LIC’s FY15 Policy Sales Income Hits a 10-yr Low

Life Insurance Corporation of India posted its worst performance in a decade on income from policy sales in 2014-15, as new regulations threw out many of its products.The coming year could be equally tough with well-capitalised private rivals taking on the state-run behemoth.

LIC’s premium collection from sale of new policies fell 13.62% to `. 78,302 crore in the fiscal year ended on March 31, 2105, compared with ` . 90,644 crore the previous year.

“Last year (2013-14) was an extraordinary year,“ said an LIC executive who didn’t wish to be named.

“Many blockbuster products were withdrawn and new products were introduced this year (2014-15). This has affected sales.“

Overall, the life insurance industry reported a 5.84% fall in new business income collection . 1.13 lakh crore, mainly beat ` cause of LIC’s weak performance. Private-sector companies posted an 18% increase in new business income, aided mainly by sale of unit-linked insurance plans.

Private-sector insurers capitalised on a surge in investor in terest in stocks by launching unit-linked plans and marketing them well.

LIC, the country’s largest insurer, didn’t have a unit-linked product, which was the flavour of the season. Unit-linked insurance plans are instruments where a part of the premium goes for insurance cover and the rest is invested in a fund. As much as 100% of the fund can be invested in equities.

LIC has predominantly relied on its traditional products. All insurance products have been re-launched this year in accordance with new rules, which offer policyholders guaranteed surrender value and lower commission charges.Traditional policies are debtoriented products in which the bulk of the underlying investment is in government and corporate bonds, with a maximum of 15% deployed in equities.

Agents push sales in the last quarter of the fiscal year as investments in life-insurance schemes with sum assured of at least 10 times the annual premium are eligible for tax deduction within the `. 1 lakh limit under I-T rules.

Source: Economic Times

Date: 30-04-2015

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Irda Plans to Trim Insurers’ Exposure to BFSI

Plans to include fixed deposits & bonds into the overall cap of 25% for the sector, but cos lobby against move, say it may hit investor returns

India’s insurance regulator plans to include fixed deposits and bonds issued by housing finance companies and non-banking finance companies in the overall cap of 25% for banking, financial services and insurance (BFSI) sector, restricting further flow and trimming insurers’ exposure to the sector.

With its newfound power after the passage of the Insurance Bill recently, the Insurance Regulatory and Development Authority has taken up the issue of linkage of financial services sector, something that the Reserve Bank of India has also been pointing out in its half yearly stability reports.

Insurance companies are, however, lobbying against the move, say ing that it may reduce returns for investors when the sector is expected to revive economic growth.

“Overexposure to one particular sector is not good,“ said an Irda official, who did not wish to be identified. “If companies are investing in FDs or bonds of finance companies, they are taking exposure to the sector.“

As per the plan, insurance companies will be allowed to invest up to a quarter of the total investible corpus in BFSI sector. This will mean that insurers will have to freeze their investment in the sector or begin realigning their sectoral exposure.

Life insurance industry manages assets worth .`23 lakh crore. Of this, state-owned Life Insurance Corporation manages . `18.5 lakh crore. Insurers are struggling to match the return offered on taxfree bonds and fixed deposits.

LIC, which has been a major buyer of stocks and bonds of staterun banks, may be among the worst hit given that it already owns huge chunks of shares. It owns 25% share in Corporation Bank, 11.82% in State Bank of India, an undisclosed amount of bonds and also deposits in many banks.

In 2013, LIC was given an exemp tion to increase equity exposure in a single company to 25%. Life insurance companies can buy 1215% in listed stocks depending on the size of their assets under management. “If banking does well, all insurance funds will be underperforming,“ said AK Sridhar, chief investment officer at Indiafirst Life Insurance. “Banking index in Nifty has 29% weightage. It will further worsen the situation.“ Whenever banking stock prices move up, insurance companies sell banking shares to fall within the regulatory restrictions.

“There will be challenges in investment,“ said the chief investment officer of a large private sector life insurance company. “In any case we have to sell bank shares if the share price moves up as our exposure is on the brink.“

At present investment in fixed deposits, bonds issued by non-baking finance companies and housing finance companies are not consid ered as exposure to the BFSI sector.

Bonds issued by infrastructure finance companies are taken as exposure to infrastructure. In infrastructure, insurers need to maintain a minimum 10% investment, but there is no ceiling.

Earlier this year, the regulator had directed insurance companies to treat investment in IDFC as banking exposure instead of banking two years after the lender turns into a bank.

RBI in its financial stability report had said that insurance companies’ investments in the banking sector as a percentage of their respective assets under management were sizeable and the interconnectedness that exists between different sectors in the financial system does expose the system to contagion risks in the event of stress scenarios.

Source: Economic Times

Date: 30-04-2015

E-comm Cos, Startups Line Up Crack Hiring Teams

Firms offer special incentives to get best talent as competition hots up

They comprise the crack team responsible for luring key candidates from competition and getting employee pipelines ready . Recruitment teams of startups and ecommerce firms consist of information technology specialists, analysts, marketing professionals and staffing heads who previously hired in large numbers for the BPO and aviation sectors.

“The competition is so fierce that positions have to be closed in three weeks as compared to a turnaround time of three months in other industries. The diversity of profiles, sheer volume and pace is the biggest challenge,“ says Saurabh Nigam, VPHR of Snapdeal.

Snapdeal, which is now four times the size it was a year ago in terms of staff strength, has a recruitment team which is divided according to profiles like technology, supply chain, and customer support.

The tech recruitment team at Snapdeal has 35 employees who are former employees of companies like Microsoft and Adobe.Those from DHL and shipping companies look at supply chain openings and recruiters with BPO and KPO experience have been hired to take care of customer support posts.

According to earlier reports of ET, the ecommerce industry is expected to hire more than 50,000 in the next couple of years.

To ensure they remain motivated and net the best candidate, some firms have even created special incentives for their recruitment teams. To encourage aggressive strategies, companies such as TinyOwl Technology and Knowlarity have decided to incentivise their recruitment team. Last quarter, TinyOwl announced that for every candidate placed exclusively by the team of 10, there will be monetary rewards over and above salary and variable pay. “In one quarter, the turnaround time dropped by 25-30%. This will keep the firm motiva ted to work within the budget and get 300 more on board,“ said Tanuj Khandelwal, co-founder.

At Knowlarity , for every outstanding hire, the recruiter will get twice the amount of variable pay or bonus he or she was entitled. This was started a quarter ago. “It is only fair that recruiters are judged and incentivised for the quality of talent they bring in,“ says Anu Yadav, HR head. From this year onwards, the company is also linking hiring to managers’ KRAs.

These incentives do help in getting the best on board.“We have to sift through diverse profiles as compared to larger firms where there is a herd mentality while selecting the right candidate,“ says Kanchan Singh, people ambassador (recruiter) with Housing.com. Singh, till two months ago, was in an established MNC and realised that recruiters at start ups and internet firms need to be at the top of their game.

The online real estate portal’s team of 40 includes handpicked software programmers who know how to marry technical abilities with talent search. On board are a group of special recruiters who have worked with the BPO, aviation and insurance sector during the boom and know the strategies to hire in large numbers when the sector is on an upswing.

It is this team that came up with the idea of an external referral system where job openings will be put up online. Anyone can refer a candidate and if successful will get monetary benefits. External referrals are thrown open to the public and will start in next two months.“We need to hire another 500-600 in this year and this will help us save the 8-30% cut that consultants charge,“ says Ajay Nair, CHRO of Housing.com.

Paytm’s recruitment team of tech hiring experts too have been given a larger chunk of their salary as variable pay that is directly linked to their recruitment targets. Its recruitment team originates from consulting firms and to beat competition, will be given bonus on a milestone basis.

Source: Economic Times

Date: 29/04/2015

FEAR FACTOR – Quake Sets Off Avalanche at Insurers

Spike in demand for home insurance

Phones are ringing off the hook at insurance companies and page views have surged at websites offering policies to cover homes and their contents. The earthquake that tore through Nepal on April 25, killing thousands and reducing scores of buildings to rubble has led to a surge in enquiries about home insurance policies in India.

Such policies are of two types -one covers the structure and construction costs in the event of damage to the property due to natural calamities while the other insures belongings and house hold contents.

“There is a spike in demand and this will stay for a short time,“ said Tapan Singhel, managing director and CEO of Bajaj Allianz General Insurance. “We have seen a similar spurt in the past -during the Jammu & Kashmir floods, the Uttarakhand floods and the Sikkim earthquake.“

As with all forms of insurance in India, home cover is also sparse. The number of insured homes is estimated at 20 lakh with annual premiums adding up to Rs. 2,500 crore. At the time of the 2011 census, In dia had 33 crore homes, of which only half are of `pukka’ construction, or permanent in nature There is huge potential in the segment, with average premiums . 3 lakh seen going up to as much as ` according to industry estimates.

“Suddenly there is a spike in en quires, but conversion into a sale is hampered due to lack of wide spread distribution,“ said Sanjay Datta, head of underwriting at IC ICI Lombard General Insurance.

Due to lack of awareness, companies are unable to capture demand. That may change following the devastation in Nepal. Industry executives said that those residing in seismic zones need to buy home insurance to protect themselves.

Policies pay for damage to property and contents due to natural or man-made calamities, including earthquakes. Rates vary from 70 . 1,000, de . 1 per cover of ` paise to ` pending on the area and the frequency. Many banks and housing finance companies insulate themselves from such possible risks by making home insurance mandatory for mortgage customers. A standard clause in most home loan contracts is that the mortgaged house should be insured against natural calamities.

Source: Economic Times

Date: 29/04/2015

Bullies beware!

WORKPLACES OF TODAY HAVE ZERO TOLERANCE FOR BULLIES

With great power comes great responsibility. However, every arena has a few rotten apples that abuse this power to yield influence over their peers, subordinates or even their superiors. Bullying can assume various forms, but the underlying principle of undermining someone’s reputation and confidence is the same. Companies today are becoming very sensitive to the issue and striving to nip all such in stances in the bud to give their employees an opportunity to work in a liberated atmosphere.

Deivasigamani,VP HR, Kaar Technologies, gives us examples of what bullying at workplace may entail,“Workplace bullying may include mistreatment of one or more employees through verbal abuse, non-verbal behaviour or even interfering with a worker’s ability to get the job done. Examples include partnering the victim with a difficult personality in the team; assigning projects that do not come under the employee’s domain expertise; allocating irrelevant tasks to the employee or requesting him her to work continuously on weekends and not approving leave requests.“

What kind of employee is generally targeted for bullying and why? K Umasanker, cofounder, AVTAR Career Creators, answers,“Generally the victims of bullying are at contrasting ends at the work place. Employees who are independent and refuse to be subservient as well as those who are non-confrontational or vulnerable could be the targets. Similarly, employees who are talented and skilled could be targeted as they are the preferred `go-to’persons for the new employees. Insecure bosses and co-workers can’t stand to share credit for the recognition of talent. People who have physical features that attract attention are some of the other targets of bullying.“

Premilla D’Cruz, professor organisational behaviour at IIM Ahmedabad and secretary of the International Association on Workplace Bullying & Harassment (IAWBH), tells us the potential consequences of bullying in an organisation: Umeed Kothavala, CEO, Extentia Information Technology, explains how curbing bullying needs to be a part of the very fabric of the organisational culture,“At the risk of being seen as bureaucratic, policies are good. Decision-making that is based on policy rather than personality helps create an atmosphere of fairness. Laws should be created by men and women with heart and empathy, but once the laws are created, it is the law that should govern and not the whims of people. Also, it is important to create a culture that weeds out those that misuse their power and a system of hearing grievances and redressal must come into place. Providing services like a concierge to run personal errands can ensure that there is no reason for anyone to have to run personal errands for anyone with power.“

TARGET:

Targets report depression, anxiety, sleep issues and various physical health complaints, which become chronic like digestion problems or hypertension;

WITNESSES:

People who know or support the target go through emotional distress. Those who choose to turn a blind eye may be less affected but feel afraid that they could also be targeted;

TEAMS, DEPARTMENTS AND ORGANISATIONS:

If the bullying is overt, severe and long-lasting and the attempt to rectify the situation results in further victimisation, then morale is weakened, productivity and commitment are adversely impacted; targets in such instances quit and take up new jobs at the cost of their career, earnings, etc.

Union Bank signs MOU with Star Union Dai-ichi Life Insurance & New India Assurance

Union Bank of India signed a MoU with Star Union Dai-Ichi Life Insurance Co. Ltd. & The New India Assurance Co. Ltd. to launch two social security insurance schemes viz. “Pradhan Mantri Jeevan Jyoti Bima Yojana Scheme (PMJJBY)“ & “Pradhan Mantri Suraksha Bima Yojana (PMSBY) “ respectively as announced by the Government in the budget as a part of financial inclusion programme implemented through Banks followed by Pradhan Mantri Jan Dhan Yojana. The above schemes aimed to extend life as well as nonlife insurance benefits to rural & poor people at a lower cost.The MOU was signed by S. K. Singh, GM, Union Bank of India, with Girish Kulkarni MD & CEO, Star Union Dai-Ichi Life Insurance Co. Ltd and Rakesh Kumar, GM, The New India Assurance Co. Ltd. in the presence of Arun Tiwari, CMD, Union Bank of India and Executive Directors Rakesh Sethi and Kishor P Kharat.

Source: The Times Of India

Date: 28-04-2015

GIC Re to Bear Brunt of Insurance Claims

State-owned reinsurer GIC Re will bear the brunt of the Nepal earthquake that has caused widespread damage to industrial and commercial property.

“We are the largest international reinsurer in the Nepal market and we have sent a team of 10 surveyors to assess the loss,“ said AK Roy, chairman and managing director GIC Re, which accounts for about a quarter of the total insurance in the Himalayan country.

Roy added, “We will have loss estimate in the next two-three days. We have kept surveyors as the backup.“

The Insurance Regulatory Authority of Nepal, or Beema Samiti, requires companies to cede 50% of insurance within the country .

A massive earthquake, measuring at 7.9 on the Richter scale, rocked Nepal on Saturday, followed by another one measuring 6.7 on Sunday, impacting some parts of India as well. The worst earthquake to hit the region in 80 years brought down several buildings and centuries old temples in Nepal.

While the quantum of insured loss due to destruction is yet to be assessed, claims will come from home insurance policy that provides cover for any damage to the property and contents due to natural or manmade calamities, including earthquake. Rates depend on the area and the frequency. There are four seismic zones -Zone I, Zone II, Zone III and Zone IV .

Private sector insurer Bajaj Allianz General Insurance came out with a dedicated helpline number for victims of the earthquake that struck northern and eastern parts of the country.A special team has been formed in the company to handle these cases and it will make efforts to settle claims on priority.

State-run insurer Life Insurance Corpo ration of India (LIC) is also set to be hit by claims from the earthquake.Life Insurance Corporation of Nepal -a joint venture between LIC (55%) and Vishal Group of Nepal (25%) -is one of the top two insurance companies in Nepal. “We expect some claims since we are among the top two insurers in Nepal and we will know about the claims in the next few days,“ said an LIC executive.

Source: Economic Times

Date: 27-04-2015