected coverage by 50 per cent as it is shared between members of the family.

Co-payments: Co-payments are a feature of many health insurances wherein you are required to pay part of your claim based on the percentage of your co-payment. It is used by many people to reduce their health insurance premiums. However, if you’re looking for coverage against big expenses, a co-payment may not be the best option.

Critical illness add-on: A critical illness add-on covers beyond cancer. Benign brain tumor, coma of specified severity, open heart surgery, organ/ bone marrow transplant, different types of cancer, heart conditions, etc. are few of the medical treatments that are generally covered under critical illness cover. Some people choose health insurance without critical illness cover. In such cases, they can look at a separate cancer benefit add-on.

Waiting periods: There will be a waiting period in case of any health insurance. And it is not different for critical illness covers. Different insurers have different waiting period options available with the product, hence it is important to understand the waiting period of the product that you have chosen.

Pre-existing medical conditions: It is very important to inform your insurer about your complete medical history. In some cases, if there is an existing cancer condition or history, then getting a new policy

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becomes difficult. However, on evaluating the needs, insurers can provide the most convenient financial protection, although at a higher premium.

Insurance providers now have policies that can cover your cancer treatment costs from diagnosis to cancer-related treatment, such as chemotherapy, surgery, hospitalisation, radiation therapy, immunotherapy and other incurred expenses. With a cancer benefit policy, along with regular hospitalization and treatment expenses are covered by your health insurance plan, a lumpsum can be claimed under the cancer benefit plan, which will help in the other expenses. Cancer insurance can be a pillar of financial support for those affected and their families. It can relieve them from the financial stress that one undergoes at the time of treatment.

(The writer is Dr Sudha Reddy.) TOP

The importance of network hospitals in health insurance – Moneycontrol - 2nd December 2020

India’s COVID-19 count continues to rise with the total number rising above 9 million. The deadly virus has till now claimed over 1.3 lakh lives throughout the country, and the toll rises with each passing day. Considering the ongoing pandemic situation, it is imperative to have a comprehensive health insurance policy that can help you avail the best treatment possible at a hospital of your choice, without burning a hole in your pocket. Your comprehensive health insurance policy will not only provide you adequate coverage against the novel coronavirus (COVID-19), but will also cover you for all other illnesses and ailments

such as cancer, stroke and diabetes. With your health insurance policy, you can not only avail quality healthcare, but also have the benefit of availing cashless treatment at your choice of network hospital. What this essentially means for the customer is that during hospitalisation, you can avail cashless treatment – without paying anything to the hospital – at your choice of network hospital.

What is a network hospital? When you buy a comprehensive health insurance policy from your choice of insurer, you get a list of hospitals under the name of Network Hospitals. Apart from the policy documents, you can find this list on the website of the insurer as well. All hospitals mentioned in this list allow policyholders to avail cashless treatment at their centre. This means, the policyholder does not have to pay anything at the hospital for taking treatment, apart from nominal file charges. The biggest benefit of availing treatment at a network hospital is that the insured does has to run to different places in order to make financial arrangements and all expenses are borne by the insurer. The insurer directly settles the bill with the hospital without you paying any amount, provided the treatment is taken as per the policy terms and conditions. Making a cashless claim in a network hospital When you file for a cashless claim at a network hospital, there are usually three major entities involved – the insurance company, the hospital and the insured person. You can file an insurance claim under two categories – Planned Hospitalisation and Unplanned Hospitalisation (Emergency). In a planned hospitalisation, both the insurer and the network hospital are informed about the hospitalisation of the insured beforehand. As a process, before availing the treatment, the insured or the family members need to fill a pre-authorization form to get the person admitted. You can download the pre-authorization form from the insurer’s website; it may even be available at the hospital’s TPA counter. A TPA counter is a

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dedicated kiosk at the hospital premises where all the insurance-related queries and processes of the insurers are addressed.

Once the pre-authorisation form is submitted, the TPA desk will verify the submitted details and will inform your insurer regarding the claim. Once the insurer approves your claim request, an authorization letter is sent by the insurer/TPA to the hospital, stating the amount approved for the treatment. This amount is directly paid to the hospital by the insurance provider. The approximate Turn Around Time (TAT) for pre-authorized claims in the case of network hospitals is approximately 30 minutes to 2 hours. However, one must know that TAT varies from insurer to insurer.

(The writer is Amit Chhabra.) TOP

What is micro health insurance and what it means for you? – CNBC – 2nd December 2020

India is predominantly a developing country wherein a major part of its population lives in rural areas. In the year 2019, the rural population in India accounted for 65.53 percent of the total Indian population as per the data furnished by the World Bank.

The rural population has limited income and more prone to illnesses and injuries. When a medical contingency strikes, the family finds it difficult to afford quality healthcare and so, proper medical treatments are usually given a miss. Especially in recent times when the rural population is being infected with COVID, having sufficient financial

provision for meeting the medical costs has become necessary. This is where micro health insurance comes into the picture.

Micro health insurance is health insurance for the rural sector of India. Micro health insurance plans provide insurance coverage to individuals living in rural sectors.

Some of the salient features of these schemes are as follows: • Sum insured ranges from Rs 1 lakh to Rs 5 lakh for the PM JAY scheme. • The premiums are low allowing the rural population to easily afford the policy • The coverage is granted for one year • The policy can be taken on a family floater basis covering all the family members • Since the sum insured is low, no pre-entrance health check-ups are needed when buying the plan • Entry age is usually restricted to 65 years • Lifelong renewals are available under the plan

Coverage under micro health insurance plans Micro health insurance plans provide basic coverage benefits. These benefits include the following –

• Coverage for pre-hospitalization expenses • Coverage for post-hospitalization expenses • Coverage for expenses incurred on hospitalization when the individual is hospitalized for 24

hours or more • Coverage for daycare treatments • Cost of the ambulance

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Micro health insurance in India Currently, there are a few insurance providers that offer micro health insurance plans for the rural population of India. Such micro health insurance plans provide a good scope of coverage to the rural populace at extremely affordable premium rates. Such plans allow individuals in rural areas to afford health insurance and avail the necessary medical treatments without burning a hole in their pockets.

Besides health insurance providers, the Government of India has also introduced many health insurance schemes for the poor and backward class individuals. One of the most recent and popular health insurance schemes is the Ayushman Bharat Scheme or the Pradhan Mantri Jan Arogya Yojana PMJAY). This scheme, launched by PM Narendra Modi, revolutionized health insurance for the low-income class individual. Under the PMJAY scheme, coverage of Rs 5 lakh is given to the family of each beneficiary per year for secondary and tertiary care.

Another popular scheme is the Aam Aadmi Bima Yojana (AABY) scheme which provides health insurance coverage to individuals engaged in 48 specific occupations like weaving, fishing, handloom, carpentry, etc. This scheme also has a low premium rate and allows a good scope of coverage.

While the PMJAY and AABY schemes are national health insurance schemes, there are State-specific schemes too which are promoted by the different States of India. All these schemes have one objective – to allow the rural and backward class individuals to avail of quality healthcare services without worrying about its affordability.

Importance of micro health insurance in the Indian context With a major part of the population being rural, having suitable micro health insurance plans is important. Both the Government and insurance companies are doing their bit to offer comprehensive yet affordable health insurance plans for the people living in rural areas. The recent pandemic has caused the most severe loss to the rural populace as many have lost their source of income and are also falling prey to the infection.

In these trying times, having access to a micro health insurance policy allows them to avail of proper medical treatments without straining their finances. There is, therefore, good potential for the growth and development of micro health insurance plans in India. Insurance providers are also expected to contribute to the growth of such plans so that health insurance penetration reaches even the grassroots level of the economy.

(The writer is Dhirendra Mahyavanshi.)

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Are you covered for under-trial vaccinations? Know your insurance limits - Zee News - 1st December 2020

Insurance coverages are not only a factual risk or liability coverage but to a large extent, they are also a mental peace cushion for an individual. Such coverages assure the individual policy holders that should a situation go wrong, he/she has something to fall back on.

At a time when companies and governments world over are putting immense efforts to roll out a potential Covid-19 vaccine, it is also pertinent that the recipient is well informed regarding vaccination trials and if they have any insurance coverage on the same.

A high level of effort is equally important to

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counteract any levels of apprehensions, fears and ambiguity that the participants may be facing regarding (under trail) vaccination insurance.

It is against this backdrop that T A Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance spoke to Reema Sharma of Zee Media Digital on the issues covering vulnerabilities regarding vaccination (if some sort of complications arise post vaccination).

He also spoke on what insurance companies can offer regarding vaccination. Or, is there any scheme in the market that covers vaccination issues if any vaccination drive goes wrong? Are insurance companies giving them any cushion against such vulnerabilities? No. A common man cannot purchase any vaccination policy that is under trial. One has to be a registered volunteer to get under-trial vaccination.

Ramalingam says, “Clinical trial policies are available in the market which provide coverage to cushion the blow from legal liabilities arising from the clinical trial due to any adverse effects on the trial subjects.” Another question that comes to mind is whether there is any insurance scheme run by companies which gives buffer to individuals if such a situation arises where the vaccination drive may go wrong. Only a registered volunteer gets under-trial vaccination and it is not meant for the common man.

However, “Once the vaccine is approved and then if there are any issues in the vaccine/drug which cause negative effects during administration of the vaccine or drug then such liability is covered in the product liability policy of the pharma company. Clinical Trial Insurance will cover adverse effects during the course of trial and Product liability will take care of legal liabilities once the product is approved and sold,” Ramalingam adds.

(The writer is Reema Sharma.)

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Monthly health plan premiums a positive, but there’s a flip side – Live Mint – 1st December 2020

More and more first-time buyers in the younger age brackets are opting for the monthly premium option when going for health insurance policies, the recent buying pattern on Policybazaar.com, an online marketplace for insurance, shows.

The monthly premium option was introduced by the Insurance Regulatory and Development Authority of India (Irdai) in April to provide relief from steep one-time premium payouts after covid-19 struck. The regulator asked all health insurers to introduce the instalment facility immediately either on a permanent basis or as a temporary relief for a period of 12 months till 31 March 2021. The idea was first

floated by Irdai in September 2019, when it asked insurers to file revamped policies, with the instalment option, from 1 October 2020.

Policyholders now have the option of paying premiums in monthly, quarterly or half-yearly instalments. However, only a few insurers are offering this facility as of now. Among the ones that are, most are sticking to the monthly option. “Instalment premium option is a good mechanism to help increase penetration of health insurance and encourage more people to get themselves insured, especially where affordability is a big challenge," said Prasun Sikdar, managing director and chief executive officer of ManipalCigna Health Insurance Co. Ltd.

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As per the analysis done by Policybazaar.com, around 40% of individuals in the age group of 25-30 years bought health insurance through the monthly payment option against 30% for the annual payment mode from September to November. “Individuals in the top cities have much better adoption rate compared with people in tier-II or tier-III cities. It is an expected trend that younger people and those living in tier-I cities would be using this option, as they are most exposed to EMIs and personal loans," said Amit Chhabra, health, business head, Policybazaar.com.

The instalment option has given a boost to mediclaim policies this year, he added. However, the instalment facility has certain fallouts. We tell you what these are and why all insurers are not offering it as of now.

watch out for Pricing: While the benefits are identical in the instalment option to the yearly payment mode, the pricing can vary from company to company. According to Abhishek Bondia, managing director and principal officer, SecureNow.in, an insurance broker, the premiums under the instalment option can be marginally higher to account for the time value of money, which indicates that the value of money goes down over time.

Risk of lapsation and lack of coverage: Monthly option is convenient if you are in a cash crunch but remember to put a standing instruction in place for automatic periodic deductions. According to the Irdai circular in 2019, missing the instalment may result in lapsation of policy. In the case of monthly premium option, the grace period is around seven to 15 days against one month for the annual option, said Chhabra.

Moreover, late payment may mean absence of coverage for that period. During the grace period, the coverage of the policy will not be available from the due date of payment till the date of receipt of premium by the company, according to the Irdai circular. The insurers also have the option to cancel the policy, in case the instalment is not received within the grace period.

Claims process: The instalment option may also impact the claims process. In the event of a claim, an insurer may deduct all the subsequent premium instalments from the claim amount, Irdai’s 2019 circular had said. For example, suppose the policy premium is ₹12,000, and you are paying ₹1,000 a month. If the claim is of ₹50,000 and you have paid just two EMIs, and ₹10,000 is pending. Then, the remaining premium amount of ₹10,000 will get deducted, and you will get a claim payment of only ₹40,000.

Still in the works According to experts, not all companies have started rolling out this facility as they are still working on the technology part. Some of the large insurance companies that have rolled out this option are Star Health & Allied Insurance Co. Ltd, Care Health Insurance Ltd, HDFC ERGO General Insurance Co. and Cholamandalam MS General Insurance Co. Ltd.

“Monthly payment has been associated with lower persistency. So, insurers prefer annual payment modes to ensure high customer retention. Apart from the opportunity cost of investment income, insurer’s operating expenditure may go up, including changes in IT infrastructure, operational processes to track payments and accommodate change requests," said Bondia.

Health insurance has increasingly become a necessity, but it’s becoming unaffordable for some, given the rising premiums and the prevailing cash crunch situation. The instalment options thus works for a lot of people. The added advantage is that the policy benefits are the same. “Generally, for policies with the instalment premium payment option, the benefits do not vary. Only the premium frequency can be selected. Thus, it is an affordable option," said Sikdar. However, keep in mind the fallouts of the instalment option. Moreover, it is not available for renewal of policies as of now.

(The writer is Abhinav Kaul.)

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Mind over matter: India’s mental health policy – The Hindu - 30th November 2020

Months of battling a worldwide pandemic have shone a spotlight on the importance of mental health and India’s approach towards an often neglected healthcare issue.

To a child battling nervewracking competition, an investment banker hustling for over 100 hours a week, a woman subjected to domestic violence, and a senior citizen dealing with loneliness, mental health is as real as anything that causes the human body to bleed. However, it takes a pandemic to build a conversation around mental health in an Indian household.

For the uninitiated, mental health includes our emotional, psychological, and social well-being. It incorporates a wide range of issues, from clinically diagnosed mental disorders to substance abuse and addiction.

Globally, around 8,00,000 persons die by suicide each year (1 death every 40 seconds), while over 264 million people of all ages suffer from depression. According to the WHO, at least 57 million people in India are depressed – the highest in the world.

Issues It has been observed that mental health issues are more prevalent in urban areas with specific disorders like schizophrenia and other psychoses, mood disorders, and neurotic or stress-related disorders being nearly three times more prevalent in urban metros. Nearly 50% of persons with major depressive disorders reported difficulties in carrying out their daily activities. It has been estimated that by 2030, the mental health crisis is going to cost India a trillion dollars in lost productivity.

Despite these staggering numbers, there are glaring gaps in the preventive and curative care of these mental disorders. For instance, the mental health workforce amounts to less than 4,000 psychiatrists in the country. Lack of funds is another deterrent. While the total healthcare budget increased by 7% in 2020, there was no corresponding increase in budget for the National Mental Health Programme; the allocated amount is only 0.05% of the total healthcare budget. The actual current spending to implement provisions of the Mental Healthcare Act, 2017 is a very small fraction of the conservative estimate of `94,073 crores.

Mental Healthcare Act, 2017 The Act ensures healthcare for people suffering from mental illness through health services funded by the Government. It decriminalises suicide, disallows sterilisation and

Innovative Recommendations A national plan for mental health literacy should be envisaged.

Mental health should be integrated with the National Urban Health Mission and other programmes to deal with the high prevalence of mental health issues in urban areas.

An incentive-based approach should be utilised to encourage interest in the field of psychiatry and psychology and to solve the shortage of medical professionals in the field. While Ayushman Bharat allows for insurance for medical treatment of the mentally unwell, financial protection in the form of allowances should be initiated.

Corporate Social Responsibility (CSR) should be encouraged in the field of mental health.

solitary confinement of mentally unwell patients. The Act provides for the setting up of Central and State Mental Health Authorities for the training of medical professionals. It also mandates insurance companies to provide mental health insurance.

In 2018, the Government also initiated the Ayushman Bharat, a medical insurance scheme for the economically deprived people.

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Corona Insurance policy costs Rs 2 per day, still has less buyers: Tapan Singhel, Bajaj Allianz GI - The Economic Times - 30th November 2020

There are different health insurance policies covering even specific diseases but the insurance penetration in India is very less compared to other emerging countries. During lockdown, insurance Insurance Regulator IRDAI asked Insurance companies to issue dedicated insurance policies for Covid-19. All the health and general insurance companies launched Corona Kavach and Corona Rakshak policies but the response was not as expected.

“The cost of Corona Kavach policy is Rs 2 per day. The product is available online with only a few clicks. Generally there is a lack of insurance

awareness but in the case of Corona everybody is aware and knows the risk very well. Buying products is seamless as no major questions are asked. Policy comes into action within just a 15 days waiting period... but people are not buying. It’s unfortunate,” said Tapan Singhel, MD&CEO, Bajaj Allianz General Insurance.

Singhel explained the Insurance industry has innovated a lot and the cost of the crucial products is very less but the response is very less.

“Industry has close to 400 products. Today the biggest risk is cyber. And the cost of the cyber insurance is Rs 700 a year. But people don’t buy.”

However, insurers received a huge response for the motor insurance product ‘pay as you go’. A motor insurance policy that allows customers to pay insurance premium according to the kilometres they drive.

Dealing with Pandemic Digitally Digitalisation has been picking up in every business but the insurance sector has its own challenges.

“Digital lacks in many ways... For even digitally advanced countries like Singapore, 95% policies are sold on paper. But in the lockdown we issued one crore policies and settled 30-40 lakh claims digitally. One corona followed by lockdown enabled digital tools. 'Which means digital tools that were already there were used extensively? What is also surprising is, the grievance ratio dropped by 90%,” explained Singhel.

E-commerce selling insurance E-commerce companies and online portals have been partnering with insurance companies aggressively but it will take some time to reach to a next level. “E-commerce is a high volume, low value business. The policies sold on e-commerce platforms are for specific purpose i.e mobile cover. But it's an emerging distribution segment, because it can sell products with ticket size which are difficult to sell otherwise due to low commission. Importantly, they have the distributor license and they can also sell other products too,” added Singhel.

InsureTech model yet to pick up Currently the InsureTech companies are offering customised policies and selling policies online. But will it be a successful model?

“InsureTech model has been there in the western countries for some time. But they are not successful as a company as yet. They are not successful in the volume, profit or shareholder returns. So the hype is gone down. So maybe the time was not right,” Singhel explained.

While comparing with Insurtech models, Singhel added.

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“Traditional companies have the massive distribution base and infrastructure in place. So, smart companies are those who will learn from each other. Be it Insurtech gaining from traditional companies or vice versa. Right now the hybrid model will work and will go forward.”

World after the pandemic Singhel believed that Corona is not going to be the last virus and hence it's important for businesses, society and the country to prepare for the unprecedented future.

“We had SARS, EBOLA and many other events in the past. Considering the frequency of such events, the question is, is this something we have to prepare for in our business, society and country? Coronavirus is not going to be the last virus. So the question is have we learnt enough from it? I don’t think so. This may repeat in the next 3-4 years. Then will the country and businesses go for lockdown every time or do we have a plan?" He added.

(The Writer is Amol Dethe.)

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Covid claims put health insurance ecosystem to test – Live Mint – 30th November 2020

Earlier this month, my 16-year old son tested positive for covid and was briefly hospitalized. It took us about six hours to get a bed and the all-in cost was over ₹35,000 a day. I have three different health insurance policies with a cumulative cover of over ₹75 lakh. The first insurer had recently dis-empanelled the hospital, the second had had some differences with the hospital on room eligibility, and the third was of the view that hospitalization was not necessary. Covid claims such as this are testing the health insurance ecosystem deeply and at the core are the seemingly unbridgeable differences between hospitals and insurers.

All participants in the ecosystem are facing challenges, including patients. Many cashless claim requests are being converted to reimbursements because insurers believe that hospitalization is unnecessary, particularly just for observation. But patients will not push back when advised hospitalization. More reimbursement claims will lead to potential grievances because these take longer to settle, often one to three months from claim intimation, and can be rejected. Separately, claim paid as a proportion of the hospital bill has reduced, from about 80% to 50% in many cases. One reason is that hospitals are charging more than the recommended tariffs. The penalty, for this difference of opinion between hospitals and insurers, is borne by policyholders. In some cases, policyholders are unclear about what is covered. In one example, a patient did not realize that the policy had a ₹5 lakh deductible, which means that only expenses over ₹5 lakh are covered.

Insurers find it difficult to price covid insurance so dynamically when they have limited insight into disease incidence rates and little control on costs. They also end up being blamed for hospital administration issues. The discharge process is one such. This can take over eight hours, as it did for my son, and is largely due to inefficient hospital administrative processes or simply the overwhelming load of bed occupancy. Insurers also face fraudulent claims. During the early lockdown months, many insurers allowed patients to submit scanned bills, instead of originals, for claims settlement. This made the process easier. However, now instances are coming to light where patients used scans to claim from multiple insurers for the same medical treatment.

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The kindness of doctors and nurses in dealing with patients is heart-warming, but hospitals are woefully short on capacity. In the Delhi hospital where my son was admitted no rooms were vacant, emergency beds all occupied, staff were trying their best to manage capacity and doctors were working long hours. If the eight hours that it takes to discharge patients could be reduced, it would only allow more patients to be taken in and ease capacity.

There are some new challenges also. A friend in the UK needed to take an RT-PCR test before returning to India. This cost over ₹30,000. Travel insurance rejected the claim, citing the clause “routine physicals or other examinations where there are no objective indications or impairment in normal health" are excluded. I can appreciate the insurer’s as well as the claimant’s perspectives. There were no objective indications, but RT-PCR during a pandemic is not a routine examination. How such cases get redressed will clarify the boundaries of health insurance.

Although I have thrown up more issues than solutions, one idea is to create smaller ecosystems, for example a preferred network with just a handful of hospitals, where the patient, insurer and hospital can work more harmoniously on issues of higher cashless claims, package-based payments, and quicker discharge. Patients should be encouraged to visit this small network. Success here will provide the basis for larger scale implementation.

We were driving home after my son recovered and was discharged from the hospital. After some cajoling, insurance did pay the bill. As I narrated some of these incidents, my son wanly asked me if these would find their way into my column. I laughed because though he has been a loyal editor of my column for a decade, this was the first time that he actually provided the content.

(The writer is Kapil Mehta.)

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Tips for buying a good health cover - The Hindu Business Line – 29th November 2020

The Covid-19 pandemic has taught people the importance of insurance . If one falls sick and is in need of hospitalisation, not having an adequate health insurance plan can impact your finances . Also, the financial setback that comes with pre-hospitalisation costs, OPD expenses, medicines, diagnostic tests, etc. can be avoided if one has a comprehensive health insurance plan. One should choose a policy that covers not just hospitalisation, but also related medical costs, together with outpatient treatments and check-ups. Besides, check for policies that boost sum insured for every claim-free year. Also, there are policies that increase the sum insured every year even if there

is a claim. These features will help you be in tune with rise in future medical treatment and hospitalisation costs. Be sure to check exclusions, specific waiting periods, conditions for pre-existing diseases as well as other things such as number of daycare procedures included or specific benefits like maternity, depending on one’s life stage.

Different plans will have specific limits on the benefits that can be claimed. These can vary from a limit on sum insured for specific diseases or limits on amounts payable towards certain medical expenses. This is termed as sub-limit. So, an insurance plan with a sub-limit will impact one’s out of pocket expenses, as a policy holder will have to bear the expenses. Thus, it is advisable to opt for a plan with no disease-wise sub-limits.

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Take note that hospital charges are linked to the type of room or the room rent you have taken. It is important to check the room rent and ICU sub-limits of various health plans before finalising on one. Generally, sub-limits in the plan makes the insurance policy look cheaper. You may claim for an illness and, God forbid, there could be multiple unrelated illnesses or injury that require you to get hospitalised. Restoration cover restores the sum insured any number of times under the policy (for unrelated illness/injury) to additional 100 percent in a policy year. This is provided the existing sum insured, including cumulative bonus, is insufficient to settle a claim.

Select insurers whose claims processing service is fast and accurate. A simplified claim filing process can help you to conveniently access digitally and on phone for expeditious cashless and reimbursement claims settlement. Check the network of hospitals under the policy that offers cashless facility and the proximity to one’s neighbourhood. In case one travels frequently, check hospital network across the country so that a policyholder can continue to get treated from his/her preferred choice of hospital. With non-communicable diseases, including cancer, cardiovascular diseases, stroke and diabetes on the rise, it is always prudent to choose a health policy that could help cover critical illnesses. However, this comes with a price and the decision needs to be made based on its affordability. It’s also important to look for additional benefits and riders such as cumulative bonus booster and rewards for healthy lifestyle, among several other factors. These tips can come in handy while investing in a health insurance plan that is comprehensive and best-suited for one’s family. After all, an economical and comprehensive health insurance plan is much better than inflated medical bills.

(The writer is Prasun Sikdar.)

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Are more people buying health insurance policies now? Find out - Financial Express – 27th November 2020

After the outbreak of the COVID-19 pandemic, the demand for health insurance was widely perceived to go up. With rising medical cost and especially the exorbitant cost associated with the treatment of coronavirus, a rush was witnessed to buy health insurance plans. IRDAI also allowed insurance companies to launch exclusive plans to cover the coronavirus treatment in hospitals. According to the recently released Kotak Institutional Equities Report, overall growth in the health business has been muted at 6% YoY in October 2020. The retail health category, however, saw a 30 per cent growth in the same period.

A sharp 9% YoY decline in group health (up 29% YoY in 2QFY21) was witnessed. Kotak Institutional Equities in its report says that October does tend to be a weak month for group health business. A slowdown in growth in retail health was likely an interplay of (1) slowdown in daily new Covid-19 cases in India and (2) lower volumes during the festive season. It is always suggested to have an independent health insurance policy and not to rely entirely on an employer-provided group insurance plan.

Standalone health insurers reported a 32% YoY increase in health premiums, led by a 43% YoY increase in the retail health business. Private players were up 3% YoY in the health business (up 17% in retail health) while PSUs were down 7% YoY. Among major private players, SBI, Tata AIG and ICICI Lombard witnessed strong growth in retail segments at 49% YoY, 21% YoY, 95% YoY and 32% YoY respectively; Star Health and Aditya Birla Health up 45% and 58% YoY respectively.

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Key highlights Aditya Birla Health and Star Health retain strong momentum. The premium for standalone health insurers was up 32% yoy led by strong growth for all players. This has, however, moderated slightly over the past few months (36-42% yoy over the past four months). HDFC Ergo Health was muted at 1% yoy. Aditya Birla Health and Star Health continued to see strong growth; up 56% yoy and 45% yoy respectively in October 2020 (up 71% yoy and 45% yoy respectively in 7MFY21).

ICICI Lombard: Retail health was in line with the industry average (up 32% yoy),while Group health was muted at 2% yoy (down 9% yoy for the industry).

Bajaj Allianz General Insurance: . Health insurance premiums were down 24% yoy despite 16% yoy growth in retail health (group health down 4% yoy and the company did not any have any premiums from government business during the month).

Chola MS: Retail health slowed down during the month (down 46% yoy).

SBI General Insurance: Health increased 65% yoy (83% yoy growth in group health and 49% yoy increase in retail health).

Buying health insurance policies for self and family members is a better way to ensure one doesn’t have to dip into savings to meet hospital bills. If you don’t have one or want to enhance coverage, it is better not to contemplate rather take the step now.

(The writer is Sunil Dhawan.)

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MOTOR INSURANCE

No need for insurance firms to question chargesheets in accident cases: HC – The Hindu – 28th November 2020

There is no mandate in law for insurance companies to challenge chargesheets, filed by the police in motor vehicle accident cases, to controvert the contents of chargesheets before the Motor Accident Claims Tribunal (MACT) in the insurance claim case proceedings, said the Karnataka High Court.

“...if the insurance companies are saddled with burden of challenging the chargesheets filed throughout the country without there being no clear legal mandate to do so, their work would be seriously crippled and they would not be able to do their insurance business without enhancing their

premium, thereby further burdening the ever-suffering owners of motor vehicles,” the High Court said.

A Division Bench comprising Justice S. Sunil Dutt Yadav and Justice P. Krishna Bhat delivered the verdict while declining to accept the contention of claimants that MACT could not have accepted the claim of the insurance company that the particular vehicle was not involved in the accident contrary to the chargesheet as the company had not challenged the correctness of the chargesheet before the High Court.

“Is not still the standard of proof one of preponderance of probabilities? Is a mere chargesheet, which in this case is shown to be deficient in truth, sufficient to tip the balance only on the premise that insurance company has not dipped deep into its pockets to challenge the chargesheet - what with the toxic nexus

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between the black sheep among the police, medical professionals and touts of every kind masquerading the field that has become a notorious fact of life,” the Bench observed.

On claimants’ dependence on a 2011 judgment of the High Court, the Bench said the 2011 verdict has not laid down law that in all cases, where chargesheets were filed, MACTs are required to act upon the same unless insurance companies question the same and obtain writ of mandamus. In the present case, the court agreed with MACT’s finding from the evidences that the vehicle named in the chargesheet was planted, by the younger brother of the deceased, in collusion with the parties after 103 days of accident as the vehicle belonged to the younger brother himself and when none had seen the actual vehicle involved in the accident as the complaint had described it as ‘unknown vehicle’.

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CROP INSURANCE

Pradhan Mantri Fasal Bima Yojana: Insuring crops, ensuring happiness - Financial Express – 2nd December 2020

The Pradhan Mantri Fasal Bima Yojana (PMFBY) is the largest risk-mitigation programme launched by the government for providing a protective shield to farmers from all natural risks over the entire cropping cycle. This scheme is the first in terms of the lowest premium payable by farmers and the highest value of crop insured. All general insurance companies registered by the IRDAI (Insurance Regulatory and Development Authority) in the country that have a reasonable rural presence have been empanelled for the implementation of the scheme. At present, all the five government companies and 13 private companies registered with the IRDAI are empanelled.

The basic idea for increasing the number of companies was to leverage their cumulative network in rural areas and to take the advantage of efficiency of the private sector in scheme implementation.

The scheme is in its fifth year of implementation and has been recently revamped to address the challenges in smooth implementation, including making it voluntary for all farmers and leveraging technology.

A lot has been said about the participation of private companies and insurance companies reaping supernormal profits from the scheme. In the first three years of scheme implementation for which complete data is available, the claims ratio at the national level for all insurance companies combined is 89%. This would mean that for every Rs 100 collected as premium by insurance companies, Rs 89 have been paid as claims by them; insurance companies generally incur a cost of 10-12% for reinsurance and administrative expenses. Thus, insurance companies have barely broken even in the first three years in spite of a good monsoon in those years. Any catastrophic risk programme should be evaluated at least over a five-year horizon and at the national (aggregate) level. Arguing that a particular company had higher or lower loss ratio in a particular season/year is not the right way of looking at the performance of a company or of the scheme.

The Kharif 2019 season was particularly good for crop, but widespread unseasonal rains damaged the harvested crops leading to substantial claims pay-outs in Maharashtra and Madhya Pradesh where the claims ratios were 121% and 213%, respectively.

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Claims pay-outs to farmers require timely sharing of Crop Cutting Experiments (CCE) data with insurance companies by the states and the release of the state share of premium subsidy. In certain instances, there has been a delay in sharing of CCE data/release of state subsidy, leading to delay in release of claims to farmers.

There has been criticism of low claims ratios and profits earned by insurance companies including private insurance companies based on incomplete data, which leads to unfounded criticism of the scheme. Later, when the complete data for the season was available, the claims ratio went up substantially. To address the problem of gaps in data in the public domain, the agriculture ministry has been releasing the season-wise data every month to ensure that experts can do analysis of the performance of the scheme on the basis of the most recent data.

On analysing data for public and private insurers for the period of three years (2016-17 to 2018-19) for which majority of the data has been received, the claims ratio stands at 98.5% and 80.3% for public and private companies, respectively. For kharif 2019, as CCE data has not been received from Gujarat, Jharkhand and Karnataka, and rabi 2019-20 data is pending from half a dozen states, the final claims ratio for all companies including private companies for 2019-20 is bound to increase significantly on the receipt of pending data.

In the revamped scheme effective from kharif 2020, the provision has been made to allocate work to insurance companies for a period of three years, which will average out any volatility in terms of high/low claims ratio seasons and will act as an ideal period for the analysis of the scheme in terms of claims paid by insurance companies with respect to the premium collected.

The primary driver of the premium is the unavailability of historical yield data at the granular level and the discrepancies on account of human errors in computation/calculation and recording of yield data. Technology-based yield estimation through a robust arithmetical model incorporating satellite imagery, gridded weather data and soil moisture data can go a long way in moderating the premium rates and stabilising the scheme implementation.

The agriculture ministry has initiated large-scale prominent government, international and private technical agencies and it is expected that a tech-based protocol for yield estimation would be in place in 1-2 years. That would lead to a paradigm shift in the implementation of crop insurance schemes and would meet the needs of smallholder farmers in the long run.

(The writer is Sudhanshu Pandey.)

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Technology transformation of the insurance industry during the pandemic - Express Computer – 1st December 2020

The insurance industry has traditionally been a face-to-face contact-based industry, depending on relationship. While technological advancements had been underway for most insurers, COVID-19 changed perspectives overnight.The insurance industry in India faced challenges of leveraging their personal equity through a virtual environment in the initial days of the COVID-led lockdown.

Digital transformation on a war-footing Business continuity took on a whole new proportion in the insurance industry as all departments finance, sales, marketing, claims,

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human resources etc., had to function effectively irrespective of the lockdown, overcoming issues of accessibility, connectivity and above all security.

Transition from a physical environment to the work-from-home environment happened almost overnight where every function went online to cope with needs of customers and other stakeholders in what are traditionally the busiest months for the insurance industry (March and April). Digitisation, automation went on an overdrive and the insurers began responding to the needs of worried customers, employees and channel partners, understanding individual needs, and providing resolutions with empathy.

With a sizeable workforce catering to customers, operational challenges in a work-from-home environment were met with ingenious solutions. For instance, human resources departments provided extraordinary support to internal stakeholders through online team building measures, creating learning modules, helplines to assist employees facing challenges in a work-from-home environment and the leadership stepping in with frequent connects to boost morale of employees.

Personalised customer experience For customers, insurers have shown an increased level of digitised engagement and delivery. The usage of digital payment mechanisms through smartphones has been key to business continuity in the pandemic situation.

The pandemic has brought the IT to center stage. The increased use of technology across all departments has highlighted that there is a great opportunity to collaborate and reimagine products& processes with technology for insurance that is essentially believed to be driven on brick & mortar module.

What the future holds It has also given insurers a unique opportunity to re-look at the vision of innovating products basis the changing behaviour of not just customers but also the situation.

For instance, in general insurance, there may be an appetite for “usage-based” insurance products. For instance, data-analysis and telematics can be used to assess a customer’s usage to decide the quantum of motor insurance. Changes like these can catapult personalisation and thus enhance value proposition of insurance products as a whole.

What’s more with customers’ seeking hyper-personalisation everywhere, data-based innovations can change customer mindset with regards to insurance, that is still somewhat purchased grudgingly. Further, with distribution being reimagined, the day may not be far away when customers engage with advisors on a video call as first step before moving on to online channels for purchase.

A lasting impact What the pandemic has brought to the fore is a fresh perspective, one that will have far reaching impact well beyond the pandemic. New models of working, better use of collaboration tools, enhancing customer experiences in a tech-enabled environment have transformed the industry for the better.

The current situation has compelled all companies to integrate technology in a manner to make the ecosystem more robust. In a heavily digitised and personalised world, the value proposition of the insurer must be consistent with the customer experience, no matter through which channel it is accessed.

(The writer is Pankaj Pandey.)

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Pay paddy insurance premium before December 15, farmers told - The Hindu - 30th November 2020

Since the district is likely to receive heavy rains during this week, paddy farmers have been asked to pay the insurance premium before December 15. In a statement, Joint Director of Agriculture R. Gajendra

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Pandian said the Union Government had introduced crop insurance scheme to bailout farmers who had suffered crop loss due to nature’s fury or vagaries of monsoon. Farmers should pay in advance the prescribed premium before the deadline as they cannot avail compensation for the crop loss if they have not paid the premium on time.

Since 320 revenue villages in Tirunelveli district have been notified as hamlets growing paddy, farmers from these places should pay the premium of ₹444 per acre to Agriculture Insurance Company of India before December 15 for insuring paddy for an insurance amount of ₹29,600 per acre.

As per the agreement reached between Agriculture Insurance Company of India and the Government of India, the insurance benefit would be shared by both the parties. Farmers availing crop loan should insure the crop without fail, as mandated by the bank concerned.

The insurance premium may be paid in the Primary Agriculture Cooperative Societies, nationalised commercial banks or common service centres by submitting the application along with copies of first page of the bank passbook, chitta / patta and the adangal issued by the village administrative officer concerned. The farmers should receive the premium payment receipt without fail.

For more information, the agriculturists may contact the extension centres and pay the insurance premium immediately as the district is likely to get heavy rains in the days to come, Mr. Gajendra Pandian said.

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Govt. itself will settle crop insurance claims, says CM – The Hindu - 30th November 2020

Chief Minister Y.S. Jagan Mohan Reddy has said the government will settle crop insurance claims (CICs) for the 2020 kharif season by March-April 2021 after the crop cutting experiments are over by the end of January and the Planning Department submits its report in February.

Never in the State’s history was a CIC settled in less than a year and there were claims pending from 2012. Besides, the premium rates were so high that the farmers could not afford to pay.

Taking this grim scenario into consideration, the government has decided to set up AP General Insurance Corporation (APGIC) on its own to

promptly pay insurance to farmers instead of leaving at the mercy of insurance companies.

The proposal to establish it was sent to the Central government to obtain necessary clearances, the Chief Minister said, while claiming to have disbursed ₹13,000 crore under the ‘Rythu Bharosa’ scheme in just 18 months after his party came to power.

Procurement Another thing which the government took upon itself was the procurement of discoloured and sprouted grains especially paddy, which was largely confined to rhetoric previously.

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Making a statement in the Legislative Assembly on the schemes being implemented in the agriculture sector, Mr. Jagan Mohan Reddy said the government categorically stated that the enumeration of loss caused by cyclone Nivar to the farm sector would be completed by December 15 and compensation paid by December 31.

Ex gratia An ex gratia of ₹5 lakh each has already been paid to the families of eight persons who died during the cyclone, and like no other government did in the past, a sum of ₹500 was paid to each person (irrespective of age) who took shelter in relief camps.

“Work on restoration of public infrastructure is going on at a brisk pace. Also, damages to private buildings will be compensated after assessment is over by December 15.”

Mr. Jagan Mohan Reddy said the government cleared free power dues amounting to roughly ₹8,655 crore which were passed on by its predecessor. Similarly, input subsidy running into hundreds of crores of rupees were paid to the farmers.

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Fasal Bima profits of private insurers jump, as state govts, state-run firms falter – Financial Express - 30th November 2020

Some of the private insurers seem to have cut against the grain and found a lucrative business model under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the government-supported crop insurance scheme. Claims to premium (CP) ratio of private insurers in kharif 2019 season stood at just 60%, and was as low as 23% in the case of one firm, implying their high profitability.

This is even as many public-sector insurers made losses under PMFBY – their aggregate CP ratio was 113% in the last summer crop season (see chart on Pg 1). While public-sector insurance companies have

been nudged by the government to stay with PMFBY and even cover crops and areas that are highly vulnerable to the vagaries of nature, private insurers limit their PMFBY portfolio to the crops less likely to suffer damage. Also, private firms have had a less creditable record in admitting claims of farmers.

In three years since its 2016 launch, PMFBY became the third largest line of non-life insurance business in India. The private sector insurers are estimated to have made a surplus of Rs 12,500 crore in the last four kharif seasons (data as of November 16, 2020). But their profit could be around Rs 7,500 crore only after netting out 10% (of the gross premium) expenditure on reinsurance and other administrative expenses. On the other hand, the claims ratio of the public sector insurance companies was 102% (against Rs 48,000 crore collected as premium) during the last four summer seasons.

Currently, private and public-sector insurers have roughly equal share in the crop insurance business. The improved profitability of private insurers during kharif 2019 season, curiously, coincides with a trend among state governments to quit the PMFBY, citing rising premium bill. Andhra Pradesh,

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Telangana and Jharkhand wrote early this year to the Centre, communicating their decisions to exit the scheme. Gujarat also did not implement the scheme for kharif 2020 crop, while Madhya Pradesh took the plunge after some initial dithering. Under PMFBY, farmers’ premium is fixed at 1.5% of sum insured for rabi crops and 2% for kharif crops, while it is 5% for cash crops. The balance premium is split equally between the Centre and states.

Effective Kharif 2020, the Centre has decided that it will foot the PMFBY subsidy bill to the extent of its formulaic share so long as gross premium level is up to 30% of the sum assured in non-irrigated areas and 25% in irrigated areas. The onus is on the states if they want to implement the scheme even if insurers quote any premium above 25-30%. Meanwhile, the payout ratio (actual payment against claims made) for kharif 2019 improved to 85% till mid-November, as against only 61% till mid-June. The gross premium was Rs 23,930 crore while reported claims were Rs 20,764 crore for kharif last year.

Four private insurance companies — ICICI Lombard, Tata AIG, Cholamandalam MS, and Shriram General Insurance — had opted out of PMFBY for both the kharif and rabi seasons of the 2019-20 crop year, as the claims ratio in the states where they were operated in the previous year were quite high, leading to losses. During kharif 2019, among the six major private insurers (over Rs 1,000 crore premium collected by each) only IFFCO Tokio has claims ratio over 100%, while – Bajaj Allianz, HDFC Ergo, Reliance General, SBI General and Universal Sompo have reported much lower ratios.

“Selection of clusters during the bidding process is crucial in the crop insurance business as perennially drought or flood-prone districts increase the risk. Normally, it is seen that the public sector companies, particularly the Agriculture Insurance Company (AIC) win the bids in high risk districts,” an analyst said. Out of about Rs 12,000 crore premium collected by public insurers AIC had a share of nearly 85% during kharif 2019. In the crop insurance business, PMFBY has about 90% share while the other scheme, RWBCIS, has the remaining 10%.

(The writer is Prabhudatta Mishra.) TOP

SURVEY & REPORTS

China, US and India have highest insurance potential: MAPFRE - Reinsurance News – 1st December 2020

According to the latest Global Insurance Potential index by MAPFRE Economics, China, the US and India currently rank top of the table of countries, both in terms of life and non-life lines.

MAPFRE’s index looks at 96 insurance markets around the world to measure the insurance protection gap and create a metric that identifies which countries offer the highest insurance potential in the medium and long term.

The indicator is based on the size of the insurance protection gap (IPG) in these markets, which now stands at $5.77 trillion globally.

According to MAPFRE, the life segment accounts for 70.8% of the global protection gap, with the remaining 29.2% accounted for by the non life segment.

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“More than 70 percent of the current gap is explained by the underinsurance of emerging countries,” said Manuel Aguilera, MAPFRE Economics General Manager.

“In this sense, the aging populations, their income growth and size are factors that determine the widening insurance gap for the Life business in these countries. The IPG in the Non-Life business has also grown over the last three decades, although significantly less.”

The MAPFRE index also accounts for variables such as insurance penetration, economy size and population size, although markets need to have a large GDP in order to be ranked and also need adequate capacity to close their own protection gap.

Nonetheless, the report recognizes the value of those countries that have ample capacity to close their own gap, but also have relatively little economic weight and are therefore placed in a low position in the ranking.

MAPFRE believes these markets represent a future source of insurance potential given their alignment, with Egypt, Pakistan and Nigeria pegged as potential contenders for top ten positions in the life segment.

Within the non-life line, Pakistan, Egypt, Bangladesh, Nigeria and the Philippines have been identified as countries with huge potential to reduce their domestic insurance gap.

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INSURANCE CASES

‘Doctors, not insurer decide treatment’- The Times of India – 2nd December 2020

The Valsad District Consumer Redressal Commission (VDCRC) has directed United India Insurance Co Ltd to pay a claim amount of Rs 1.15 lakh to a woman from Silvassa in Dadra & Nagar Haveli, ruling that doctors advice for hospitalization is part of the patient’s treatment.

The insurance firm had in May 2019 rejected the claim of Dipali Vasaya on the grounds that her treatment for four-day at Mumbai-based Kokilaben Dhirubhai Ambani hospital did not require hospitalization.

Vasaya got chest pain and fell unconscious on September 14, 2018, and was taken to Kokila Dhirubhai Ambani Hospital in Mumbai.

She was admitted on the advice of the doctor there and was discharged on September 18, 2018.

Her hospital treatment bill was Rs 1.15 lakh. As she had medical insurance of Rs 5 lakh from United India Insurance Co, she claimed reimbursement. However, the insurance firm rejected her claim in May 2019. “The procedure or treatment usually done in Out Patient Department are not payable under the policy even if converted as an in-patient in the hospital for more then 24 hours or carried out in Day Care Centre,” the firm contended.

Vasaya had approached Valsad District Consumer Redressal Commission in October 2019.

VDCRC ruled, “The patient was hospitalised on the advice of the doctor and expenses incurred is related to medical treatment and the treatment was based on doctor’s advice and it is a part of the treatment and therefore complainant is entitled to get reimbursement claim amount with 7.5% interest effective from October 2019.”

It also ordered the insurance company to pay Rs 2,500 to the complainant for the mental stress and complaint fees.

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PENSION

EPF Act provisions applicable to private security agency: Supreme Court – Live Mint – 2nd December 2020

The provisions of the Employees' Provident Fund Act are applicable to private security agencies providing personnel to clients, the Supreme Court said on Wednesday.

A bench of Justices Navin Sinha and Surya Kant said the appellant company is engaged in the specialised and expert services of providing trained and efficient security guards to its clients on payment basis.

The apex court rejected the firm's contention that it merely facilitated in providing Chowkidars, holding that the provisions of Private Security Agencies

(Regulation) Act, 2005 make it clear that the firm is the employer of such security guards and are paid wages by it.

"Merely because the client pays money under a contract to the appellant and in turn the appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client," the bench said.

The top court held that the appellant company never made available the statutory registers under the Act of 2005 to the authorities under the EPF Act and it has no hesitation in holding that it actually withheld relevant papers.

The provisions of the EPF Act are applicable to a private security agency engaged in the expert service of providing personnel to its client, if it meets the requirement of the EPF Act," the apex court said. The judgement came on a plea filed by Panther Security Service Pvt Ltd which provides private security guards to its clients on payment basis.

The company, registered under the Act, approached the top court against the high court order, affirming the direction of Assistant Provident Fund Commissioner, Kanpur, holding the appellant liable for compliance with the provisions of the EPF Act and to deposit statutory dues within 15 days.

According to the company, it was not covered under the EPF Act, since it was not engaged in rendering any expert services and merely facilitated in providing Chowkidars to its clients. It argued that the company only levelled a service charge for facilitation and the salary was paid to the Chowkidars by the client who engaged their services.

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Income tax benefits on EPF contributions and withdrawals: All you need to know – Financial Express - 2nd December 2020

The Employee Provident Fund (EPF) is an excellent tool for salaried to accumulate funds for their retirement. Income tax has implications at the time of contributions, interest earned as well as withdrawal of balance.

Let us discuss the income tax implications of EPF contributions and withdrawals.

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Contribution stage The employer deducts you EPF contribution @ 12% of your basic salary at the time of payment of the salary. All the persons whose basic salary is upto Rs 15,000 are mandatorily covered under EPF. For

those above this threshold it is voluntary. However, once opted in, you cannot opt out from the same employer. In case the basic salary exceeds Rs 15,000, the employer has the option to restrict the deduction on 12% of Rs 15,000/- instead of deducting it on whole of the basic salary. The employer also matches the contribution by an equal amount.

For the EPF contribution deducted by your employer, you are entitled to claim the amount of PF deduction under Section 80C upto Rs 1.50 lakh every year along with other eligible items like life insurance premium, repayment of home loan,

National Saving Certificates, ELSS, tuition fee for children etc. An employee can contribute more than what minimum is required but the deduction will be restricted to the maximum of Rs 1.50 lakh under Section 80C.

The employer gets deduction for the amount contributed towards EPF of employees as business expenditure. There is no tax liability for the employee in respect of contribution made by the employer upto 12% of the basic salary beyond which it becomes taxable in the hands of the employee. Likewise in case the aggregate amount of the contribution made by the employer towards employees EPF, Superannuation or NPS account of the employee taken together exceeds Rs 7.50 lakh, such excess becomes taxable in the hands of the employee.

Interest accrued on the balance in EPF The interest credited to the Provident Fund account is tax-free as long as one is employed. However, once the employee retires, the amount of interest credited to his EPF account becomes taxable and is required to be offered for tax under the head “Income from other sources.”

Taxability of EPF withdrawal The entire balance lying in the EPF account is fully tax-free in your hands unless you have withdrawn the balance in your EPF account where contribution has not been made for a minimum period of 5 years. Please note for enjoying exemption on EPF withdrawal, it is not the time for which the account is maintained but the number of months for which EPF contributions have been made which entitles you for the exemption.

In case the EPF balance becomes taxable in your hands due to premature withdrawal, tax will be deducted @ 10% on the entire balance in case the accumulated balance payable to the employee is fifty thousand rupees or more. However, in case you do have Permanent Account Number (PAN) or do not furnish the same to the person responsible for paying the amount, the payer will deduct tax @ 30%. Please note that tax deduction and discharge of your tax liability are two different and distinct things. So, you may have to pay more tax in case the slab rate applicable to your income is more than 10%. Likewise in case you do not have any tax liability or the tax liability on your total income including such withdrawal is less than 10%, you may get refund of the tax deducted on your EPF withdrawal.

As far as the head under which the accumulated balance withdrawal will be taxed, if it is withdrawn before five years, is concerned, the portion representing the employer’s contribution along with accrued interest thereon shall become taxable under the head “Salaries”. However, your contribution along with interest thereon will be taxed under the head “Income from other Sources.”

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Please note that in case you had not claimed deduction for your contribution under Section 80C, you need not offer your portion of contribution towards the EPF account for tax and only offer the interest on that portion for taxation.

I am sure now you know when you get the tax benefits for your EPF contribution and when you have to pay tax on your EPF withdrawals.

(The writer is Balwant Jain.) TOP

From NPS deposit to withdrawals, three new online facilities explained here – Live Mint – 30th November 2020

For the benefit of NPS subscribers, pension fund regulatory body PFRDA has introduced many new facilities that can be done online. Recently, Pension Fund Regulatory and Development Authority or PFRDA launched D-Remit facility that helps National Pension Scheme subscribers transfer money directly to their NPS accounts from their bank accounts and also get same-day NAV. They can also contribute on regular basis, just like systematic investment plan or SIP in mutual funds.

PFRDA had also recently allowed e-sign based online facility for change of nomination. Nomination made under the NPS can modified by a subscriber at any time. Prior to that the regulator

allowed video-based customer identification process to further facilitate on-boarding, withdrawals and exit for NPS subscribers.

How to use the D-Remit facility for NPS: Voluntary contributions from NPS subscribers received at Trustee Bank till 9:30 am on any day (other than Saturday, Sunday and Holidays) under D-Remit would be considered for giving the subscriber the same day’s NAV. The minimum contribution amount through D-Remit feature is Rs. 500.

1) To use D-Remit, NPS subscribers are required to have a Virtual ID (Virtual Account). They have to access the Central Recordkeeping Agency (CRA) portal for National Pension System.

2) The subscriber will be sent an OTP for authentication on the mobile number registered in PRAN.

3) The generation of the virtual id is a one-time activity and these ids are permanently attached to PRAN for the purpose of D-Remit.

4) The virtual Ids are unique for Tier I and Tier II NPS accounts.

5) NPS subscribers who have net banking facilities of banks can avail benefit of R-Remit feature.

6) After logging into the net banking, the subscriber needs to add the virtual id as beneficiary with the unique IFSC details of the trustee bank to transfer fund or set up auto debit from their bank accounts.

How to change NPS nomination online: NPS subscribers can access their CRA system with login credentials and select the option "update personal details" under "demographic changes" menu.

The subscriber then needs to select the option add/update nominee details.

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After that the NPS subscriber needs to submit details of the nominee such as name, relationship with nominee and percentage share

Once the details are saved and confirmed, subscriber is required to submit the one-time password (OTP) received registered mobile number.

On submission of OTP, subscriber is required to e-sign to authenticate the changes by selecting the E-sign option

The subscriber will be taken to e-signature service providers page for e-sign where he or she is required to enter Aadhaar/Virtual ID and click on send OTP. OTP will be sent to the mobile number registered with UIDAI. Subscriber needs to submit the OTP and click on verify OTP.

After authentication, the nomination details will be updated in NPS records If he e-sign fails, the subscriber has to option to update the nomination as per the existing physical process.

Video-based Customer Identification Process (VCIP) for NPS subscribers

PFRDA has now permitted its intermediaries to use of Video-based Customer Identification Process (VCIP), in addition to the existing options, in order to further facilitate on-boarding, withdrawals, exit and for processing of other related service requests of NPS subscribers.

It eases the process of on-boarding/exit/other service requests as the subscriber verification is carried out without the need for physical presence of subscribers before Point of Present (PoP) nodal officers.

Intermediaries which are solely registered and regulated by PFRDA will follow the guidelines issued by the authority for performing VCIP.

(The writer is Surajit Dasgupta.)

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Withdrawn money from EPF account? You need to report it in your IT returns – Live Mint – 27th November 2020

In case you have withdrawn money from the employee's provident fund (EPF) during FY2019-20, you will have to report while filing your income tax returns. It is important to report the amount irrespective of the fact that the amount is tax exempt under certain conditions.

“In case of recognised provident fund (RPF), the withdrawal is exempt if the employee has completed five years of continuous service. In case of less than five years, the withdrawal is tax exempt if the employment is discontinued by reason of sickness or causes beyond the control of the employee or if the amount withdrawn has been

transferred to a new account in case of re-employment," said Divakar Vijayasarathy, founder and managing partner, DVS Advisors LLP.

The government has also allowed withdrawal of provident fund money for those facing financial stress due to covid-19. An employee is allowed to withdraw 75% of the outstanding balance in the PF account or three months’ basic plus dearness allowance, whichever is lower, under this relief.

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For example, if you have a balance of ₹1 lakh in your PF account and your basic wage plus dearness allowance is ₹20,000 per month, you will be eligible to withdraw up to ₹60,000. The withdrawal under covid relief is exempt from tax even if the employee has not completed 5 years of service as per the government guidelines. Experts, however, advise declaring the amount withdrawn while filing income tax return.

"In case the tax department maps the income of the taxpayer, it may show a mismatch if the exempted income is not declared. There is a specific field to declare the exempted income in the tax forms, therefore there is a need to declare it but there is no penalty as the income is exempt from tax," said Sudhir Kaushik, CEO, Taxspanner.in

"The PF withdrawn should be shown as part of exempt income under Section 10(12) of the income tax return in case of recognised provident fund," said Vijayasarathy.

In case you have withdrawn money from provident fund before finishing five years of complete service, other than in the case of covid relief and under conditions where it is tax exempt, not only the amount received becomes fully taxable but the income tax deduction if claimed under Section 80C will be reversed.

Employee’s contribution to provident fund up to ₹1.5 lakh is eligible for tax deduction under section 80C. Of the sum withdrawn, the employer’s contribution and interest earned on it will be taxable as salary while the employee contribution and interest earned will be taxed as other income. Here, also, one will have to report the EPF money withdrawn in the income tax return.

In case you don’t disclose it, the tax department may leavy penalty for non-disclosure of taxable income.

(The writer is Renu Yadav.)

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IRDAI CIRCULARS

Terms and Conditions of Life Products for F.Y. 2020-21 are available on IRDAI website.

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IRDAI issued press release regarding information to the public on revision in health insurance premium.

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IRDAI issued circular regarding guidelines for all general insurance companies for submission of reports.

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IRDAI issued circular regarding guidelines for practical training for surveyors and loss assessors.

TOP IRDAI issued circular regarding guidelines for grant of fresh licence / renewal of license to act as insurance surveyor and loss assessor.

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Gross premium underwritten by non-life insurers within India (segment wise) : For the month / upto the Month Of October, 2020 (Provisional & Unaudited) is available on IRDAI website.

TOP IRDAI issued circular regarding mismatch in GDP flash figures and segment wise GDP figures total to All Non-Life insurers (Including Stand Alone Health Insurers)

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IRDAI issued circular guidelines on insurance claims of victims of Cyclone Nivar (Nov,2020) in the calamity affected areas to all CEOS /CMDs of all general insurance companies and stand-alone health insurance companies.

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IRDAI (Insurance Surveyors and Loss Assessors)(Amendment), Regulations, 2020 is available on IRDAI website.

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Covid19 Corner is available on IRDAI website.

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GLOBAL NEWS

Singapore: Healthcare cost inflation estimated to remain relatively flat this year – Asia Insurance Review

Singapore's medical trend rate - which measures medical cost inflation - is projected to remain flat at 9.5% in 2020, down from 10% in 2019, according to a new report by Mercer Marsh Benefits (MMB).

The sixth annual “MMB Health Trends: 2020 Insurer Survey”, covered close to 240 insurers across 59 countries, excluding the US, between early June and mid-July 2020.

In 2019, insurers in Singapore reported medical care cost increases of 10%, which was 10 times the rate of inflation. In 2020, medical costs are expected to follow the same trajectory of the nation’s inflation rate at -0.2%, softening to 9.5%.

Singapore’s medical trend rate is below the 10.7% projected rate across Asia.

Across the 11 Asian markets surveyed, Singapore’s expected medical trend rate for 2020 came in eighth. Indonesia is top with a projected 13.8% increase, followed by Malaysia at 13.5% and Vietnam at 12%.

Mr Neil Narale, Singapore health leader at Mercer Marsh Benefits, said, “Cost management remains a key priority for medical insurers and employers. While employees can take comfort knowing that the medical trend rate has softened slightly, we expect there to be an increase in outpatient costs as individuals

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return to care in the second half of this year. We are also expecting a rise in inpatient claims as waiting lists for inpatient treatment are cleared, which will carry on into 2021.”

COVID-19 The survey revealed that 68% of insurers globally expect increased medical claims driven by COVID-19 diagnostics, care and treatment. Insurers also said they expect increases in medical costs to continue to vastly outstrip inflation.

For 2021, 86% of insurers in Asia expect the trend to be sustained or increase.

On the double-digit 2020 increase for Asia, Joan Collar, Mercer Marsh Benefits Asia leader, said, “The region was the first to be hit by COVID-19 and has “bounced back” faster than many other parts of the world, as a result of swift and widespread containment efforts. Much of the impact from COVID-19 claims deferral was felt in the first part of 2020. A significant portion of medical spend, including inpatient and outpatient expenses generally covered under medical plans, given that employees heavily rely on employer-sponsored medical in some of the region’s countries, has resumed.

“The rise in medical costs also reflects the increased unit cost of care due to providers passing on the cost of personal protective equipment (PPE) needed to safely perform services in their bills as well as the higher cost of supply imports due to exchange rate fluctuations.”

Broadening suite of solutions The survey found an increase in the number of insurers offering virtual health consultations, or “telemedicine” with 47% in Asia, saying it was an active part of their current approach to plan management, up from 32% in 2019.

In Singapore, telemedicine providers such as Doctor Anywhere reported a 156% increase in digital active users, and MyDoc recorded a 147% increase in the last year. Furthermore, 47% of insurers in Asia now cover preventive health initiatives, such as screenings, with an additional 22% indicating they are experimenting or have developed plans to initiate this within the next 24 months.

Employer-sponsored plans will continue to play an important role in providing people with the health services they need. For example, about 55% in Asia expect their employer-sponsored plans will cover COVID-19 vaccinations, while 82%, compared to a global average of 69%, expect to cover COVID-19 in-patient treatments.

Mental health support gap The survey also found remaining gaps in mental health support, despite the increase in demand seen during the pandemic. For example, virtual mental health counselling is still not widespread, with only one-third of insurers offering it globally while 38% of insurers in Asia do not provide plans covering any mental health services. Less than half of insurers in Asia cover in-patient and outpatient treatment for mental health.

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Europe: Risk managers sustained business continuity during pandemic - Asia Insurance Review

European risk managers have helped maintain the continuity of their organisations during the COVID-19 pandemic crisis, revealed a survey published by the Federation of European Risk Management Associations (FERMA).

Risk managers are said to have participated in task forces and crisis units, promoted communication, supported new working practices, pursued insurance recoveries where possible and begun work on recovery.

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FERMA’s COVID-19 survey titled ‘Risk management, recovery and resilience’ offers the first Europe-wide look at risk and insurance management during the ongoing pandemic.

The survey was carried out among FERMA’s 22 member associations between 28 September and 21 October. Replies were received from 314 respondents across 21 countries.

The responses are a snapshot of risks managers’ perspectives in the middle of the pandemic crisis. They also provide a quantitative contribution to the policy discussion taking place at EU and national levels on resilience to a pandemic and other large catastrophe events.

Commenting on survey findings, FERMA president Dirk Wegener said that most respondents felt their organisations were largely or fairly well prepared to

manage the pandemic. However, at that stage, a majority of respondents noted that their organisations had suffered negative operational and financial impacts from the pandemic.

According to Mr Wegener, FERMA could not anticipate the full impact of government lockdowns and other control measures.

When the federation has a longer perspective, it believes that the value of flexible risk management tools such as business continuity plans in business resilience and recovery will be seen.

“Insurance, unfortunately, has not provided the support organisations need for their business interruption. There is a strong appetite for a future financial solution. We have a long relationship with the insurance industry. We want it to be part of a solution by contributing not just risk transfer but also risk expertise to a combined public-private initiative,” said Mr Wegener.

He also said that while FERMA’s recent survey is not exhaustive in terms of content, it provides an important insight into the role of risk managers during the pandemic and lessons that will be incorporated into enterprise risk management for the future.

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UK - Home insurance premiums fall 0.9% since April 2020 - Asia Insurance Review

Home insurance premiums in UK have fallen 0.9% since April this year as prices continue to trend downwards following the coronavirus pandemic according to an analysis released by Consumer Intelligence of UK.

The analysis said with more people staying at home because of the national lockdowns claims have reduced.

Consumer Intelligence pricing expert John Blevins said, “Break-ins are generally less frequent when people are at home more. The most recent Office for National Statistics figures show that domestic

burglaries fell by 72% in the first national lockdown.

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Mr Blevins said, “With more people than ever staying at home, claims have reduced. This is reflected in reduced premiums.” Home premiums have dipped 0.9% since April, with a typical building and contents policy now costing £150.

Overall, premiums have increased just 1.4% since Consumer Intelligence first started collecting data in February 2014. Premiums reached their peak in June 2020 but have come down slightly since. Nevertheless, prices continue to remain broadly stable. For instance, premiums have ticked upwards just 0.5% in the last 12-month period.

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Malaysia: Life insurance market shows recovery in 3rd quarter - Asia Insurance Review

The Malaysian life insurance industry rebounded strongly in the third quarter of this year, registering a 44% increase in total new business premiums to MYR2.92bn ($717m) as compared to 2Q2020, says the Life Insurance Association of Malaysia (LIAM).

The industry registered a modest growth of 6.5% in total new business premiums in 3Q2020 compared to 3Q2019.

The positive performance in the third quarter is attributed to an improvement in investment-linked business, which doubled from MYR737.72m in 2Q2020 to MYR1.43bn in3Q2020.

In 2Q2020, the total premium for new business dropped by 37% to MYR2.03bn as compared to MYR3.22bn in 1Q2020. The plunge was mainly in the sales of group policies and investment-linked policies which contracted by 56% and 25% respectively quarter-on-quarter. The second quarter of this year was the most challenging times for businesses in Malaysia including life insurance business as because of the government's Movement Control Order (MCO) and Recovery Movement Control Order (RMCO), imposed because of COVID-19.

The lockdown started on 18 March 2020 and life insurance sales activities came to a halt as face-to-face selling were restricted for more than three months.

According to LIAM president Ms Loh Guat Lan, the strong third-quarter growth was due to the positive effects of the reopening of the economy and the government’s recovery efforts to revitalise economic activities.

“The pandemic has also increased the awareness among Malaysians on the importance of financial protection as a safety net in facing uncertainties in life,” Ms Loh added. Individual new business premiums also saw an increase of 32% in 3Q2020 to MYR733.75m as compared to MYR556.01m in 2Q2020. Group new business premiums recorded a quarter-on-quarter increase of 2% to MYR750.51m in 3Q2020.

Outlook On the overall outlook, the life industry believes that if the positive trends continue in 4Q2020, the sector foresees a modest single-digit growth for 2020.

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US: Workers compensation insurers face most uncertainty during pandemic - Asia Insurance Review

The financial impact from the pandemic is still being felt by all lines as 2020 nears its end, with workers compensation among the lines facing the most uncertainty, experts say.

The drop in direct written premiums due to the decline in payrolls and negative premium rate pressure is likely to create challenges for the still-strong workers comp line, they say.

“The fact of the matter is, 2020 is an unprecedented year in the roughly 110-year history of workers compensation,” said University of South Carolina Risk and Uncertainty Management Center

clinical associate professor and director Robert Hartwig.

“Even to this day, we’ve recovered only about half of the jobs lost when the country went into lockdown in March. Some of the lessons here are not going to come from historical insurance data, they’re going to come from economic experience and economic expectations,” he said.

In the past five years, net written premium in the industry has held steady, ending 2019 at $47bn and the line’s combined ratio averaged 91% during that period according to data from Fitch Ratings.

The first half of this year saw direct written premium decline by nearly 10% amid the sharp drop in employment due to COVID-19 shutdowns.

In a study of the property and casualty market conducted by the Council of Insurance Agents & Brokers in October, more than one-third of insurers surveyed between 1 July and 30 September reported that their workers compensation premiums had begun to rebound from shutdown-related second-quarter declines.

Insurers with higher concentrations of small businesses have been hit the most by premium decreases as a result of declining payroll, said AM Best financial analyst Dan Mangano.

The ratings agency is closely monitoring how pandemic-related issues may affect the workers comp line, analysing the uptick in severity in certain areas, the COVID-19 rebuttable presumption measures approved in some states, the effect of shutdowns on entertainment, hotels and restaurants and how remote working employees may affect comp, he said.

The National Council on Compensation Insurance, which typically provides preliminary estimates of net written premium volume and combined ratio in late fall for the current year, declined to provide 2020 data “given the uncertainties surrounding the current pandemic”.

Despite payroll declines negatively affecting premiums and the unknowns of how workplace COVID-19 cases may affect comp, Mr Hartwig is confident that the economy will rebound more quickly than during other times of workforce reductions.

“I think most carriers will be looking past this and understand that this is temporary,” he said. “I think recovery from COVID will actually occur much more quickly than the recovery from the financial crisis, which is not only good for the overall economy, but very good news for property and casualty insurers.”

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New Zealand: Insurer now provides selected coverage for pandemic diseases - Asia Insurance Review

As part of its ongoing response to the global COVID-19 pandemic, Allianz Partners New Zealand recently introduced leisure and business travel insurance for international travel with selected cover for epidemic and pandemic diseases.

The insurer has accelerated the roll-out of cover for epidemic and pandemic diseases in preparation for when borders reopen and international travel resumes. Currently, New Zealand’s borders remain largely closed.

“Since launching our new domestic policy with selected cover for epidemic and pandemic diseases in October, the feedback has been highly positive.

We work with some of New Zealand’s most recognised and trusted brands in travel and insurance and it was important to extend this offering to international travel for our partners and their customers – especially in anticipation of a travel bubble with the Pacific Islands,” said Allianz Partners New Zealand CEO Kevin Blyth.

The policies became available on 1 December through travel agents distributing policies issued and managed by Allianz Partners New Zealand. It will be available through more outlets over the coming months. The policies provide selected cover for epidemic and pandemic diseases, including but not limited to, COVID-19. According to Mr Blyth, Allianz Partners made a conscious decision, for a number of reasons, not to limit coverage specifically to COVID-19.

“This ensures our policies continue to support customers, should COVID-19 evolve or another epidemic or pandemic arise in the future,” he said. While the policies carry a general exclusion for epidemics and pandemics, there will be provision to claim for cancellation if travellers contract an epidemic or pandemic disease such as COVID-19 after purchasing their policy and can no longer travel.

Cover for medical claims directly related to an epidemic or pandemic disease such as COVID-19 will only apply after travellers commence their journey. However, it is important to note that there is no cover for lockdowns, changes in government alert levels, quarantine or mandatory isolation applying to a population or part of a population. The policy will not respond in the event that any government calls for border closures. As with any travel insurance, disinclination to travel due to fear or change of mind is not covered.

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Hong Kong: Regulator extends validity of temporary COVID-19 measures - Asia Insurance Review

The Insurance Authority (IA) of Hong Kong has announced the extension of temporary facilitative measures for non-face-to-face distribution of specific protective insurance products to 31 March 2021 in view of the latest developments of the pandemic.

The scope of products covered and the implementation details of the measures remain unchanged.

Products covered by the temporary facilitative measures include qualifying deferred annuity policy, voluntary health insurance scheme products, term life policies and refundable policies without substantial savings component or renewable policies without cash value that provide insurance protection.

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Insurers and intermediaries can distribute these products via different non-face-to-face means such as digital, telemarketing, postal or video conferencing. However, they are required to make upfront disclosure at the point-of-sale and provide an extended cooling-off period of no less than 30 calendar days for the protection of policy holders.

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Australia: Affordability weighs on private health system - Asia Insurance Review

Insurers are at risk of declining profitability as squeezed margins undermine their ability to pay claims in the long term, and consumers are being turned off by climbing premium costs. That is according to "Affordability Ails Australia's Health Insurers," a report published yesterday by S&P Global Ratings.

To combat higher claims, Australia's private health insurers have lifted rates yearly over the past decade and premiums are now over 70% higher than in 2010. Average wages, however, have only grown 32% in the same period. This affordability issue, which we expect to continue to worsen over

the next five years, has resulted in declines in participation or level of cover sought.

"Without structural change, we expect participation rates to continue to fall, likely led by younger members," said Craig Bennett, a credit analyst at S&P Global Ratings. "A decline in younger premium holders will contribute to diminishing cross-subsidy benefits between older and younger members, further hitting the industry's long-term viability. With fewer new and younger policyholders, we expect health insurers to experience further profit and capital pressures, potentially leading to voluntary industry consolidation or funds forced to merge at the brink of failure."

The Australian health industry is saturated with over 30 players--but with the top five taking in nearly 80% of insurance premiums and about 85% of profits. While the top five insurers dominate the market, many smaller health insurers are member-owned mutual organisations with very limited access to capital. S&P estimates that mutual health insurers will continue to experience profitability pressures over the next three years, in particular. It expects mutual health insurers will likely consolidate within the next 12 to 24 months.

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Singapore: General insurers starts new accident reporting system today - Asia Insurance Review

The General Insurance Association (GIA) of Singapore has launched its new accident reporting system, known as the GIA Easy Accident Reporting System (GEARS).

The online platform is scheduled to go live at 9am today, while the previous system was decommissioned at 5pm on 27 November, the GIA says in a statement.

GEARS incorporates several new features, leading to a more seamless and convenient payment and reporting experience. These features include:

One-step contactless authorisation – motorists can remotely and securely authorise the purchase of accident reports by their repairer or lawyer digitally. Available 24/7, GEARS will send an authorisation

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link to the email address of the owner/driver, requesting confirmation that the law firm/workshop represents them.

Cashless payment – GEARS accepts payments by GIRO, direct debit, or NETS/PayNow QR codes. Cash and cheque payments are no longer accepted, as part of Singapore’s thrust to go cashless.

Paperless and secure – GEARS includes improved security features to make sure the authorisation process for the purchase of third-party reports is secure.

The system is also fully digital, with walk-in and postal applications no longer supported beginning today. It was developed in cooperation with Shift Technology, which specialises in claims automation and fraud detection for the global insurance

industry. GIA and Shift have worked together on the development of the GIA Fraud Management System.

GIA said that GEARS is part of its thrust to accelerate digitalisation in the industry and provide accessible and convenient services to its customers.

“As our economy begins to open up and we see a resumption of key activities, more consumers will be back on the road, making the launch of GEARS particularly timely,” said Ho Kai Weng, GIA CEO. “Launching GEARS represents the sector’s long-term commitment to digitising, enhancing our operations and processes, and providing consumers with greater ease of use and improved convenience.”

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Japan: Life insurers to maintain healthy profitability despite pandemic - Asia Insurance Review

Despite pressure from the pandemic, Japanese life insurers are expected to maintain their healthy profitability in 2021.

According to Fitch Ratings, insurers will be supported by mortality and morbidity margins stemming from seasoned and stable in-force policies of profitable protection type products.

The aggregate core profit of JPY1.2tn ($11.5bn) at Japan's nine traditional life insurers was stable in the first half of the financial year ended March 2021 (1HFYE21) from a year earlier.

Fitch estimates that more than 95% of the insurers' underwriting profit came from stable in-force policies, accumulated over several decades, which have low surrender and lapse rates, even under the economic stress caused by the pandemic.

The in-force policies have kept earnings healthy despite a 32% year-on-year drop in aggregate annualised new business premiums over April and September 2020 due to the pandemic-related social-distancing measures.

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However, the international operations of major Japanese life-insurance groups, which have expanded following the acquisition of US- and Australia-based life insurers in recent years, showed some weakness – especially in the US which has been hard-hit by the pandemic.

For example, the net profit of Protective Life Corporation, the US life-insurance subsidiary of Dai-ichi Life Insurance, declined by 63% year-on-year in H1FYE21. The net profit of StanCorp Financial Group, the US life-insurance subsidiary of Meiji Yasuda Life Insurance, also decreased by 10%.

Meanwhile, accumulated retained earnings and capital reserves together with unrealised gains on securities led to the statutory solvency margin ratio of the nine traditional Japanese life insurers improve to a weighted average of 1012%, from 1000% at end-March 2020.

Fitch expects the life insurers to maintain strong capital adequacy for their credit ratings, supported by a steady accumulation of retained earnings and continued hybrid-capital issuance based on their solid financial flexibility.

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