Insurance sector’s five expectations from Budget 2013: Deutsche Bank

NEW DELHI: The upcoming Budget 2013 is high on expectations, but the finance minister has to deliver as he has reiterated his commitment to fiscal consolidation, and allayed fears of excessive populism,Deutsche Bank has said in a report.

While these assurances have assuaged investor concerns somewhat, the global investment bank believes investors are still unsure of the scale of fiscal consolidation and will be watching the budget closely.

Dutsche Bank says that it would like to give the government the benefit of doubt and reiterates that the FY14 budget will see the finance minister walk the tightrope.

The fiscal deficit target for FY14 will likely be pegged at 4.8 per cent, accompanied with the articulation of a credible roadmap on achieving this objective.

We expect the FM to also use the FY14 budget as a platform to build the confidence of investors, corporate India and credit rating agencies.

Investors and insurance companies look forward to the Budget session for passage of Insurance Laws (amendment) Bill, which proposes to raise FDI in insurance from 26 per cent to 49 per cent. All insurance holding companies will in principle benefit as it will bring them closer to listing.

Here are the insurance sector’s expectations from the Budget:

1) Investments into Provident Fund and Insurance premiums: Under section 80(C) of India’s Income TaxAct, investments into provident fund and insurance premiums, among others, are eligible for tax deductions up to a limit of Rs 100,000.

The insurance industry wants an additional relaxation to encourage purchase of long-term insurance policies. There is expectation that the government would consider creating a separate limit (over and above the Rs 100,000) for pension products, including National Pension Scheme (NPS), and long-term insurance policies.

2) Reduction in service tax: It will be on first-year regular premium as well as single premium policies.

3) Service tax on a realization basis: There is expectation that service tax may be assessed on a realization basis. At present, a service tax is levied on premium on an accrual basis.

However, some amounts due are never received. Similarly some amounts received in advance with proposal are not converted into policy. Considering the nature of life insurance, service tax liability should be on the basis of receipt of amount and subsequent conversion as premium.

4) Annuity policy: The policy is treated on par with subscriptions to the National Pension Scheme (NPS) and to be exempted from service tax rules.

The existing insurance policies are grandfathered whenever changes are made to direct tax laws, so that changes will apply only to policies issued prospectively.

5) Post-retirement medical schemes: Contributions made to post-retirement medical schemes offered by insurance companies may be allowed as a deduction.

At present, TDS applies to every payment of commission to an agent above Rs 20,000. There is expectation that the exemption can be shifted from every payment of commission to a cumulative commission payment exceeding, say, Rs 50,000 or any other suitable threshold in a year.

Irda introduces File and Use procedure for life products

NEW DELHI: To fast-track the approval mechanism,insurance sector regulator Irda today re-introduced the process of automatic clearance to life insuranceproducts.

Irda said in a circular that the process “…requires the insurers to submit a copy of policy document with policy schedule under File and Use application…in respect of all products filed from April 1, 2013 onwards”.

Irda had dispensed with the submission of policy document under File and Use or automatic clearance procedure in 2007.

The regulator said it has re-introduced the approval of policy bond under File and Use procedure as various stakeholders of the life insurance industry approached it on the issue.

“Therefore, the Authority would be placing all the terms and conditions of the products approved on its website.”

At present, Irda approves all insurance products on File and Use basis.

Use your social networking profile to land the right job

If you thought only your friends and followers go through your Facebook and Twitter pages, think again. Recruiters routinely scan your profiles and, if interested, an updated, well-maintained profile could be instrumental in landing you the perfect job. For some time now, recruiters have trawled potential candidates’ professional sites like LinkedIn, either to tap passive talent or as a background check.

Now, however, they are peeking at social networking accounts to judge a candidate’s background and form a more rounded opinion about him. In many ways, it serves as an extension of your resume. Says Ronesh Puri, managing director, Executive Access, a head hunting company: “The company is sure to exercise due diligence before hiring a candidate, but a well-written profile is a good indicator of the kind of person you are.”

Under the scanner 

When recruiters scan your online profiles, they are looking for proof that you will fit into the company culture. “If articles related to your field of interest are posted on, say, Twitter, it would indicate that you are in tune with the events and developments happening around you. However, posting frivolous and irrelevant tweets would not speak highly of you,” says Yashwant Mahadik, vice-president and head of human resources,Philips IndiaBSE -1.83 %.

According to experts, recruiters also give brownie points to memberships and affiliations with professional organisations on your profile. Who you know also matters, so be careful about the names on your friend list. Facebook is used relatively less than LinkedInwhen it comes to reviewing a candidate, but it is not unheard of. “Not all companies are hassled about you getting drunk during your nonworking hours, but some employers are concerned about the background of the person they hire, which can be checked through Facebook,” says Mahadik.

Making your offline resume

Everybody understands that it is a personal networking site, so the occasional party revelry snap will not kill your employment chances. However, repeated posts and pictures projecting you in an unfavourable light are sure to be viewed negatively. Some other red flags include posts of a sexual nature, political and politically incorrect rants, and negative comments about your current job.

Make your profile count 

To begin with, choose your profile photograph carefully. Since your details will be viewed by recruiters, you should project a professional look, which is possible only if you are dressed formally.

“You may or may not wear a tie, but you definitely cannot have a photo of you lounging in tees and shorts on the beach,” says Puri.

A group photo as your display picture is also not a good idea. However, don’t rely on a great picture to divert focus from your qualifications and work experience.

Says E Balaji, managing director and CEO of Ma Foi Randstad, India: “Since social networking sites have become one of the channels to seek candidates, it is best to have an updated profile ready.”

RIL, Airtel Emerge Top Recruiters in IIM-A’s 2nd Placement Round

Reliance Industries (RIL) and Airtel emerged as the biggest recruiters in the second round of final placements at the Indian Institute of Management-Ahmedabad (IIM-A) on Sunday with nine offers each. The second round, which IIMs refer to as the second cluster, seemed to have matched the expectations of students as more than 30 companies participated, including some first time recruiters like Wipro Consumer Care & Lighting and L’Oreal Group. Airtel offered roles for its Africa operations, while Wipro Consumer Care & Lighting hired a student for its Malaysia office.
The 2011-13 batch of the flagship Post Graduate Programme in Management (PGP) had experienced a muted start to placements in the first cluster, held on the previous Sunday, as the finance sector, the best pay masters, did not make a large number of offers. However, in the second cluster this Sunday (February 17), the mood was rather more upbeat.
“Several firms had conducted pre-interview processes on February 16 in the form of group discussions and tests, and offers were extended following the interviews conducted today (Sunday). The second cluster consisted of five cohorts: consumer goods and services, general management and leadership, strategy and niche consulting, Indian financial services and business development,” according to a release by IIM-A.
The consumer goods and services companies included regular participants
such as HUL, P&G, ITC,
Nestle, Airtel and L’Oreal Group. KT Prasad, executive vice-president, corporate human resources of ITC said: “We recruit individuals with the intention of creating a leadership pipeline in our organisation and hence we ensure that the senior leadership at ITC participates in identifying talent every year.”
The general management and leadership cohort comprised recruiters such as Mahindra Group, TAS, RIL and Lodha Group. The Niche Consulting sector saw firms such as Feedback Infra, TSMG, Capgemini, EXL and Cheers Interactive take part.
Samsung, a first-time recruiter for a managerial role, participated in the business development cohort, the release stated.
According to sources, companies such as Asian Paints, Vector Consulting, HSBC, which was looking to recruit in the area of marketing, and Standard Chartered, too offered various roles to students.
Last year, IBM was the top recruiter in the second cluster, with 20 offers in the technology sector. The other recruiters last year included FMCG companies HUL, P&G, ITC, Kraft, Pepsi, Nestle and SuperMax. Also, recruiters like Tata Administrative Services (TAS), Reliance Industries and Lodha Group had offered roles in general management.

Motor insurance premium to go up from April 1: IRDA

Motor Insurance premium is set to become more expensive, with IRDA proposing up to up a two- fold hike in rates from April 1 in view of risinginflation and the history of claim settlement.

Charges for the third party insurance cover, as per the IRDA exposure draft, will go up for two-wheelers,passenger cars and commercial vehicles.

For passenger cars not exceeding engine capacity of 1,000 cc, the revised third party premium is proposed to be hiked by 85.30 per cent to Rs 1,453 per annum. For two-wheelers exceeding 350 cc, the premium would go up by 108.14 per cent to Rs 1,415.

For goods carrying vehicles, excluding three-wheelers, with carriage capacity exceeding 40,000 kg, the premium would go up by 313.45 per cent to Rs 53,832 per annum.

The earlier hike which was done in March 2012 was disputed by transporters’ association which had fought a legal battle with IRDA and general insurers in the Calcutta High Court. However, after eight months of litigation, the court had passed verdict in favour of the hike.

Earlier in 2012, while asking domestic general insurers to hike the provisioning — capital to be set aside to pay the future claims as it takes years to settle claims under this category — against the third party motor portfolio, IRDA had assured general insurers that it will allow them to hike the third party motor rates gradually.

The Insurance Regulatory and Development Authority (IRDA) had dismantled the third party motor insurance pool from April 1 last year thereby linking premium rate with the prevailing market rate.

The sector regulator has asked the stakeholders to submit their comments by March 1 on the issue.

How to ready yourself for the appraisal meet

A performance appraisal is meant to help employees realise their strengths and shortcomings and receive a compensation accordingly. However, since most of us dread unpleasant interactions with our bosses and abhor the idea of being measured, the process has turned out to be a much maligned event in the calendar. So, how do you ready yourself for the inevitable? First, chalk out what you want to write in the pre-appraisal form. This is not the time to be a wall flower. You owe it to yourself to record all your achievements and present the best picture on record. Your self-appraisal helps the boss fill in gaps in his evaluation and overcome the bias of recent events.

Next comes the ‘make or break’ appraisal meeting. The chat will fall into one of the following five categories and calls for different strategies for the best outcome.

The ‘you are the best’ talk 

You are a star performer and your boss has acknowledged your contribution. Now, you need to figure out the responsibilities that you would like to shoulder in the coming year. You should be asking for a promotion or at least an opportunity to make a greater impact in the organisation. Don’t be shy to suggest a lateral move to assume another role or geography that holds better opportunities.

The company is likely to prefer to keep you happy rather than have you seek a better deal outside. However, based on official guidelines, the increment offered to you may not match your expectations. So, press your case or ask for alternatives, such as an award—’manager of the year’ or a ‘fast track’ training programme. Both add to your resume.

The ‘you messed up and I know it’ talk 

You have probably missed the targets set in the previous year, taken some wrong decisions or have been part of a failed project. Will you be asked to plan a gracious exit from the firm or will you get a chance to redeem yourself? If there is no discussion on areas of improvement, you may be let go as soon as a viable replacement is recruited. If the conversation steers to what could be done to better it, the firm wants to know if you are lacking in attitude or training. If you are truly uninspired by your work, you are better off elsewhere. Explore other options within the firm and discuss it with your boss. If the attitude is right, but the skills are lacking, figure out the kind of training or exposure that would help you overcome the handicap. Be open to feedback and input on the possible corrective actions that you could take.

Budget 2013 presents good opportunity to introduce insurance reforms: USIBC

The US India Business Council (USIBC) has said that Budget 2013-14 presents a distinctive opportunity for India to realise the latent potential in long-awaited reforms in the insurance sector.

“Other sectors where USIBC sees potential for reforms is pensions, technology, real estate, and infrastructure. All economic indicators point to now being the right time,” USIBC President Ron Somers said.

“We believe in the resolve of the government to work through political challenges and kick-start the engine of jobs and opportunity,” he said.

“We strongly support the government’s continued efforts on the Goods and Services Tax (GST). We believe the GST would dramatically increase government revenue while decreasing the cost of doing business across states, creating a ‘win-win’ dynamic that will be good for the economy,” Somers said.

USIBC asked Finance Minister P Chidambaram to take a broad view on the core concerns impacting investment levels in India in the upcoming Union Budget.

The industry body has underscored the need to encourage investment via strong signals to the global business community in a pre-budget memorandum submitted to the Finance Minister.

A consequent return of investor confidence would harness the tremendous power of India’s economy to restoring growth levels, USIBC said in a statement.