“ICICI Lombard General Insurance IPO opens this week: 4 things to know”

Chanda Kochhar, the CEO of ICICI bank says that ICICI Lombard General Insurance IPO provides an attractive opportunity for the investors.


ICICI Lombard General Insurance IPO will launch its Rs 5,700 crore IPO on September 15. This issue is one of the five mega insurance IPOs which will collectively raise up to Rs 40,000 crores. Highlighting the strengths of the company, Chanda Kochhar, the CEO of ICICI bank told ET Now on Friday, “This is the largest private sector non-life insurance company growing at a very robust space with a very sustainable model and has been generating, for the past two three years, a ROE of more than 15% and a very good track record. In that sense, this really becomes an attractive investment for the investors.” Here are four key details to watch out for in the ICICI Lombard General Insurance IPO.

IPO Details

The company looks to raise about Rs 5,700 crores at the higher end of the price band which is set between Rs 651-661 per share. The IPO will launch on September 15 and close on September 19.  The initial share sale will see stakeholders ICICI Bank Ltd and Fairfax Financial Holdings Ltd sell around 86.24 million shares. ICICI Bank looks to sell 31.76 million shares to get Rs 2,099.40 crore while Fairfax will look to raise Rs 3,601.50 crore by selling 54.48 million shares. The ICICI Lombard IPO will see a dilution of over 19% stake—7.15% of ICICI Bank and 12.27% of Fairfax.

About the company

ICICI Lombard GIC was founded in 2001 and is one of the leading private sector general insurance companies in India with a Gross Written Premium (GWP) of Rs 109.60 billion for the year ended March 31, 2017. It offers a range of insurance products such as motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels.

ICICI group earlier insurance IPOs

ICICI Lombard General Insurance is the second insurance company from the ICICI group to go in for an IPO. Last year, ICICI Prudential Life Insurance raised Rs 6,000 crore in an initial share sale, the first public offering by an Indian life insurance company.

Chanda Kochhar, Chairperson of ICICI Lombard’s expectation from the IPO

In conversation with ET Now, Chanda Kochhar, Chairperson ICICI Lombard GIC said, “I really cannot comment on the returns going forward but if you go by an example, last year we did an IPO of our life insurance company and if you see the track record there so far for those investors the group has delivered a 33% annualised return just in this last year.”

Source:  The Financial Express

Date: 11th September, 2017

“It Is Important For HR To Retain Talented Employees Than Hiring”

Leaders should be encouraged to look at their value proposition and should think about policies that would attract the kind of talent they would like to have working at their organization

The human resource community should engage in the conversation about policies, and how policies are enacted across an organization. Leaders should be encouraged to look at their value proposition and should think about policies that would attract the kind of talent they would like to have working at their organization.

Dr. Brad Shuck, Strategic & Academic partner, BI WORLDWIDE told BW Businessworld, “It is even more important for HR to retain those highly talented, smart, and engaged employees. Policies provide guidelines, and employees interact with those guidelines, so leaders need to think about how formal organizational polices and informal norms are experienced and how they shape the organization’s overall employee value proposition.”

Open dialogue and transparent communication and re-envisioning the value proposition of the organization are the important to keep employees’ morale high. Leaders who openly communicate keep the message of the organization in front of employees, which shapes the corporate narrative. This helps in driving meaning in work and organisational pride.

Digital disruption is double edged. Digital and technological advancements can streamline workflows, automate systems, and connect organisations and people like never before; and at the same time, it can be isolating.

Brad Shuck further added, “Talent acquisition and appreciation, or recognition, has changed over the years by recognizing that organisations need a multifaceted approach and strategy. External reward structures can be fruitful, but by themselves they will not motivate at optimal levels. “

Leaders should be open to listen to ideas to bring the change. In a new study, we found that employees who believed their leader was open to new ideas and listening to those ideas were also more likely to report higher levels of engagement, and also more likely to speak up and use their voice.

Shuck added, “Leaders who are generally known for being closed to new ideas, in both positive and negative environments, lose out on the benefit of high engagement, and also, they have employees who do not speak up in good and bad situations. Such environments are often experienced as closed and, psychologically unsafe. Psychologically unsafe work environments have a cascading set of associated problems and issues and have been documented to lead to disastrous consequences.”

Source: Business World

Date:11th September, 2017

Crop Insurance Scheme Set for Revamp

Government wants to increase competition among insurers to lower premiums for PM Fasal Bima Yojana & also widen its coverage

The government’s farm insurance scheme is in for a revamp just about one year after launch, with the focus now on increasing competition among insurers, lowering the average premium and widening the scope of cover to include losses due to natural disasters.

There is tremendous potential to improve the Pradhan Mantri Fasal Bima Yojana started last year and a high-level team has asked to make it more holistic in coverage and a win-win proposition for all parties, a senior government official working closely on revamping the scheme told ET.

“There is a need to make agriculture insurance more competitive. This can be done by increasing competition among insurance companies, which in turn will lower the premium charged and thus make it more attractive for farmers,“ the official said on condition of anonymity.

Under the existing scheme, farmers pay 1.5% to 2% as premium for most crops compared with the average of 11% charged by insurance companies, and the remainder is equally divided and paid by the Centre and the state.

The official said coverage under the insurance scheme may be widened to include damage and loss to housing and property in the event of a natural disaster. So far, such damage was covered by the National Disaster Response Fund.

The government estimates farmers have paid premium of `2,000 crore, while claims worth `8,000 crore have been paid and another `2,000 crore are in pipeline for settlement.

The scheme now covers 30% of the gross cropped area.

Prime Minister Narendra Modi had tasked think tank Niti Aayog with suggesting ways to improve the government’s flagship farm insurance scheme, which has faced criticism for tardy implementation and being skewed in favour of insurers.

The Niti Aayog, under member Ramesh Chand, has prepared a blueprint to make the scheme more robust and wide ranging.

Launched on August 5, 2016, the farm insurance scheme was the first of its kind in the country, aimed at providing farmers with an inexpensive option of sustaining cultivation even if yield is damaged.

The agriculture sector in the country is under pressure with rising input costs, failing crops and falling prices adding to the debt burden of farmers.

Many states have seen unrest by farmers, even leading to suicides, forcing state governments to waive loans, a measure that critics say is a stop-gap arrangement and not a solution.

Source: Economic Times

Date: 11th September 2017

General Insurers can Sell Auto Cover via Dealers

In a bid to offer more choices to customers, regulator Irdai (Insurance Regulatory and Development Authority) has allowed all general insurers to sell motor cover policies through auto dealer networks by offering differential pricing.

The move, under the new guidelines will offer customers choices in terms of pricing apart from increased competition among insurers to offer best price to customers.

Earlier, it was mandatory for customers to buy an auto insurance from an insurer with whom the auto dealer already has an exclusive arrangement. Also, insurers were not allowed to offer differential pricing which would reward good customers and ensure higher premium for bad customers.

An August 31 Irdai circular recognised the role of auto dealers in distributing and servicing of motor policies along with a regulatory oversight over their activities connected to insurance.

Source: Economic Times

Date: 11th September 2017

ICICI Lombard Sets IPO Price, Could Raise Up to Rs 5,700 cr

ICICI Bank has set a price band of `651-661 for the `5,700-crore IPO of ICICI Lombard, its general insurance joint venture with Fairfax, which will open for subscription on September 15 and close on September 19, said two people close to the development.

ICICI Bank and Fairfax will sell 19% stake in their joint venture, valuing the company at `30,000 crore.

ICICI Bank owns 63.31% in the venture, while Fairfax has approximately 22.13%.

The IPO is an offer for sale of 86.24 million shares by ICICI Bank and the joint venture partner FAL, an affiliate of Canadian billionaire Prem Watsa-led Fairfax Financial Holdings Ltd. The IPO will help Fairfax get approval for a second general insur ance company.

ICICI Bank will sell 31.76 million shares and Fairfax 54.48 mil lion shares, according to the draft prospec tus filed with the Sebi.

Bank of America Merrill Lynch, ICICI Securities and IIFL Holdings are lead merchant bankers for the offer, which includes reservation of up to 4,312,359 for ICICI Bank shareholders.

ICICI Lombard is the largest private sector general insurance company with market share of 8.4% in non-life insurance industry , as on March 31, 2017. Its gross direct premium income stood at `10,725 crore at the end of the last financial year.Its total worth of investment assets is `15,079 crore for the financial year ended March 31, 2017.The company had posted net profit of `622.1 crore in FY17.

Fairfax sold 12.18% stake in ICICI Lombard for `2,500 crore as part of a plan to float a new insurance joint venture. The buyers were private equity firm Warburg Pincus LLC, IIFL Special Opportunities Fund and Tamarind Capital hich is part of Singapore’s Clermont Group.

Source : The Economic Times

Date : 08-09-2017

Settle car accident claim in 1 hr with video proof

Getting Motor Insurance Payouts, Policy Renewals Becomes Easy With Mobile Apps

When aspeeding biker knocked off the exterior rear-view mirror of N Krishna’s car, he did not want to proceed on the Bengaluru-Chennai highway without fixing it. So he took the car to the nearest garage. As he waited for the mechanic to fix it, Krishna decided to try and file the claim on his mobile. He shot a video of the damage, filled in the details and uploaded his claim.To Krishna’s surprise, the claim amount of Rs 1,200 was processed immediately and the amount credited to his bank account, all within an hour -before the mechanic could finish repairing his car.

Settlement of accident claims with an hour has become the new add-on in insurance.And companies are able to do this because of automation.

Take for instance Bengaluru resident Syed Saifulla, who works in an IT company and was recently surprised by a pleasant experience. “My policy expired and I thought I’ll try the self-inspection video service. The turnaround was very quick. It was fast, simple and processed at my convenience,“ he says.

Every month, more than 25,000 users are doing their own photo shoot for renewals, says insurance aggregator Policybazaar, which has general insurance providers like Kotak Mahindra, Liberty Videocon, Bharti Axa and TATA AIG on board for renewal of lapsed policies.

But insurers like Bajaj Allianz and ICICI Lombard General Insurance are going a step further by offering this for accidents via their in-house designed mobile apps. With insurance regulator IRDAI allowing policyholders to do self-assessments for vehicle damage of up to Rs 50,000, this has proved of enormous help to many .

“With `Motor on the Spot’ facility, vehicle users can just click pictures of the damaged vehicle, their driving licence, FIR copy (if required) on their mobile phone and send it to us with the insurance policy number.Using our data analytics, we give an immediate quote to the customer. If the customer is happy with the quote, he can agree and get an immediate settlement. If he is not then he can disagree, and our surveyorscustomer service representatives will get in touch with him,“ Tapan Singhel, CEO, Bajaj Allianz General Insurance, said.

While Bajaj Allianz General is offering this facility for customers up to damages of Rs 20,000, ICICI Lombard General Insurance supports up to Rs 50,000. Sanjay Datta, chief underwriting & claims, ICICI Lombard General Insurance, says, “When it comes to assessing the damage, everyone has a smartphone these days. And we have not really faced any difficulty in terms of video quality being too poor for us to reasonably assess the damage.“

Policybazaar’s co-founder Tarun Mathur says adoption of their app has increased after they started offering it in seven regional languages.“We realised it takes the customer four-five minutes to shoot their videos and upload. We then created a help video, which gives instructions -`Turn right, turn left, shoot the bonnet, shoot the side-door, etc’. After that, it takes our customers just 50 seconds-1 minute to shoot and upload the video,“ he says.

Policybazaar says for every 100 renewals, there are roughly about 30 of those for lapsed policies. “Physical inspection of the vehicle and documentation can take twofive working days. For those who live in rural or semiurban areas, getting hold of an inspection agent can be time-consuming. With the self-inspect video feature, policy renewal has become faster,“ he says.

Source : The Times Of India

Date : 08-09-2017

Insurance brokers can offer up to Rs 10 crore without prior Irdai nod

The Insurance Regulatory and Development Authority of India (Irdai) will soon come out with regulations that would allow insurance brokers to offer claim consultancy up to Rs 10 crore without the prior approval of the regulator.


The Insurance Regulatory and Development Authority of India (Irdai) will soon come out with regulations that would allow insurance brokers to offer claim consultancy up to Rs 10 crore without the prior approval of the regulator.

For claims above Rs 10 crore, the brokers would need to take approval from Irdai.

Sanjay Kedia, president of the Insurance Brokers Association of India (IBAI), said: “This point was discussed in the last board meeting of Irdai and our demand has been largely been agreed by the regulator and we welcome the move.” He was speaking at the launch of new volume of its “General Insurance Claim Insights for Policyholders: A Handbook” on September 06, 2017.

Claim consultancy services will provide for efficient liaisoning with the insurance companies so that the claims can be settled on time. Senior officials in the insurance industry say that, this move will ensure that policy holders do not approach unauthorised agencies to get assistance for claims. “We have been verbally told regrading the change in regulations and we are happy with the move. Going forward we hope that, regulator remove all the restrictions of prior approval of above `10 crore for claim consultancy services,” said a senior official.

Data from the handbook showed the claims settlement ratio is the highest by the New India Assurance, at 70.97%, among the  public sector insurance companies, while Royal Sundaram’s claims settlement ratio stood at 70.79% among large private general insurance companies. Insurers are evaluated and ranked basis the above five criteria for individual lines of business such as fire, marine cargo, marine hull, motor own damage, motor third party, health and niscellaneous, and for all lines of business combined.

The handbook intends to capture data in these parameters and present it in a lucid and accessible manner, which would help policyholders in making an informed decision while choosing a general insurance policy.

However, claims settlement ratio for motor third party has been very less for the entire industry, the data suggests that, claims settlement ratio is below 20% for general insurance companies. While in health insurance claims settlement ratio for New India Assurance is 83.83% in public sector insurance companies.