Hudhud may Leave Crop Insurance Claims Worth Rs 1,500 cr in Its Wake

Cyclone has caused much damage; sum assured on the crops in the region is Rs 3k crore

Cyclone HudHud that hit the coastal regions of Odisha and Andhra Pradesh over the weekend may not have claimed many human lives, but the damage it brought to crops may cost insurers up to Rs 1,500 crore.

The two states were hit by a similar storm a year earlier. Cyclone Phailin in 2013 had also cost Rs 1,500 crore to insurers. The Agriculture Insurance Corporation alone had shelled out Rs 1,200 crore under the National Agriculture Insurance Scheme, Modified National Agriculture Scheme and Weather-Based Insurance Scheme at the time.

This time, too, claims will come under yield-related insurance products like the National Agriculture Insurance Scheme and Modified National Agriculture Scheme, said an Agriculture Insurance Corporation executive. Private-sector insurers HDFC Ergo and ICICI Lombard are also active in writing weather-based insurance cover.

Despite facing large claims last year, insurers could not increase premiums as rates are capped. But they have shrunk coverage. “We are not allowed to raise premium rates so we have tweaked terms of insurance to cope with heavy losses from recent incidents,“ said an executive from an insurance company.

Weather-Based Crop Insurance Scheme is intended to provide insurance protection to the cultivator against adverse weather incidents, such as deficit and excess rainfall, frost and heat wave conditions.

Farmers in Jharkhand and Chhattisgarh, which are also likely to see some impact of Cyclone HudHud, could get only limited claim payout under the Weather-Based Insurance Scheme since the two states have crossed the period for which the scheme is valid.

“We are keeping a tab on the situation and there will be some claims under the weather-based insurance cover from Chhattisgarh,” said Sanjay Datta head of motor insurance ICICI Lombard.

Crops insurance is provided for the two seasons of kharif and rabi. More than two lakh hectare of farmland was devastated when cyclone Phailin hit the coastal areas of in Andhra Pradesh and Odisha on October 12, 2013.

Also, over Rs 5,000 crore of crop loans could turn bad because of the damage to crops from the hailstorms that several parts of the country witnessed early this year.

Source: Economic Times

Date: 14th Oct, 2014

LOOK WHO’S GOING DIGITAL

Technology is fast seeping into every conceivable field, including human resources.
According to a recent report, the usage of technology by HR is playing a key role in improving employee satisfaction levels
With the expanding reach and effect of globalisation and technology, organisations across the globe have adopted technology in various functions and departments in the recent past. A significant amount of reports and facts has revealed that the use of technology has had a great impact on the functioning of various departments. Jumping on the same bandwagon is the HR function, that has recently adopted technology in a huge way. And the benefits and results are there for all to see. Validating the same, according to a NASSCOM report, the usage of technology by HR is playing a key role in improving employee satisfaction levels.
Talking about what HR automation means and the key HR functions that have undergone automation, Amit Kumar, head HR, Convergys India explains, “HR service automation is one in which organisations use tools or technology to automate and thereby make HR services achieve faster, more efficient, effective, accurate results and delivery ¬ both to the endusers (as in the case of employees) as well as those who use the information to gather and report data from said services for decision-making (as in the case of HR business partners for the management team).“
Similarly, Mukesh Kumar, executive director, HDFC ERGO General Insurance Company Ltd avers that HR automation means the efficient use of technology and systems in managing employee matters leading to delight. “All major HR functions from day-to-day HR operations to talent acquisition, development, engagement, performance management and succession planning all are automated for efficiency and ease,“ he says.
So, what is the correlation between the usage of technology by HR and employee satisfaction?
Mukesh Kumar says that they have witnessed it themselves. He explains, “At the click of a button, employees can accessupdate personal details, health card, salary statements, leave balances, apply for leaves, do their tax planning, give approvals on mobile platforms and many more for which they would have otherwise been dependent on human intervention. The faster the turn-around time, the more satisfied the employee. Employees like real stakeholders, now contribute to talent acquisition by referring their friends for an appropriate opening in the organisation. Their learning needs are objectively derived by the administration of an online competency assessment test, a technical learning platform allows them to read, learn, review and assess themselves on the technical quotient required to be a well-informed general insurance professional and interact on many more interfaces. We believe and have witnessed, that a technologically-linked HR function is in sync with, and is directly proportional to employee satisfaction.“
As per the NASSCOM report, for two-third of respondents, employee satisfaction levels went up by 10-25 per cent. The positive impacts included improved clarity and transparency of HR policies; a better twoway communication; and an improved perception of HR.
Kishore Sambasivam, director, Total Rewards, SAP Labs India expresses that technology can drive employee satisfaction as it helps to drive efficiencies, transparency, consistency and effectiveness of the various HR programmes. “It reduces cycle time and helps in time management as most systems are available 24×7 and hence providing much needed flexibility to employee managers. It also contributes to faster roll-out of HR programmes, benefits administration, provides choice and add-on options,“ he shares. He adds that in his view, there would be a 10 per cent positive impact on employee satisfaction on account of automation of HR processes.
With the kind of speed that technology is spreading its wings in the HR field, it is certain that we will see the unison of HR and technology taking shape more rapidly.Sambasivam anticipates HR analytics to be a huge focus area for companies as they scramble for talent and work towards building efficiencies, employee engagement and retention. “Analytics can be used to hire the right talent, forecast future requirements, determine employee morale and motivation, anticipate retention risks, drive a more aggressive use of competencies for hiring, skill-development, performance management and succession plan ning. Workforce planning, leadership development and e-learning are other underexplored areas where automation can enable better channelising of energies and investment,“ he adds.As the role of HR continues to evolve from being transactional to strategic, HR professionals will be key to solving challenges such as increasing retentionreducing attrition, quality talent hiring and talent development, points out Amit Kumar. He adds, “The key is in ensuring that HR leverages the entire value chain (from recruiting to development, engagement, etc) in driving technology-based innovations and improvements to help their organisations achieve goals holistically, and remain competitive.“
Thus, the future of HR and technology seems to be bright and this does entail happy times!

Source: The Economic Times.
Date: 14th Oct,2014

Startups Install Hiring Alarms, Filters

CHECKS AND BALANCES An industry that is growing at breakneck speed needs not just the money, but also the right hires. To minimise the risk of hiring the wrong people, startups are using multi-level assessments, psychometric tests and roping in external partners

Hiring mistakes can prove costly given the fierce pace at which startups are scaling up. Swati Bhargava, co-founder of leading cashback site Cashkaro, learnt this the hard way when they hired a senior person for online marketing last year.
They faced various issues with the hire, says Swati, including overpromising and underdelivering on his part and management styles, which alienated other team members. “We had to let the person go in three months and undo and re-do a lot of work done by him. We realised in hindsight that it would have been better to wait and look for the right person than spend so much energy , time and resources on making it work,“ says Bhargava. In the process, Cashkaro estimates they lost out nearly Rs 8 lakh on salaries, training and the like.
As Bhargava learnt first-hand, the biggest challenge facing startups today isn’t getting funded ¬ it’s hiring the right people. Attracting good talent isn’t enough ¬ they need to be the perfect fit as well. That’s why a bunch of them, from Snapdeal and Vuclip to Cashkaro, Wingify and TastyKhana, are now deploying techniques like multi-level assessments, psychometric tests and roping in external partners to make sure they don’t end up paying a heavy price for quick, wrong hires.
“The industry is growing at breakneck speed. The margin of error of getting a wrong hire is minimal,“ says Saurabh Nigam, VP ¬ HR at Snapdeal. “We want to guarantee that our hiring is as scientific as possible.“
Recently, Snapdeal rolled out a three-level assessment test to get the right talent, in skills, aptitude, culture and fitment. There’s a standarised aptitude test with different benchmarks; after clearing which a candidate is tested on functionspecific skills. In the technology domain, for instance, Snapdeal has tied up with HackerRank to test candidates on coding skills.
The final stage involving psychometric tests is to gauge cultural and values fitment, and for that Snapdeal is speaking to multiple partners besides the likes of Aon Hewitt and Development Dimensions International. All this will be in place before the company hits campuses for hiring later this year.
Cashkaro’s Swati and her co-founder husband Rohan now extensively use numerical, written and psychometric tests to measure various parameters including analytical skills, communication skills, multitasking skills and the ability to function independently . “When it comes to recruitment, we can’t afford to get it wrong,“ says Swati.
Unlike large companies which have big training setups to train new joinees, startups want people who can jumpstart, says Varun Aggarwal, CTO and COO of leading employability solutions company Aspiring Minds, which works with nearly 600 startups. “They really want to avoid bad hires. For some, even one bad hire might be 10% to 20% of their total work force,“ he says.
According to the Indian Startup Study Report 2014 by the Hay Group, Indian startups face a high employee attrition rate of 17%, which rises to 21% in growth startups, says its director Debabrat Mishra. “More than the direct cost, it’s the cost to business that has bigger implications in case of a bad hire,“ says Anuj Roy , partner, digital practice at executive search firm Transearch.
Startups across the board agree that the success of their organisations hinges on the right talent. People who thrive in a startup are generally cut from a different cloth: they need to be goal-oriented, passionate, self-motivated, be able to handle uncertainty, think out of the box, be adaptable, open to chances and have the ability to exceed expectations.
Simulated tests of programming, personality assessment and those based on situation handling skills are very relevant for startups, says Aspiring Minds’ Aggarwal. Their technology and products are used in various combinations by customers according to requirements and include AUTOMATA (simulated test of computer programming), AM-Start (workplace competency test measuring traits like effective communication, team work, learning attitude, prioritization, etc) and AMPI (Big-five based personality inventory to measure goal-orientation, dependability, and so on).
In March this year, mobile video company Vuclip used psychometric tests at two campuses to filter through hundreds of resumes to get down to a set of about 30-40 candidates for in-person interviews.
“We assessed potential hires for what we call their `get-it’ ability as well as their other skills to help find the best functional and cultural fit. This is because we believe that a combination of natural intelligence (not just grades) coupled with a great attitude leads to amazing results,“ says Nickhil Jakatdar, CEO of Vuclip.
Candidates have mastered the art of cracking the interviews and hence, start-ups are using psychometric assessments to know their real self, adds Mohit Gundecha, co-founder and CEO of Jombay, a startup in the space of recruitments and profiling.
“Start-ups typically measure behavioural traits like stress tolerance, risk taking, adaptability, guilt consciousness and dependability of the potential hires,“ says Gundecha, whose clients include Vuclip and Pune-based food ordering startup TastyKhana. Jombay uses assessment and analytics to find the cultural fitment of the candidate to the job and the company.
Sparsh Gupta, partner and CTO of Wingify , says that they have used external agency tests to whittle down the number of applicants while hiring for customer happiness (support) engineers where the pool of available talent tends to be very big.
Overall, he says, the passion and the vision of the hires are hugely important. “Every product we design is like a baby. We nurture it, design it and spend months, even years, refining it.We need people who believe that we can become the next big thing and work towards making it happen.”

Date: 10th October 2014

Source: The Economic Times (Mumbai)

RBI May Vet Insurance Model to Allay Customer Concerns – Dheeraj Tiwari New Delhi:

Complaints against banks forcing customers to buy insurance policies while availing other services prompts govt to seek a review of bancassurance model
The government is in discussions with the Reserve Bank of India (RBI) on scrutinising the practice of banks selling insurance products, commonly called bancassurance.
The move follows fresh complaints of customers being forced to buy insurance policies when they apply for loans or seek other banking services.
“The issue was flagged by the central vigilance commission,“ said a government official with knowledge of the matter. “This review cannot be limited to state-run banks, and needs to be done for the entire sector, including private banks.“ The government also wants a review of existing incentive structures at banks for selling insurance products, because of concerns that giving over-importance to bancassurance could affect core banking functions.
As per industry estimates, insurance business through bancassurance accounts for just about 7.5% of total insurance premiums. About 15,000 of India’s 100,000 bank branches are engaged in selling insurance policies.
The vigilance authority, in its communication to the government, had pointed out that sale of insurance products usually form a part of the bank’s appraisal system. “This impacts the core function of the banks, which is not conducive for the system,“ the official cited earlier said.
The RBI had previously highlighted the need to revisit the marketing and sales strategies used by banks in pushing insurance products, especially since insurance is considered as a more complex financial product.
Several issues have risen in the bancassurance structure, such as misselling and also using unfair practices such as linking purchase of insurance products to provide locker facilities, the central bank had said in its financial stability report. Under the previous Congress-led government, the finance ministry was pushing for banks to be permitted to act as insurance brokers and use their entire network, as part of its efforts to bring more people under insurance cover. The Insurance Regulatory and Development Authority has already allowed banks to act as brokers and sell products of more than one insurer.
As per latest data, just 3.96% of the population had insurance in 2012-13, a drop from 5.2% in 2009-10. General insurance penetration in the country stands at just 0.78%. Both bank officials and insurers say questioning the basic premise of the bancassurance model will be a retrograde step.

Source : The Economics Times
Date :9th Oct 2014

What You Need To Ask At Every Interview

The Questions Everybody Should Ask Their Interviewer

Having interviewed thousands of people over the years, I generally have a formula that I adhere to. I know what sort of questions I’ll ask and what direction I want the interview to take. At the same time, there are also common traits that I look for in the people I’m meeting.

What you have to remember is that a vacancy is available because the company has a need or a problem. You have to position yourself as the best solution to that problem – and the mere fact that you have got to this stage means you are in their top bracket of candidates. So as much as the interviewer will ask you questions, you need to do the same. The company needs to sell themselves every bit as much as you.

If you get to the end of an interview and almost all the questions have been asked by the person at the other end of the table, then quite frankly it is highly unlikely you will get the job. Not only does it make you seem unconfident, but it gives the impression that you’re not actually that committed to getting the job. If you really want to work for somebody, then it makes sense to find out as much about them as possible – in particular things which you can’t glean from a mere job advert.

Here are some questions you should be asking at every single interview.

What are your short, medium and long-term goals?

This is one which always impresses me because it shows the candidate is interested in the vision of the business. I have said before that companies don’t hire people who are merely looking for a job – they hire people who want to work for them. Ask the interviewer where they see the business heading over the next year, and in particular, what their specific goals are for you and your department. As well as making a great impression on the company, it gives you an idea of what sort of expectations will be placed upon you.


What’s the culture like?

A job is not just a series of tasks, it is also the place where you will be spending a substantial amount of your time. Therefore you need to ask the interviewer what the company culture is like, because it should match up with what you want. For example, are you somebody who enjoys a high level of interaction with colleagues, or do you prefer autonomy? What managerial style do you work best under?Asking about the culture shows that you have a high attention to detail – and that’s something which goes down extremely well with any hiring manager.

What are the opportunities for progression?

You will probably be asked questions like: ‘Where do you see yourself in 5 years’ time’– this is something I discussed in a previous blog. You then need to follow up on this and see if the company offers you the chance of progression. Remember – this doesn’tmean they need to offer you exactly what you want in 5 years. If you said you want to end up in a Directorship role, don’t expect the interviewer to say that’s exactly what they can offer you! But what they should provide is a rewarding environment where you have the opportunity to expand your skill set and climb up the ladder. A good company will not be put off by your ambition; in fact they will admire and encourage it.

How will I be measured?

Every job has its Key Performance Indicators, and although you may not get all of them in huge detail at the interview stage, you should at least have a broad idea. It very much depends on what the role is of course – the measurements for someone in a Finance role will be different to someone in Marketing for example. But you should walk out of that room knowing what you have to do to hit your targets and add value to the business.

Source : LinkedIn

Why you should invest in Ulips now

Recently launched Ulips have very low charges. Find out why you should buy these insurance-cum-investment plans now.

They were once the most bought financial product. Then Ulips became the most reviled investment, forcing a string of reformatory measures. Now

these investment-cum-insurance plans have changed once again to become a low-costinvestment option. In fact, some of the Ulips introduced in recent months are cheaper than the direct plans of mutual funds.

We won’t be surprised if this evokes an angry response from readers. Ulip became a four-letter word due to the high charges levied by insurance companies and rampant mis-selling by distributors. In some cases, the charges were as high as 80% of the first year’s premium. Distributors lured gullible investors by not revealing the high charges and showcasing only the returns offered by the market-linked product.

The Insurance Regulatory and Development Authority (Irda) clamped down in 2010,capping the annualised charges of Ulips at 2.25% for the first 10 years of holding. The charges were fixed at this rate because it was the average cost charged by competing products such as mutual funds. With no incentive left for distributors, Ulip sales plunged.

In recent months, insurance companies have sweetened the deal for investors byreducing the charges even further. The Bajaj Allianz Future Gain plan does not levy premium allocation charges if the annual investment is `2 lakh and above. The Edelweiss Tokio Wealth Accumulation Plan doesn’t have policy administration charges. Some Ulips, such as Aviva i-Growth and ICICI Prudential Elite Life II, don’t have lower charges but compensate long-term investors with `loyalty additions’.

But the Click2Invest plan from HDFC Life is a game changer. The only charge it levies is an annual fund management fee of 1.35% of the corpus value. There is also a mortality charge but that is for the life cover offered to the policyholder. The low charges make the Click2invest plan cheaper than even the direct plan of a diversified equity fund. For instance, the direct plan of the largest equity scheme, HDFC Equity Fund, charges an expense ratio of 1.5% per year.

Some readers may pooh-pooh the idea of saving a sliver on costs. After all, a 0.15% saving on costs makes a difference of only `150 on an investment of `1 lakh. While this may seem small, the difference in the cost can balloon into substantial savings in the long term.

Shed your aversion to Ulips

This transformation of Ulips from a costly bundled product to a low-cost option has led to a change of heart among financial planners as well. For long, they have advised clients to keep insurance and investment separate. Says S Sridharan, head of financial planning, FundsIndia.com. “Low-cost products like this will be suitable for investors who want to combine insurance with investments,“ he adds.

He’s not alone. With more low-cost Ulips on the anvil (at least two companies are awaiting Irda’s approval for their low-cost Ulips), many financial planners are changing their tune. “The Click2Invest plan from HDFC Life is a good product. We are recommending it to our clients,“ says Jaya Nagarmat from Investor Shoppe. Tanvir Alam, founder & CEO of Fincart goes a step further. “This Ulip will give the mutual fund industry a run for its money,“ he says.

Indeed, it is time to get rid of the historical aversion to Ulips and look at them through the prism of lower charges. This will not be easy because a lot of investors have been scarred by their experience with Ulips. Many have lost money due to the doublespeak of distributors and the failure (or unwillingness) of insurance companies to redress their grievances. Policyholders lost money even though the markets were shooting up. Buyers didn’t realise that even though their funds went up by 15-20% in a year, they were suffering losses because only 40-50% of their money was actually invested in the first 2-3 years. “The new Ulips are facing the baggage of old Ulips,“ says Yashish Dahiya, CEO and co-founder Policybazaar.com.

The tax advantage

While the low charges of new Ulips make them attractive, the main advantage is the seamless and tax-efficient transfer from debt to equity, and vice versa. This switching may be for varied reasons, including rebalancing the portfolio oreven timing the markets by savvy investors.“Though retail investors may not have the bandwidth to switch on the basis of market views, people who are aware can make use of this facility very effectively,“ says Alam.

It is important to note that Ulip is not just about equities. Smart investors can also move within debt, shifting to long duration funds when interest rates are expected to go down and moving to short-term funds when rates are on the rise. If mutual fund investors do this, they will have to pay tax on the short-term and long-term capital gains made on the fund. Since Ulips are insurance plans, the gains and maturity proceeds are tax-free under Section 10(10d).However, the sum assured must be at least 10 times the annual premium for this tax benefit.

This year’s budget has changed tax rules for debt funds. The minimum holding period has been increased from one year to three years .Debt fund investors will have to pay higher tax if they rebalance by shifting out of debt within three years of investing. However, there will be no tax in case of Ulips. Investors should note that insurance companies allow only a limited number of free switches. While some Ulips allow unlimited free switches, others permit only 4-12 free switches in a year. There is a `100-250 charge for every switch beyond the free limit. Like banks, insurance companies also charge you less if you do the transaction online. For example, HDFC Click2invest charges `250 per additional switch if done offline and only `25 if the same is executed online.

Decoding the charges

The charge structure of Ulips is not as straightforward as that of mutual funds. There is a premium allocation charge, a policy administration charge and a fund management charge. There is also the mortality charge for the life cover offered by the plan. The 2010 Irda guidelines say that the combined charge cannot be more than 2.25% a year in the first 10 years. They have also capped the fund management fee at 1.35% per annum, though many Ulips are charging less than that on their short-term debt schemes.

The mortality charge differs across Ulips. Some plans offer either the sum assured or the fund value on death. These are Type I Ulips and their mortality charges go down as the fund value goes up. The Type II Ulips offer both, the fund value as well as the sum assured. Obviously, the mortality charges are higher when it comes to such plans.

ThoughUlips offer a cover to policyholders, the benefit may be a drag for those who are interested purely in investment. The low-cost Ulips are, therefore, Type I plans that will pay either the fund value or the sum assured. Here’s how itwill work. Suppose a person buys a Ulip with a `1 lakh premium for 20 years. The plan will give him a cover of `10 lakh (10 times the annual premium), but the insurance company will charge mortality premium for only `9 lakh since the total risk for the company is `9 lakh. With every annual payment of the premium, the risk of the company will come down, reducing the mortality charge. When the fund value of the Ulip exceeds the sum assured, the plan will stop deducting mortality charges and the entire premium will go into investment.

Another way to reduce the impact of mortality charges is to buy the policy in the name of your spouse or child. Income from investments made in the name of a spouse or a child are subject to clubbing provisions, but since the maturity proceeds from Ulips are tax-free, you don’t have to worry about that. You can also go for single premium Ulips, with an insurance cover of only 1.25 times the premium. However, the maturity proceeds of such a plan will not be covered under Section 10 (10D) and will be taxable in your hand.

SOURCE: TIMES OF INDIA

DATE : 6-10-2014

Rel Cap to hive off health cover biz

Reliance Capital, the holding company for all the financial services businesses within the Reliance Group controlled by Anil Ambani, plans to hive off its health insurance business into a separate company from its general in surance business, and also get a global player from the same industry as a partner.

“We look forward to partnering with global companies in health insurance business to bring best practices, products and service to the Indian market,“ Ambani, chairman of Reliance Capital, said at its AGM.

Source: Times of India

Date : 1st October 2014