Banks Want to Revive Trade & Warehouse Insurance

Indian banks are lobbying with the Reserve Bank of India and the Insurance regulator to revive trade and warehouse Insurance as the rise of digital tracking and traceable payments has become a lot more robust under TReDS, unlike in the past where inventories could not be tracked and malpractices were rampant in the absence of tech-based tracking.

“We have represented to the RBI that trade insurance should be made available to banks as most of the factoring is done by banks, and we are taking the credit risk when financing lower-rated MSMEs,” said a banker who did not wish to be identified.

RBI did not respond to an email query seeking its response to the story. TReDS is an online electronic institutional mechanism which facilitates the financing of trade receivables of MSMEs through multiple financiers. The platform enables discounting of invoices of MSME sellers against large buyers through an auction mechanism that ensures prompt realisation of trade receivables at competitive market rates. Banks, till a few years ago, were eligible to get an insurance cover for any money lent to trade and trade receivables, but it was later rolled back after several instances of mis-selling, and bogus bills were brought to Irdai notice.

“If Irdai can extend the insurance cover for trade insurance to banks, it will help us in a big way,” said Kalyan Basu, MD, Invoicemart. “Today, banks want collateral for loans which is a huge impediment for MSME finance. Trade insurance can be taken by MSMEs and buyers, but it is not assignable… if the bank is taking a trade exposure and the insurance cover is not assigned to the bank, then it makes no sense.” “Today, banks are only taking risks on select corporates. In due course, this can be expanded to corporates with low rating and for those corporates this insurance risk will play a substantial role,” said Sundeep Mohindru, founder, M1Exchange.

Source:-The Economic Times-Mumbai

Date:-15th December,2017-Friday

Advertisements

Edelweiss Life Gets ₹670 cr from Fin Arm, Tokio Marine

Edelweiss Tokio Life Insurance on Thursday announced an equity capital infusion of ₹670 crore from Edelweiss Financial Services and Tokio Marine to fund business expansion, develop its bancassurance channel, and explore inorganic growth opportunities. The company is a joint venture between Edelweiss Financial Services and Tokio Marine Holdings where Edelweiss Financial Services owns 51% and Tokio Marine owns the rest 49%. In February 2016, Edelweiss Tokio Life Insurance had received ₹527 crore in capital from Tokio Marine.

The fresh capital shows the long-term commitment by Tokio Marine and growth potential of Edelweiss Tokio Life Insurance. “This will take our solvency to above ₹800 crore of the required capital requirement to support 40-50% growth for the next four years,” said Dipak Mittal, MD of Edelweiss Life Insurance.

“We are evaluating inorganic opportunities. Currently, there’s no transaction in the advanced stage and if there is a need, the promoters will be willing to invest more capital.”

Edelweiss Tokio Life Insurance looks to expand the number of branches to 180 from 110.

“Insurance serves the dual purpose of mobilizing long term savings into investments, and providing protection,” said Rashesh Shah, chairman Edelweiss Group.

“With the increasing financialisation of savings acting as a significant growth driver for Life Insurance, Edelweiss Tokio Life has laid a strong foundation, and is well poised to take advantage of this growth opportunity.”

Source : The Economic Times

Date : 01-12-2017

“Padmavati’ delay can trigger insurance claim”

‘Padmavati’ distributors can make a claim for losses due to the delay in the movie’s release, thanks to a new insurance cover that has evolved in the last decade. New India Assurance, which is facing claims of Rs 3 crore following damage to the film’s sets by protesters, has also insured the movie for Rs 80-crore loss in box office collections if screening is affected or of the public cannot access the theatres.

Until a decade ago, film-making was treated as project insurance, where the cover ceased on completion. Once production was completed, the producer recoveredmoney spent on it by selling various rights of the film. In 2009, after an outbreak of Swine Flu, the Maharashtra government had ordered a shutdown of public places including schools and theatres. The move had hit the collections of two releases — Vishal Bhardwaj’s ‘Kaminey’ and Ram Gopal Varma’s ‘Agyaat’. This unexpected risk prompted the development of the ‘distributor’s loss ofprofit’ cover.

 

Officials at New India confirmed that they are in receipt of claims for Rs 3 crore at the production stage, which was insured for Rs 140 crore. Thestate-owned insurer has also covered Sanjay Leela Bhansali’s historical fantasy for Rs 80 crore for distributor’s loss of profits. New India Assurance chairman G Srinivasan said, “The policy will cover a strike or riot situation and would also cover weather-related events, but it does not cover any loss if the film is banned by any government. Also, the cover comes into effect only after the film is released.”
JLT Independent Insurance Brokers director Amit Agarwal said, “The distributor’s loss of profit policy has evolved quite well over the last eight-nine years. The distributor forecasts the revenue according to territory. A claim occurs if, due to any of the listed perils, the general public is not able to reach the theatre.” According to Agarwal, a Mumbai weekend would account for nearly 25% of a movie’s revenues. “However, if in the subsequent weeks, revenue picks up so that the total two-month revenue is in line with projected earnings, no claim is paid.”
In addition to covering box office losses due to insured events, the policy will also reimburse the producer the cost of promotion. “If for any of the perils mentioned the release date is delayed, the producers are compensated the cost of promoting the film — advertisements, posters and promotional events. But even here the money is paid after two months of release,” said Agarwal.
Industry officials say that movie-making in India is quite different compared to the West. In the West, movies are researched for two years and the shooting is completed in 60 days. In India, the research takes a few months and the production takes a much longer timewith changes made during the shooting. Also, contracts are very loose and stars do not return the money paid to them.

Source: The Times of India

Date: 23RD November, 2017

Magma HDI General Insurance launches OneHealth

Magma HDI General Insurance (Magma HDI), a joint venture between Magma Fincorp and HDI Global SE, Germany, launched its health insurance policy, OneHealth.

This product covers various medical conditions as well as lifestyle diseases which are covered rarely in the industry. The India State-Level Disease Burden Initiative’s Report released recently states that lifestyle diseases now kill more people than communicable ones like tuberculosis or diarrhoea in every state in India. Very few of the existing health insurance policies cover lifestyle ailments like Lasik, bariatric surgery, IVF treatment and in-patient psychiatric treatments among others.

Rajive Kumaraswami, MD & CEO, Magma HDI said, “According to studies, with increasing prevalence of lifestyle diseases in India, one out of four Indians is at risk of dying from non-communicable diseases. This policy along with covering all major lifestyle diseases will also offer additional benefits like restoration benefit, cumulative bonus, free annual health check-up.”

The product offers Rs 2 lakh to Rs 50 lakh, across only 4 variants. This can be taken for three years and there is a zone-wise premium calculation based on the location. Maternity is also covered under some variants of the product.

There is also an income benefit available that offers up to six months’ salary to the policyholder if they have any accident/injuries preventing them from reporting to work.

 

Source: www.moneycontrol.com

Date: 16th November,2017

Magma HDI General expects flat bottomlin this year

Mumbai, Nov 16 () Magma HDI General Insurance, which has completed five years of operations, is expecting profit to be in line with the previous year due to its growing portfolio.

“We had a robust growth in the first six months of this financial year. Going forward, we are expecting net profit to be in line with last year, which stood at Rs 6.3 crore, as our portfolio is growing,” Magma HDI managing director & chief executive Rajive Kumaraswami told reporters here today.

The combined ratio till September was 125 per cent and its accumulative losses were Rs 30 crore, he said. “We have all the top management in place. Now the challenge is to increase our portfolio and manage our expenses.”

He said gross written premium, which stood at Rs 423 crore in fiscal 2017, is likely to grow 30 per cent this year.

“The first six months has been robust for us. Going forward, we are expecting gross written premium to grow upwards of 30 per cent for the full year,” he added.

Kumaraswami said they are focused on retail segments like motor, critical illness and commercial. “In the next three-four years we see motors to be 65 per cent of our total business followed by health 20-25 per cent and commercial 15- 20 per cent.

Meanwhile, the company today launched a new healthcare prodcut called OneHealth, which covers various medical conditions including lifestyle diseases apart from offering restoration benefits, cumulative bonus, free annual health check-ups among others.

Magma HDI is a joint venture between Magma Fincorp and HDI Global of Germany, which is part of the Hannover-based Talanx Group–the third largest insurance group in the largest European economy. SM DSK BEN BEN

 

Source: Times Of India

Date: 16th November, 2017

HDI to exit JV with Magma after a five-year marriage

Mumbai: HDI, the German insurer which partnered with the MagmaBSE -0.06 % group for general insurance, has decided to exit the venture after nearly five years of partnership as their joint venture failed to grow on expected lines.

Magma HDI General Insurance, a joint venture between Magma Fincorp LtdBSE -0.06 %, Kolkata, and HDI Global SE, Germany, offers a wide range of products from health to travel to motor insurance.

“HDI is looking to exit the joint venture with Magma as the business in India has not grown as per their expectation,” said a source close to the development. “Magma HDI is less than 0.5 per cent of the market share and is growing at a slower pace than the industry. This has been a concern for HDI.”

The company had reported profit after tax of Rs 6.3 crore in 2016-17 as against a loss of Rs 11.9 crore in the previous year. The company had even moved its leadership team to Mumbai headquarters to attract talent. The company has a 0.32 per cent market share in the generalinsurance sector, which is dominated by the four public sector insurers andlarge private sector companies like ICICI Lombard, Bajaj Allianz and HDFC Ergo. Magma said it cannot comment as it is in a silent period while HDI said it does not respond to market rumours. In 2016-17, Magma HDI had reported a 3.85 per cent growth in gross written premium to Rs 419.29 crore, up from Rs 403.93 crore in the previous year.

EXITS & BUYOUTS
Earlier this year, Fairfax had sold a substantial stake in ICICI Lombard to float another general insurance company. In 2015, Royal & Sun Alliance Insurance had exited a joint venture withSundaram FinanceBSE -0.40 % in this sector.

After the government raised foreign direct investment limit to 49 per cent from 26 per cent, several private equity investors and large corporates have shown interest in general insurance sector.
Star Health & Allied Insurance has seen interest from several existing and new investors to buyout the company, which is a market leader in standalone health insurance. Similarly, private equity investors including Warburg Pincus had bought stake in ICICI Lombard from Fairfax. Private equity fund True North, along with other funds, have expressed interest in buying into Religare Health Insurance. Narayan Murthy-promoted Catamaran has invested in Akko General Insurance, which received the final set of licence and will soon be starting business.

Source-The Economic Times

Date-13-11-2017

“Star Health Insurance promoters too head for the exit door”

Star Health Investments, which owns close to 40% of Star Health Insurance, seeks to cash out in the wake of a slew of insurance IPOs

Star Health Investments Pvt. Ltd, the promoter of Star Health and Allied Insurance Co. Ltd, is looking to exit India’s first and largest standalone health insurance firm, seeking to cash out in the wake of a slew of initial public offerings (IPOs) in the insurance sector, three people aware of the matter said.

Star Health Investments, which owns close to 40% of the insurance firm, joins other investors such as ICICI Venture Fund Management Co. Ltd and Sequoia Capital in trying to monetize their investment in Star Health Insurance.

The Economic Times first reported on 9 February that these shareholders wanted to exit.

On 4 August, Mint reported that Star Health Insurance was looking to raise up to Rs3,000 crore in funding through primary and secondary stake sales.

“As you are aware…these are natural processes in any growing company. I can only say that the company and its current management team will continue to serve the public,” said V. Jagannathan, chairman and managing director of Star Health Insurance. Jagannathan, also spokesperson for Star Health Investments, refused to elaborate further.

Shareholders of Star Health Investments include Sequoia Capital-owned Snowdrop Capital Pte Ltd. (43.71%) and a clutch of Chennai-based individuals, according to Registrar of Companies data.

Apart from Star Health Investments’s close to 40% stake in Star Health and Allied Insurance, ICICI Venture and Tata Capital Ltd hold close to 20% each. Apis Partners LLP, Alpha TC Holdings Pte. Ltd and others hold the rest.

ICICI Venture, Sequoia Capital, Tata Capital and Apis Partners declined to comment. Alpha TC and other shareholders did not respond to emails and calls seeking comment.

Two weeks ago, bankers sent an alert for a confidentiality agreement to existing domestic general insurers for exploring the option of a potential merger with Star Health Insurance recently, the three persons cited above said on condition of anonymity.

Kotak Mahindra Capital Co. Ltd has been appointed as the investment banker for shortlisting new promoters and public shareholders for Star Health Insurance. Kotak Mahindra did not respond to an email seeking comment.

“…considering the competition and the scope of penetration, capital infusion will be crucial for health insurers in the coming days for strengthening the network further and employing better technology to service customers’ needs,” said Shashwat Sharma, partner and head of insurance at KPMG India.

“So, along with strategic partners, having serious investors, too, will be important for health insurance firms,” he added.

Source: LiveMint

Date: 9th November, 2017