One-time insurance likely for two-wheeler

Soon, two-wheeler owners may be able to buy longterm insurance policies, which could do away with the hassle of annual renewals. Long-term policies are expected to reduce instances of dropouts, which is rampant among two-wheelers since agents do not find it lucrative enough to pursue renewals.

The General Insurance Council — an association of non-life companies set up under the aegis of the Insurance Regulatory and Development Authority — has initiated a move to push long-term contracts that will be valid for 10 years or so. The idea is to replicate the concept of road tax where annual payments were replaced by a one-time levy many years ago.

Besides taking up the issue at the council level, insurance companies have discussed the proposal with the finance ministry as one of the measures to curb losses under third-party insurance . Although owning a third-party liability insurance — the cover that compensates accident victims — is a statutory requirement for vehicle owners, industry officials estimate that half of two-wheelers are without the cover. “Since third-party liability insurance is a tariff product, insurance companies cannot change the terms and conditions on their own,” said Sanjay Datta, head, underwriting and claims, at ICICIBSE 1.16 % Lombard General Insurance.

The third-party cover is required by law so that in case of an accident, the victim receives compensation. These payouts are awarded by Motor Accident Claims Tribunals across the country. If an uninsured vehicle is involved in an accident, the owner is liable to pay compensation to the victim.

The cost of third-party cover is a few hundred rupees and since commissions are a small percentage of the premium, insurance agents do not find it lucrative enough to chase renewals . Insurance companies have been sending out text reminders and offering facilities to renew policies online. However, for the section of the population not familiar with online payments, renewal continues to be a challenge.

“We have been looking at ways and means of making distribution easier. We have introduced touch points at petrol pumps just like the centres that issue PUC certificates,” said Datta. However, in rural areas where two-wheeler sales are picking up in a big way, reaching out to vehicle owners will be a challenge. In many cities where awareness is low, insurers have detected agents selling fake certificates and pocketing the premium.

Earlier, the insurance industry was pursuing an initiative of creating a centralized database of all insured vehicles and their registration numbers. The idea was to make it possible for traffic police across the country to verify whether a vehicle is insured by merely sending an SMS to a central database.

Tatas, Birlas, Premji vie for Star Health & Allied Insurance stake

Tata Capital, Aditya Birla Private Equity andPremjiInvest are vying for an under 10% stake in India’s first stand-alone health insurer , Star Health & Allied Insurance.

The private equity arms of India’s leading conglomerates might value the six-year-old insuranceoutfit at almost Rs 2,000 crore, said people familiar with the matter . The Chennai-based insurer , headed by industry veteran V Jagannathan, will issue fresh shares worth Rs 150 crore to the preferred suitor , they added.

Star Health and Allied Insurance already has a varied shareholder base with the likes of Middle East’s construction giant ETA, Oman Insurance, SequoiaCapital and ICICIBSE 1.10 % Venture as its investors . The company plans to go public in the near future.

Star Health CMD Jagannathan was unavailable for immediate comments.

For Tata and Aditya Birla groups, a deal in Star Health will increase their exposure in the insurance sector, having floated their own life and general insurance ventures. While for Azim Premji, Star Health would mark the software czar’s maiden investment in the insurance space.

Star Health collected Rs 116 crore as premium in the September quarter and hopes to achieve a premium income of Rs 1,000 crore in the fiscal 2013. Private equity investors have been chasing deal opportunities in India’s banking, financial services and insurance (BFSI) sector, which have been receiving good investments.

In the third quarter of this year, it attracted $200 million from 12 deals, data from researcher Venture Intelligence showed.

Increments in 2013 may be only a tad less than 2012, forecast HR agencies

In the next few weeks, business and talent managers in India Inc will get into huddles to squeeze out increment budgets for their firms for 2013. But early signals tracked by at least two HR agencies suggest the continuing economic lethargy will result in employees taking home pay hikes that may be less than 2012 levels.

“Investments have been slow, projects are on back burners and business is a challenge. While the mean for this year’s increment was 10-12 per cent, it will be a mere 8-9 per cent in the next one,” says Ganesh Shermon, KPMG India partner and country head (human capital).

Salary increments in 2013 are expected to be 10.6 per cent on an average across sectors, a marginal drop compared to an 11 per cent raise in 2012, says Anandorup Ghose, practice head for executive compensation and corporate governance at consulting firm Aon Hewitt.

If these forecasts come true, increments next March may be the lowest in four years. The worst year though was 2009, when hikes were just 6.6 per cent.

Increments in 2013 may be only a tad less than 2012, forecast HR agencies

KPMG’s Shermon said some companies may increase bonus component in salaries, but will reduce any form of guaranteed payments. Increments in infrastructure, IT, real estate and manufacturing will be less than last year while BFSI, pharma, retail and telecom will see marginal increases.

“The government has taken some positive decisions, but it is too early to gauge when things will improve. Increments may be on a par with 2012 when it ranged between 5-7.5 per cent, or even lesser,” says Adil Malia, group president (HR), Essar Group. “People are still evaluating how the markets will turn.”

But firms do not fear that talent will be upset with lower hikes. “Employees are well aware of the economic situation, so they are mindful that it will impact industry as well,” Malia adds.

The IT sector is expected to lay low in the new year as well and make its performance rating systems more competitive. “The increments will be around 6 per cent for the IT sector and we will not give a standard raise anymore,” said the HR head of a mid-tier IT company. He did not wish to be named.

Therefore, only if someone gets a rating of 3 and above (on a scale of 1 to 5) will he/she get an increment in the coming year,” he added. Given the cautious overall environment, even companies that have outperformed the market are taking it easy.

Panasonic, with a 40 per cent-plus revenue growth over last year, is planning to pay out average increments of 12-13 per cent on an average in the upcoming appraisals as compared to an average of 15 per cent in 2012. Says Prashant Deo Singh, head (HR & general affairs), Panasonic India: “Over the past 2-3 years, we have benchmarked ourselves against competition. In 2013, most companies in our sector will be paying out increments in this range. Since we have already done salary corrections over the past two years, so will we.”

IT companies like Wipro, Mindtree, HCL and others see sharp drop in July-Sept attrition levels

Attrition in toptier IT companies has seen a sharp decline over the past year, indicating a slowdown in hiring of mid to senior level IT professionals in the current tough business climate.

Wipro’s attrition rate has dropped sharply to 14.6% in the September quarter from the 21-22 % rates in the first half of the last financial year. TCSBSE 0.43 %, the country’s largest IT company, saw the rate dip to 11.4% in the most recent quarter, from 14.8% in the June quarter of last year. Mindtree’s has dropped in the same period from 25.6% to 16.5%.

Saurabh Govil, senior VP-HR in Wipro Technologies , said voluntary attrition (attrition that excludes firing ) in the company touched a 36-month low at 12% in the September quarter. “The tough environment is helping us to keep attrition levels low. Jobs aren’t available and companies are going slow on all fronts,” he said.

Ravi Shankar, chief people officer in Mindtree, said attrition had softened as companies were hiring more freshers than lateral hires. “We are looking at ways to improve utilization on the bench,” he said.

The IT sector has slowed down sharply because of economic weakness in the US and Europe. The industry’s apexBSE 0.00 % body Nasscom recently lowered the dollar revenue guidance for the $100-billion industry on account of underperformance by several of the big companies, notably InfosysBSE 0.93 % and Wipro. Nasscom in February had predicted an 11-14 % growth, but a fortnight ago it said it was likely to be at the lower end of this range. The unexpectedly sharp slowdown this year has also meant that companies have large reserves of unutilized employees, or what in industry parlance is called the bench. In many cases, 30% or more of employees are on the bench today . There are campus recruits from last year who are yet to work on a project.

HCL’s head of talent acquisition Naveen Narayanan said the company was deploying people on the bench for customer build programmes, involving high degree of engagement with the client. “This gives them confidence and we support them through a defined reskilling programme,” he said.

Some companies say attrition has dropped for them because of special efforts to retain people. MindtreeBSE 0.32 % said it had put in place a retention council headed by senior management within each business unit to address employee woes. “They address non-compensation related problems, issues like role change, upgradation of skills. We’ve seen a large percentage of attrition getting reversed through this process ,” Shankar said.

HCL’s Narayanan said programmes to identify top performers among entry level and supervisory roles and to put them through leadership training had helped rein in attrition.

Rajesh Kumar, CEO of recruitment service provider, said attrition levels were expected to be in the 13-15 % range in the current quarter, and may be fall further in the final quarter.

Why ‘industry friendly’ Irda is a dangerous idea

The five-year term of India’s chief insurance regulator, chairman of the Insurance Regulatory and Development Authority (Irda), comes to an end in February. According to news reports, there’s quite a race to become the next Irda boss — as many as 30 people have applied for the post, including some from the insurance industry.

The choice of the Irda chief by the government is one of the more important decisions that will directly impact the savings and investments that a huge number of Indians make. After banking, insurance is the financial service that most Indians use, giving Irda a much wider direct reach than Sebi has. By itself, that wouldn’t have mattered had Irda’s approach to its job and the shape of the insurance products in India was a settled matter. Had that been the case, the government’s choice of the chief wouldn’t have mattered so much.

But the fact of the matter is that insurance regulations are in a state of flux. Under the current chairman, J Hari Narayan, Irda has pivoted quite sharply in its attitude towards the industry and the insurance industry has been chafing under the current regime. If he is replaced with an industry insider or with someone who is excessively ‘friendly’ to the insurers, then that will be a setback for the customers.

To understand why this is the case, one has to appreciate the fact that the last decade — the period from the large-scale entry of private insurers till 2010 — was a disaster for insurance customers in India. Helped by theraging bull market in equities that lasted till 2008, life insurance companies focused almost exclusively on unit linked insurance plans (Ulips). As they were then structured, Ulips had very little element of insurance about them. They were largely equity investment products, somewhat like mutual funds but with high expenses and commissions, and poor transparency.

Moreover, the fine prints of Ulip investments seemed written to ensure that a good proportion of the policies lapsed after the first few years, having served the purpose of being gutted for the initial commission and expenses. Till 2009, this continued unchecked and despite some negative publicity Irda did not really catch on or act against what was happening.

The robust returns from the equity markets meant that despite everything, many Ulip policyholders still got some returns and did not really protest. All this changed after the markets crashed in early 2008. It was no longer possible to hide that the general conduct of the insurance industry was deeply anti-customer. By the end of 2010, Irda had drastically overhauled the structure of Ulips.

However, the overhaul went much deeper into the attitude of the regulator. As any insurance industry insider will tell you, the period since then has been one of almost continuous confrontation, with Irda appearing to fully appreciate that it has to watch insurers like a hawk without any let up. One curious response has been that there is a new narrative that the industry has gradually adopted, which is that the Irda’s attitude is harming the investment situation in the country. The idea is that if the insurance industry is allowed to rake in money without regard to investors’ interests, then those funds will flow into the equity markets.

The current whispers of the need for an ‘industry friendly’ Irda is an effort in this direction. This is a dangerous idea. The job of the regulator is to protect the customers. If it is indeed the case that the insurers cannot flourish without trampling on consumers’ interests, then this proves that the path that the regulator is taking is the correct one. Insurance penetration in India is still very far from where it should be. The logic of opening up the insurance sector was that Indians are grossly underinsured.

However, insurance here should really mean life cover, as in the money that your family gets when you die. Unfortunately, more than a decade has instead been wasted in this cat-and-mouse game of insurers selling dodgy investment products and the regulator trying to deal with that. Hopefully, Irda’s leadership will find renewed focus on the real goal, which is real insurance for the under-insured.

HR departments are increasingly prioritising employee wellbeing

Wellbeing schemes are not new. But since they initially emerged much has changed. They have evolved from seeing wellbeing as health and safety guidelines that seek to do no harm, to a wide range of initiatives that aim to tackle absences, presenteeism, poor productivity, employee engagement, staff retention and beyond the confines of the business, make employees happier and healthier.

Certainly the need for these kinds of interventions has never been clearer. In society obesity, chronic health conditions and mental health issues are on the rise. With such high stakes HR departments are increasingly prioritising employee wellbeing.

Smart businesses are joining up the dots to encourage their employees to become well connected through a new generation of wellbeing programmes. The basic recipe for these includes encouraging employees to get physically active and develop mental resilience, play a role in local communities, embrace a healthy social life, and even be aware of the role of sleep and nutrition. But these elements don’t work in isolation. Employees can become more physically active while fundraising for charity or volunteering in their community. Better nutrition can be encouraged through social lunch clubs. Morrison’s ‘Miles for Smiles’ campaign is an example of this. Employees are engaged in the charity of the year Save the Children and encouraged to get active at the same time.

For those organisations that don’t have a wellbeing programme in place, creating a new scheme is often easier than expected. Integration is critical and many organisations are not making the most of the resources they already have in place to support their employees.

For those seeking to improve existing schemes the starting point should be to review what is already in place. For example one of the hardest things for organisations to achieve is not an overall increase in physical activity amongst its employees but an increase in employees who never take physical activity to take their first steps. While new showers, bike racks and company runs are all important, they are not enough to motivate new audiences to get started. Businesses must look again at the barriers that are stopping employees from becoming active and work on removing them.

In among the dismal reports on productivity, there are glimmers of hope in the attitude shift on employee wellbeing. Half of private companies are taking steps to reduce stress in the workplace – to bring down an estimated cost of £3.8 billion a year to UK businesses. Also the Chartered Institute of Personnel and Development (CIPD) Absence Management survey has shown we’re reaching a point of critical mass, with for the first time over half the respondents indicating a wellbeing strategy was in place. Likewise the research showed organisations that were actively evaluating their schemes were significantly more likely to have increased spend on wellbeing this year and predict a rise for next year.

The strong examples and pioneers of integrated employee wellbeing need to be promoted and celebrated, so others may follow where they lead. With an increase in the number of older workers, and a steady rise in young interns and apprentices, programmes must evolve to cater to employees’ individual needs. It’s about time business leader recognised having well-connected employees is not an optional extra, it’s an economic imperative.