Govt weighing proposals of 4 PSU insurers for PMFBY

The Centre is actively considering proposals of four public sector general insurance companies to be part of the Pradhan Mantri Fasal Bima Yojana (PMFBY) launched this year. Currently, the Agriculture Ministry has empanelled 11 private sector companies and state-owned Agriculture Insurance Company (AIC) to implement the new scheme. “The four state-owned Oriental Insurance Company, New India Assurance Company, National Insurance Company and United India Insurance Company have sent theproposals to participate in the scheme. We are actively examining them,” a senior Agriculture Ministry official told . A meeting with the four public insurers was held last week on this issue, the official said. Both public and private insurers are being encouraged to create healthy competition for better implementation of the scheme. All claim liability is on insurer and the Centre will give upfront premium subsidy, the official added. Besides PMFBY, theseinsurers will also sell Weather-based Crop Insurance Scheme (WBCIS). As of now, 11 states — Andhra Pradesh, Telangana, Madhya Pradesh, Uttar Pradesh, Odisha, Chhattisgarh , Gujarat, Himachal Pradesh Jharkhand Uttarakhand andWest Bengal — and one Union Territory Andaman and Nicobar Islands have notified the PMFBY, as per the ministry’s data.

For instance, in Gujarat, Bajaj Alliance and HDFC-ERGO have won the bids to sell the PMFBY in the state for 2016 kharif season. Similarly, states which have notified the scheme have selected insurers through the tendering process.

The Centre has released aboutRs 3,000 crore to expedite settlement of claims for the kharif 2016 season.

It may be noted that PMFBY replaces the existing two schemes National Agricultural Insurance Scheme and Modified NAIS, which have had some inherent drawbacks.

Under the PMFBY, farmers’ premium has been kept lower between 1.5-2 per cent for foodgrains and oilseed crops and up to 5 per cent for horticultural and cotton crops.

There will not be a cap on the premium and 25 per cent of the likely claim will be settled directly infarmers’ accounts.

The new scheme aims to increase the insurance coverage to 50 per cent of the total crop area of 194.40 million hectares, from the existing level of about 25 27 per cent. LUX SRK ARD ABM


Source: TOI, 29th May

Heavy discounts in insurance to come under scanner

Regulator has now come up with new set of norms for maintaining solvency ratio by insurance companies based on each line of business.

Heavy discounts in segments like group health will soon come under the scanner of Insurance Regulatory and Development Authority of India (IRDAI). With IRDAI asking insurers to maintain higher solvency for segments, such as like health and motor where incurred claims are high, insurance companies will be required to reinvent their business straegies.

The regulator has now come up with new set of norms for maintaining solvency ratio by insurance companies based on each line of business. For segments such ashealth, motor and liability, the insurer will be required to maintain a higher solvency ratio since not only the premiums, the incurred claims are also high.

As per IRDAI, Available Solvency Margin (ASM) is calculated as the excess of value of assets over the value of liabilities. Solvency Ratio means the ratio of theamount of Available Solvency Margin to the amount of Required Solvency Margin. The higher the solvency ratio, the more financially sound a company is considered to be. The required solvency ratio as per IRDAI norms currently is 150% which is the minimum to be maintained at all times.

Discounts on the premium being given in the group health insurance continue to be a source of worry for the general insurance companies. Though the Insurance Regulatory and Development Authority of India (IRDAI) asking insurers to refrain from this practice, high premium-related incentives are still being given. The chief executive of a standalone health insurer explained that several private insurers are exiting or cutting down on this business due to discounts. Companies in the health insurance and general insurance space are also cutting down business in this space due to intense competition in pricing which is often termed unviable.

“Bigger insurers have made pricing so tough that it is difficult for others to offer such rates. Now with the regulator’s diktat,these practices would have to discontinue since additional solvency has to be maintained if claims are high,” said the head of underwriting at a mid-size private general insurer. IRDAI had earlier said that industry-wise loss cost must be the starting point and should be considered for pricing a product. It has also said that non-compliance to these norms which included assessing the burning cost will lead to penalties being imposed. However, while this was made applicable to segments like group health from early 2015, insurers said that discountscontinue.

Burning cost is the estimated cost of claims in the forthcoming insurance period, calculated from previous years’ experience adjusted for changes in the numbers insured, the nature of cover and rate of medical inflation. This is a ratio used by insurers to protect themselves from larger claims that exceed premiums paid. Experts said that unhealthy competition is eroding the group health space with prices as low as 25-35 per cent less than previous year despite high claims. To retain large corporate clients or to attract them with better rates heavy discounts are offered. Due to this, there is not just transfer of accounts from private to public, but also from one private non-life insurer to the other.The incurred claims ratio in health insurance has seen a rise year after year to about 101 per cent. This means about Rs 101 is paid as claim for every Rs 100 collected as premium.

Source: Business Standard

Date: May 26 th, 2016


Online insurance broker Coverfox to sell Oriental’s motor policies

State-owned Oriental Insurance has for the first time tied up with a private online insurance broker, Coverfox, to sell its comprehensive motor insurance product for both four- and two- wheelers.

For Coverfox, which operates the online insurance portal, this is the first engagement with a public sector general insurer.

Currently, auto insurance is the largest selling category for Coverfox. Founded in 2013, Coverfox sells insurance online and offers car, health, home and travel insurance.

Talking about the partnership, Varun Dua, CEO and Co-Founder,, said, “We are indeed thrilled by this partnership with Oriental Insurance, one of themost prestigious PSUs (public sector units) in the insurance sector today.

“We appreciate the trust that Oriental Insurance has placed in us through this collaboration. This broadens and gives much-needed depth of choice to our customers.”

Steady growth

Coverfox is the second-largest online auto insurance provider in India. It also sells health and travel policies.

It sells nearly 10,000 policies (auto, health and travel put together) a month and is witnessing steady growth of about 20 per cent month-on-month.

In March 2014, a new report by Boston Consulting Group (BCG) and Google India had estimated that three of every four insurance policies sold by 2020 would beinfluenced by digital channels during either the pre-purchase stage, purchase or renewal stages.

Insurance sales from online channels are expected to grow 20x by 2020, the study had said, adding that overall impact of internet-influenced sales would be ₹3-4 lakh crore.

Date: 26th May,2016

Source: The Hindu Business Line

After MFs, insurance companies now have to disclose executive pay

Close on the heels of mutual funds (MFs) disclosing remuneration of its top executives following a directive from market regulator SEBI, insurance companies have also been asked to provide information on executive pay. The Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies to disclose details of remuneration paid to key executives from 2016-17.

IRDAI has mandated insurance companies to disclose remuneration of managing director (MD), chief executive officer (CEO) and key management persons in its revised guidelines on corporate governance. “Elements of remuneration package (including incentives) of MD & CEO and all other directors and key management persons should be disclosed,” the regulator said.

“These (revised) guidelines) are applicable from FY (financial year) 2016-17,” it said. “The IRDAI (Preparation of Financial Statements and Auditors’ Report of Insurance Companies) Regulations, 2002, have prescribed certain disclosures in the financial statements and the authority is in the process of finalizing additional disclosures to be made by insurers at periodical intervals,” the regulator stated.

Insurance companies now disclose salaries in a consolidated form. Though insurance companies disclose the remuneration of MDs and CEOs in their annual reports, they do not contain details on the pay of key officials such as chief investment officer, chief risk officer and chief actuary. Moreover, incentives paid to key management persons are also typically not included. Further, insurers should provide details of remuneration paid to independent directors. “All pecuniary relationships or transactions of the non-executive directors vis-a-vis the insurance company shall be disclosed in the annual report,” IRDAI said.

Financial performance including growth rate and current financial position of the insurer should also be disclosed, it said. The new guidelines are however not applicable for reinsurance companies andbranches of foreign reinsurers in India.

Latest Comment

Incidentally, MFs have started disclosing details on executive pay only now. MFs were not disclosing the remunerationpaid to its star fund managers. They started to disclose compensation paid to key managerial personnel (KMP), which includes the MD only recently.

Interestingly, KMP included the MD and CEO, CFO (chief financial officer) and the company secretary and not the CIOs who run the fund management business. But following the SEBI diktat they have started providing information on the pay of CIOs and all those whose remuneration is above Rs. 60 lakh per year. The information for 2015-16 was made available early this month.

Date: 27th May,2016

Source: The Times Of India (Business)

Your insurer is watching your diet, fitness regimen

Insurance companies are keeping tabs on the regimen and diet of policyholders with pre-existing medical conditions to reward those who stay on the wagon and knock those who don’t.

Given that stress will exacerbate any illness, that makes one wonder if they’re doing their clients a service or disservice. After all, the last thing someone with, say, diabetes and hypertension, wants is a company rep to leap out from behind a screen and exclaim: “Don’t eat that gulab jamun !” Seriously, though, in what appears to be a well thought out programme, several insurance firms have launched carrot-and-stick policies to keep their policyholders in shape.

Play by the rules, live a healthy lifestyle, and the companies offer you various benefits, including reduced annual premiums; fall off the wagon and you’ll have to pay higher premiums. All of these wellness programmes are for people with pre-existing medical conditions like diabetes, hypertension, cancer and other lifestyle ailments.

To keep discreet but thorough checks on their policyholders, the companies have tied up withgymnasiums, dieticians, doctors and fitness consultants – and they believe it will help policyholders stay on the straight and narrow road to fitness. Among the companies on the ball are Bajaj Allianz General Insurance, Cigna TTK Health Insurance and Star Health and Allied Insurance Co.

Cigna TTK Health Insurance, for instance, covers diabetes mellitus and diabetes insipidus aspart of its ProHealth insurance policy. It offers a “health coach” programme for policyholders with these conditions.

Cigna TTK gives its customers a ‘Health Passport’ – which lists a personalised meal plan and lifestyle activity plan.

Bajaj Allianz General Insurance covers people with critical illnesses like cancer. To getmore people on board, the firm has tied up with spas, salons, and gyms. Theinsurer also has tie-ups with online pharmacies, diagnostic scan centres and eye care and dental care facilities to give its policyholders discounts.

Star Health and Allied Insurance Co, which also offers critical illness cover, runs its ownwellness programmes in schools, corporate houses and homes. A Star Health policyholder can now opt to hit the gym every day or go to aerobic dance classes or maybe something fancier like sessions in Chinese martial art taichi.


Source: ETHealthworld

Date: 27th May, 2016.

The right man for the job

Sudhakar Adapa, Founder and CEO, Talentvouch is a man on a mission, looking to leverage the power of the crowd for smarter recruitment

In this day of age of widely available social media, how strong a tool is it for recruiters when it comes to getting the right candidate?

Social media is a double edged sword. While it captures the entire digital footprint of the candidate, the challenge is how to make sense out of the humongous amount of data that social media throws in. The other challenge is social media throws in data which is not validated, like for example a candidate can boast of a skill but how do you know whether he actually possesses that particular skill?
So the challenge for the recruiter is not data but validation of the data, if you can get that equation right then social media is a great tool for recruitment.

Social hiring as a practice is gaining wide acceptance. What would you say inspired to venture down this path of converging recruitment with a digital means of doing so?

Recruitment globally not just in India but globally is broke. It largely has been untouched by the digital revolution till date in a significant way but for small bit of hiring via social media.Talentvouch is a disruption in the recruitment space, Talentvouch leverages the power of the crowd in two ways; one, by leveraging their social networks to refer candidates and the other leverage their knowledge to validate the skills of referred candidates.So it’s not just data but validated data backed by the domain knowledge of the crowd.

So essentially Talentvouch is an innovation on two fronts on sourcing and validation which is a potent combination which harnesses the power of the crowd. While we are already operating in the human resources segment in recruitment and training, we believe Talentvouch has the potential to be a game changer in the recruitment not just in India but globally as well. We have set ourselves an audacious goal of building a global consumer internet company out of India and with Talentvouch we believe we have a good shot at it.

Source: The Times of India (Mumbai)

Date: 26-05-016


Why your business needs a social purpose

Businesses that don’t have a distinct social purpose may be missing out on the very best of today’s young talent pool after a recent study revealed the majority of new graduates chose their current employer because they were looking for more than a pay check.

The report, conducted by PR agency Claremont, found that 60 per cent of millennials surveyed said their employer’s ‘sense of purpose’ was part of the reason they chose to work where they do.

The report defines ‘purpose’ as something that goes beyond corporate social responsibility and “is fundamental to how the business thinks and is at the heart of everything it does” – how the business makes a difference.

MasterCard CHRO Ron Garrow told HRM that the trend towards valuing social purpose is one that HR simply can’t afford to ignore.

“We really need to think about our employees as consumers and they have choices – they have choices just like they have choices on the way they shop and do all other things, they have choices on how they work,” hestressed. “It is about driving a consumer driven HR organization.”

Aside from being a key attraction tool, Garrow said major organizations should find a social purpose out of benevolence rather than just business.

“I can’t say all companies must [support a social purpose] but where I come from I think they should,” he told HRM.

“Can we benefit from that as a company? We can – but we shouldn’t go at it as we’re only doing this for the sake of making more money, we’re doing it to make this a better world and if more companies did that, I do think it would progress the world along in different ways.”

Source: HRM

Date: 25-05-2016