Hudhud & Other Disasters Make Landfall at Insurers

Cyclone Hudhud and cyclone Nilofar are likely to contribute to insurance claims of over `. 5,000 crore, making the current fiscal year possibly the worst in a decade for general insurers that have also taken a hit from the floods in Jammu & Kashmir.

The industry’s hopes of turning in a profit this year after increasing premiums for retail categories such as automobile and health may not materialise due to these natural calamities, several executives said. Cyclone Hudhud, which hit the coast of Odisha and Andhra Pradesh, resulted in total claims of .

`4,000 crore, including crop and industrial claims.

Cyclone Nilofar is expected to hit north-west Gujarat soon with equal severity.

RMS modelling agency has pegged the insured loss from cyclone Hudhud at .

`2,400 crore, estimating with the help of catastrophe models that map the risk landscape, quantifying the impacts of natural and manmade catastrophes for the global insurance and reinsurance industry. “This is the first time cyclone has hit the industrial belt. The two cyclones are going to jeopardise insurance companies and hopefully stop freefall of prices,” said AK Roy, chairman & managing director of national reinsurer General Insurance Corporation.

In the absence of claims for the past few years, the general insurance industry had been offering huge discounts on corporate policies. The underwrit ing losses of non-life insurance industry reduced 20.88% to .

`6,984 crore in 2012-13 over the previous year due to reduction in percentage of claims incurred, as per the latest report by the Insurance Regulatory & Development Authority.

Cyclone Hudhud damaged crops worth .

`1,500 crore, about the same amount for which insurers had to settle claims last year in the wake of cyclone Phailin. The large claim notwithstanding, the industry did not revise the premium on crop insurance.

“Price correction is overdue,” said Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance. “We have always believed in pricing products appropriately.” After the deregulation in 2007, insurers have been undercutting each other in most lines of business. Experts say insurers need to invest in actuarial capabilities to underwrite risk and price it accordingly while the companies are focusing on grabbing market share even at a cost that could wipe them out.

Source : Economic Times

Date : 30-10-2014

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THE RAPID THREE – “OFTEN, ORGANISATIONS PICK A CEO BASED ON EXPERIENCE ALONE”

WHICH ARE THE BIGGEST MISTAKES CEOS MAKE GLOBALLY IN RUNNING THE WORKFORCE?

Even as a CEO, it is still important to emphasise the value in developing personal relationships with at least the other higher level executives responsible for running a successful workforce. A key finding from our `Employee Engagement’study found that 54 per cent of employees are engaged when they believe their manager cares about their personal life, versus 17 per cent who do not believe their manager cares about their personal life.>> In order to inspire employees to work hard and remain fully engaged at work, the leader of the organisation needs to establish and maintain a positive reputation in the workplace.While it can be difficult for CEOs of large organisations to communicate positively and openly with each individual, it should be expressed to managers who can then relay the message to lower level employees.>> When CEOs don’t make enough time for themselves outside of the office, they risk sabotaging not only their own career, but also the company as a whole.Vacation time has been also cited to increase productivity and creativity, leading to an overall healthier workplace, and this begins with the CEO.

WHERE DO ORGANISATIONS GO WRONG SOMETIMES IN PICKING A CEO

Often, organisations pick a CEO based on hisher experience alone while ignoring soft skills, or vice versa. No matter the industry, both experience and strong emotional intelligence are important when picking any employee, and especially the CEO. Leadership is a skill that needs to be developed over time, and strong soft skills such as strategic thinking, problem-solving, and the ability to clearly communicate one’s ideas, often come with that experience.Organisations should therefore focus on picking a well-rounded CEO, rather than focusing on hiring for one type of skill.

WHY DO SO MANY LEADERS FAIL IN EXECUTION

Having a great leader is essential to the overall success of the company, and there are mistakes that CEOs make that can lead to failure. In most cases, upon first stepping into a role as a CEO, it’s important not to make too many changes in too short a time period. Employees will need time to adjust to their new leader, and in order to ensure a smooth transition, major changes should be made carefully if possible. Additionally, it is important for CEOs to employ active listening skills and an open-door policy throughout their career as a leader. In order to run a successful business, employees need to feel comfortable and confident in their leader.

Source: The Times of India (Mumbai)

Date: 29th October 2014

Insurers Seek Lower Fine in Bill to Curb Mis-selling – Dheeraj Tiwari New Delhi

The bill seeks to raise foreign investment limit in the sector to 49% from 26%
Insurance companies have sought relaxation in the hefty penalties proposed in the insurance bill for `mis-selling’ and demanded that they should not be held liable for any `act of omission’ by their agents.
In a representation to the select committee of Rajya Sabha, which is examining the bill, insurers have argued that an “exorbitant increase“ in penalties will not only discourage regulated entities but also affect voluntary compliance.The insurance bill seeks to raise foreign investment limit in the sector to 49% from 26%. The bill, which has been passed by the Lok Sabha, met stiff resistance from opposition parties in the Rajya Sabha where the ruling NDA is in a minority.
The 15-member select committee, headed by BJP leader Chandan Mitra, is expected to submit its report in the first week of the winter session of parliament. The government hopes to get the bill approved by the house in the upcoming session. “We have said that the quantum of the monetary penalties should be justified,“ a senior executive with a life insurer, who is aware of l the deliberations, told ET. “Exorbitant increase could discourage regulated entities and will not support voluntary compliance.“
The insurers have also sought a distinction between them and the actions their agents. Under the proposed law, insurers are .1 liable to pay a fine of up to ` crore for any act of omission by their agents.The Life Insurance Council has also argued that the proposed penalties may be benchmarked with those levied by the other sectoral regulators.
The council is an association formed to discuss matters of interests to life insurers.The insurance industry wants the government to amend Section 45 (1) of the insurance bill that says no life insurance policy can be questioned after expiry of three years from the date of issuance.“We want that policies obtained through fraudulent means should be kept out of that clause,” said the head of a life insurance firm, adding that paying such claims may encourage unscrupulous customers who want to take advantage of amended section that restricts the insurer’s right to prevent fraud beyond three years.
“Further, if fraud is detected, only surrender value till the date of repudiation should be paid in such policies as against the full fund value envisaged in the present law,” the top executive said.
Both the finance ministry and the insurance regulator have labeled some of these demands as unjustified.“Stringent penalties will ensure that customer’s interests are protected. Besides, this will ensure insurers will be extra cautious towards monitoring and training of its employees,” said an official with Insurance Regulatory and Development Authority.

Source : The Economics Times
Date : 27th Oct 2014.

Companies with women board members make more money – Namrata Singh & Shubham Mukherjee Mumbai: TNN

Mumbai: Have more women on company boards. Not because it is good for your public image. Not because you have to meet government norms.
But because it makes good business sense—boards with women provide better financial returns than those without.
That’s the finding of a TOIcommissioned study on the co relation between companies with women on board and profitability. An analysis of return on equity (ROE) data of top 100 Indian firms (BSE 100) by Randstad, a leading HR services provider, says that companies with women on their boards have a positive impact on ROE.
The study shows that the board of a private sector firm, run by a professional CEO with a mix of men and women, helped ROE rise by 4.4% in 2014 over the last year. In contrast, a men-only board of a similar firm saw its ROE rise by only 1.8% in the same period. This holds true even for family-run firms. Those with more than two women directors saw their ROE rise by 1% while those with only men on board fared worse, showing a negative difference of 1.6%.
When all private companies with women on their boards were considered, the findings held: ROE was higher by 1.4% over 2013 as against no difference for companies with only men on their boards.
That it makes business sense to have solid representation for women in senior leadership and board positions is very clear to companies such as Godrej Consumer Products (GCPL), which has three women on its board. For one, almost 50% of the Indian population comprises women and an even higher percentage of them are decision makers in purchasing consumer products. “So, it just makes sound business sense to have adequate levels of representation of both genders. Our board discussions are a lot richer as a result of having a diverse representation on the board,“ said Vivek Gambhir, MD of GCPL, whose current ROE is around 20%, while the sector median is around 11%.
Vijay Govindarajan, management guru and Coxe Distinguished Professor at Tuck School of Business, Dartmouth says diversity is the key to maximizing mega business opportunities. “Approximately 50% of the world’s population is women. If we have to harness the full power of human imagination, we must reflect that diversity in all aspects of business,“ Govindarajan said.
While the deadline to induct a woman director on the board for listed companies was recently extended by six months, this analysis suggests that companies may want to hasten the process, given the additional bang for the buck that a gender-diverse board brings to the table.
“The responsibilities held by boards of director today are very different from what they were a few years ago. And, diversity at the corporate board levels helps to look at issues and decision making from different perspectives. Also, there are discernible benefits to having gender diversity at the corporate board levels,“ said Moorthy K Uppaluri, CEO, Randstad India & Sri Lanka.
Unfortunately , data on women’s participation in top management in India is still dismal. Overall, women hold just 9% of the total number of board positions across the companies listed on BSE 100.Only five are headed by women CEOs. Of these, only ICICI Bank, which is headed by MD & CEO, Chanda Kochhar, has shown a positive difference in ROE with 0.9%.
Kochhar stresses the need for gender diversity but feels there are two or three factors due to which there aren’t too many women on company boards. “It’s a relatively recent phenomenon. This is the culmination of a social process which saw women starting to take up careers about 30 years ago. It takes time to build a career,“ she said.
Secondly , women continue to be under-represented in the workforce. “You have only about 20 women for every 100 qualified job applicants. Further, many women drop out of the workforce after a few years,“ she added.
When an organization gets women on its board, there is a trickledown effect with respect to gender balance as it puts pressure on boards to bring more women into the organization, says Rohini Anand, senior VP & global chief diversity officer, Sodexo.
“In a recent internal global research, we found that in entities that have a gender balance, there was higher engagement as compared to those entities which were not gender balanced. Similarly , brand awareness was much higher in entities with a gender balance and so was client retention. When we looked at the financial performance, it was again much higher in an entity which had a gender balance,“ said Anand.
Industry-wise data suggests that information communication technology and consumer goods sector has the highest representation of women in their boards with 13.3% and 13.1%, respectively .The lowest representation of women has been found in the energy and infrastructure sector with 5.4%.
The global scenario is no different. According to Credit Suisse Research Institute’s `The CS Gender 3000: Women in Senior Management’, encompassing over 3,000 companies and 28,000 senior managers across 40 countries, companies with higher female participation at board level or in top management exhibit higher returns, higher valuations and higher payout ratios. As per the report, board diversity has increased in almost every country and every sector, progressing from 9.6% in 2010 to nearly 12.7% at the end of 2013. It said the 2013 sector-adjusted ROE of companies with at least one female board member was 12.2% compared to 10.1% for those with zero representation.

Source : The Times of India
Date : 27th Oct 2014

Aditya Birla Group Signs Health Insurance Joint Venture with South Africa’s MMI

MMI Holdings to hold a 26% stake in the JV.

Aditya Birla Financial Services Group, the financial services arm of the Aditya Birla Group, said on Tuesday that it had signed an agreement to form a health insurance joint venture with MMI Holdings (MMI) of South Africa.

The two will enter into a formal joint venture in which the foreign partner will hold a 26% stake, the company said.

“Health insurance as a category has extremely low penetration levels in India,” said Ajay Srinivasan, chief executive, financial services, Aditya Birla Group.

“Given our group’s focus on building our retail presence across products, we foresee a huge potential to target the requirements of untapped customers and theirfamilies. Our partnership with MMI Holdings will give us the competitive edge given their strong proficiency in the health insurance sector.” MMI is a leading insurance based financial services company listed on the South African stock exchange. It was created in December 2010 through the merger of Metropolitan Holdings and the Momentum Group.

MMI is one of the largest insurers in South Africa. It has business in 12 other African countries and in the UK, too.

“MMI considers India as an important strategic market. We are confident that this relationship between MMI and ABG will lead to the establishment of a successful health insurance business in India,” said Nicolaas Kruger, group CEO of MMI Holdings.

The Mumbai-headquartered Aditya Birla Group is present in the life insurance segment through a jointventure with Canada’s Sun Life. Birla Sun Life sells a range of life insurance products, including unit-linked and traditional products.

The 12,606-crore domestic health insurance business accounts for about a quarter of the total non-life insurance business in the country.

Penetration of the insurance industry has grown at a steady pace since non-state companies were allowed in 2000.

The latest entrant into the seg ment is Cigna TTK, a joint venture between US-based Cigna and India’s TTK Group. Apollo Munich, Max Bupa, Star Health & Allied Insurance and Religare are the other standalone companies in the sector.

Standalone health insurance companies focus mainly on the urban market, which is seeing growth through hospitals, clinics and doctors.

Source: The Economic Times

Date: October 22, 2014

Apply Now @ Social Media, MNCs Hiring

Cos increasingly using sites like Twitter and Facebook to recruit the right candidates

Uber Cabs and Twitter India are hiring. But unless you follow the right people on Twitter or are on their mailing list, you’ll never know about it. These companies aren’t putting out advertisements on their websites or using traditional recruitment companies to find them the best candidates; but have been sending out mailers and tweets to customers or followers.

The team for Twitter India has posted tweets inviting candidates to apply for a job in Mumbai. It reads: “Team @TwitterIndia is looking for an associate partnership manager to join us. #ApplyNow.” Uber Cabs is looking for managers and has decided to go the non-traditional route to find them. In a mail to clients in Delhi, it said: “Are you fired up by the opportunity to move your city through data and analytics, world-class support and cre ative strategy? Come join us!“ The company’s general manager in Delhi, Gagan Bhatia, said people who have used their service are the ideal candidates since they are locals.“This is a fantastic tool to use for recruiting.“

Social recruitment has taken off with a bang over the past year. “It’s a quick process that helps short-listing candidates while doing some research on them. We help clients like Sula Vineyards and L’Oreal find junior to midand senior-level executives,“ said Zafar Rais, founder and chief executive at Mindshift Interactive, a digital outreach company.

According to Rais, about two million jobs are posted on Twitter every month and around 39% of all job seekers are on Twitter and 23% have leveraged Twitter in their job hunt.In addition to this, 45% of the Fortune 500 companies include links to social media on their career pages and 45% are hiring managers to use social media websites to check candidate backgrounds. The most popular social media or networking sites used for recruiting are LinkedIn, Facebook, Twitter, Google+ and BranchOut.

And candidates, too, are getting smarter. They are engaging with brands, analysing activities on social media and then drawing out job offers from there.

Companies like Aircel, Cognizant Technology Solutions, Expedia and HCL Technologies are conducting recruitment drives exclusively through social media platforms. Some of the other big names in the social recruitment space are Infosys and the Tatas, who use social HR as a tool to recruit prospective employees. Cosmetics brand L’Oreal launched its Facebook page `L’Oreal Careers’ and International Business Machines provides a `Smarter Workforce’ technology to help businesses capture and understand data from social media. HCL has saved over $500,000 on recruitment costs by leveraging LinkedIn. One of the main reasons for the shift, say social media experts, is that the dynamics of the traditional recruitment processes are changing. “Social media has a pull factor. It helps engage prospective candidates and companies have to convince them to work with them.

It helps get passionate and more committed candidates than someone who was pursued by an human resource manager,” said Ankita Gaba, co-founder of social media knowledge website socialsamosa.com.

Sumana Samuk, account director at advertising company Ogilvy & Mather who looks at social media strategy for brands, said companies must be integrated with social media platforms. “Business will use this as a way forward to hire. It not only shortens the process of hiring but also saves cost for organisations. In addition to this, social profiles are representative, more or less of what the candidate is and it’s good to do research on them before hiring.”

Source: Economic Times

Date: 20th October 2014

JUST ARRIVED – 70 per cent of employers plan to EXPAND THEIR TEAM over the coming year

With Indian companies now competing on an international scale, latest findings in the 201415 Michael Page India Salary & Employment Forecast confirm the prediction of high levels of growth in India’s employment market.With 70 per cent of surveyed employers planning to expand their team and 45 per cent of them indicating that mid-level professionals will be in highest demand, an accelerated growth trajectory is foreseeable. Senior-level executives and human resources teams recognise the importance of retention strategies, with 51 per cent of surveyed employers expecting staff turnover in the coming year. Companies are implementing full-fledged diversity programmes to ensure equal opportunity for candidates, irrespective of their background or gender; Social media is also becoming an increasing popular talent sourcing tool among Indian firms with 68 per cent of surveyed employers actively employing social media as a part of the their processes; 79 per cent of employers sur veyed indicate that women in their organisation are provided equal opportunity to progress to executive level roles; Finance and accounting: According to the survey findings, there has been a steady strength of hiring activity in the finance and accounting sector compared to the last 12 months. High performers can continue to expect salary increments in the range of 18-20 per cent; Sales and marketing: Permanent headcount has increased over the last 12 months and is expected to pick up further in sales and marketing. Annual increments for sales and marketing professionals have been 12 per cent on an average in retail and healthcare and life sciences, while within FMCG, professionals have received slightly higher rises at around 12-15 per cent; Human resources: Overall hiring activity within the HR discipline has maintained a sense of stability. Salary levels have remained consistent over the past 12 months, with little difference between geographical locations; Banking and financial services: More value-add onshore roles are moving to India, Shared Services Centres (SSCs) relocating from Singapore to India, and additional foreign investment in the local banking sector have played a significant role in boosting hiring in this sector.Those with niche skills or in critical roles can expect a salary upto 25-35 per cent higher in a new role, and a yearly increase of upto 15 per cent in the same role.

Source : Times of India

Date: 15/10/2014