Sunday, April 18, 2010
US Healthcare Bill - Opportunities and Challenges for India
The landmark Healthcare reform bill passed in US is set to change its healthcare system. The US Healthcare reform bill extends coverage to an additional 32 million Americans at the cost of nearly a $ trillion.
Sunday, April 11, 2010
SEBI and IRDA fight over ULIPs
Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA) have locked horns over ULIPs sold by life insurance companies in India.
Saturday, April 3, 2010
Multi-year insurance for two-wheelers
Multi-year insurance or long term insurance is worth considering when it comes to motor insurance for tw-wheelers. This would help reduce the number of uninsured two-wheelers plying on Indian roads. The insurance term could vary from a three-year to five-year or ten-year policy.
Motor insurance lapsation is high for two-wheelers when compared to cars or other light motor vehicles (LMVs). Cost is the main reason for this. Small premium amount and commission amount does not interest the agents to follow-up on renewals. Depending on the age of the vehicle and its past claim record the insurance amounts to anywhere between Rs.500 to Rs.800. In most cases the only time the consumer would have paid attention to insurance is at the point of sale, where the showroom vehicle comes with first year insurance.
With the present structure of annual renewals, the onus of renewing lies with the owner of the vehicle. Once the customer fails to renew within the renewal date, it is observed that they are all the more reluctant to renew it with a penalty of late fees and in turn increasing the number of lapses.
One way to address this issue would be to bring into practice the sale of long-term / multi-year insurance policies for two-wheelers.
General Insurance Council (GIC) in partnership with other non-life insurers is working on developing such lomg-term cover for two-wheelers. The vehicle owners wil have an option of paying the entire premium at one go. Mr S.L. Mohan, Secretary General, GIC, mentioned that providing discounts for long-term insurance will further bring in lot of uninsured vehicles under the purview of insurance.
Both third party (TP) and own damage (OD) aspects of vehicle insurance (comprehensive cover) needs to worked out by the actuarial team in designing this product and to arrive at an affordable long-term insurance premium amount.
Third-party (TP) cover protects accident victims (other than the owner and the rider) while the own-damage (OD) portion insures the bike in case of an accident. Premium for a bike priced at Rs 50,000 is about Rs 900, which includes TP as well as OD. If there are no claims, bike owners receives a no-claim bonus on the premium to the extent of 20% in the first year and keeps on increasing by 5% for every claim-free year to a maximum of 50% discount. All these needs to be incorporated in the new long-term policy.
Mr Vijay Kumar, head motor insurance at Bajaj Allianz General said: “Currently, TP premiums are fixed by the regulator and is uniform across India. However, experience show that there are geographical locations where incidences of claims are very high. This makes the portfolio loss making. Insurers should be offered some lee-way so that they can factor in such high incidences in the premium while working out the long term policy.”
According to the latest available data from Tariff Advisory Committee, about 2 crore two-wheelers were insured in 2007-08. Although there is no published data on the number of two-wheelers plying on Indian roads, close to 4.5 crore two-wheelers have been sold in the past seven years, according to the Society of Indian Automobile Manufacturers (SIAM). Each year about 75 lakh new two-wheelers get added to Indian roads; 84 lakh vehicles have been added so far this financial year.
Motor insurance lapsation is high for two-wheelers when compared to cars or other light motor vehicles (LMVs). Cost is the main reason for this. Small premium amount and commission amount does not interest the agents to follow-up on renewals. Depending on the age of the vehicle and its past claim record the insurance amounts to anywhere between Rs.500 to Rs.800. In most cases the only time the consumer would have paid attention to insurance is at the point of sale, where the showroom vehicle comes with first year insurance.
With the present structure of annual renewals, the onus of renewing lies with the owner of the vehicle. Once the customer fails to renew within the renewal date, it is observed that they are all the more reluctant to renew it with a penalty of late fees and in turn increasing the number of lapses.
One way to address this issue would be to bring into practice the sale of long-term / multi-year insurance policies for two-wheelers.
General Insurance Council (GIC) in partnership with other non-life insurers is working on developing such lomg-term cover for two-wheelers. The vehicle owners wil have an option of paying the entire premium at one go. Mr S.L. Mohan, Secretary General, GIC, mentioned that providing discounts for long-term insurance will further bring in lot of uninsured vehicles under the purview of insurance.
Both third party (TP) and own damage (OD) aspects of vehicle insurance (comprehensive cover) needs to worked out by the actuarial team in designing this product and to arrive at an affordable long-term insurance premium amount.
Third-party (TP) cover protects accident victims (other than the owner and the rider) while the own-damage (OD) portion insures the bike in case of an accident. Premium for a bike priced at Rs 50,000 is about Rs 900, which includes TP as well as OD. If there are no claims, bike owners receives a no-claim bonus on the premium to the extent of 20% in the first year and keeps on increasing by 5% for every claim-free year to a maximum of 50% discount. All these needs to be incorporated in the new long-term policy.
Mr Vijay Kumar, head motor insurance at Bajaj Allianz General said: “Currently, TP premiums are fixed by the regulator and is uniform across India. However, experience show that there are geographical locations where incidences of claims are very high. This makes the portfolio loss making. Insurers should be offered some lee-way so that they can factor in such high incidences in the premium while working out the long term policy.”
According to the latest available data from Tariff Advisory Committee, about 2 crore two-wheelers were insured in 2007-08. Although there is no published data on the number of two-wheelers plying on Indian roads, close to 4.5 crore two-wheelers have been sold in the past seven years, according to the Society of Indian Automobile Manufacturers (SIAM). Each year about 75 lakh new two-wheelers get added to Indian roads; 84 lakh vehicles have been added so far this financial year.
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