Mis-selling of LIC policies continues

Agents are painting a rosy picture and promising guaranteed returns to clueless investors

Even as insurance behemoth Life Insurance Corporation of India (LIC) is busy bailing out initial public offerings of public sector units (PSUs), LIC agents are finding new ways to trick investors.

Meanwhile, the insurance regulator is busy issuing advertisements selling and explaining products such as unit-linked insurance plans (ULIPs) instead of cracking down on dubious selling tricks.

A source told Moneylife,”Two years back, a client was sold an LIC policy for which she made one-time premium payment of Rs1 lakh for 10 years. After the vesting period, she was promised a monthly pension of Rs5,000 (Rs60,000 annually) for the rest of her life. This sounded too good to be true. At this rate, the client’s entire notional corpus is likely to get eroded. From where will LIC fund this kind of money? It is hard to believe that the insurer would sell such a product. When we did the calculation, we found that the return being promised by the policy worked out to be 25% compounded annually. A debt-oriented product cannot offer a return of more than 6%-7%. Even equity-linked products can manage 15% returns at the most.”

Often, agents show a performance chart to the investor which is invented by themselves and not LIC. The performance chart shows impressive compounded annual growth rate (CAGR) returns of 20%-25% over a period of one year.

According to sources, agents don’t give the product literature to the investor during the 15 days of the ‘cooling-off period’ under some pretext. In this case too, the agent said that she was “busy with the financial year end” and would submit her product literature later. By the time the agent produces the documents, the investor has no option but to continue with the policy.

Numerous misleading advertisements of LIC are being circulated in regional languages carrying a logo of LIC, in smaller towns. These ads promise astronomical returns.

Apparently LIC is not responsible for publishing such misleading claims but it is the agent who takes investors for a ride. Usually the product literature is not on the letterhead of LIC.

“There are umpteen instances where clients are promised exaggerated returns. One of them was promised a return of 35%. This example is just the tip of the iceberg,” adds the source.

Earlier, LIC’s Money Plus—launched in 2007—was also rampantly mis-sold by distributing pamphlets promising unrealistic returns.


The reason for this mis-selling is the high commissions doled out to agents.


Courtesy  : Money life  March 25, 2010 04:49 PM   Ravi Samalad

Life Insurance: True Numbers-LIC’s leads decline; private players still in growth mode

LIC’s leads decline; private players in growth mode. 

A decline in growth of new-business premiums(NBP) for Jan ’10 stemmed from LIC’s high base last year. 
NBPs fell 40.3% yoy (up 15.3% ytd), primarily led by LIC (down 53.5%yoy, up 23% ytd). 


Private insurers recorded another month of positive NBP growth in FY10 (up 11.6% yoy, 3.3% ytd)

SBI Life, HDFC and Kotak show high yoy NBP growth 

 SBI grew 45.4% yoy, (21.1% ytd)

HDFC grew 41.6% (11.7% ytd) 

Kotak grew 25.1% (-13.6% ytd). 

ICICI (17bp) to5.8%, 

Bajaj Allianz (11bp) to 3.8% 


Reliance, Birla and ICICI show yoy NBP decline 
Of the other large insurers, 

Reliance fell 22.4% yoy, (7.8% ytd), 

Birla 24.8% yoy (up 10.1% ytd) and ICICI 9% yoy (-17% ytd). Birla lost
the most market share (10bp) to 2.9%.
 LIC fell a sizeable 53.5%,and lost market share (33bp) to 65.1%, on account of a high base
last year. In Jan ’09, LIC mobilized individual single premiums of
Rs82bn, compared to Rs16bn in Jan’ 10, and higher than FY09’s
monthly average of Rs13bn.
 
 FUTURE of Life Insurance:
The revival in NBP growth of private insurers has beenled by equity markets looking up, and a favourable “base-effect”.So far, the monthly trend is encouraging, with strong NBP growth in the last three months. We expect the industry’s APE to grow ~8% in FY10.
 


Courtesy:Anand Rathi 

Regulator acts like an industry association; IRDA promotes ULIPs!

The insurance regulator has launched an unprecedented advertising campaign, hard-selling ULIPs. Not only is this a bizarre action for a regulator, but the ad is also misleading as it fails to provide any concrete evidence of ULIPs’ superior performance
Can you imagine the Reserve Bank of India (RBI) hard-selling recurring deposit schemes of banks or the Securities and Exchange Board of India (SEBI) bombarding investors with ads asking them to buy infrastructure funds? That is exactly what the Insurance Regulatory and Development Authority (IRDA) is doing.

IRDA recently launched an advertising campaign promoting unit-linked insurance plans (ULIPs) for pensions. The ads seek to educate investors of the benefits of ULIPs in providing for regular income or pension during retired life. However, in its attempt to hard-sell ULIPs, IRDA has brought out an ambiguous and misleading ad.

A ULIP is a life insurance policy, which provides a combination of risk cover and investment. It is the most common ‘insurance’ plan sold by life insurers and is quite popular among investors, thanks to massive promotions and incentives. The ad basically tries to impress upon the reader that a ULIP is a sound investment option if one is looking out for regular income during retired life. However, there are several issues with the claims made in the ad.

First, it has failed to substantiate this argument with any comparative indicators as to the returns that the product is likely to generate over a period of time. The ad provides no factual basis for making claims that ULIPs are the right product to ensure that you are well-provided for in your retirement. There is no comparative data of the returns of other long-term investment products, to underline ULIPs’ superiority.

The fact is that IRDA or anybody cannot provide this comparative information. This is simply because ULIPs have no track record. Who can say how ULIPs would do over, say, 30 years? Even products with established records do not perform as per their promise. What if ULIPs turn out to be the worst option between bank recurring deposit schemes, balanced funds, New Pension Scheme and even diversified equity funds? There is no guarantee that a ULIP will provide the holder with a safe kitty once he reaches retirement. If so, is the regulator pushing the investors into a wrong product?

Second, what is the rationale behind the insurance regulator recommending an investment product? The main purpose of insurance is to provide protection to the policy-holder and is not meant for generating investment returns.

Third, the ad also appears vague in advising the reader on the tenure of investment. It says, “If the term is too short, the policy accumulation would be insufficient for a pension corpus. If you stretch the term too long, you may end up being required to pay premium when you would actually like to receive pension payouts.” The obvious question that arises here is what term or period is ideal for a ULIP? The ad leaves this bit of information hanging in thin air.

Fourth, as we mentioned in the beginning, it is bizarre that IRDA as a regulatory authority should be expounding the benefits of a single product type. The fact that it is touting the benefits of ULIPs while ignoring other products is surprising. If instead it were to launch a public awareness campaign highlighting the benefits of insurance, it would make more sense.

Interestingly, IRDA’s advertising blitz comes at a time when it is waging a war with SEBI over the regulatory purview of ULIPs. Moneylife tried contacting some industry experts on their views on this matter, but no one appeared to be willing to speak on this strange ad.

Moneylife : Regulator acts like an industry association; IRDA promotes ULIPs!

Moneylife : Regulator acts like an industry association; IRDA promotes ULIPs!

Can Promises of Highest NAV Guarantee Deliver?

Can Promises of Highest NAV Guarantee Deliver?
 
Insurance companies have launched a spate of funds promising investors a guarantee of the highest NAV achieved. Can these schemes deliver what they are promising?Over the last few months, one after another, a number of insurance companies have launched ULIPs which promise to repay the investor on the basis of the highest NAV that the fund has achieved. The pitch is that these funds' NAV effectively does not drop. Once a level is achieved, then the investor is assured of getting at least as much, no matter what happens to the market. It's certainly a very attractive idea. From the way insurance companies are stampeding into launching such products, I'm sure investors must be putting down their money in good numbers-in just a couple of months, six insurance companies have launched such products. Any investor who is told of this concept will immediately start salivating at the thought. Imagine how rich you could have been had you been invested over the last ten years and had been able to lock your investments at the magical value that the markets achieved on the day when the Sensex touched 20,873!

Any investor thinking about this product would say, "What a wonderful idea!" Why don't all investment schemes-whether mutual funds or ULIPs or even portfolio management schemes offer this kind of a protection on all their products anyway. The answer to this obvious question is simple. There is no free lunch. These products don't actually offer what you think they are offering. That is, they do not offer equity returns that never fall. Instead, they offer an investment system with a very long lock-in (seven to ten years) in which protection is achieved by progressively putting your gains in a fixed income assets which will give returns far more slowly than a pure equity option. The lock-in and the non-equity assets make this a very different kind of investment than the equity-gains-without-losses dream that these funds' advertising seems to imply.

However, even that's not the real reason that these funds are useless. The real reason is that if you are willing to lock-in for seven to ten years, then practically any equity mutual fund would deliver this dream of equity-gains-without-losses. Seven years is a very long time. Over such a period practically any equity portfolio into which any kind of thought has gone would capture substantial gains. This is not mere conjecture. Since at least 1997 the minimum total return that the Sensex has generated over its worst seven is 12 per cent, which was over the seven year period from 6th July 1997 to 5th July 2004. The truth is that in a growing economy like India's it's extremely hard to lose money over a long period like seven years. If you are willing to lock in your money for seven years, then for all practical purposes, you have a guarantee of making a profit.

Of course, this is not a guarantee that is signed in a contract and legally enforceable, but it's the kind of guarantee that any thoughtful investor would be willing to believe in. Mind you, this is also not a guarantee that you will get the highest NAV achieved but again, that's the kind of thing that can't be attained if you want the gains of pure equity anyway.

The most instructive thing in this whole business of guaranteed highest NAV products is the contrast between the illusions spun by those peddling complex financial products and the reality of simple, straightforward investing. It just reinforces one's belief that financial products are being designed whose goal is nothing more than to create a marketing hype which can manipulate the psychology of the ordinary saver.

-- Dhirendra Kumar

Courtesy:   Value Research

Customised risk gauge to cover life insurers :Irdas new economic capital model provides safety net to policyholders as well

THE CHANCES OF AN INDIAN LIFE INSURER going bust would not be more than once in two centuries.Sounds incredible,but this is the essence of the insurance regulator Irdas new model,released last week,for life insurers to assess risks and compute the capital needed to cover them.
A life insurer that adopts this model economic capital in jargon has a 99.5% chance of remaining solvent with the financial strength to pay claims of policyholders.The new model allows insurers to factor in various types of risks,quantify each of them and charge capital accordingly.The amount of capital that the company needs to set aside would depend on the type of business it underwrites.
More work for actuaries,but the spinoffs are many.The insurance company will have a clearer understanding of its risks and would be able to quantify such risks better.This,in turn,would improve efficiency in capital allocation and allow the company to review its pricing decisions.If more capital is released,it would help the insurer grow,boost profitability and lend more financial stability to the business.
Stability of financial institutions has dominated the agenda of regulators the world over,after the global financial crisis in 2008.India is no exception,though its financial institutions were insulated from the crisis.US insurer AIGs insurance joint ventures in India with the Tatas,for instance,did not feel the ripples of the crisis that saw AIG borrow from the Fed Reserve to meet its collateral obligations.
To Irdas comfort,the solvency margin the excess of assets maintained by an insurer in the interest of policyholders of most domestic life insurers is well over the prescribed norm of 150%.Now,the regulator wants insurers to move beyond this regime and adopt solvency-II norms that would allow them to assess their own capital needs.One size fits all will not work.
The reasons are simple.The current solvency regime does not make a distinction between a risky and a not-so-risky portfolio,whereas the new model would do so.It would factor in various types of risks including insurance,operational,market,credit and liquidity risks.
The fund management fee,for instance,could take a hit when equity markets are choppy,putting pressure on a companys profitability.Economic capital would ensure a safe level of capital to counter such cycles.The companies need capital to grow and to meet unexpected claims,expense over-runs and investment losses.Currently,if the solvency margin of an insurer is,say,200%,the extra 50% can be used to write new business.However,if the insurers business projection crosses this threshold,the company has to bring in extra capital to maintain solvency.
Economic capital would provide a cushion for companies to pay policyholders claims in turbulent times.Its impact on domestic life insurance companies would depend on their product portfolio.Broadly speaking,the capital requirement will be higher for products with a guaranteed return and lower for products that offer no guarantees like the unit-linked insurance plans,one of the hottest products in a bull run.
Globally,banks have been ahead of insurance companies in computing the exact level of risks and setting aside capital against such risks.According to global audit firm PwC,Citigroup,ANZ and Barclays use economic capital computations as input for strategic decisions.
Once an insurer identifies the risks,it can strategically position its policies to address and mitigate them.The difference between actual capital available,economic capital and solvency capital will determine the policy of the insurer to take on extra risks to write new business.Ultimately,we have to move towards risk-based supervision and the other side of this coin is risk-based capital,reckons Dr R Kannan,Irda member and head of the panel that scripted roadmap for the new model.
Life insurers have to compute economic capital from end-March 2010.The timing is apt as some insurers,including Reliance Life,have announced their plans to float an IPO.Economic capital requirements would give prospective investors a clear view of a companys performance and help them make comparisons across companies.
It would also improve the comfort level for foreign promoters of insurance joint ventures that are expected to bring in more capital after the government amends the insurance law to hike the FDI cap from 26% to 49%.
The new model is a good start for life insurers in India whose business hinges on the expectation of making money in future.Other emerging economies that plan to open up insurance sector could take a cue from the Irda,if the model helps provide a safety net for policyholders.
hema.ramakrishnan@timesgroup.com
Courtesy:
http://lite.epaper.timesofindia.com/getpage.aspx?articles=yes&pageid=13&max=true&articleid=Ar01302&sectid=11edid=&edlabel=ETBG&mydateHid=16-03-2010&pubname=Economic+Times+-+Bangalore+-+Policy&title=Customised+risk+gauge+to+cover+life+insurers&edname=&publabel=ET

Why not worried of Life?

In our day to day life, we are much worried about our things in different manner and in different issues. The only issue we never worried of is Life Insurance.  That's right you heard it right.

Just sitting before the wheel we do check a lot issues like pressure in tyres, fuel in tank, spare tyres and condition of the brakes but why we never check the right amount of insurance or cover needed for our life and family in case of any eventuality because we are afraid of the thought that we are no more tomorrow and that fear leads us to different root.

It's very important to give support to the family who lost us though that space cannot be filled with any means for life but certainly our handy  coverage will certainly help them to great extent.

 I do write more about amount of insurance and type of cover we need in next episode..

Happy Living 

Insight of Insurance

TYPES OF INSURANCE POLICIES

Insurance provides compensation to a person for an anticipated loss to his life, business or an asset. Insurance is broadly classified into two parts covering different types of risks:

1. Long-term (Life Insurance)

2. General Insurance (Non-life Insurance)

Long-term Insurance

Long term insurance is so called because it is meant for a long-term period which may stretch to several years or whole life-time of the insured. Long-term insurance covers all life insurance policies. Insurance against risk to one's life is covered under ordinary life assurance. Ordinary life assurance can be further clasified into following types:

1. Endowment Policies

In case of endowment assurance, the term of policy is defined for a specified period say 15, 20, 25 or 30 years. The insurance company pays the claim to the family of assured in an event of his death within the policy's term or in an event of the assured surviving the policy's term.

Whole Life Assurance           

In whole life assurance, insurance company collects premium from the insured for whole life or till the time of his retirement and pays claim to the family of the insured only after his death.

Whole Life Limited Payment Policy

In whole life Limited Payment Policy plan, insurance company collects premium from the insured for limited period and pays claim to the family of the insured only after his death

2. Child Policies

i). Child's Deferred Assurance: Under this policy, claim by insurance company is paid on the option date which is calculated to coincide with the child's eighteenth or twenty first birthday. In case the parent survives till option date, policy may either be continued or payment may be claimed on the same date. However, if the parent dies before the option date, the policy remains continued until the option date without any need for payment of premiums. If the child dies before the option date, the parent receives back all premiums paid to the insurance company.

ii). School fee policy: School fee policy can be availed by effecting an endowment policy, on the life of the parent with the sum assured, payable in installments’ over the schooling period.

3. Term Assurance

The basic feature of term assurance plans is that they provide death risk-cover. Term assurance policies are only for a limited time, claim for which is paid to the family of the assured only when he dies. In case the assured survives the term of policy, no claim is paid to the assured.

a)      Decreasing Term Insurance

A Decreasing Term policy decreases over the life of the term, which could be 10, 15, 20, 25, 30 years. Or it could be decreasing to age 65.

A Decreasing Term policy is designed to cover a financial need or debt, such as a mortgage. The principle loan decreases as you make payments. The Decreasing Term will also decrease along with the principle, and will expire at the end of the term. This insurance would be called Mortgage Decreasing Term, designed to decrease with the principle, based on the interest rate of the loan.

This type of policy could also be used by a business owner to cover a business loan which is financed over a period of time.

Decreasing Term is sometimes also used to provide an income to a surviving spouse, based on life expectancy. As time goes by, the less amount of coverage one would need for an income; taking into account that the surviving spouse also has less time to live.

Although the amount of insurance decreases, the premium remains the same. As the insured gets older, insurance costs more, so each year, the amount of coverage will decrease.

Decreasing Term will have a guaranteed convertible benefit, giving the insured/owner the right to convert the policy to a Whole Life policy at whatever amount is in effect at the time of conversion.

In a Life Insurance Need situation, a Decreasing Term Rider could be added to a participating (pays dividends) Whole Life policy to provide level coverage, at a reduced premium rate than with Whole Life alone

As the name implies, the death benefit paid out for a decreasing term life insurance plan decreases over time. The premiums remain the same for the life of the policy, but the amount of coverage grows smaller over time

b)      Increasing Term Insurance

Increasing Premium Term is temporary life insurance protection at an affordable initial premium. This type of policy is renewable each year which means you may renew the policy annually (until the expiry age which varies by state) without providing evidence of insurability, or proof of your good health. As long as you pay the premium, the policy remains in force. Like all term insurance, Increasing Premium Term provides pure insurance protection only. It does not accumulate cash value, nor is it eligible for dividends.

Premiums increase each year you renew the policy. The amount of this increase is guaranteed in the policy for the first ten years. Each year, premiums on the renewed policy will typically be higher, because they are based on your age at the start of the renewal period. You may convert all or part of an Increasing Premium Term policy into a permanent, cash value policy without furnishing evidence of insurability.

·         For an extra premium, you can also buy the option to increase the amount you are insured for, either at set intervals, such as on each anniversary of taking out the insurance, or when a particular event occurs – marriage of the birth of a child, for example.

·         As you would expect, if you choose to increase the amount you are insured for your premiums will become more expensive.

·         The advantage of buying this sort of add-on to a basic policy is that the premiums are worked out on the basis of your health at the time when you first took out the original policy, even if your current health is not so good.

·         Keeping your options open while increasable insurance lets you increase the amount you are insured for during the policy term, renewable insurance allows you to take out another policy regardless of your state of health at the time.

·         Premiums will be based on your age at the time you renew but there will be no increase if your health deteriorates.

·         Although you may pay more for this option, it could be worth considering if you are worried about future health problems which would make life insurance expensive (or even unobtainable).

·         However, the option of renewing your policy may not be available if you want the renewed policy to end after your 65th birthday.

·         Term extension as well as – or instead of – being able to increase the amount you are insured for, it may be possible to extend the term of the policy (i.e. increase the length of time it runs for). This should be cheaper than taking out a new policy at the end of the term: premiums increase as you get older

·         Renewable annually, which means you may renew the policy annually (until the expiry age which varies by state) without providing evidence of insurability, or proof of your good health.

·         Premiums increase each year. The amount of this increase is guaranteed in the policy for the first ten years.

·         Premiums on the renewed policy will typically be higher, because they are based on your age at the start of the renewal period

·         There are limited funds: in situations where life insurance is essential but dollars are scarce, IPT could serve as a stop-gap. Young people starting their careers can choose IPT, then covert to a permanent policy as their finances improve.

·         There is a need for supplemental insurance. IPT is an affordable way to increase total insurance coverage. IPT can also be added as a rider to a permanent plan to boost death benefits.

·         There is a need for family coverage. Optional riders such as the Children’s Insurance can be added to the policy to extend coverage to your children (see “Available Riders” below for more Information.)

Advantages of Term Life Insurance

·         Initial premiums generally are lower than those for permanent insurance...allowing you to buy higher amounts of coverage at a younger age when the need for protection often is greatest.

·         It's good for covering needs that will disappear in time, such as mortgages or car loans.

Disadvantages of Term Insurance

·         Premiums increase as you grow older.

·         Coverage may terminate at the end of the term or become too expensive to continue.

·         The policy generally doesn't offer cash value or paid-up insurance.

4. Annuities

Annuities are just opposite to life insurance. A person entering into an annuity contract agrees to pay a specified sum of capital (lump sum or by instalments) to the insurer. The insurer in return promises to pay the insured a series of payments untill insured's death. Generally, life annuity is opted by a person having surplus wealth and wants to use this money after his retirement.

There are two types of annuities, namely:

A.      Immediate Annuity:

In an immediate annuity, the insured pays a lump sum amount (known as purchase price) and in return the insurer promises to pay him in instalments a specified sum on a monthly/quarterly/half-yearly/yearly basis.

B.      Deferred Annuity:

A deferred anuuity can be purchased by paying a single premium or by way of instalments. The insured starts receiving annuity payment after a lapse of a selected period (also known as Deferment period).

5. Money Back Policy

Money back policy is a policy opted by people who want periodical payments. A money back policy is generally issued for a particular period, and the sum assured is paid through periodical payments to the insured, spread over this time period. In case of death of the insured within the term of the policy, full sum assured along with bonus accruing on it is payable by hte insurance company to the nominee of the deceased.

6. Combination of Term Assurance and Pure Endowment

Life Insurance Companies in India

1.       Bajaj Allianz Life Insurance Company Limited .

GE Plaza, Airport Road , YerawadaPune 411 006

2. Birla Sun Life Insurance Co. Ltd

One India Bulls Centre, Tower 1, 16th Floor, Jupiter Mill Compound, 841 , Senapati Bapat Marg, Elphinstone Road, Mumbai-400013.

3. HDFC Standard Life Insurance Co. Ltd

2nd Floor, Trade Star,Kondivita Junction,Andheri Kurla Road, Andheri East, Mumbai 400059

4. ICICI Prudential Life Insurance Co. Ltd

ICICI Prulife Towers , 1089, Appasaheb Marathe Marg, Prabhadevi,  Mumbai 400 025.

5. ING Vysya Life Insurance Company Ltd.

ING Vysya Home, 5th Floor, #22 Mahatma gandhi Road Bangalore-560 001.         

6. Life Insurance Corporation of India

Yogakshema, Jeeva Bima Marg, Post Box No. 19953 MUMBAI 400 021    

7.Max New York Life Insurance Co. Ltd

11th Floor, DLF Square , Jacaranda Marg, DLF City , Phase-II,  GURGAON 122 002.             

8. Met Life India Insurance Company Ltd.

Brigade Seshamahal, No. 5, Vani Vilas Road , Basavanagudi,  BANGALORE-560 004.

9. Kotak Mahindra Old Mutual Life Insurance Limited

9th Floor, Godrej Coliseum,Behind Everard Nagar,Sion (East),MUMBAI-400 022..

10.SBI Life Insurance Co. Ltd

Turner Morrison Building, 2nd Floor, 16, Bank Street, Fort Mumbai-400 023.

11. Tata AIG Life Insurance Company Limited

5th 7 6th Floor, Peninsula Tower,  Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, MUMBAI 400 013.

12. Reliance Life Insurance Company Limited.

1st Floor, Midas, Sahar Plaza,Andheri Kurla Road,   Andheri East, Mumbai 400059.            

13. Aviva Life Insurance Company India Limited

Aviva Tower, Sector Road, Opposit Golf Course, DLF-Phase V, Sector-43,Gurgaon - 122 003

14.Sahara India Life Insurance Co, Ltd.

Sahara India Bhawan, Kopoorthala Complex,Lucknow 226024

15. Shriram Life Insurance Co, Ltd.

3-6-478, 3rd Floor, Anand Estate, Liberty Road, Himayat Nagar, Hyderabad - 500029

16. Bharti AXA Life Insurance Company Ltd.

601-602 6th Floor,Raheja Titanium Off Western Express Highway Goregaon (E) Mumbai – 400 063

17.Future Generali India Life Insurance Company Limited

001, Delta Plaza, Ground Floor, 414, Veer Sarvarkar Marg, Prabhadevi, Mumbai 400 025.

18. IDBI Fortis Life Insurance Company Ltd.,

Tradeview, Oasis Complex, Kamala City, P.B. Marg, Lower Panel (W),Mumbai-400 013

19.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.

C/o. HSBC at Amsoft Systems, Unitech Trade Centre, Sector-43, Sushant Lok-1,Opp. Park Plaza Hotel,Gurgaon-122 001.

20. AEGON Religare Life Insurance Company Limited.

GYS Heights,   2nd Floor, Paranjpe “B” Scheme, Subhash Road, Near Garware House,

Vile Parle (E), Mumbai – 400 057

21. DLF Pramerica Life Insurance Co. Ltd.

4th Floor Tower B, Building No.-9,DLF Cyber City, Phase-III, Gurgaon-122002.     

22. Star Union Dai-ichi Life Insurance Co. Ltd.,

 Star House, 3rd Floor, (West Wing), C-5,Bandra-Kurla Complex, Bandra (East), Mumbai 400 051

 23.IndiaFirst Life Insurance Company Limited

301, 'B' Wing, The Qube, Infinity Park,Dindoshi - Film City Road,Malad (East), Mumbai - 400 097.

General Insurance

Also known as non-life insurance, general insurance is normally meant for a short-term period of twelve months or less. Recently, longer-term insurance agreements have made an entry into the business of general insurance but their term does not exceed five years. General insurance can be classified as follows:

Fire Insurance:

Fire insurance provides protection against damage to property caused by accidents due to fire, lightening or explosion, whereby the explosion is caused by boilers not being used for industrial purposes. Fire insurance also includes damage caused due to other perils like strom tempest or flood; burst pipes; earthquake; aircraft; riot, civil commotion; malicious damage; explosion; impact.

Marine Insurance

Marine insurance basically covers three risk areas, namely, hull, cargo and freight. The risks which these areas are exposed to are collectively known as "Perils of the Sea". These perils include theft, fire, collision etc.

Marine Cargo:

Marine cargo policy provides protection to the goods loaded on a ship against all perils between the departure and arrival warehouse. Therefore, marine cargo covers carriage of goods by sea as well as transportation of goods by land.

Marine Hull:

Marine hull policy provides protection against damage to ship caused due to the perils of the sea. Marine hull policy covers three-fourth of the liability of the hull owner (shipowner) against loss due to collisions at sea. The remaining 1/4th of the liability is looked after by associations formed by ship owners  for  the purpose (P and I clubs).

Miscellaneous   As per the Insurance Act, all types of general insurance other than fire and marine insurance are covered under miscellaneous insurance. Some of the examples of general insurance are motor insurance, theft insurance, health insurance, personal accident insurance, money insurance, engineering insurance etc.

General Insurance Companies in India

1.       Bajaj Allianz General Insurance Co. Ltd.

GE Plaza, Airport Road, Yerawada,   Pune411 006.

2.       ICICI Lombard General Insurance Co. Ltd.

Zenith House,Keshavrao Khade Marg,MahalaxmiMUMBAI-400 034.

3.       IFFCO Tokio General Insurance Co. Ltd.

4 and 5th Floors, IFFCO Tower, Plot No.3, Sector 29,GURGAON-122001(Haryana)

4.       National Insurance Co.Ltd.

3, Middleton Street, P.B. No. 9229,   KOLKATA 700 071.

5.       The New India Assurance Co. Ltd.

New India Assurance Bldg. 87, M.G. Road, Fort, Mumbai 400 001.

6.       The Oriental Insurance Co. Ltd.

A-25/27, Asaf Ali Road,New Delhi 110 002.

7.       Reliance General Insurance Co. Ltd.

570, Naigaum Cross Road , Next to Royal Industrial Estate, Wadala(West), MUMBAI – 400 031            

8.       Royal Sundaram Alliance Insurance Co. Ltd

"Sundaram Towers" 45-46, Whites Road, Royapetah,CHENNAI-600 014.

9.       Tata AIG General Insurance Co. Ltd.

Peninsula Corporate Park,Nicholas Piramal Tower, 9th Floor Ganpatrao Kadam Marg Lower Parel

MUMBAI 400 013.   

10.   United India Insurance Co. Ltd.

24, Whites Road, CHENNAI – 600 014.

11.   Cholamandalam MS General Insurance Co. Ltd.

"Dare House" 2nd Floor, New No.2 (Old No. 234) N.S.C. Bose Road, Chennai - 600 001

12.   HDFC ERGO General Insurance Co. Ltd.

6th Floor, Leela Business Park, Andheri Kurla Road,Andheri (East),Mumbai - 400 059.

13.    Export Credit Guarantee Corporation of India Ltd.

10th Floor, Express Towers, Nariman Point,Mumbai – 400021

14.   Agriculture Insurance Co. of India Ltd.

13th Floor, 14 K.G  Marg, Connaught Place,New Delhi - 110001          

15.   Star Health and Allied Insurance Company Limited

No.1, New Tank Street,Vlluvarkottam High Road,,Nungambakkam, Chennai - 600 034

16.   Apollo Munich Health Insurance Company Limited

Building No. 10B,10th Floor, DLF Cybercity, Gurgaon 122001 Haryana, India

17.   Future Generali India Insurance Company Limited

001, Trade Plaza, Ground Floor,414, Veer Sarvarkar Marg,Prabhadevi, Mumbai 400 025         

18.   Universal Sompo General Insurance Co. Ltd.

310-311, Trade Centre,Opp. MTNL Building,Bandra Kurla Complex,Bandra(E),Mumbai-400 051.

19. Shriram General Insurance Company Limited,

Greams Dugar,5th Floor, No.-149,Greams Road,Chennai-600 006

20.Bharti AXA General Insurance Company Limited

First Floor, The Ferns Icon,Survey No.28, Next to Akme Ballet,Doddanekundi, Off Outer Ring Road,Bangalore – 560 037       

21. Raheja QBE General Insurance Company Limited,

Commerz, 10th Floor, International Business Park,Oberoi Garden City,Western Express Highway, Goregaon (East),Mumbai-400 063.       

22. SBI General Insurance Company Limited

The IL & FS Financial Centre,7th Floor, Plot C 22, G Block,Bandra Kurla Complex,,

Bandra East,Mumbai – 400 051         

23. Max Bupa Health Insurance Company Ltd.

Max House,1, Dr. Jha Marg, Okhla,New Delhi-110020

Reinsurance

Reinsurance balances risk over large groups that may be united only through the re-insurance link. By reducing the risk of random fluctuations in claims, reinsurance reduces the probability of insolvency in the ceding insurer.

The Social Re model of reinsurance proposes a relationships between Social Re and the MIU based on:

— how Social Re can stabilize the MIU;

— method of reinsurance;

— the MIUs attitude to risk (how much risk to cede and how much to retain).

Social Re will be solvent if the total premium income received from MIU suffices to cover all claims plus administrative costs. Setting premium levels requires estimation of:

— the risk that the MIU will submit a claim;

— the average claim that will be presented by the MIU;

— administration costs.

The first two depend on the financial management of the MIU, the last on Social Re's management. In order to assess the first two, Social Re has developed a Data Template to standardise data and reporting capacities.

Reinsure Companies in India

GENERAL INSURANCE CORPORATION OF INDIA

Suraksha, 170, J Tata Road Church Gate,Mumbai 400 020