QUOTE OF THE WEEK

“The first step toward success is

taken when you refuse to be a captive of the environment in which

you first find yourself.“

Mark Caine

INSIDE THE ISSUE

Insurance Industry 2 Insurance Regulation 5 Life Insurance 8 General Insurance 21 Health Insurance 31 Motor Insurance 41 Crop Insurance 42 Survey 44 Insurance cases 47 Pension 48 IRDAI Circular 52 Global News 53

INSUNEWS Weekly e-Newsletter

9th – 15th January 2021

Issue No. 2021/02

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INSURANCE TERM FOR THE WEEK

Parent company

Where property-casualty (P&C) insurers constitute a group of companies, the “flagship” or senior company. The use of multiple corporate entities allows additional flexibility in working with varying state regulations. For example, an insurance company group might consist of one or more admitted insurers and one or more no admitted insurers operating in various states. The entire group is often referred to by the parent company’s name.

INSURANCE INDUSTRY

Budget 2021: 'Govt should focus on making insurance more than a tax saving tool' – Live Mint – 15th January 2021

Union Budget 2020 must initiate some new measures to make insurance policies more attractive and customer-friendly, insurance players have demanded. In 2018, insurance penetration in India was one of the lowest at 3.70%, according to the annual report by Insurance Regulatory and Development Authority of India (IRDAI). Experts expect higher tax deductions in the Budget. "Having a separate tax deduction towards insurance premiums, over and above the current 80C limit, similar to one allowed for NPS. Alternatively, enhancing the insurance limits under section 80C and 80D will further encourage people to opt for life insurance. Implementing either of the proposed

recommendations will aid in bridging the protection gap in the country," says Rushabh Gandhi, Deputy CEO, and IndiaFirst Life Insurance. Insurance experts believe the Government must aim towards making life insurance policies more than a tax saving tool and focus should be on policy persistence. "Introducing separate deduction of ₹50,000 for first time life insurance buyers and an additional capping of ₹50,000 for someone purchasing a pure protection (term) plan will put life insurance on fast track," says Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance.

Rushabh Gandhi proposes linking of Sec 10(10D) to policy persistency instead of amount of Sum Assured i.e. Sec 10(10D) should be available for policies where minimum fivr annual premiums have been paid with minimum policy term of 10 years. Other areas of consideration include amendments in tax treatment for annuity as proposed by PFRDA regulator i.e. making annuity income as tax free income, leading to greater uptake in annuity policies resulting in improved financial security during post retirement years. This recommendation is particularly critical in India which has limited social security measures. In order to increase the insurance penetration, insurance experts believe it is necessary to relook at the 18% GST structure, say experts. "We hope the government reassesses the GST rate structure for pure protection cover and offers relaxation on existing 18% GST," says Rushabh Gandhi.

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On table: 74% FDI cap for insurance - The Economic Times – 12th January 2021

The government is considering a higher limit for foreign investment in the insurance and pension sectors, currently pegged at 49% of paid-up equity capital. The proposal under consideration is to raise the limit to 74%, on par with that for private banks, an official aware of deliberations told ET. “There is a view that

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both the insurance and pension sectors can be further opened up with existing clauses that management control is held by Indians, as applicable in banks,” said the official.

In her 2019 budget speech, finance minister Nirmala Sitharaman had said that the government will explore further easing the foreign direct investment (FDI) limit in insurance. The Insurance Regulatory and Development Authority of India (IRDAI) has also backed an increase in the limit to 74%.

A decision is expected at the highest political level ahead of the budget, as raising the limit will require an amendment to the Insurance Act. While such a move would help insurers attract more capital to expand business, it would also potentially boost the government’s divestment programme.

Better Valuations for Stakes The Centre is looking to sell its stake in general insurance firms and a higher

foreign investment limit could fetch better valuations, the official added. The government had raised the overseas limit, including direct and portfolio investment, for both the insurance and pension sectors to 49% in 2015. Overseas investment in pension funds is allowed under the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013.

Insurance companies should be Indian owned and controlled under the law, which would need to be reviewed if the limit is raised. "The government needs to revisit the Indian owned and control clause," said an industry executive. "It will be difficult for the foreign partners to convince their parent firm to pump in more money without actually having a say on the board."

Industry lobby groups have also sought a more liberal FDI policy, citing the high amounts of capital companies will need to expand if India is to increase penetration. Overall insurance penetration was 3.7% (premium as percentage of GDP), according to the latest IRDAI data, which is for FY18. Life insurance penetration stood at 2.74%, while non-life was 0.97%.

Experts said an increase in the FDI limit will provide an impetus to the industry to scale up and help lift the pandemic-hit Indian economy. "Insurance business requires huge capital and deep pockets and with the increase in FDI limits, additional infusion of capital into the business could enable growth in the industry," said Vikas Vasal, national managing partner, Grant Thornton Bharat. The government has already allowed 100% foreign investment in insurance intermediaries such as brokers, consultants, third-party administrators, surveyors and loss assessors.

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Special exemption for insurance products will help, says Anuj Mathur, MD and CEO, Canara HSBC OBC Life Insurance – Moneycontrol – 11th January 2021

For the upcoming Budget 2021, Anuj Mathur, MD and CEO, Canara HSBC OBC Life Insurance says: "In recent times, we all have understood the importance of Insurance and its benefits to an individual during utmost need. Given the Budget 2021, one reform which I would like to see is the reduction in existing GST rate and a special tax exemption on insurance products to help improve insurance penetration and secure bottom of the pyramid of the population in India. Through this, insurance will not only reach the remotest location possible but will also become affordable for everyone. Protection premiums are already increasing due to reinsurance premium hikes and Coronavirus (COVID-19) impact. So, relief is required to ensure that customers are able to protect themselves with limited cost impact on their stretched household budgets."

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Will standard insurance products be the magic pill to boost coverage in India? – Moneycontrol - 9th January 2021

Term insurance, accident insurance, fire insurance and home insurance. These are some of the standard insurance products (apart from the April 1, 2020-launched standard health plan) that will be available for Indian insurance customers from 2021 onwards.

Insurance Regulatory and Development Authority of India (IRDAI) launched these products to ensure that there are easy to understand policies for mass-market customer.

But will this be the magic pill needed to bridge the insurance gap in the country and boost penetration of products?

India has consistently faced the challenge of low insurance penetration and density even 21 years after privatisation. When it comes to the insurance penetration and density, the figures for India were flat as per the Swiss Re’s sigma report. This data showed that insurance density, which is premium per capita stood at $78 (approximately Rs 5,850) in FY20 compared to $74 (approximately Rs 5,550) in FY19. The world average in FY20 was $818 (Rs 61,350 approximately).

Similarly, insurance penetration (premiums as a percentage of gross domestic product) stood at 3.76 percent in India for FY20. Here, life insurance penetration was at 2.82 percent while that for non-life stood at 0.94 percent. The world average was 7.23 percent with 3.55 percent for life and 3.88 percent for non-life insurance. The most common reason cited for these poor numbers in India are lack of awareness and inadequate distribution reach apart from low disposable income to buy insurance products.

The government-sponsored term insurance and accident insurance under the Jan Suraksha Yojana with Rs 2 lakh cover each was a good starting point for a lot of uninsured Indians. However, this scheme hasn’t motivated Indians to buy higher covers on their own nor has it been used as platform by insurers to cross-sell proper covers.

IRDAI’s vision is to nudge customers to buy simple products if they find the barrage of products on offer by companies to be confusing. An added concern could be possible misselling of inappropriate policies to unaware customers. But will insurers be open to sell these standard plans at the cost of their other specific policies? For example, insurers have been reluctant to sell the standard health plan Arogya Sanjeevani. Instead, they have primarily been selling their own health plans that have a similar cost structure.

Insurers' justification is 'we have similar plans with better features' while clarifying that customers are free to buy what they want. It is to be seen whether the standard term, home insurance and personal accident products suffer the same fate. When the competition is between a me-too product and one’s own insurance policy, companies opt to sell the latter.

For customers, these standard policies could be a good first step into the world of insurance. Once they have experienced these plans (read claims settlement), an insured could be motivated to buy a higher and comprehensive cover based on his/her needs. However, this would require additional efforts from the distributor (agent or bank officials) to stay in contact with the customer and understand their needs better. This will help these intermediaries suggest a need-based product over and above the standard policy. The initial optics look good for these standard plans. But the key lies in distribution and customised insurance product offerings for customer groups for the coverages to really improve across India.

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INSURANCE REGULATION

Here’s how IRDAI wants insurers to settle cashless health insurance claims for Covid-19 treatment - Financial Express – 14th January 2021

The cost of hospitalisation due to COVID-19 may run into a few lakhs as the hospital stay is generally around 14 days. The General Insurance Council (GI Council) has prepared a rate chart for the COVID-19 treatment, taking into account rates published by various state governments and also after discussions with health claim experts. The rates are proposed by the GIC to be considered during treatments in hospitals. The IRDAI has sent a communication to all life and health insurance companies regarding the settlement of health insurance claims against General Insurance Council’s instructions dated 20th June 2020 on ‘Reference Rates for COVID-19’.

The treatment for dealing with Coronavirus appears to be different from treatments done in other medical conditions as it entails the use of PPE Kits and specific procedures for medications. It is important that the hospitals across the country follow a standardised rate chart and the insurance companies keep the claim settlement process smooth and simple for the policyholders.

In the communication to the insurers, IRDAI has stated that in case of ‘Cashless Claims’ under a health insurance policy, the claims shall be settled as per the tariff decided by the parties as per the provisions of Regulation 31 of IRDAI (Health Insurance) Regulations, 2016. However, the insurers shall make efforts to have an agreement with health providers on rates for treatment of Covid-19 similar to other diseases for which rate agreements are in place.

Also, while entering into such agreements, the reference rate of General Insurance council can be kept in view for guidance along with rates fixed by State Governments and Union Territory administration, if any and as relevant. Further, all the insurers have been directed by IRDAI to ensure that the ‘Reimbursement claims’ under a health insurance policy shall be settled as per the terms and conditions of the respective policy contract.

The Reference Rates for COVID-19 of GI Council will be applicable to both cashless and reimbursement Covid-19 claims where any Government Authority has not published standard charges for Covid-19 treatment. Wherever Covid-19 treatment charges have been published by any Government Authority, those charges shall be applicable to insurance claims with member companies.

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IRDAI sets up panel to examine availability of health insurance products - Business Standard - 13th January 2021

Regulator Irdai on Wednesday set up a panel of experts to examine the availability of health insurance products in the country considering the need of the Indian society and recommend suitable products and processes.

Health insurance has grown significantly in recent years and the trend is expected to continue in the coming years, said the Insurance Regulatory and Development Authority of India (IRDAI) while setting up the Health Insurance Advisory Committee.

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It said the insurance industry is offering various products/services to cater to the needs of the society and also bringing in innovative products/services regularly. IRDAI also said it has taken various steps to ensure orderly growth of the health insurance industry, improving efficiencies of health insurance system and protect the interests of the policyholders. The panel has been asked to examine the availability of the health insurance products in the country in light of the need of the Indian society and recommend suitable products and processes.

It will also suggest approach on coverage of specific disease or an area of practice (like cardiology). Examining the extant health insurance product structure in terms of policy conditions to protect the interest of the policyholders and develop strategy on treatment protocol or rate structure to improve affordability of health insurance are among the other tasks given to the panel.

IRDAI Chairperson will head the committee and Member (Non-Life) will be the vice-chairperson. Members of the committee include Nachiket Mor (Visiting Scientist, Banyan Academy of Leadership in Mental Health), A K Chand (Professor and Neurosurgeon, Bangalore), B K Mohanti (Former Professor and Oncologist, AIIMS), K Hari Prasad (Anaesthetist, Hyderabad), and Pankaj Sharma (IRDAI). The committee, which has a term of one year, may meet as often as needed and submit separate recommendations on specific issues taken up, the regulator said.

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Covid impact: Irdai recommends extension of 2 yrs for validity of sandbox regulations – Live Mint – 13th January 2021

The Insurance Regulatory and Development Authority of India (Irdai) on Tuesday recommended the extension of the period of its sandbox regulations by two years, saying experiments for such products could not be completed because of covid. The validity of the Irdai (Regulatory Sandbox) Regulations, 2019, expires on 25 July 2021 and the proposal, if accepted, would take this to July 2023. The sandbox regulations aimed to create an environment for insurtech and fintech companies to carry out innovations in the insurance space. The experiments were initially allowed for six months

under the regulations. “It is observed that most of the proposals could not be completed within six months because of covid. They were, therefore, granted extension by another six months to complete the experiment," Irdai said on Tuesday, adding that it is recommending the period of validity of the regulations be extended by two years. The move was welcomed by stakeholders. “It’s a welcome move, as it will help companies come up with more interesting and useful products. It empowers companies to innovate further. We will take this opportunity to bring in more simple and relevant products," said Adarsh Agarwal of Digit General Insurance Ltd. Irdai had first invited applications under the sandbox regulations from 15 September to 14 October 2019. The applications covered concepts such as wellness, group insurance, usage-based insurance and loyalty/rewards programmes.

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Bharat Griha Raksha: IRDAI to introduce standard home insurance policy – Outlook – 11th January 2021

The Insurance Regulatory and Development Authority of India (IRDAI) has announced introducing a new standard home insurance policy which will cover the risk of fire and allied perils for certain risks. The new guidelines issued by IRDAI states that the Standard Fire and Special Perils (SFSP) policy provided for in the erstwhile All India Fire Tariff (AIFT) 2001 will be replaced by the following product:

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Bharat Griha Raksha (for home building and home contents) Bharat Sookshma Udyam Suraksha (for enterprises where the total value at risk is up to Rs 5 Crore) Bharat Laghu Udyam Suraksha (for enterprises where the total value at risk is more than Rs 5 Crore and up to Rs 50 crore) IRDAI has asked all general insurers carrying on fire and allied perils insurance business to offer the plans from 1 April 2021. The initiative comes after India was ravaged by a number of natural calamities in the recent year.

Bharat Griha Raksha The standard home insurance policy would offer "cover against a wide range of perils, namely fire, natural catastrophes (storm, cyclone, typhoon, tempest, hurricane, tornado, tsunami, flood, inundation, earthquake, subsidence, landslide, rockslide), forest, jungle and bush fires, impact damage of any kind, riot, strike, malicious damages, acts of terrorism, bursting and overflowing of water tanks, apparatus, and pipes, leakage from automatic sprinkler installations and theft," IRDAi said.

The policy will provide cover within seven days from the occurrence of any of the aforesaid events. It will provide cover for general home contents automatically (without any need for a declaration of details) for 20 per cent of the sum insured for the building subject to a maximum of Rs 10 lakh. One can also opt for a higher sum insured for general contents by declaring the details.

There would also be two option covers on offer including insurance for valuable contents' like jewellery and personal accident of the insured and spouse due to an insured peril under the policy. Bharat Griha Raksha will also provide a complete waiver of underinsurance. If the sum insured declared by a policyholder is less than what ought to have been declared for the property in question, the policyholder’s claim will not be settled proportionately but up to the sum insured that is declared.

IRDAI added that Bharat Sooksma Udyam Suraksha and Bharat Laghu Udyam Suraksha would be useful for MSMEs' financial protection.

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Irdai wants fuel pumps and cooking gas agencies to sell insurance - Business Standard – 8th January 2021

The insurance regulator is in talks with the petroleum ministry to see if fuel pumps and cooking gas agencies can be used for selling simple insurance products. This will help expand the distribution channels, said Subhash Chandra Khuntia, chairman of the insurance regulatory and development authority of India (Irdai).

“The motive is to provide access to motor insurance in rural and remote areas as all vehicles have fuel pumps as touch points. However, simple products including micro-insurance products can also be sold there. This will augment the distribution channels like bank branches, common

service centres and motor insurance service provider in rural, remote areas, and small towns,” said a source aware of the development.

The regulator also wants all life insurance companies to have a 13th month persistency of 90 per cent and 61st month persistency of not below 65 per cent. Persistency ration looks at the number of policies renewed each year to assess how long do customers stay with a particular policy. Despite making good progress on this front in the past few years, life insurance companies have not been able to touch the global average so far.

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“There has been steady growth in persistency but it is not up to expectation. In 2019-20, the average 13th month persistency for the industry was 71 per cent. This drops drastically when you go to 61st month,” said Irdai chairman. “We would like all insurance companies to have a persistency figure hovering around at least 90 per cent for the 13th month. As far as 61st month is concerned, we have requested all companies to ensure it is not below 65 per cent, which is the world average,” he said at the 22nd C D Deshmukh Seminar organised by National Insurance Academy.

Persistency shows the health of the industry. It measures whether companies have sold policies carefully, whether they have assessed the capacity of people to pay premiums, and whether relevant policies have been sold to customers. While it was expected that the pandemic, which brought along with it economic hardship for a large section of the population, would have a negative impact on the persistency ratio, the impact so far has been limited. After coming out with a series of standard products in different domains such as life, health, personal accident, travel, and fire, the regulator will launch a standard annuity product now. The chairman said every company should have a good balance of different channels of distribution so that they are not overly dependent on any one channel.

Also, to control frauds in life insurance products, the regulator is pulling up information of various insurance companies together and creating a database. It is also creating a database in the Insurance Information Bureau to help life companies assess their customers when claims come so that there is better processing of claims and less frauds. The insurance industry has completed 20 years since the first time private insurers were allowed into the sector. Total premium collection, which was close to Rs 35,000 crore in 2001, has gone up to Rs 5.72 trillion in 2019-20 —a CAGR of 16.5 per cent.

The sum assured has also grown and is now 28 times the premium collection, indicating premiums are low while the sum assured is high. The AUM has gone up 20 times in the last 20 years, with a CAGR of 17 per cent. “However, the protection gap is high at 83 per cent in India, which we need to reduce,” the chairman said.

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LIFE INSURANCE

Purchase annuities in a staggered manner to get a better rate of return - Business Standard – 14th January 2021

Immediate annuity plans of insurers are currently offering relatively attractive rates of return. The rate for 60-year-olds with the return of purchase price (RoPP) option, where the principal is returned on death, is 5.55-6.37 percent. The without RoPP option plans offer even better rates of 7.23-8.49 percent. Experts say these are reasonably good rates to lock into at a time when fixed deposits (FDs) from the State Bank of India (SBI) are offering senior citizens 5.5-6.2 percent for the 1-10-year tenor. An annuity provides a guaranteed pension. “Whatever rate the annuity buyer locks into at the time of purchase remains applicable, so long as he is alive. There is no reinvestment risk here, as is there is in FDs,” says Vivek Jain, head of investment business, Policy Bazaar. Rates are more attractive for the without RoPP option than with RoPP. Online versions also offer better rates. Beware of illiquid annuities. Your money gets locked in for your lifetime. Only some versions (usually with RoPP) offer the surrender option. These come with steep penalties. By investing in annuities, you forgo the benefit from any uptick in interest rates. And inflation erodes the value of the pension amount over time.

The answer depends on your view on the long-term direction of interest rates. “If a retiree believes interest rates will fall from current levels over his retirement years, then annuity is the ideal product for locking into a guaranteed income for as long as he is alive,” says Samit Upadhyay, chief financial officer and head of products, Tata AIA Life Insurance. According to Jain, as India develops, the secular trend for interest rates will be downward. He points out that the one-year SBI FD rate has declined from 8.25 percent in May 2015 to 5 percent now (5.5 percent for senior citizens). An element of risk exists anytime you buy annuities. “Two years later, if FD rates decline further, locking into current rates will look like a

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good decision, and vice versa,” says Deepesh Raghaw, founder, PersonalFinancePlan, a Securities and Exchange Board of India-registered investment advisor.

Invest a part of your retirement corpus in annuities for a minimum guaranteed pension. Begin purchasing at 60, or whenever your regular income stops. “Stagger your purchases and buy an annuity every five years. This will help you average out the impact of interest-rate movements. The rates also get better with age,” says Raghaw. Life Insurance Corporation of India’s Jeevan Akshay, for instance, offers 8.1 percent at 60. The rate rises to 10.5 percent at 70 (for without RoPP option). By delaying your purchase of annuities to a later age, you can free up a considerable portion of your corpus for emergency needs, or to invest in equities for countering inflation. The risk in this strategy of buying the without RoPP option at a later age is that the money gets wasted in case of early demise. Diversify into other instruments as well to generate a regular income, like Pradhan Mantri Vaya Vandana Yojana (return 7.4-7.6 percent, depending on frequency of payment) and Senior Citizens Savings Scheme (7.4 percent). Systematic withdrawal plans of debt funds and FDs are other options.

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Like sanitizer is to Covid, life insurance is to financial distress – Live Mint - 13th January 2021

There is a good chance that 2020 did not go the way you had planned it. But, 2020 did teach us life lessons like never before. The COVID-19 year changed our priorities with health, family and life taking precedence over everything else. We all faced changes in the way we live, view simple things and most importantly opened our eyes to our finances. The upside of 2020 was that finally many of us started to take our lives and health a lot more seriously. The health scare made us imbibe several habits that today are second nature; the inspiration from 2020 is to develop good financial habits for a healthy financial life. Our 2021 philosophy should be to #GetFinanciallyFitter, and by relating to post Covid habits that we have all developed, they can be used to improve our financial lives.

People who have a recurrent cough, cold and fever may have symptoms of COVID-19 and would need to undergo screening to check if they are positive. The outcome of the test result decides the next course of action for such people. Similarly, you could test your financial condition by screening your income, expenses, savings, investments, insurance and debts to arrive at your net worth. #GetFinanciallyFitter: Use online resources to check your credit score and net worth by inputting your financial details to know how fit you are. The adage “Prevention is better than cure" is even more vital in these times. We have cared about hygiene with regular washing of hands with soap and using hand sanitizers. Ideally, frequent washing of hands is a good hygiene practice, and one shouldn't wait for a health advisory to get one to act. Insurance does what sanitizers do; they protect our family's financial interests. You could use the additional time available these days at home by collating all your existing life insurance policies to evaluate your risk cover. #GetFinanciallyFitter: Use online resources to check how much life insurance you need after accounting for existing insurance and consider bridging the deficit.

Long before the face mask became a necessity, as a COVID-19 precaution, it was being used by people in the healthcare sector, patients and people facing breathing trouble due to pollution. Good health is a must for our optimum functioning, but we cannot ignore the rising incidents of health-related ailments and lifestyle-related health issues. The increasing costs of health care have made health insurance unavoidable. If you do not have health insurance, now is the time to get one. #GetFinanciallyFitter: Create

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your mask with the right type of health insurance with a significant scope that would be useful to address varying healthcare risks. We are all facing self-quarantine of some form or the other. The upside of staying at home with family is reducing discretionary expenses at the mall and online. If you have followed a household budget, you may witness a spike in your savings, which should be put to good use. #GetFinanciallyFitter: Use a digital resource or paper budget sheet to develop a family budget; track here the money comes from and where it goes. Explore ways to cut expenses to save more or reduce debts for a healthy financial life.

Several job skills are finding new ways to adapt to the new normal– school teachers adapting to digital teaching aids, technology teams working from home and even doctors taking video calls to diagnose and treat illnesses. You could use the opportunity not just to clean up your house and discover what to keep and what to let go; you could also find the money. #GetFinanciallyFitter: Don't use the time for just spring cleaning your house; use it to spring clean your finances; you may land up finding investment you had forgotten about or the currency notes you had stashed away for safekeeping. Social distancing is the practice of staying away from gatherings and maintaining a safe distance. It is a situation which you could learn from and control your spending habits, particularly if it results in borrowing. By managing your debt and reducing it or staying away from it, you are less likely to be impacted financially and maintain a healthy credit score. #GetFinanciallyFitter: If servicing debt is getting tough; you may be in a better situation by talking to your lender to rework on your loan repayment given the uncertain future.

COVID has been classified as an epidemic and pandemic, as it spread across the world, impacting all of us. Time and patience will not only help us tide over this but will also be beneficial for successful long-term investors. Stay invested in your financial goals that are 3-5 years ahead. #GetFinanciallyFitter: Use this opportunity to review your asset allocation and consult with advisors to help you rebalance your portfolios. The public contribution is necessary to fight the financial implications of COVID-19, and the Government of India and State governments have asked for people to donate in these challenging times liberally. Corporate India is contributing, and so are individuals. The income tax and GST that you pay are also used in its small way towards maintaining people's lives and the country's infrastructure. When life offers you lemons, make lemonade! Let’s utilize the terms made popular by COVID-19 to our advantage as a reminder to get financially fitter.

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Enter term insurance early, lock in the premium as delay means higher cost - Business Standard – 13th January 2021

Online insurance marketplace Policy has launched the country’s first indices on term and health insurance, based on prices from leading insurers. These indices will allow buyers to observe trends in premium rates. A closer look at the data in these indices reveals insights that buyers can use to make informed decisions. The increase in term premium rates is not linear. As the sum assured increases, insurers offer a discount. This is why the premium for a Rs 1 crore sum assured is less than 2x the premium for a Rs 50 lakh sum assured (see table). Should you then go for one large policy or two smaller ones? Some people buy multiple policies as a hedge against a claim being denied. But experts say the probability of their claim being rejected is low if they are honest with disclosures. So, you may buy one large policy and enjoy the discount. However, it is a good idea to diversify term covers based on maturity. Let one policy terminate on retirement. The other one can extend to the maximum possible tenure. Once you have retired, your human life value anyway goes down, so you need a smaller cover. So, buy two policies if you are willing to pay a higher premium. Mrin Agarwal, financial educator, and director, Fin safe India, says, “If the difference in premium is not high, it’s better to diversify.”

According to the index, the average term premium increases exponentially with age. The average premium is 85 percent higher for a 55-year-old than a 45-year-old; 70 percent higher for a 45-year-old than a 35-year-old; and 45 percent higher for a 35-year-old than a 25-year-old. A 55-year-old pays four times what a 25-year-old pays. Naval Goel, chief executive officer (CEO) and founder, PolicyX says, “Enter a term plan early and lock in the premium.” Your insurance needs can change with the life stage. Goel adds, “Evaluate your insurance needs every five years, but start early.” Smokers should be prepared to

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shell out much higher premiums. On an average, across age groups, a male smoker pays 57 percent more than a non-smoker while a female smoker pays 55 percent more. The increase in premium is higher for smokers in higher age bands. Agarwal says, “Smokers get the worst deal in insurance as they carry high risk. But be honest about smoking while filling the proposal form. Failure to disclose correctly could jeopardise your dependants’ financial lives.”

Premiums increase rapidly with age as both the frequency and severity of ailments rise. From age 26 to 36, the average rise in health premium is a nominal 14.6 percent. But it rises 60.7 percent from age 46 to 56. Customers in higher age brackets need to prepare themselves for steep hikes. Even in health insurance, buy early. M. Barve, founder, MB Wealth Financial Solutions, says, “If you get a lifestyle ailment, getting a health cover will become difficult.” By buying at a young age, you avoid loading of premium and the risk of your proposal being rejected. Family floater health plans are more economical than individual policies. The premium increases by only a small amount when children are added. Goel adds, “But, buy a separate policy for elderly parents.”

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Wait to buy standard insurance plan gets longer – Live Mint - 12th January 2021

You may have to wait a bit longer to buy a standard term insurance plan, the Saral Jeevan Bima, which was slated to be launched on 1 January by life insurance companies, as the products filed with the Insurance Regulatory and Development Authority of India (Irdai) are still under review. A term plan pays out the sum assured to nominees in case of the insured’s death. To help customers select the right term product, Irdai in October had mandated all life insurers to launch the Saral Jeevan Bima plans with simple features and standard terms and conditions. “The aim is to simplify the product and eliminate confusion in customers’ minds which arises from the different features attached to a term plan and the varying prices on account of these features," said Karthik Raman, chief marketing officer and head, products, IDBI Federal Life Insurance Co Ltd. Irdai mandated the minimum sum assured at ₹5 lakh, which could be extended up to ₹25 lakh in multiples of ₹50,000. Insurers were also allowed to attach accident and permanent disability benefits as riders with the base plan. According to industry experts, individuals who are non-graduates or have low financial profile usually find it difficult to buy existing term plans, while Saral Jeevan Bima were to be offered without restrictions on gender, place of residence, travel, occupation or educational qualifications. However, none of the life insurance companies have launched the plan yet.

Some insurers Mint spoke with expect the approvals to come later this month, while some others expected to launch the products in the first week of February. “Our product is under review by the regulator and we will assess the launch date upon approval of the product by the authority. As the product reviews by the regulator undergo detailed assessments, the entire approval process can take time to conclude," said Aalok Bhan, director and chief marketing officer, Max Life Insurance Co. Ltd. IDBI Federal Life Insurance Co. Ltd is looking to launch the plan at the end of January or early February, which will be subject to regulatory approvals. Besides, IndiaFirst Life Insurance Co. Ltd and Kotak Mahindra Life Insurance Co. Ltd are yet to receive approvals to launch the product. Most life insurance companies refused to comment as the products are still under review by the Irdai. According to industry experts, there are two areas where insurers are still in discussions with the Irdai. “One is flexibility in terms of the maximum sum assured and the other is pricing. These are the two areas where certain approvals are still pending," said Mahavir Chopra, founder, Beshak.org, a research platform for insurance users. An email sent to Irdai seeking its response remained unanswered till the time of filing this story.

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How to choose payout option while buying term insurance – Live Mint - 12th January 2021

A payout is death benefit given to dependants or beneficiaries of a term insurance policy when the insured dies. While signing up for the policy, the insured gets to decide how the death benefit will be paid out. Your decision to choose a payout option must be based on your family’s financial understanding, financial liabilities and any future goals.

Here’s a low-down on how life insurance payout works: 1. Lump sum payout The lump-sum payout option is the most popular option. It entails receiving death benefits in one go. In case the policyholder dies, the insurer pays a lump sum amount equal to the sum assured to the dependent (nominee/beneficiary) of the policyholder.

"When you opt for lump sum payout method, it becomes important to check the family’s financial literacy. This is

because the amount that the dependant (insured) receives from the lump sum payout can be further invested and the insured can gain better returns from it over the years. For instance, some might have a need to pay off loans etc at once while some might need monthly payments to meet living expenses," said Naval Goel, CEO & Founder, PolicyX.com.

Similarly, Santosh Agarwal, CBO- Life Insurance, Policybazaar.com said, “People with better financial acumen and knowledge about investment avenues should go for lump sum payout options. But on the flip side, without a plan to use the large amount, getting a lump sum payment may not give you the right value for your money." For instance, Mr X while buying a policy knew that he has huge liabilities to clear off. So, in a bid to ease the burden on the family he chose the option of lump-sum payout. He was also sure about the ability of his family to put the money to good use.

2. Staggered payout If you are doubtful that your dependents may not be able to manage the huge amount received as death benefit efficiently, then you need not worry. To solve this problem, insurers also offer staggered payout options. In the staggered mode of payout, the dependents receive a portion of the sum assured as lump sum benefit and the remaining amount in monthly instalments for over 10-15 years.

“Staggered payout option is best suited for people who want to have a constant source of income and are doubting about using a huge amount efficiently. Under staggered payout options, insurers even offer a monthly income payout option under which the beneficiary will receive the entire sum assured in equally divided monthly instalments for a pre-fixed period," said Agarwal.

a) Fixed monthly payouts The lump sum with fixed monthly income payout option enables the dependent of the policyholder to receive around 50 to 60% of the total sum assured amount as a lump sum and the remaining amount as monthly instalments.

Besides, some insurers provide 100% sum assured as a lump sum pay-out plus an additional payout each month for the next few years to the dependent. For instance, if you have purchased a policy with sum assured of ₹50 lakh under this scheme, then your dependent/nominee will receive a one-time pay-out of ₹50 lakh immediately, and then a fixed monthly payout of ₹20,000 will be paid to him/her for the next ten 10-15 years, as per the scheme. “This option allows you to clear all your liabilities and also enables your family to have a consistent source of income. For instance, this payout option helps the family of the insured to meet the one-time expenses like child’s education and marriage along with taking care of day-to-day financial needs," Singh explained.

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b) Increasing monthly payouts There is an option of increasing the monthly payout which constitutes the payments of the total sum assured in gradually increasing monthly instalments.

“Under the lump sum with increasing monthly income payout method, the financial dependents of the policyholder receive some portion of the total sum assured as a lump sum and the remaining sum assured in monthly instalments with an annual increase of 10% - 20%. This payout option is best to beat the high inflation rate," Goel said.

What you should do With the fast-evolving financial landscape, both the options allow you to take calculative decisions as far as money is concerned. “With staggard’s monthly pay-out decision, you are likely to take short term money decisions which is a safe bet. But in a lump sum, you are likely to take long term money decisions which can be risky. So, risk appetite is the other determining factor to choose the payout option," Singh said.

Financial planning experts believe that if you have the good financial understanding and have the confidence that you will be able to manage the lump sum money efficiently, then can go for a lump sum payout option or else go for the staggered option that pays the sum assured as per your convenience and comfort.

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To get life insurance, COVID survivors need to be fit after three months waiting period - The Logical Indian - 12th January 2021

Life insurance may reject corona survivors proposal if they are found unfit after the three-month waiting period imposed by an insurance company. This new rule is even more strict for people above 60 years of age. Many corona survivors are expected to deal with ailments related to like heart, kidneys, and lungs, especially those who are admitted in the hospital for more than four weeks after contracting the virus.

Chief actuarial officer of Aditya Birla Sun Life Insurance, Anil Kumar Singh said, "Cost of life insurance cover will be decided after the three-month waiting period and depends on the effect the virus has had on the individual's health. Additional

premium charges are decided based on how many organs are impacted."

However, Singh clarified that if the COVID survivor does not show any complications or long-term effect, then extra charge will not be placed, reported Times of India.

Earlier, when the pandemic was at its peak, corona patients struggled to get money and their insurance company as most of the insurance company denied repaying the treatment of medical bills citing the clause that pandemic is not covered in the insurance.

Anish Kumar, a covid survivor from New Delhi, stayed nine days in a private hospital in August last year. He paid a ₹2.79 lakh to the hospital for his treatment. After filing the hospital bill to his insurance company for reimbursement, he only received ₹1.14 lakh from them. Anish wrote back to the insurance company for the payment of rest amount, instead of money he got a reply that PPE kits, pharmacy and doctor's visit are not included in reimbursement.

Many cases like Kumar's came in the public view last year after which IRDAI (Insurance Regulatory and Development Authority of India) issued guidelines for covid claims.

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IRDAI instructed health insurance companies to resolve covid claims on priority and told that the insurer should cover the expenses during the treatment and the quarantine period. The companies are also told to come with new insurance plans that cover treatment, medicines and diagnosis costs of coronavirus infection only.

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The changing face of insurance distribution - Financial Express – 12th January 2021

The need for a sharper distribution strategy has never been more pressing, with digital disruption changing the business landscape across sectors and businesses. Covid-19 has only hastened this process of change in distribution models across industries. Distribution is a critical link that connects products with customers. For a consumer-focused company across industries, it is even more imperative to sharpen its strategy in the current context.

The life insurance industry is no different. The pandemic has driven insurance providers to integrate best practices of distribution, with convenience, safety, security and technology

becoming the guiding mantra for interacting with a wider range of customers. When people could not come out of their homes due to the stringent lockdown, it disrupted the decades-old life insurance sales process that depended heavily on face-to-face meetings. However, most life insurance companies in India immediately shifted their selling process online, providing a seamless digital platform for customers to purchase and address their service requirements from the comfort of their homes.

Apart from focusing on building digital capabilities for various distribution channels, a paradigm shift is currently under way with respect to the way life insurance products are sold. It is transitioning from selling products using the distribution partner’s relationship skills to expertise-based financial advisory skills. Today, an agent is armed with digital enablers to understand a customer’s financial needs, evaluate their current financial situation, and accordingly provide personalised solutions. This approach also helps in applying a customer-centric lens instead of just having a product-centric approach.

Vital transformation Celebrity agents: At the end of FY20, over 2 million distributors were working on the ground. Some of them have pivoted to leveraging the power of the social media to build a competitive advantage over their peers. They have understood that there is a massive potential for lead generation on these platforms, besides the luxury of continuous engagement. Establishing themselves as celebrity distributors, right from prospecting to lead scoring, they integrate their social media presence with an insurer’s digital platform for a better brand recall for their clients.

Building an integrated platform: Insurers deal with many distributors. Changing customer expectations and behaviour due to the rapid transformation is pushing insurers to collaborate with other players and build channels where they can engage with customers in newer ways. As multi-channel is the future, insurers have to be strategic, re-grading who they collaborate with and how they manage these partnerships. Most insurers are looking at converging all their partners onto a single platform to increase efficiency and bridge the demand-supply gap.

Agent recruitment: Hiring the right talent is half the battle won for any company. As a career option, insurance sales is losing steam amongst today’s youth as better alternatives have pushed it down the pecking order. However, the impact created by top-performing distributors cannot be neglected. Insurers

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are mapping out the vital attributes of successful distributors and employing artificial intelligence to hand-pick candidates who display these attributes through written or oral tests.

Insurtech on the rise: Insurgents are challenging incumbents saddled with old process and systems with digitally-enabled simpler products. Many Insurtech players are revolutionising the distribution game. For instance, Insurance Drip, an automated mobile marketing system that sends social media posts on behalf of distributors, analyses post views and alerts them regarding the same. Bancassurance: Since the notification of the IRDA in 2002, which paved the way for banks in India to operate as corporate agents, bancassurance has emerged as an important channel of distribution. Most insurance companies have integrated their products with a bank’s platform to provide customers a seamless journey during the purchase process. Currently, with the use of analytics and automated underwriting, insurance companies are collaborating with banks to provide customised offers, which they are integrating into bank systems to create a differentiating factor.

Future of insurance distribution Assisted distribution: Tech-enabled chatbots, virtual assistants and digital enablers such as WhatsApp would be future sales faces, focusing on immersive experiences. Many life insurers are experimenting with augmented and virtual reality to take customers through their future, highlighting the powerful propositions offered by life insurance products.

The Internet of Things (IoT): The industry can leverage the wealth of information stored by wearable devices to provide customised insurance products. Usage of the IoT and advanced machine learning algorithms will open up new avenues to distribute products. In the future, several life insurers would partner with companies providing wearable devices.

Entry of Big Tech: The rise of e-commerce has been phenomenal and it is only expected to expand as life insurers evaluate prospects of tying up with majors such as Amazon and Flipkart. According to the World Insurance Report 2020 by Capgemini, 36% respondents said they would consider purchasing insurance from Big Tech, compared to just 17% in the 2016 report.

The writing on the wall is clear. Today’s tech-savvy customers are focused on the ease of purchasing. They are ready to take a chance with non-traditional players. It is, therefore, important for life insurers to be present on platforms preferred by their customers, and offer a convenient, safe, secure and hassle-free buying and claims process.

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Life insurers bet on guaranteed return products to woo customers - The Hindu Business Line - 11th January 2021

Amid the trying pandemic times and low interest rate environment, private life insurers are seeing opportunity and pushing protection products with a promise of guaranteed income. These products bundle life insurance coverage with benefits of savings, offering a suitable product for risk averse individuals who are keen to get regular income and are eyeing assured financial returns over the medium term. In view of a higher life expectancy, rising inflation, and rising healthcare costs, the combination of protection and savings with guaranteed returns and guaranteed additions in life insurance plans make them attractive for those who seek assured returns on their savings.

Alternative to FD In the past few months, many insurers, including Bharti AXA Life, ICICI Prudential Life, Future Generali Life, and HDFC Life, have introduced insurance plans with guaranteed returns to help people secure financial stability and meet their different life goals. They have increased the focus on non-participating saving products with guaranteed returns, pitching them as an alternative to bank fixed deposits that have seen sharp fall in rates over the past year.

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Recently, Bharti AXA Life launched ‘Guaranteed Income Pro’, a non-linked, non-participating savings insurance plan, that offers life insurance along with guaranteed returns and maturity benefits. Parag Raja, Managing Director & CEO, Bharti AXA Life Insurance, said: “Guaranteed income is ideal for risk-averse individuals who aim to generate a substitute source of regular income and achieve assured financial returns for tomorrow. We designed Bharti AXA Life Guaranteed Income Pro as an innovative solution that provides life insurance coverage and benefits of a savings product. The hallmark of our offering is the sound financial returns amid uncertain markets. It not only offers flexible short, medium- and long-term income options, but also helps people meet different financial needs at various milestones of life.”

Launching Future Generali Assured Wealth Plan, a guaranteed endowment plan in October last year, its Chief Customer and Marketing Officer, Rakesh Wadhwa, had said: “Given the volatility in interest rates,

many customers look for long-term solution with guaranteed returns. Also, the ongoing pandemic has made people understand the importance of being financially protected. Both of these factors have resulted in higher enquires for guaranteed life insurance products.’’ ICICI Prudential Life Insurance had, in December 2020, unveiled ‘ICICI Pru Guaranteed Pension Plan’ that offers guaranteed life-long income to lead a financially independent retired life. Similarly, HDFC Life Sanchay Plus also works for those who are risk-averse and want assured returns for their later years.

Managing risk So, how are life insurers able to manage the risks on guaranteed products in an environment of low interest rates? Are they knowingly exposing themselves to liabilities when they hard sell guaranteed products?

Sandeep Nanda, Chief Investment Officer, Bharti AXA Life Insurance, said: “Insurance companies need to carefully monitor the duration of their liability cash flows and then decide their asset allocation and duration to reduce interest rate risk. If interest rates move adversely as compared to assumptions, then products may need to be repriced or withdrawn. Insurance companies sell a variety of products with different liability cash flow durations. Hence, the overall interest rate risk gets reduced as some products have relatively shorter duration.”

Nanda adds that life insurance companies are required to have at least 50 per cent of their assets in government securities, and these are generally long-duration to match with liabilities and to benefit from the upward sloping yield curve. Interest rate derivatives such as forward rate agreements or swaps as permitted are also used to lock in rates of future cash flows. Several high-quality private and public sector issuers have also issued partly paid bonds, which are invested into by insurers who are looking to match cash flows at a pre determined interest rate.'' According to industry experts, life insurance companies are capitalising on exempt-exempt-exempt (EEE) taxation, implying tax benefit available on investment and no tax on accrual and when the product matures. The experts pointed out that customers who buy insurance plans with guaranteed returns must ensure to run them till maturity as any exit before maturity will be very costly in such schemes.

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Life insurers hold on to biz growth in Dec; investors eye profitability boost – Live Mint - 11th January 2021

India’s private sector life insurers have more than made up for the pandemic hit of the first quarter, latest business growth metrics from the regulator show. For December, private life insurers reported new business premium growth of 22 percent, while Life Insurance Corp. of India Ltd (LIC) reported a decline

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of 15 percent. This takes the business growth for the nine-month period of FY21 to 6.5 percent, which is decent given the massive contraction seen in the first quarter. Insurers seem to have got back their mojo in the ensuing two quarters. That said, the outcome has not surprised investors as the surge in stock prices shows. After all, Indians have turned more willing buyers of life insurance amid the covid-19 pandemic. Ergo, the growth has been largely driven by retail new business premium. Individual new business premium (both single and non-single) grew by 9.15 percent, showed the regulator’s statistics.

But there is a small factor to worry about for investors. Growth in new business has been completely led by the increase in single premium policies. This category grew a whopping 46 percent year-on-year in December and 40 percent during the April-December period. Single premium policies are typically market linked and are subject to volatile market conditions. Adverse market conditions mean the surrender ratios here may be higher than other insurance plans. Low growth of 2.2 percent in non-single premium business shows that the growth in protection business is slowing down, according to analysts at Motilal Oswal Financial Services Ltd. However, the trend still remains healthy. “For private insurers, while individual un-weighted non-single premium grew 2.2 percent y-o-y in December, individual sum assured declined 14.3 percent y-o-y. Even for total un-weighted single premium, growth in sum assured at 36.8 percent y-o-y was lower than the 46.1 percent y-o-y growth in premium," they wrote in a note. Slower protection business growth does not augur well for margins and profitability.

Overall, listed private sector life insurers have performed well in December. The retail weighted received premium (RWRP) for private insurers has grown by 3 percent in December, point out analysts at Jefferies India Pvt. Ltd. “Steep month-on-month growth of 55-60 percent for industry/private players indicates sequential improvement and seasonality," they wrote in a note. Those at Motilal Oswal Financial Services Ltd expect growth to continue to be strong in the fourth quarter, helped by a low base. HDFC Life Insurance Co. Ltd is expected to report 14 percent growth for FY21, while the largest private sector insurer, SBI Life Insurance Co. Ltd, may see 5 percent growth. In December, SBI Life reported 12 percent year-on-year growth in new business premium. SBI Life continued to be the market leader and the largest player although growth was slower than the industry. Rivals HDFC Life and ICICI Prudential Life Insurance Ltd reported higher growth. Shares of listed private life insurance companies gained more than 1 percent on Monday and rose by 18-26 percent in the past three months. Analysts say current valuations reflect much of the expected positive growth metrics for listed insurers.

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What is the process of reactivating lapsed life insurance policy? - The Economic Times – 11th January 2021

It is a good practice to set reminders for premium payments of insurance policies. If the due premium is not paid beyond the grace period, the policy tends to lapse which leads to termination of all the benefits and coverages provided under it. However, one can reinstate a lapsed policy by following a process.

Check revival period Most companies provide a period of two to three years from the end of the grace period for the reinstatement. The policy document provides this information along with the process to be followed. One must make sure that the reinstatement is being made during the revival period.

Application To reinstate a lapsed policy, the policyholder needs to make an application for revival to the insurance

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company. The company may prescribe submitting a standard revival form. It is recommended to take advice from the insurance agent or visit the company branch to understand the process.

Due payment and penalty To be able to revive a policy, one needs to pay due premiums for all the years since the lapse of policy along with any penalty that the insurance company may levy for non-payment of premiums.

Medical checkup In certain cases, a medical checkup at the designated medical centre is mandatory. In other cases, a declaration of good health may be required for the revival.

New terms and conditions A reinstated policy is as good as a new one, and hence the insurance company may impose new terms and conditions. The policyholder needs to make note of the same by going through the new policy documents.

Points to note Reinstatement of a policy tends to be a cost-effective option as compared to getting a new one. Insurance companies also come up with policy revival campaigns encouraging people to reinstate their lapsed policies extending policy benefits on revival.

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Premiums for Rs 1 cr term plans starting at Rs 7,080 – Check the latest offers - Financial Express – 8th January 2021

The starting of a new year is a perfect occasion to take stock of our finances, lay down the financial plans for the year, review the progress made in the previous year, identify problematic areas and take effective corrective measures, if required. It is all the more important this year as the world is yet to recover from the Covid-19 pandemic which exposed our vulnerabilities like nothing before.

In fact, the previous year made many among us realise the true importance of having in place a life insurance plan to protect the financial interests of our dependents if something untoward were to happen to us. As such, if you still don’t have a life insurance policy, you must prioritise getting one with an adequate sum assured at the earliest.

If you are not sure how much sum assured would be adequate, you may consider the popular rule of thumb which states that your life insurance plan should be worth at least 10 times your current annual income. You may want to go for a higher sum assured based on your requirements.

It may be noted that there are different types of life insurance policies available in the market with varying features and benefits and you should choose the one that best meets your requirements after carefully

comparing all your options. These include term insurance plans, unit-linked plans, endowment policies, retirement plans, money-back plans, whole life policies, child insurance plans, etc. Now, many people

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choose term insurance plans for a high sum assured at relatively cheaper premiums, according to Bank Bazaar.

Do note, however, the premiums of any life insurance policy would increase as you grow older. So, if you’re planning to get one, you’ll be well-advised to get one at a younger age. That being said, the cost of the premiums shouldn’t be the only consideration while choosing a particular insurance policy. You also need to factor in other important things like the chosen insurer’s claim settlement ratio, policy features, add-on benefits, etc. to make a pragmatic choice that best meets your requirements, informs Bank Bazaar.

So, if you’re looking to purchase a term insurance plan, here are the approximate annual premium costs for policies with a sum assured of Rs 1 crore currently being offered by 21 insurers in our country. Do note, the premiums costs of all the below-mentioned policies are calculated for a 30-year-old non-smoker salaried male residing in Bangalore with an annual income of Rs 5 lakh for a policy tenure of 30 years.

Your applicable premium could be different based on your age, income, place of residence, occupation, chosen policy’s features, sum assured, premium payment term, or your insurer’s terms and conditions, among others.

Disclaimer: Data pertains to term insurance cover for a 30-year-old, salaried, non-smoker male, residing in Bangalore, earning Rs 5 lakh annually, for a 30-year term. The list is not exhaustive. The table excludes insurance companies for which data is not available on their websites. Data as on January 5, 2021. *Claim settlement ratios as per IRDAI Annual Report FY2018-19. Data compiled by BankBazaar.com

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Insurance in 2021: Looking beyond the 'new normal' - The Economic Times – 9th January 2021

2020 showed us what difference a single year can make. While it all started on a positive note, a one-of-its-kind black swan event radically shifted customer’s needs, behaviour and expectations, while disrupting insurance operations and prompting an overnight shift to virtualization. This turned headwinds and tailwinds for several insurers. Even though there was turbulence and uncertainty in the economy, the life insurance industry remained resilient and continued to grow on the back of increased awareness and need for protection.

Digital overhaul fast paced customer facing developments: The year exposed shortcomings of the industry for not being digitally ready like its peers in BFSI and it's over dependency on relationship-based selling. This realization and the need to connect with customers, especially during the lockdown, emerged as the biggest positive for the industry. The sector streamlined and simplified its tech experience to become more agile and offered innovative digital propositions to enhance customer journeys, in just couple of months, what might originally have taken three-to-five-years to transform.

Growth on the back of increased awareness and demand: While digital platforms and tools helped companies to create and distribute simplified, digital-native products and aided with renewals, it also raised consumer awareness at the time of massive uncertainty. There was a flight to safety which reflected in the mind-shift of people perceiving life insurance as one of the best safeguards against risk and not merely a savings instrument for future. The industry witnessed increased demand of pure protection products (Term plans) across age-groups and demographics.

Affinity towards guaranteed products and increased confidence in insurance: Increased financial awareness, turbulent markets and falling interest rates gave prominence to guaranteed life insurance solutions for people looking to conserve wealth with secured returns. This further firmed up the growing customer confidence towards insurance as a safe financial instrument especially in times of uncertainty.

Honouring the moment of truth: The proof of the pudding of a life insurance company is in its claim settlement. The industry yet again showed how robust it is even in a time of crisis of this magnitude. It stood by its customers honouring claims and ensuring that they always remain protected.

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The life insurance industry matured and took one of the biggest leaps in the last one year. While, the sector collectively held its ground in 2020, it is preparing well to make 2021 another differentiated year. This year, life insurers will strive to play an expanded role in a customer’s life – from payer to a caring partner to preventer – with the following key focus areas:

Keeping up with new consumer behaviour and expectations: Customer engagement will take centre stage in the new year. Omni-channel sales and novel ways of interacting with the customers through hyper-personalization and more intimate digital sales interaction will encourage companies to explore newer ways to enhance customer engagement and experience. Customer preference for easy process and digital channels will continue to be on the rise. Besides company websites and Mobile Apps, Chatbots and Social Media will emerge as the next set of preferred channels, which will push insurers to leverage data as a critical asset.

Data and accelerated digitization for heightened customer experience: Customers today see speed as a differentiator. Life insurers will enhance use of alternate data for better customer insights. Technological advancements and artificial intelligence in machine learning along with intelligent automation, will enable faster turnaround time. 2021 will see companies transitioning out of legacy platforms to collaborate with ecosystem players to speed-up their game. Modernizing core systems will help companies to launch new products rapidly, integrate widespread multiple channels for consistency, and enable effective policy service and timely problem resolution, leading to enhanced customer experience and understanding.

Provide insurance as a utility through product disruptions and transformations: Need for adequate life insurance and being covered with appropriate products, will take a leapfrog in 2021. Demand for protection products will continue, despite hardening of reinsurance rates. Companies will focus on simple, innovative and differentiated products to offer better customer experience. There can be innovations in the space of protection and health-related covers. These solutions will be simple to understand, will have hybrid features or bundled offerings, available across channels. The focus will be on creating hyper-personalized customer-centric offerings to cater to policyholders’ emerging needs.

The 2021 policyholder: 2020 witnessed customers becoming aware, realizing the need and the real potential of life insurance. 2021 will see the trend continuing. Fear of uncertain global events and the flight to safety will further push the need for protection solutions. Individuals will opt for securing their savings with guaranteed return plans. There will also be increased demand for child products and retirement solutions. Customers will ask for increased transparency in coverage details, on the go access, speedy transactions and need-based customized solutions.

Binding all these aspects, customer centricity and engagement will remain the key differentiator in 2021 as well. Simplifying products, developing go-to-market agility, making processes intelligent, building a resilient business while embracing an open ecosystem will be factors which will re-define and shape the life insurance industry in 2021.

DISCLAIMER: The views expressed are solely of the author and ETBFSI.com does not necessarily subscribe to it. ETBFSI.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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Life insurers see 2.7% contraction in December premium collection - Business Standard – 8th January 2021

The life insurance industry saw a 2.7 per cent contraction in premium collection in December, a second consecutive month of decline.

Insurers earned new business premiums (NBP) of Rs 24,383.42 crore during the month, compared to Rs 25,079.79 crore in December 2019. While private insurers, 23 in total, recorded a 22 per cent growth rate, state insurance behemoth, Life Insurance Corporation, saw its NBP contract 15 per cent. NBP is the premium acquired from new policies in a year.

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Top private insurers such as HDFC Life, ICICI Life, and Max Life Insurance registered double-digit growth in December.

In November, the NBP of the industry totalled Rs 19,159.31 crore, compared to Rs 26,221.24 crore in the same period last financial year (FY20). While private insurers had seen their NBP decline 5.15 per cent to Rs 7,066.65 crore, LIC’s NBP had fallen over 35 per cent to Rs 12,092.66 crore.

After witnessing growth in NBP for four straight months starting from July, the collection had fallen in November. Experts had suggested the decline was on account of a high base and December would see normalisation.

In Q3FY21, the industry was again in the red, with NBP contracting 3.2 per cent to Rs 66,318.76 crore, compared to Rs 68,572.89 crore in Q3FY20. LIC’s NBP declined more than 10 per cent but private insurer’s NBP rose 13 per cent. In Q1FY21, life insurers saw their premiums decline 18.5 per cent YoY owing to the pandemic-induced lockdown. However, recovery followed soon after, aided by a surge in demand for insurance products as the pandemic accelerated adoption of insurance in the country.

As a result, in Q2FY21, life insurers saw their new business premiums rise 16 per cent YoY.

Similarly, in the first nine of months of FY21, the sector saw NBP decline 1.7 per cent to Rs 1.91 trillion. Despite that, the private insurers are in the green, with an almost 7 per cent rise over last year but LIC’s NBP declined over 5 per cent.

As the pandemic struck India, demand for pure protection products spiked. Even guaranteed products saw a huge demand as many consumers stopped looking for higher returns and tilted towards some form of stability. Hence, demand for unit-linked plans declined.

But with the number of infections falling and vaccines getting approvals, the initial euphoria for protection products has come down. Unit-linked policies have again started gaining traction.

According to experts, growth will be driven by pension products, life cover products, supportive regulations, effective distribution and, improving customer services. “The industry is expected to grow in single digits for the year as compared to a double-digit growth witnessed last year. The medium-term outlook is stable,” said experts.

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GENERAL INSURANCE

Pharma firms seek insurance cover for indemnity in Covid vaccine trials - The Indian Express – 15th January 2021

A host of pharma companies have opted to buy insurance covers from domestic general insurers for their clinical trials to develop such vaccines in the country. Some of the general insurers who have provided these covers include New India Assurance, ICICI Lombard General Insurance and Raheja QBE General Insurance, sources said.

The insurance cover, known as ‘Clinical Trial Liability Insurance’, seeks to indemnify the insured, including institutions or organisations conducting clinical trials, against legal liability arising out of clinical trials on claim-made basis, said Atul Sahai, CMD, New India Assurance, the largest general insurance company in the country.

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The policy covers serious adverse event on the volunteers. The legal liabilities may arise out of death and bodily injury or disease to volunteers while undergoing clinical trials of product specifically named and insured. The policy provides cover for legal liability arising out of lack of care or negligence resulting in injury or death of the subject participating in the trial, said Pankaj Arora, MD & CEO, Raheja QBE General Insurance.

The cover is taken till the particular medical product or vaccine for which the cover has been given is completed. Once the product is launched in the market, the cover ceases to operate. “The policy indemnifies the insured for legal costs, damages and compensation for injury or death caused to a research subject participating in a trial. The policy also provides cover for medical expenses in respect of such subjects who sustain injury arising out of their participation in a trial,” Arora said.

Raheja QBE General Insurance has issued 119 ‘Clinical Trial Liability Insurance’ policies including 53 covers exclusively for the “Covid-19 Clinical

Trials’’ from April till November 2020. Of the 53 new policies given for clinical trials for developing Covid-19 remedies, some companies have taken more than one policy. Sources said the premium for a ‘Clinical Trial Liability Insurance’ is based on the risk exposure and depends on a wide range of factors. It may range anywhere from less than Rs 1 lakh for simple trials for limit of liability as low as Rs 50 lakh to over Rs 1 crore for complex trials for high limits of liability ranging from Rs 50-70 crore.

While most of these are Indian companies, some foreign companies and joint ventures/partnerships have also taken this cover, he said without disclosing the names of these pharma companies. Indian companies such as Zydus, Bharat Biotech and Gennova are developing indigenous vaccines, other domestic companies are collaborating with companies such as Serum Institute with AstraZeneca, Dr Reddys with Sputnik and Biological E with J&J. Insurers have already received some claims against Covid-19 policies. Clinical trial cover market has grown at 30 per cent in India, but, this year, growth has been substantially higher due to Covid-19, Arora said.

India has a large pharma industry and some pharma companies have taken ‘Clinical Trial Liability Insurance’ for developing Covid-19 vaccine, said Sanjay Datta, chief–underwriting, claims, Reinsurance and Actuarial, ICICI Lombard General Insurance. “We have also issued some Covid-19 policies and have received some claims against these policies,” he said. Although the domestic clinical trial cover market is Rs 400-500 crore, despite growing demands and claims, the premiums for clinical trials haven’t gone up post-Covid-19. Insurance officials said clinical trial premium is more expensive than other liability products. “We estimate the insurance market size to be about Rs 50 crore and our market share in the industry is around 10 per cent,’’ said an official.

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Budget Expectation 2021: Giving special rebate could incentivise people to buy home insurance - Financial Express - 13th January 2021

Union Budget Expectation 2021: The Covid-19 pandemic has brought to the fore the importance of having health insurance. Industry experts say even after the rollout of the government’s Pradhan Mantri Jan Arogya Yojana (PM-JAY), a large part of the Indian population is still without any health insurance policy.

Experts expect the budget to increase health insurance penetration by offering special tax benefits for new health insurance buyers. For instance, the government’s announcement of including payment of premiums on purchase of new insurance policies (between October and March 2021) under the LTC scheme will incentivise people to buy the insurance and improve its penetration.

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Parimal Heda, Chief Investment Officer, Digit Insurance says, “The budget could enhance the extent of income tax exemptions under Section 80D to Rs 50,000 for individuals from 25,000 currently and to Rs 75,000 for senior citizens from Rs 50,000 currently.” On the home insurance front, experts say making home insurance mandatory at the time of purchase of the property or giving special rebate (similar to health Insurance) for Insurance of houses could incentivise people to buy home insurance. Heda says, “Additionally, the government could roll out a mass product scheme similar to its flagship programs like PMJSBY, PMFBY, etc. for compulsory home insurance under affordable housing.”

Further, experts say the budget could look into reducing the GST percentage for non-life insurance products to incentivise people to buy more insurance to cover their assets. Salil Bhandari, founder, BGJC Associates and LLP says, “The Indian economy is on a recovery path. Although there are parameters which reflect that the overall growth may take 2-3 years, the initial fillip has happened.” He further adds, “The key parameters like growth in GST collection, commercial vehicle manufacture goods movement is growing which is reflected in improving results of the corporate sector in most of the products.”

The salaried class has been consistently the largest number of taxpayers in the tax-paying classes. Experts say, as they have limited options in rebate and therefore with increasing costs the standard deduction should be enhanced to Rs 1 lakh. For the Senior citizens, they have to be taken care of and their income reduces as they grow in age. Therefore, industry experts believe, a couple of important support should be provided; for instance, medical benefits – any amount of insurance paid should be allowed as a rebate. All Hospital bills and bills of nursing homes, doctors with PAN, chemist shops registered under GST should be allowed as a deduction up to Rs 1 lakh or 20 per cent of their Gross total Income whichever is more. Bhandari says, “Any travel made by senior citizens, on a scheduled airline or Indian railways should be allowed as a deduction from their income.”

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Non-life insurers see around 12% growth in December premiums, shows data – Business Standard – 13th January 2021

Non-life insurers have recorded around 12 per cent year-on-year (YoY) growth in gross premiums underwritten in December. This comes after low single-digit growth in November and contraction in September and October.

In December, non-life insurers — that include general insurers, standalone health insurers and specialised PSU insurers — reported gross premium underwritten to the tune of Rs 17,935.97 crore, compared to Rs 16,048.86 crore in the same period last year. In November, they had reported a 2.7 per cent growth in premium, while in October and September, premiums earned declined 0.41 per cent and 4.41 per cent, respectively.

While general insurers, 25 in total, collected Rs 15,491.12 crore premium in December this year, up 10.59 per cent YoY, the standalone health insurer’s premium went up more than 5 per cent in the same period over last year. In December, among state-owned insurers, New India Assurance and National Insurance Company were in the green with 16.02 per cent and 42.10 per cent premium growth, respectively, over last year. Among private insurers, Bajaj Allianz general insurance reported a 22.73 per cent growth in premiums, HDFC Ergo a little over 40 per cent growth, ICICI Lombard saw a 10.52 per cent rise and IFFCO Tokio recorded a 14 per cent growth.

Furthermore, in the April-December period of FY21, the general insurers’ premium totalled Rs 1.25 trillion, up 1.14 per cent over last year. Apart from New India Assurance, all the other three state-owned general insurance firms were in the red during this period.

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As far as private insurers are concerned, apart from HDFC Ergo, which reported a 26 per cent growth, all the other private insurers, with sizeable market share have reported low single-digit growth in premiums. Standalone health insurers, on the other hand, reported a 7 per cent rise in premiums in April–December of FY21, with growth being driven by the retail health segment.

Government schemes and overseas health insurance (travel) proved to be the dampener.

On an industry level, the first nine months of FY21 has seen non-life industry premiums grow by 2.53 per cent to Rs 1.45 trillion, compared to Rs

1.42 trillion in the same period of last financial year. Growth in the non-life industry has been primarily driven by health, followed by the fire segment. With gradual opening of the economy, motor insurance segment has picked up but without a hike in third party premium rates, the growth is muted. Crop insurance, on the other hand, remains a challenge for the industry, going forward.

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Lower non-Covid health claims silver lining for general insurers - The Hindu Business Line - 12th January 2021

Faced with muted growth in premium and high Covid claims, general insurance companies are hopeful that lower number of non-Covid related health insurance claims as well as the falling Covid cases will help them improve their balance sheets.

According to data with the General Insurance Council, 8.03 lakh Covid related claims amounting to ₹12,184.09 crore were filed by January 11, 2021. Of this, 6.26 lakh cases worth ₹6,109.81 crore had been settled while 1.77 lakh claims are pending.

“Health claims are still under control and are being offset by lower number of non-Covid claims,” noted an executive with a general insurance company, pointing out that many people are still postponing elective surgeries.”

‘Still manageable’ “Covid related claims were becoming a bit worrying for the industry. But since a large number of elective surgeries are getting postponed, it has helped to offset the loss. Otherwise, it would have gone beyond control but retail claims are still manageable,” he noted. According to industry estimates, about 15 per cent of Covid patients require hospitalisation and intensive medical care and file claims. The average claim amount is estimated at about ₹1.5 lakh.

“Typically natural catastrophes are built into projections but something like a pandemic is usually not factored in. Right now there is a decline in cases but the concern is about a second and third wave as is being seen in many European countries,” noted another insurer, adding that a large number of patients are also being advised home quarantine.

More clarity will be available in coming weeks as many of the listed general insurers start to report their third quarter results. Meanwhile, non-life insurers registered 2.7 per cent premium growth in November 2020 but there are concerns about softening in health insurance premium. According to GIC data, health insurance premium grew by 12.96 per cent between April and November this year.

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Will ensure unorganised poultry players get insurance: Maharashtra minister - Hindustan Times – 12th January 2021

Mumbai, Jan 12 (PTI) amid the poultry sector facing bird flu threat, Maharashtra Animal Husbandry Minister Sunil Kedar on Tuesday said the government will soon take steps to ensure that unorganised players engaged in poultry farming get insurance cover.

Talking to reporters here, the minister also said that a mention will be made in this regard in the forthcoming budget of the state government.

"What I have noticed as the minister of the department is that insurance companies entertain organised players from the poultry business, but not the unorganised ones.

"The state government will soon take a step to take insurance schemes to the last common man (unorganised players doing poultry business)," Kedar said. He said the issue had come up for discussion during a review meeting chaired by Chief Minister Uddhav Thackeray on the bird flu situation on Monday.

Avian influenza has been confirmed as the cause of the death of different birds in Parbhani, Mumbai, Thane, Beed and Dapoli (Ratnagiri district) in Maharashtra, as per test reports of a Bhopal-based lab, a senior state government official said on Monday. Kedar on Monday said that around 70,000 to 80,000 birds are expected to be culled in a village near Parbhani, where hundreds of hens had died at a poultry farm.

State animal husbandry department secretary Anoop Kumar had said they would be increasing bio-safety measures in poultry farms so that there is no interface with wild birds. Besides Maharashtra, Kerala, Rajasthan, Madhya Pradesh, Himachal Pradesh, Haryana, Gujarat, Uttar Pradesh and Delhi are among the states where bird flu outbreak has been confirmed.

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Standard Fire Insurance for homes from April 1: Up to Rs 10 lakh cover for home contents without declaration - Financial Express - 11th January 2021

Standard Fire Insurance: The Insurance Regulatory and Development Authority of India has issued guidelines to insurers to offer three standard products covering the risk of fire and allied perils from April 1. The three products are Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha.

Bharat Griha Raksha will be available for home building and home contents while Bharat Sookshma Udyam Suraksha will be for enterprises where the total value at risk is up to Rs. 5 Crore. Bharat Laghu Udyam Suraksha policy will be available for enterprises whose total value at risk is more than Rs. 5 Crore and up to Rs. 50 crore. For those buying fire insurance for their homes, the standard product ‘Bharat Griha Raksha’ will offer cover against a wide range of perils. These include:

Fire, Natural Catastrophes (Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Tsunami, Flood, Inundation, Earthquake, Subsidence, Landslide, Rockslide), Forest, Jungle and Bush fires, Impact Damage of any kind, Riot, Strike, Malicious Damages, Acts of terrorism, Bursting and overflowing of water tanks, apparatus and pipes, Leakage from automatic sprinkler installations and Theft within 7 days from the occurrence of any of the aforesaid events.

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This standard product will not just offer coverage for the home building but also general home contents automatically. You won’t need to declare details for 20 per cent of the Sum Insured of the building subject to a maximum of Rs.10 lakh.

You can also opt for a higher Sum Insured for general contents by declaring the details.

The standard fire policy for homes will provide two optional covers: i. Insurance for Valuable Contents like jewellery and curios. ii. Personal Accident of the insured and spouse due to an insured peril under the policy.

The Bharat Sooksma Udyam Suraksha and Bharat Laghu Udyam Suraksha policies are expected to provide financial protection to micro, small and medium enterprises (MSMEs). According to IRDAI circular, the insurers would be permitted to file innovative add-ons (additional covers) over and above the basic cover, in-built cover, optional cover, if any, and standard add-ons that these retail products already offer.

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Separate tax deduction for home insurance would be ideal, says Tapan Singhel, CEO, Bajaj Allianz General – Moneycontrol - 11th January 2021

For the upcoming Budget 2021, Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance says: "A home is not just an asset that one owns, but a dream in which a person invests his/her life’s savings and pays huge EMIs for it. While people do invest a lot in buying a home, they don’t realize that their responsibility doesn’t stop there. They also need to be prepared if an unfortunate event shatters their dream. The penetration of home Insurance in India is less than 1 percent today.

While earlier the natural calamities were once in 5 years phenomenon, we now see 4-5 natural calamities in a year. This has led to massive devastation with property being impacted the maximum. Hence, I believe an incentive in the form of tax deduction to opt for home insurance will motivate people and ensure that they are financially secure in case a natural calamity damages their houses and/or its contents.

I feel the limit for deduction under section 80C should be increased to Rs 1.75 lakh after inclusion of home insurance or a separate deduction should be available for home insurance of up to Rs 25,000. Alternatively, the limit for deduction under section 80D should be increased to Rs 1 lakh with inclusion of both home and health insurance.

This step will gradually lead to people realizing the importance of home insurance, the way it has for health insurance."

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Paperless Policies: ‘Challenges exist, but e-insurance accounts seeing 100% growth’ - The Indian Express – 11th January 2021

The insurance sector is witnessing a 100 per cent growth year-on-year in new electronic insurance accounts (eIA), or dematting of insurance policies in the paperless format. The number of people opening new stockbroking accounts and buying insurance policies online has soared even though most offices were non-operational due to the lockdown in the wake of Covid-19 pandemic.

“I foresee in the near future where most of the policies would be issued only through an e-insurance account and we are working with a few of the larger insurance companies in this direction,” said Madhusudhan ML, MD & CEO, NSDL Database Management Ltd (NDML), a part of National Securities Depository Ltd (NSDL), the nation’s largest securities depository.

The capital market popularised the dematerialisation of stocks in the two decades and immensely benefitted the entire ecosystem including users to seamlessly transact. “Similarly, the Irdai has taken the initiative towards the creation of an e-insurance account with an idea to help users easily access and manage their multiple policies,” he told The Indian Express.

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eIA is the portfolio of insurance policies of a policyholder held in an electronic form with an insurance repository (IR). This will help an eIA holder keep track of insurance policies (life as well as non-life) across multiple insurers in one place. The Insurance Regulatory and Development Authority of India (Irdai) has allowed four entities to carry out IR business: NSDL National Insurance Repository (NIR), CDSL Insurance Repository, KARVI Insurance Repository and CAMS Insurance Repository.

While the benefits of having an online account are obvious, some factors are affecting the adoption of eIA in India. “Awareness about the eIA as a product and its benefits takes the top spot as the major factor affecting the adoption. Each stakeholder will have to take a step towards educating their respective customers on the features and benefits of eIA,” Madhusudhan said.

The other challenge that usually comes up is the perceived loss of customer ownership by the distribution ecosystem as issuance of a policy digitally is seen as one less opportunity to interact with the customer. “Then is the issue of ‘unless I see a physical copy, the policy is not issued’ kind of uncertainty in minds of customers. While such challenges exist, we see tremendous scope for the concept and are seeing over 100 per cent growth year-on-year in the adoption,” the NSDL chief said.

He added that Irdai has mandated the issuance of online policies through IR and currently all policies sold through insurance companies’ online portals are issued digitally through IRs. “Insurance companies have understood the importance and convenience of eIA and have adopted various strategies to drive adoption. This proactive non-regulatory initiative from a few of the progressive insurance companies has yielded immediate gain in terms of operational efficiencies and reduction in print and dispatch cost.”

He said all physical policies can be converted to electronic format and a policyholder can add their existing policies held in physical form to an eIA. “All a policyholder has to do is open an eIA and share the policy details like policy number and insurer name. This is completely a paperless process for the customer and doesn’t take more than a few minutes. As the insurance policy is issued in electronic form the hassles associated with the processing of claims for physical policies like availability of documents to the nominee, loss in transit, authenticity, mutilated document, etc. are eliminated,” Madhusudhan added.

Currently, 2.9 million customers manage their insurance policies with NIR. “The eIA helps insurers in saving costs by eliminating the requirement of printing and dispatching the complete policy kit to the customer through physical means either by post or courier. A cost-benefit analysis conducted by NIR for one of the largest insurance players showed a reduction of print and dispatch cost by over 70 per cent,” he said.

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RBI weighs trade credit insurance for financiers on TReDS - The Hindu Business Line – 9th January 2021

The Reserve Bank of India is weighing the possibility of allowing financiers on the Trade Receivables Discounting System (TReDS) to take trade credit insurance (TCI).

This insurance cover can protect financiers-- Banks, Non-Banking Finance Companies- Factors, and other financial institutions -- on TReDS platform against the risk of default when they finance/discount trade receivables of Micro, Small and Medium Enterprises (MSMEs).

TCI, if allowed, can help financiers on TReDs to minimise bad debts and reduce provisions, thereby supporting their bottom-line.

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The current regulations do not allow financiers to take TCI as the expectation is that their financing activity should be solely based on their credit appraisal and not on insurance. TCI is currently offered by general insurers to suppliers of goods and services against delay in payment or non-payment of trade credit. TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of MSMEs drawn against buyers (large corporates, public sector undertaking companies, and government departments) are financed by multiple financiers through a competitive auction process.

Three entities -- Receivables Exchange of India Ltd., A.TReDS, and Mynd Solutions -- have been operating TReDS for more than three years. A senior public sector bank official said Banks’ have requested RBI to allow them TCI cover on TReDS platform initially in view of the rising stress in the MSME segment. Moreover, this can buoy MSME financing activity, which is one of the priority areas for the Government as part of its Atmanirbhar Bharat Abhiyan (Self-Reliant India campaign), on the platform. If the central bank allows TCI coverage to financiers on TReDS platform initially and it proves successful, this could be extended to other financing activities at a later stage, the Banker quoted opined.

According to RBI’s Report on Trend and Progress of Banking in India 2019-20, the number of MSMEs customers availing Covid-19 related moratorium increased to 78 per cent in August 2020, reflecting the stress in the sector. As per RBI data on “Progress in MSME Financing through TReDS”, in FY2020, the number of invoices uploaded on TReDS platforms jumped 111 per cent year-on-year (YoY) to 5,30,077, with the amount involved rising 95 per cent YoY to ₹13,088.27 crore. The number of invoices financed in the reporting year rose 106 per cent yoy to 4,77,969, with the amount involved rising 91 per cent YoY to ₹11,165.86 crore.

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Coming in April, a new standard home insurance policy: Should you buy it? – Moneycontrol - 8th January 2021

Soon, you will be able to buy a standard home insurance cover from any general insurance company, except health insurers, in India. The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines on the standard home insurance policy – Bharat Griha Raksha – that will be available from April 1, 2021. In 2020, the insurance regulator had framed standard clauses for term insurance, health, COVID-19, personal accident, travel and vector-borne diseases covers. A home

insurance policy with uniform clauses is the latest in this list. Like in the case of other standardised covers, the premium will be decided by insurers, but clarity is awaited on whether zone and geography-based pricing will be allowed.

A cover for your dwelling unit The policy will pay for damages to your house structure due to natural and man-made perils. These include fire, storm, cyclone, typhoon, tsunami, flood and even thefts, riots, strikes and acts of terrorism. What about a gas cylinder blast/short circuit caused by negligence, etc.? These accidents are often seen happening in small Mumbai homes. Now, they are not specifically mentioned in the policy wordings, but could be covered under ‘explosion’ or ‘implosion’ clauses. Full clarity is still awaited on policy wordings and the implied coverage.

The sum insured of your house will depend on your property’s carpet area and prevailing cost of construction as on the policy commencement date. You can choose between policy tenures of one to 10 years.

General contents – for instance, television set, refrigerator or furniture – in your house will also be covered. Unlike some home insurance plans in the market, you need not necessarily declare details of the contents. These will covered to the extent of 20 percent of the sum insured for the house structure, up to

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a maximum of Rs 10 lakh. However, if you wish to buy higher coverage for the contents in your house, you will have to share detailed information about the value of these contents.

Insurers have also been asked to offer two optional covers – insurance for valuable contents (such as jewellery and curios) and personal accident plan (for policyholders and their spouses). In case of the policyholder or the spouse’s death due to one of the specified perils that caused damages to your house, a compensation of Rs 5 lakh per person will be paid out.

Claim settlement up to sum insured The IRDAI has also made it clear that the policy will have to give a complete waiver of underinsurance. Put simply, if the sum insured chosen by you is lower than the actual value of the property or contents, it will be termed ‘underinsurance’. In such cases, many products in the market today settle the claim proportionately. For example, under such policies, if your property’s value is Rs 2 lakh, but your sum insured is Rs 1 lakh, your claim amount will be reduced proportionately by 50 percent.

So, if your claim is, say Rs 70,000, you will be entitled to only Rs 35,000. However, since the standard product comes with an underinsurance waiver, here, you will get Rs 70,000. “If the sum insured declared by a policyholder is less than what ought to have been declared for the property in question, the policyholder’s claim will not be settled proportionately, but up to the sum insured that is declared,” the IRDAI’s official communication notes.

“This is a useful clause as it limits policyholders’ potential losses in case their sum insured is lower than their property’s valuation. Instead of being compensated proportionally, they will get the claim amount up to the sum insured,” says Abhishek Bondia, Co-founder, Securenow.in

Money control’s Take The year 2020 has been the year of insurance awareness, with many flocking to buy life and health insurance policies. Travel and COVID-19-specific policies, too, have seen an increase in demand. However, the same is not the case with home insurance – protecting one of the most precious, and expensive, assets – is not high on the priority list for many. Besides lack of awareness, complex terms and conditions, too, were their undoing. “Regular home insurance policies came with multiple sections, terms, conditions and exclusions that sometimes ended up confusing customers. This is one of the primary reasons why home insurance is not popular. In the case of a ‘standardised’ cover, it is a blanket cover for structure and contents. Customers do not have to struggle to arrive at the right valuation while availing the insurance cover,” says Saroj Sat apathy, Chief Operating Officer, JB Boda Insurance and Reinsurance Brokers.

While lay policyholders could still find it difficult to decipher standard product’s clauses, the fact that the terms are set by the insurance regulator will offer comfort. Given that you invest your lifetime’s savings into buying a house, there is every reason to insure it – and a standard product can be a good start.

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Evolving consumer needs in insurance - Outlook Money – 8th January 2021

Due to the COVID-19 pandemic, this year will go down in the history books as a pivotal point for humanity and our economies, and the general insurance sector is no exception to the same.

Among the many impactful trends that the pandemic brought along with it, increased digitisation has been one of the most substantial developments. The acronyms BC and AD could now mean something else - Before COVID and After Digitisation. This has forced the general insurance industry to evolve and the wheels of its digitisation have been set in motion.

In addition to this, general insurance has evolved as a category, propelled by the new needs that the pandemic shifted into the spotlight. And at the heart of this transformation lie the consumers we serve. Over the past few months, health insurance companies across the country have stepped up to the challenges laid bare by the crisis, and together, the industry has brought many innovations to life.

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Here is a look at three ways the sector is evolving going into 2021: 1. Increased customer-centric product alignment The COVID-19 crisis has encouraged health insurers across the country to take a second, look at their product offerings, and offer health insurance solutions that align with the changing needs of India’s new-age consumers. Where health insurance was once predominantly perceived as a necessary solution only for senior citizens and people inching closer to retirement, today, the consumer diaspora has evolved to include more millennials.

The pandemic has put mortality into perspective, and an increasing number of younger people are growing curious about health covers. As one study revealed, around 63 per cent of people aged between 25 and 35 made inquiries about health insurance amid the COVID-19 pandemic. Health insurers have responded to these evolving consumer needs with COVID-centric products.

The trend in 2021 will continue with new types of coverage, as the launch of more parametric policies (which pay upon the occurrence of a triggering event rather than having to claim a specific insured property loss) catastrophe coverage and might also have applications for future viral outbreaks.

2. Digitising for efficiency The COVID-19 crisis has also necessitated extensive digitization of the industry. Nearly every top health insurer in the country embraced digital solutions to keep the end-to-end process smooth and seamless for customers. With lockdown-induced restrictions coupled with a general need for contactless solutions, insurers in the health industry sector resorted to digital tools like telemedicine and chatbot, among others.

At Reliance General Insurance, for instance, we facilitate e-consultation through telephonic, video, and chat-based channels for our customers as early as April 2020. We also organised webinars on social media to help spread awareness of the pandemic and educate them about preventive steps. Several other industry leaders also developed digital and online solutions to ensure that customers could access every phase of the insurance journey online - from application to claim settlement.

3. Simplifying processes for a smoother experience A welcome effect of increased digitization was the simplification of processes. For the customer, this meant better and more seamless experiences. Teleconferencing made face-to-face interactions possible, so customers could get their queries answered. The process of raising and settling claims was also greatly simplified, and this meant greater satisfaction for customers, particularly during the uncertain times that marked this past year.

RGI also endeavoured to simplify the process of claim settlement, with over 90 per cent of the claims being settled digitally through our mobile app, our website, or through the customer portal and emails. In addition to this, our single page claim form and guided claim submission flow made things smoother for our customers.

Looking ahead: The health insurance sector looks set for a full-scale makeover. Innovations that would have taken years have now been accelerated out of necessity and they look like they are here to stay. This is a good sign and one can be optimistic about the industry’s growth in the next few years due to these developments.

These, I believe, will come in the form of continued product design transformation, catering to the new-age consumer. Penetration in the country looks set to improve as documentation and other processes will continue to be made smoother and even more simplified. With digitisation growing from strength to strength, it will serve as an extremely solid framework for consumers in the post-COVID era. More than anything, the entire industry is heading towards a more user-centric approach and this is the approach that is likely to be the greatest strength of the industry in the years to come.

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HEALTH INSURANCE

Insurers go stingy with Covid claims - Deccan Chronicle – 13th January 2021

Though the number of Covid-19 claims settled by non-life insurance companies has risen sequentially during the December quarter, the claim amount settled by them against the amounts claimed, has not increased in the same proportion. This indicates that policyholders are now paying a significant portion of the claim amount from their pockets owing to disagreements between hospitals and insurers on charges.

Sample this, during October to December 27, the total number of claims reported were 4.23 lakh, of these 83 per cent, or 3.51 lakh, claims were settled.

However, in value terms, claims worth Rs 6,235.8 crore were reported, of which only 57 per cent, or Rs 3,578.50 crore were settled.

Similarly, during July to September 2020, there were 2.94 lakh Covid-19 related claims reported to insurers. Of these, 62 per cent, or 1.82 lakh, claims were settled. However, in terms of value, the reported claim amount was Rs Rs 4,629.30 crore, of which insurers settled claims worth Rs 1,842.3 crore, or a mere 40 per cent of the reported claim amount.

A senior official of an insurance company said, “The pendency appears big (claims pending) because the Covid treatment is long drawn. Patients after discharge continue to remain in Quarantine and use medicines for nearly two months after discharge and they submit the final bills only after that.”

On policyholders bearing a part of the cost of treatment, the official said, “We have come across a few hospitals where the cost of the PPE kits worn by the medical staff is not equally distributed between all the patients in a ward but only to the insured patients in the ward. There are several items which are not payable by us and have been communicated to the hospitals.”

Take the case of N. Akhter, a 76-year old female who suffered from breathlessness due to Covid-19 infection. Her one-day bill in the intensive care unit of a top South Mumbai hospital was around Rs 33,000. Out of which, the insurer, however, did not pay Rs 5,318 charged for disposable gown, PPE kits, shoe cover and face mask and Rs 600 charged for resident doctor visits. So, the patient has to pay nearly Rs 6,000 per day from her pocket.

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Unhappy with your health insurance policy? Here’s how you can port your cover without losing benefits - Moneycontrol – 13th January 2021

Until 2011, you could do little if you were dissatisfied with your health insurance policy’s features, premiums or your insurer’s claim settlement record. In July 2011, the Insurance Regulatory and Development Authority of India’s (IRDAI) long-awaited health insurance portability norms came into force, giving policyholders the choice to switch insurers. However, it has not exactly taken off the way policyholders and independent insurance experts had hoped for.

Yet, the fact that the option exists is a source of comfort for many. Know more about the working and utility – or lack thereof – of this mechanism.

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What do you mean by portability? Portability allows policyholders to switch from one insurer to another, without losing out on continuity benefits earned in their existing policy. Most policies cover pre-existing diseases – that you contracted before you bought the policy – only after an initial ‘waiting period’ of up to four years. Some senior citizen policies cover pre-existing ailments after one or two years too. Then, there are conditions such as hernia or cataract that are covered in the first policy year.

What are the advantages of porting instead of purchasing a new policy? To understand portability better, let us understand the hurdle of pre-existing illnesses that plays spoilsport in making a successful insurance claim.

When you buy an insurance policy, it doesn’t mean you can make a claim immediately or sometimes even a few years down the line. Why? Because you might be having an illness or a medical condition at the time of buying a health insurance policy. This is called pre-existing illness.

As per IRDAI guidelines, pre-existing diseases can mean any condition, ailment, injury or disease that is diagnosed by a physician within 48 months prior to policy issuance or for which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy or its reinstatement.

Here is where the benefit of portability kicks in. When you port from one policy to another, the waiting period doesn’t start from the scratch. For example, let’s say your policy comes with a waiting period of four years for pre-existing diseases. If you were to switch after, say, three years of holding a policy, your new insurer cannot insist on a waiting period of more than one year. This concept is referred to as the waiting period credit. If your policy is over four years old, your new insurer will have start covering your pre-existing diseases immediately after policy purchase.

On the other hand, if you were to simply buy a new policy by dumping your existing one, your pre-existing diseases will be covered only after you serve the waiting period – ranging from one to four years – all over again. In the case of porting, the insurer will have to offer at least your existing policy’s sum insured. You can opt for a higher sum insured too, but the waiting period credit will not be applicable for this increased amount.

Will the new product’s features and premiums be identical to those of my existing policy? No. The new insurer’s product features, clauses and premiums will be applicable. These terms need to be acceptable to you before you proceed.

When should I look to port my policy? You should consider porting in case you have had a dissatisfactory experience at the time of claim settlement and policy servicing or if your premiums have seen an exorbitant hike. “Or, if you find a better product with another insurer. Parameters for choosing the new insurer will remain the same as the ones applicable for buying fresh policies. Evaluate room rent limits, co-pay and cashless network of hospitals,” says Mahavir Chopra, Founder, Beshak.org, a consumer awareness platform for insurance.

What is the process that I need to follow? Step one is to identify the new insurer you wish to port to, after research on its products, premiums and cashless hospital network. You need to approach your insurer at least 45 days before your renewal due date, expressing your intention to port out. This can be done only closer to the renewal date. You will have to specify the new insurance company you wish to shift to. “Your existing insurer will provide details of the period since when you have maintained the policy, past claims and so on,” says Chopra. Your cover should not have had any gaps in renewals.

Next, you submit your proposal to the new insurer you have zeroed in on, making a request for porting your policy. “You will have to fill up the regular proposal form, along with a portability form, disclosing all health, past policy and claim details. After the underwriting process, which could include medical check-ups, either your request will be rejected or policy issued. Earlier the process was difficult, now everything is digital and simple,” says Amit Chhabra, Head, Health Insurance, and Policybazaar.com. The

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new insurer can obtain your health insurance history through IRDAI’s common web facility with details on health policies issued and will have to take a decision in 15 days. No charges are levied for facilitating portability. If your porting request is rejected, you can continue to stick to your existing insurer.

How easy is it to port to a new policy? The process laid out might be simple, but quite difficult in practice. Senior citizens, who are more likely to have encountered disputes related to claims, rarely find takers among insurance companies, given their advance age and chronic ailments that could necessitate frequent hospitalisation.

Insurers are willing to accept portability requests of young, healthy individuals, but the latter might not feel a compelling need to switch as they are unlikely to have had disturbing claim experiences at that age. “If you are young and healthy, in fact, portability will be quick, seamless and can even be done online in some cases. For senior citizens and those with pre-existing diseases, it’s a challenge as medical underwriting will be stricter. For an insurer, it is a bigger liability as there is no buffer of waiting period which is the case with new policies,” says Chopra. For those who do not boast of a great health status, the process will be as difficult as buying a fresh policy at that stage.

“The insurer’s decision depends on your health status and pre-existing diseases. Underwriting guidelines will be the same as the ones applicable to fresh policies. So, if you have been a diabetic for over ten years, you might find it difficult to port to another insurer. But, that would have been the case if you were to buy a fresh policy too,” says Chhabra.

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Health insurance policies to cover peritoneal dialysis to reduce dialysis burden in India - Pharma Biz - 13th January 2021

To address the increasing number of kidney failure patients in India, the Insurance Regulatory Development Authority of India (IRDAI) has released the much-awaited policy guidelines to include peritoneal dialysis (PD) in the ambit of private insurance coverage.

According to the guidelines, patients taking treatment of PD can make reimbursement claims on a monthly basis through an approved pre-authorization procedure.

The provisions of the new guidelines have been in effect from October 1, 2020. According to Pradhan

Mantri National Dialysis Programme (PMNDP), in India, 2.2 lakh people get affected by end-stage kidney disease (ESKD) who are on dialysis or transplant for treatment. Dialysis becomes the only option for these patients who are waiting for the transplant. There is a demand of 3.4 crore dialysis with only 4,950 dialysis centres approximately in India.

The recent development allows kidney patients to avail the benefits of the home-based and cost-effective PD therapy which can enable both patients and nephrologists to put patients on PD rather than only haemodialysis to aid the kidney failure population in the country. This will also enable both doctors and patients analyze and choose their choice of dialysis treatment based on the patient’s lifestyle. The insurance companies’ long-awaited approval of PD’s inclusion in health insurance plans also comes at an opportune time when the public is cautioned to stay indoors owing to the Covid-19 pandemic and avoid hospital-acquired infections in a healthcare setting.

IRDAI’s decision of including peritoneal dialysis under insurance policies will eliminate the exorbitant expenditure associated with carrying dialysis at home as until now, only the conventional haemodialysis was covered under insurance policy. Around 63 million people on dialysis are pushed in debt due to expenditure related to health. At times patients miss their dialysis as they fear incurring out-of-pocket

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expenses. It is critical to understand that every dialysis session matters when a person is suffering from kidney failure. Patients should not be given a single reason to withdraw from the treatment at any point. Now doctors can prescribe the best therapy method to ensure patients receive best treatment without compromising on quality of life.

Dr. Sunil Prakash, director and head, nephrology and renal transplant service, BLK Super Speciality Hospital, New Delhi said, “IRDAI’s decision of including peritoneal dialysis under insurance policies will eliminate the exorbitant expenditure associated with carrying dialysis at home as until now, only the conventional haemodialysis was covered under insurance policy. Around 63 million people on dialysis are pushed in debt due to expenditure related to health. At times patients miss their dialysis as they fear incurring out-of-pocket expenses. It is critical to understand that every dialysis session matters when a person is suffering from kidney failure. Patients should not be given a single reason to withdraw from the treatment at any point. Now doctors can prescribe the best therapy method to ensure patients receive best treatment without compromising on quality of life.”

Earlier, only haemodialysis was covered by health insurance policies but now, the latest revisions in the health coverage can be proven to be more comprehensive and efficient for the policyholders. PD allows patients to move freely at home and maintain a flexible lifestyle. One can perform the therapy as per convenience without having to worry about visiting a hospital unlike the conventional haemodialysis which demands a patient to visit a hospital 3-4 times a week. PD saves patients multiple clinic visits and is generally more cost effective and scalable as it can be carried out at home and has lower infrastructural requirements.

Despite PD’s potential advantages, its penetration in the country is very poor. According to a report, there were just about 8,500 patients on PD in India in 2019. However, with effective reforms in our healthcare system, such progressive decisions can address challenges pertaining to accessibility and quality healthcare in the country to reach even the vulnerable and the marginalized sections of the society.

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Why Covid survivors are struggling to get health and life insurance – Moneycontrol – 13th January 2021

Madurai resident Annapurni Thevar*, 42, who recovered from Covid-19 in August 2020, has been struggling to buy a health insurance policy ever since. Two insurers turned her away citing their companies’ “underwriting policy”, while two others quoted a premium that was 45-48 percent higher than the market rate. “I disclosed that I had Covid-19 because it is not correct to lie. But insurers have been unwilling to offer a health policy. When doctors have given me a clean bill of health and I haven’t had any health complications, why deny a cover,” she wondered.

Typically, when customers are diagnosed with, say, a lifestyle disease such as diabetes or hypertension after buying an insurance policy, they are merely charged a higher premium at the time of renewal. This premium hike is also not automatic and is based on the past claims experience of the insurer. India is second in the world as far as Covid-19 cases are concerned. Out of the 10.5 million positive cases in the country, 10 million have recovered, but getting an insurance policy has become a challenge for many.

Insurers have tightened their underwriting rules, which means that those who had contracted Covid-19 will either have higher exclusions or pay a hefty premium. Many recovered patients also alleged that they are being denied a policy and want IRDAI to direct insurers to offer covers. “When I was to get my Rs 20 lakh life insurance policy renewed, I was asked to pay Rs 4,800 more in November even as the benefits got reduced. My agent said the higher premium was on account on me being Covid-19 positive. How can I afford this,” asked 44-year-old Ratna Ugale* from Mumbai.

Sources said that the insurance regulator is looking into the matter. Customers are seeking parity in pricing and policy terms.

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Why are insurers shying away? Insurers told Moneycontrol, on condition of anonymity, that the primary reason for stricter underwriting on recovered patients is to ensure that loss ratios stay under control. “We are not outright denying covers to all Covid-19 recovered individuals. It is just that such persons could be at a higher risk of developing lung-related complications. So, as insurers, we are taking a cautious approach,” said the underwriting head at a mid-sized general insurer. Close to 5,30,000 claims worth Rs 8,500 crore have been filed so far with health insurers. This would mean that any lung ailment would be treated as a pre-existing disease due to the Covid-19 strain and the policyholder would have to wait for up to two years to get claims related to this illness.

Similarly, Covid-19 has also been shown to cause long-term muscle pain. Hence, insurers are either excluding muscle ailments from coverage for Covid patients or adding a rider with an additional premium. Kolkata resident Mayur Banerjee*, 36, a regular at marathons, said that since he is prone to muscle injuries, it was essential that his insurance policy cover them. But since he had tested Covid-positive in June 2020, Banerjee was made to opt for a critical illness rider with an additional premium of Rs 3,600 per annum.

“I was told that I am at risk of long-term muscle ailments and hence would be charged a higher premium. I had no option but to buy it,” he said. Banerjee tried to buy a family floater policy in addition, but was denied a cover citing “underwriting policies”. His wife and mother had also tested Covid-positive.

Same story for life covers As for life insurance, those who had tested positive for Covid-19 are either turned away or being asked to pay a higher premium. Chennai-based doctor Satish Raghavendra*, 39, recovered from Covid-19 in September 2020 and was planning to buy a life insurance policy soon after. Four months later, he is disillusioned with the sales process and says insurers are discriminating against those who have recovered from Covid.

“Shouldn’t the insurance regulator step in and mandate companies to offer policies to all customers? Just because I was hospitalised, insurers are not willing to give me a policy. This leaves my family at potential risk,” he added. Raghavendra said that he had checked with seven life insurers of which only two had agreed to offer a policy. However, the list of exclusions in these policies were high and premiums were also 30-45 percent higher than what they charged in the market.

Doctors and other frontline health workers are considered the most high-risk category by insurance companies even as the vaccine rollout is to begin on January 16. For Raghavendra, Banerjee, Thevar and several others who recovered from their battle with Covid, there is now a longer battle to be fought buying insurance.

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Growth in health insurance segment slows as fear of Covid-19 subsides - Business Standard - 12th January 2021

After recording impressive growth in the initial months of the pandemic outbreak, the growth in the health insurance segment of non-life insurers appears to be slowing as the fear of Covid subsides.

“The initial euphoria for health products during the Covid period is dying down now because that was knee-jerk reaction to buy insurance immediately looking at the hospital cost for Covid,” said Gurdeep Singh Batra, head – retail underwriting, Bajaj Allianz General Insurance.

Within health insurance, it was the retail segment that recorded impressive growth. In the April-November period of financial year 2020-21 (FY21), general insurers recorded a 20 per cent growth in retail over the past year, and standalone health insurers saw 44.25 per cent growth, with the industry growing over 30 per cent. However, the government health and foreign medical portfolios have seen massive contraction. As a result, the health segment of the general insurance industry has grown just 13 per cent, with general

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insurers seeing eight per cent growth and standalone insurers 28 per cent growth. “Despite Covid, we have not seen adequate growth in the health insurance segment. This could possibly be because many people lost their employment, hence, they may not have enough income sources to pay insurance premiums,” said MN Sarma, secretary general, General Insurance Council.

“There was a substantial growth in the segment at the onset of Covid, largely driven by fear. As time went by, the fear diminished. People bought covers that were entry-level products and not comprehensive health insurance products,” said Bhabatosh Mishra, director — claims, underwriting, and product, Max Bupa Health Insurance.

The Insurance Regulatory and Development Authority of India (Irdai) had introduced two Covid specific products in the market — Corona Kavach and Corona Rakshak — that saw huge acceptance among the consumers as these products had lower premiums.

“The standardised Corona Kavach policy added to the growth as it was aimed for specific need of Covid treatment. There was a huge demand for this product which drove the growth of health products,” Batra said. Till September 2020, 2.3 million Covid-specific policies were issued, covering 11 million lives, with a sum insured of close to Rs 13 trillion. Senior citizens accounted for about 7 per cent of lives covered under Corona Kavach policy and four per cent of lives covered under Corona Rakshak and other such products. But the growth of these products has also slowed, experts said. Insurers are hopeful that awareness around health insurance will grow, driving growth in the segment.

“I think there will be a new normal now. Part of those consumers who bought covers due to fear will become aware and continue, but not all of them. Time will tell how much of fear gets translated into awareness in the true sense,” Mishra added. There is an expectation that based on the claim experience of insurers, premiums may rise. As of January 4, insurance companies have received about 780,000 Covid claims worth $1.6 billion of which around 600,000 claims worth $795 million have been settled.

The ticket size of claims has remained at Rs 1.52 lakh over the past four months. December saw monthly additions of around 140,000 claims ($312 million) compared to about 130,000 claims ($249 million) in November. “The growth in health insurance segment should continue next year too because the pandemic has not yet ended and we need to see the efficacy of the vaccine and it shall take some time before most of the people are vaccinated”, said Batra.

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What the Health Insurance sector is expecting from Budget 2021 – IIFL – 12th January 2021

The Fiscal Budget is important as is, but in the wake of the ongoing pandemic, it will remain in focus even more. While every sector will keep its eye on it, the Health Insurance sector expects a larger thrust on health reforms.

Kamesh Rao, MD & CEO, Aditya Birla Sun Life Insurance said, "The importance of a safety net, in the form of insurance cover has gained immense prominence, especially in the past one year. Both, Insurance companies as well as policy holders are expecting that the upcoming budget will focus on deepening insurance penetration in the country. One such goal will be to secure one’s life after retirement.

A large population in our country use pension products offered by life insurers to have regular income post retirement to lead a comfortable life. From a social security standpoint, both pension products offered by life insurers and NPS are serving the same cause of building corpus for retirement income.

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While, investment in NPS offers additional tax deductions of Rs50,000 under section 80CCD, life insurer’s pension plans do not enjoy this benefit, making it unattractive for customers.

The budget should announce measures to bring parity between pension products offered by life insurers and NPS. Additionally, life insurers offer annuities as retirement income, for which they generally invest the fund in government securities for long-term guaranteed return, which also plays a significant role in nation-building. Government should increase the supply of long dated (40-50 years) bonds for increased liquidity in the market. It should further develop the corporate bond market, where insurance companies can source long-term, credit worthy or enhanced corporate bonds, and generate better long-term yields for such annuity plans. These measures will not only encourage long-term savings but will also promote capital formation. We are also hopeful to see an expanded bond market. This will generate better yields and thereby help customers to amass greater sum for their retirement and better social security."

Mayank Bathwal, CEO, Aditya Birla Health Insurance said, “Even prior to the global pandemic, health insurance was a growing sector, however, the pandemic has spotlighted the indispensable nature of having a safety net when it comes to healthcare costs. In this situation, it is nifty to have health insurance as every family today faces questions on their preparedness coping with unforeseen and emergency healthcare costs. Given the global focus on health, we anticipate that this year’s union budget will have larger thrust on health reforms.

Our expectation are largely for the Individual Taxpayers, who need a tax impetus. As they are the ones who are investing their hard-earned money for a potential health condition, which sometimes might seem like an extra measure rather than an essential investment. This is prominently because family health insurance premiums versus the tax benefits are skewed. Hence it becomes important to increase the limits defined for mediclaim premium tax deduction under section 80D of the Income Tax Act to Rs 1,00,000/- ( Rs 50,000/- for self & spouse + Rs 50,000/- for Parents). Further allowed dependent relationship should be re-looked. It is also crucial to reintroduce the medical reimbursement with higher limit of Rs50,000/- tax deduction which got merged in standard deduction during finance budget 2018.”

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How technology is transforming the insurance industry in India - Silicon India – 12th January 2021

The insurance industry in India has seen major growth in the last decade. The industry today comprises 63 insurance companies (24 Life insurers and 39 non-life insurers) and is governed by the Insurance Regulatory and Development Authority of India (IRDAI). The industry has transformed from a seller’s market to a buyer’s market over the last two decades. Further, the market in India is expected to grow to $250 billion by 2025. Demographic factors such as growing middle class, young insurable population, and growing awareness of the need for protection and retirement planning will support the growth of Indian Life insurance. The future of the Insurance

industry in India seems quite promising, and the above-mentioned figure prominently reflects the positive disruption caused by the digitalization of the industry.

Transformations Rapid digital adoption in India (est. 829 million internet users by 2021) has created much-needed opportunities and infrastructure for insurance players to reach Indian customers. However, traditional insurers are still struggling with simplifying policy terms, settlement procedures, mutual trust deficits of

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buyers and sellers, and differentiating products that can help customers buy without much confusion. This is where InsurTech players have identified their opportunity. With the onset of InsurTech, the entire insurance buying experience in India has become completely dynamic and covers end-to-end customer journeys with highly customized and relevant services. India has over 110 InsurTech players spread across different sub-segments, such as aggregators, claims management, digital-first insurers, software white label and infrastructure APIs, and IoT. InsurTechs are solving the affordability challenge by innovating small-ticket and low-duration insurance products.

Not just that but today, insurance interactions have become more ‘phygital’ (mix of physical and digital), although increasingly bending more towards the digital side. Insurance companies are exploring options beyond the traditional banking institutions for their insurance requirements and banks are partnering with fintech companies to provide services faster and at a lower cost. This new way of servicing is benefiting insurers as well as banks as they are retaining clientele while consumers are getting better customer services from the fintech companies. Apart from that, the technology advancements have also found their application across different aspects of the insurance business including sales, claims, underwriting, as well as customer service. Leveraging the potential of Artificial Intelligence (AI) and Machine Learning (ML), insurance providers of the current era are offering simplified insurance plans to end consumers, thereby developing higher trust levels with them.

Data-backed underwriting services have enabled insurance companies and insurance web aggregators to offer personalized premium quotes to their consumers. Another way, in which technology has positively impacted the insurance sector is the automation of claim services which has made the claim processing faster and easier for consumers.

Potential Usage of Technology in the Insurance Industry In today’s world, AI and ML have made analytics processes more accurate than before. The AI/ML-backed Insurtech startups can assess the damage and estimate repair costs to analyze and define settlement claims in an automated, efficient and faster manner. For instance, AI algorithms which can automate the entire claim validation process and assess the exterior of a vehicle and share recommendations on the next course of action can help save hundreds of man-hours and millions of dollars which go as claim servicing costs. Such processes are expected to emerge as game-changers of the Indian Insurtech industry. Not just that but the AI-powered chatbot, virtual assistants and digital enablers such as WhatsApp would be future sales faces, focusing on immersive experiences. Many life insurers are experimenting with augmented and virtual reality (AR/VR) to take customers through their future, highlighting the powerful propositions offered by life insurance products.

Insurance penetration in India today is below 4 percent, and this number is low as compared to other parts of the world. This is despite a large population, rising incomes and rapid urbanization of the country which makes it quite conducive for insurance. This makes it an attractive segment for upcoming startups to launch Insurtech services targeted towards setting up a wide distribution channel across the country through a physical model. This digital set up can be operated with remote offices across the country, empowering agents to sell insurance through digital means but at the same time maintaining human interface. Internet of things (IoT) is expected to play a major role in disrupting the insurance space of India. The industry can leverage the wealth of information stored by wearable devices to provide customized insurance products. Usage of the IoT and advanced machine learning algorithms will open up new avenues to distribute products. In the future, several life insurers would partner with companies providing wearable devices.

Bright Future The amalgamation of technology with the insurance industry of India is poised to bring great transformation. It has the potential to play a catalytic role in bridging the insurance gap in India across consumers and businesses and make an impact on the entire ecosystem. The aforementioned advantages and expectations are just the beginning. There are much awaiting. It’s just that we need to prepare our systems to benefit from them.

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Covid survivors, if unfit after 3 months, may not get life cover – The Times of India – 11th January 2021

Covid survivors may face rejection or hurdles for their life insurance proposals if proved unfit after an insurer-imposed, three-month post-infection waiting period. These restrictions are stringent for Covid survivors above the age of 60. In low-risk cases, an additional 20-30 percent premium will be charged to those reporting permanent organ damage.

“Applicants with medical history will be treated differently, like those with co-morbidity. Such people are already treated as sub-standard life categories. In some cases, unfit Covid survivors are treated on a par with those with co-morbidities and charge extra mortality,” said Avdhesh Gupta, appointed actuary of Bajaj Allianz Life. Survivors will also be subject to a Covid questionnaire. Those who travel abroad will see their proposals being accepted a month after landing.

Lakhs of people, who survived Covid-19, are expected to deal with long-term medical issues like heart, kidney and lung damage, especially those who were hospitalised for four weeks or above, after contracting the coronavirus. Aditya Birla Sun Life Insurance’s chief actuarial officer Anil Kumar Singh said: “Such restrictions are placed under the guidance of reinsurers. We do not have the data to assess the risk factor, and hence charge the additional premium.”

“Cost of life insurance cover will be decided after the three-month waiting period and depends on the effect the virus has had on the individual’s health. Additional premium charges are decided based on how many organs are impacted,” said Singh. In case of no complications or long-term effect reported by a Covid survivor, no extra charge will be placed. And if the person has declared with no history of Covid or in contact with those infected, they are assumed to not be infected and treated with no restrictions.”

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Healthcare providers below 55, who died on Covid duty, can claim insurance under PMGKY: Centre to Bombay HC - The Indian Express - 9th January 2021

The Union government on Friday told the Bombay High Court that only those healthcare providers, requisitioned to fight Covid-19, under the age of 55 years and who died on duty were covered under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) insurance package of Rs 50 lakh.

It was responding to a division bench of Justice S J Kathawalla and Justice R I Chagla, which was hearing a plea filed by Navi Mumbai resident Kiran Surgade, seeking a direction to the New India Assurance Company Limited to immediately disburse her claim of Rs 50 lakh under PMGKY.

The woman, in her plea filed through advocate Ajit Karwande, said that her husband, late Bhaskar Surgade, an Ayurveda doctor, used to practice in Navi Mumbai. During the early days of the lockdown, on March 31, last year, he had received a notice from the Navi Mumbai Municipal Corporation commissioner asking him to keep his dispensary open and warning that he will be prosecuted if he did not comply.

Kiran Surgade claimed that her husband had to open his clinic and treat patients, including those infected by Covid-19. He went on to contract the infection, leading to his death on June 10, 2020, the plea said.

Last August, she claimed a compensation of Rs 50 lakh from under PMGKY. However, the insurance company, next month, rejected her claim stating that the doctor was not serving in any hospital or government healthcare centre and thus, was not eligible under the scheme. Following this, the petitioner moved HC.

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Advocate Sandesh Patil, appearing for the Centre, told the court that the insurance policy covers doctors, aged less than 55 years, requisitioned for Covid-19 duty. “He was 56 years old. It is not applicable at all. Also, there was no pleading that he had been requisitioned by a hospital and contracted Covid-19 there,” he added. However, Surgade’s lawyer submitted that the scheme did not differentiate between “public” or private doctors.

After hearing submissions, the bench asked the Centre to obtain data from insurance companies on how many claims were received from the relatives of private doctors, who had opened their clinics during the pandemic, treated patients and then succumbed to Covid-19. Seeking a short affidavit in reply from the Centre by January 11, the court posted the matter for hearing on January 13.

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Income Tax Return: Visiting 80D page is a must even if you don’t have health insurance - Financial Express – 9th January 2021

With just a day left to file the Income Tax Return (ITR) for the Assessment Year (AY) 2020-21 before the due date gets over on January 10, 2021, unless extended, the assessees – whose income needn’t be audited – are in a hurry to file their return of income. However, there are some issues that the assessees need to keep in their mind to complete the filing issues smoothly.

One of the issues is the page containing declaration of health insurance premium and/or expenses made on preventive health checkup and/or cost of treatment u/s 80D of the Income Tax Act.

For Individuals below 60 years of age The first component u/s 80D is the health insurance premium, where, presently, an individual may claim deduction up to Rs 25,000 in a year for self and family of below 60 years of age. Such an individual may also claim deduction up to Rs 5,000 on preventive health checkup within the overall limit of Rs 25,000.

In such a case, you have to select ‘No’ against the question – “Whether you or any of your family member (excluding parents) is a senior citizen?” In case no deduction is claimed, you have to select, ‘Not claimed for self/family’, against the question.

For Senior Citizens On the other hand, the deduction limit u/s 80D is Rs 50,000 for senior citizens, which may be claimed on payment of health insurance premium or on expenses for medical treatment, including cost of medicines, in case no insurance is there. Senior citizen individuals may also claim deductions on preventive health checkup within the overall limit of Rs 50,000.

In such a case, you have to select ‘Yes’ against the questions – “Whether you or any of your family member (excluding parents) is a senior citizen?”

For Assessees and Parents below 60 years of age In case an assessee has incurred the expenses allowed as deductions u/s 80D for his/her parents, he/she may also claim deductions for the same along with deductions for self and family.

In case, none of the family members and parents are senior citizens, total deductions allowed u/s 80D on expenses made for self and family and for parents are up to Rs 50,000 – i.e. up to Rs 25,000 for self and family and up to Rs 25,000 for non-senior citizen parents.

In such a case, you have to select ‘No’ against both the questions – “Whether you or any of your family member (excluding parents) is a senior citizen?” and “Whether any one of your parents is a senior citizen?”

For Individuals below 60 years and Senior Citizen Parents Similarly, if expenses are made on self and family with no senior citizen member and on senior citizen parents, total deductions may be claimed u/s 80D is up to Rs 75,000, i.e. up to Rs 25,000 for self and family and up to Rs 50,000 for senior citizen parents.

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In such a case, you have to select ‘No’ against the question – “Whether you or any of your family member (excluding parents) is a senior citizen?” and ‘Yes’ against the question “Whether any one of your parents is a senior citizen?”

For Senior Citizen Individuals and Parents On the other hand, in case expenses are made on self and family having senior citizen members and on senior citizen parents, total deductions may be claimed u/s 80D is up to Rs 1 lakh, i.e. up to Rs 50,000 for self and family and up to Rs 50,000 for senior citizen parents.

In such a case, you have to select ‘Yes’ against both the questions – “Whether you or any of your family member (excluding parents) is a senior citizen?” and “Whether any one of your parents is a senior citizen?”

When No Deduction is Claimed However, in case you are not claiming any deductions u/s 80D for self/family or for parents or for none, you still have to visit the 80D page to declare that you are not going to claim any deductions, else you won’t be able to submit your ITR.

In case no deduction is claimed, you have to select, ‘Not claimed for self/family’ and/or ‘Not claiming for parents’, against the questions respectively.

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MOTOR INSURANCE

Delhi HC forms panel headed by judge to monitor motor accident claims - The Indian Express – 15th January 2021

THE DELHI High Court has constituted a special committee, to be headed by a judge of the court, to supervise the implementation of a scheme formulated by it for Motor Accident Claims. Under the scheme, the investigating officer (IO) is required to send a First Accident Report (FAR) regarding any road accident to the Claims Tribunal and insurance company within 48 hours. It has also directed Delhi Police to set up a monitoring cell in four weeks for implementation of the scheme and upload the FARs on its website.

“India has a dubious distinction of having the highest number of road accidents,” said Justice J R

Midha in a ruling regarding motor accident compensation, adding that road safety was an important issue of national concern. In 2009, the court had formulated the Claims Tribunal Agreed Procedure for time-bound settlement of motor accident claims within 90-120 days and later directed Delhi Police to prepare an Accident Investigation Manual and implement a Detailed Accident Report (DAR) procedure on the same lines as is being done in Tamil Nadu.

As per Justice Midha’s order, the committee meant to supervise the scheme will be headed by a sitting or former HC judge, will have member secretary, DSLSA, as convenor and will include a Special Commissioner of Police, an Additional Secretary in the Ministry of Road Transport and Highways, and Secretary General of the General Insurance Council as its members. Delhi Police and insurance companies are required to file monthly compliance reports before the committee starting from April 2021.

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The court has also directed the road transport ministry to consider the scheme at the time of framing of rules regarding the Accident Information Report. It has also directed Delhi Government to consider amending the Delhi Motor Accident Claims Tribunal Rules, 2008, to incorporate the scheme.

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Motor insurance policies to not get deadline extension from government - The Indian Wire – 12th January 2021

Amid the ongoing Corona pandemic, Central Govt. has advised state governments to extend the validity of all vehicle-related documents up to December 31, 2020. However, the order doesn’t apply to the motor insurance policies. Ministry of Road Transport and Highways’ letter of 24th August 2020 advised State Governments that in case the validity of fitness certificates, permits, driving licences, and registration certificates pertaining to vehicles have expired on or after 1st February 2020 and not extended due to the lockdown, such certificates may be treated as valid until December 31, 2020.

The documents which are now valid till the end of 2020 include driving license, vehicle registration and fitness certificate, pollution under control (PUC) certificate, etc. However, according to the General Insurance Council, this extension of validity does not apply to the car insurance policy. It is hereby clarified to all policyholders that the letter issued by MoRTH does not include car and Two Wheeler Insurance policies, which needs to be renewed as per the renewal date. All vehicle owners are advised to get their insurance policies renewed on or before the due date of renewal for continued validity of the insurance policies,” the GIC said in a note.

According to a report, General Insurance Council (a representative body of insurance companies formed by Insurance Act 1938) said that vehicle insurance policies, especially own-damage cover, need to be renewed timely as they are not covered under the extension announced by the government of India in August 2020. The pandemic has hit many sectors worldwide and non-life insurance sector has been hit particularly hard reporting a 5.55 per cent decline in gross premium income at Rs 22,774.60 crore during the month of September, according to IRDAI data. Public sector insurers witnessed a 6.08 per cent fall in gross premium collection at Rs 10,959.88 crore in September this year, while the private players reported a 5.04 per cent fall in premium at Rs 11,814.71 crore.

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CROP INSURANCE

Crop insurance to cover damage by wild animals – The Times of India – 14th January 2021

Farmers facing damage to their crops due to attack by wild animals can now file for claim under the central flagship crop insurance scheme. The participating states will have to notify add-on coverage under the Pradhan Mantri Fasal Bima Yojana (PMFBY) for such crop loss which can be assessed at individual farm level in a village or panchayat. The National Board of Wildlife (NBWL) — apex body which takes a call on development projects in and around conservation areas including national parks and sanctuaries —had in its standing committee meeting on January 5 approved an advisory for management of human-wildlife conflict (HWC) in the country, providing

for states to utilise “add-on coverage under the PMFBY for crop compensation against crop damage due to HWC”. Though the agriculture ministry has given this choice to the states to consider providing add–on coverage under PMFBY, all vulnerable states did not opt for the provision.

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This even as at least 10 of them invariably report crop damage due to attack by wild animals. “Under the advisory, approved by the NBWL, all 27 participating states of the PMFBY will now have to compulsorily notify the add-on provision,” said an official, referring to the approval of the HWC management advisory, on Wednesday when the central flagship crop insurance scheme completed its five year. Besides adopting area approach for wide-spread calamities like drought, flood etc., which affect large areas, the scheme also envisages coverage of localised risks such as hailstorm, landslide, inundation, natural fire and cloud burst and post-harvest losses due to cyclonic rains, unseasonal rains and hailstorm, which affects comparatively smaller areas/plots and assessment of crop losses is made on individual farm level.

“The scheme is a milestone crop insurance scheme covering full crop cycle against the losses occurring due to non-preventable natural risk. A total of Rs. 90,000 crore (against Rs 19,912 crore of farmers’ share in premium) have been paid as claims to farmers till now. In fact, the scheme was fully operational during the Covid-19 lockdown, distributing claims of over Rs 8,741 crore to 69.70 lakh farmers across India, which is highly commendable,” said agriculture minister Narendra Singh Tomar while interacting with stakeholders across the country via video conferencing on the occasion of completion of five years of the PMFBY.

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Pradhan Mantri Fasal Bima Yojana completes 5 years of operation; govt urges farmers to take benefit of scheme - The Economic Times – 12th January 2021

The Centre on Tuesday urged the farming community to take advantage of the Pradhan Mantri Fasal Bima Yojana (PMFBY), which has completed 5 years, in order to become "self-reliant farmers". In a statement, the Union agriculture ministry said claims worth Rs 90,000 crore have so far been disbursed to farmers since the launch of the scheme on January 13, 2016.

Even during the COVID-19 lockdown period, nearly 70 lakh farmers benefitted and claims worth Rs 8,741.30 crore were transferred to the beneficiaries, it added. "The Government of India urges farmers to take advantage of the scheme by associating themselves to become self-sufficient in times of crisis and support the creation of an Aatma Nirbhar Kisan," the ministry said.

The Centre is committed towards protecting the interests of the farmers, it said. According to the ministry, the scheme covers over 5.5 crore farmer applications year-on-year. The Aadhar seeding has helped in speedy claim settlement directly into the farmer accounts. The scheme was made voluntary for all farmers, after its revamp in February 2020. Further, the states have also been provided flexibility to rationalise the sum insured so that adequate benefit can be availed by farmers, it said.

The PMFBY was conceived as a milestone initiative to provide a comprehensive risk solution at the lowest uniform premium across the country for farmers. Under the scheme, premium cost over and above the farmer share is equally subsidised by states and the central government. However, the Centre's share is 90 per cent of the premium subsidy for north eastern states to promote the uptake in the region.

The average sum insured per hectare has increased from Rs 15,100 during the pre-PMFBY schemes to Rs 40,700 under PMFBY. As an end-to-end risk mitigation mechanism for farmers, the scheme extends coverage for the entire cropping cycle from pre-sowing to post-harvest, including coverage for losses arising out of prevented sowing and mid-season adversities.

Individual farm-level losses arising out of localised calamities and post-harvest losses are also covered due to perils such as inundation, cloudburst and natural fire. Further, the ministry said some notable examples of these crop insurance covers are prevented sowing claims over Rs 500 crore in Andhra Pradesh and Karnataka during the kharif 2019 dry spell, and localised calamity claims of over Rs 100 crore in Haryana during kharif 2018 hailstorm.

Claims to the tune of Rs 5,000 crore in Maharashtra during the kharif 2019 unseasonal rainfall and mid-season adversity claims of nearly Rs 30 crore in Rajasthan during rabi 2019-20 locust attack are also another examples. Integration of land records with the PMFBY portal, crop insurance mobile app for easy enrolment of farmers and usage of technology such as satellite imagery, remote-sensing technology,

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drones, artificial intelligence and machine learning to assess crop losses are some of the key features of the scheme. The scheme makes it easier for the farmer to report crop loss within 72 hours of occurrence of any event through the crop insurance app, common service centre or the nearest agriculture officer, it added.

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SURVEY & REPORTS

Study says 65% of respondents keen on buying insurance online – Live Mint – 14th January 2021

Supportive government policies and a covid-enforced spike in digital activity are pushing consumers, and their insurance needs, online, says a Swiss Re study released on 13 January. The survey results underline Indian consumers’ extensive use of digital platforms and their preference to purchase insurance through them.

However, traditional channels, such as agents, brokers or insurance aggregators are still the primary channels for insurance-related information searches in India.

“Around 65% of Indian respondents are likely to use digital channels such as e-wallets, bank or insurance

websites and e-commerce platforms to purchase insurance in the future, indicating there is potential for primary insurers to move their offerings online and engage new digital consumers," said the study titled "Going Digital–Insights to Optimize Consumer Appetite for Online Insurance". According to the reinsurance major, the growing presence of e-commerce and digital wallet apps presents opportunities for innovative partnerships between insurers and digital platforms to bridge the $369 billion health protection gap in India.

“Health and safety measures intended for curbing the spread of covid-19 have now driven a clear paradigm shift towards digitalization in the post-virus era," said Hadi Riachi, market head, Swiss Re India. “With an increasing number of digital platforms extending their business reach into financial services, insurers need to adapt their business models to become more relevant and responsive to the latest customer needs," he added.

Swiss surveyed 1,800 consumers in India, Indonesia, and Malaysia in June 2020 to understand their attitudes toward digital platforms and perceptions of buying insurance online. Respondents were household decision-makers aged between 18 and 65 and had used digital platforms at least once within three to six months prior to being surveyed. The survey results indicate that digital platforms have a high penetration rate in India, with an average of 90% using these channels at least once a week. Among the different types of digital platforms, consumers in India indicated a stronger preference for purchasing insurance through payment or digital wallet and e-commerce platforms.

However, respondents also expressed various concerns when buying insurance online. Around 45% of Indian respondents found it hard to decide on the best product while 37% said there is no agent to help explain the terms. “The results reveal that while digital insurance is becoming more popular, offline support is still necessary due to the need for guidance and assistance for certain products. It is important for insurers to adopt an omni-channel approach to complement online customer journey with personal assistance to address consumer concerns," said Hadi.

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The survey illustrates that insurers should personalize their digital offerings to drive uptake. According to the survey, the majority of the respondents (69%) are willing to share some form of personal data for a more relevant experience. Around 20% are willing to share such information only when there is a premium discount.

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Insurance purchases in India shifting rapidly to online modes: Swiss Re - Financial Express – 13th January 2021

The coronavirus pandemic is accelerating the use of digital platforms in India, offering insurance companies a vital new pathway to connect with and serve customers. Consumer surveys and sales data this year show that the pandemic has rapidly raised public awareness about both health risk and insurance in India – and insurance purchases are shifting rapidly to online modes, reveals the latest Swiss Re study.

According to the study, supportive government policies and a COVID-enforced spike in digital activity are pushing consumers – and their insurance needs – online. The growing presence of e-commerce and digital wallet apps presents opportunities for innovative partnerships between insurers and digital platforms to bridge the $369-billion health protection gap in India.

The survey results underline Indian consumers’ extensive use of digital platforms and their preference to purchase insurance through them. Around 65% of Indian respondents are likely to use digital channels such as e-wallets, bank or insurance websites and e-commerce platforms to purchase insurance in the future, indicating there is potential for primary insurers to move their offerings online and engage new digital consumers.

The Swiss Re Institute study, titled “Going Digital – Insights to Optimise Consumer Appetite for Online Insurance”, surveyed 1,800 consumers in India, Indonesia and Malaysia in June 2020 to understand their attitudes toward digital platforms and perceptions of buying insurance online. The survey also tested their acceptance of selecting and purchasing six life and health insurance products tailored to fit digital

platforms. The three Asian economies represent a combined population of over 1.5 billion people, with a burgeoning middle class increasingly dependent on technology and connectivity to drive their decision making.

Survey respondents were household decision-makers aged

between18 and 65 and had used digital platforms at least once within three to six months prior to being surveyed. These digital platforms include e-commerce apps/websites, payment/ digital wallet apps, health-tracking apps, connected commuter platforms, among others.

“Health and safety measures intended for curbing the spread of COVID-19 have now driven a clear paradigm shift towards digitalisation in the post-virus era,” said Hadi Riachi, Market Head, Swiss Re India, adding, “With an increasing number of digital platforms extending their business reach into financial services, insurers need to adapt their business models to become more relevant and responsive to the latest customer needs.”

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“There is also an opportunity to reduce the digital divide by adding more 3G, 4G and even 5G connectivity across India to change consumer behaviour, and this includes how they purchase insurance. Three quarters of rural India have mobile phone connectivity, according to an Indian government survey last year,” said Hadi. “We have the opportunity to leverage technology to make insurance more accessible to those underserved in our society, helping them and their families to reduce their health protection gap.”

Increasing receptiveness to buy insurance digitally The survey results indicate that digital platforms have high penetration rate in India, with an average of 90% using these channels at least once a week. Among them, digital payment apps such as Paytm are most popular, used by 85% of Indian respondents at least once a week, closely followed by health-tracking apps (84%), e-commerce apps and websites (76%) and connected commuter platforms (69%).

Digital wallet and e-commerce apps are most suitable for online insurance distribution There is also a growing trend in seeking insurance information and buying insurance digitally. Traditional channels, such as agents, brokers or insurance aggregators are still the primary channels for insurance-related information searches in India. However, 65% of respondents in India expressed interest in using online channels to purchase insurance.

Among the different types of digital platforms, consumers in India indicated a stronger preference towards purchasing insurance through payment/digital wallet and e-commerce platforms. This preference is driven by the respondents’ trust in the platforms where payment/digital wallet apps were rated as most credible, followed by bank and insurer website or apps, and e-commerce platforms.

Combining online and offline customer support will be key When respondents were asked why they want to purchase insurance digitally, ease of application and getting the best premium rates are the top reasons across three markets. However, respondents also expressed various concerns when buying insurance online. 45% of Indian respondents find it hard to decide on the best product while 37% said there is no agent to help explain the terms. “Our survey results reveal that while digital insurance is becoming more popular, offline support is still necessary due to the need for guidance and assistance for certain products. It is important for insurers to adopt an omni-channel approach to complement online customer journey with personal assistance to address consumer concerns.” said Hadi.

Strong preference for simpler critical illness and medical reimbursement insurance on digital platforms The survey tested six hypothetical life and health products to gauge consumer interest in insurance offered through different digital channels. They include medical reimbursement insurance, cancer reimbursement insurance (to cover cancer-related medical expenses), critical illness pay-per-use insurance, cancer insurance (pays a lump sum upon cancer diagnosis), hospitalisation cash – parametric haze/ smog protection and income protection for gig workers. The results show that Indian consumers (nearly 80%) are strongly inclined to purchase hospitalisation cash and critical illness pay-per-use insurance through digital platforms, but the other four products also have relatively high levels (over 70%) of interest.

Opportunities for insurers and digital platforms to leverage insurance solutions The survey illustrates partnership opportunities between insurers and digital platforms that will benefit the entire insurance value chain and unlock demand from new insurable risk pools. Partnering and working with digital platforms and ecosystems will give insurers access to millions of consumers that are often under-protected. Insurers should leverage data collected from the platforms, such as health tracking apps, for personalised wellness programmes and a more holistic risk assessment by incorporating lifestyle factors like physical activity and sleep. This could transform life and health insurance, where risks evolve over time and individual behaviours influence health outcomes.

Meanwhile, digital platforms can benefit from business diversification and stronger customer loyalty by offering financial services online. Partnerships across industries can also offer digital platform expertise in different domains at low cost of failure and minimal risk to their mainstream offerings.

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INSURANCE CASES

Insurance firm penalised for repudiating claim - The Tribune – 14th January 2021

The District Consumer Disputes Redressal Forum has directed an insurance firm to pay Rs 3,82,315 to a resident for repudiating a policy claim. Friends Cold Storage through its partner, Ramanjit Singh Bedi, had registered a case against Future Generali India Insurance Company Limited. The complainant had reportedly insured his car from the insurance company on January 23, 2014 to January 22, 2015 and paid a premium of Rs 32,084. Meanwhile, the car met with an accident on December 12, 2014. Intimation regarding the accident was given to the company four days later.

However, it was further alleged that the insurance company wrongly repudiated the claim of the complainant on the ground that the vehicle was not registered with the Transport Authorities at the time of accident and its temporary registration certificate also expired. But at the time of issuance of insurance policy it was made specifically cleared to the company that the vehicle was not registered and the temporary registration certificate had also expired, however, they received the premium amount and issued the policy. The car was kept at Kosmo Automobiles to assess the damage.

In the meantime, the car was registered with the Transport Department on February 7, 2015, but the company wrongly again repudiated the claim. After that the complainant served a legal notice to the opposite parties to lift the salvage from Kosmo Automobiles at the earliest and to make the payment of the claim amount but to no avail. The complainant after the expiry period of the notice sold the salvage for Rs 2.5 lakh as the same was deteriorating and Kosmo Automobiles was charging parking fees.

“The car was insured with the insurance firm for the sum of Rs 8, 60,000 and it was liable to pay a sum of Rs 9, 57,000 i.e. the insured value of the vehicle in question along with interest from the delayed payment at the rate of 15 per cent per annum”, the complainant said. Whereas, upon receiving the notice of the complainant, the opposite parties filed a written reply taking preliminary objections, and stated, as per Section 39 of the Motor Vehicle Act, no person should drive any such vehicle in any public place. Hence, Sunil Chawla surveyor and loss assessor of the insurance company informed the complainant through a letter that the claim was not payable as per terms and conditions of the insurance policy. Chawla assessed the loss to the tune of Rs 6, 32,315.

Subsequently, consumer forum president Kuljit Singh and member Jyotsa after hearing arguments of both the parties concluded that, while it was an admitted fact that at the time of issuance of insurance policy the complainant was not having registration certificate of the vehicle and temporary registration certificate of the vehicle was also expired, but even then the opposite parties received the premium amount from the complainant and also issued an insurance policy.

Citing a National Commission order, the forum stated that since the insurance company had received the insurance premium and there was no violation of any specific condition in the insurance policy, the insurance company was liable to indemnify the insured amount for the loss suffered by the insured.

“Though plying a vehicle on road without registration is a violation of provisions of the Motor Vehicle Act, the competent authority to take action against a non-registered vehicle. The insurance company after accepting the premium, cannot escape from its liability and repudiate the claim on this technical ground”, reads the order.

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Consumer authority writes to RBI, IRDA to look into complaints against insurers over failed transactions – The Times of India – 10th January 2021

The Central Consumer Protection Authority (CCPA) has written to the Reserve Bank of India (RBI) and the insurance regulator, IRDA to look into complaints of failed transactions but money not reversed, delay in crediting the amount and inordinate time taken in processing of insurance claims.

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It has urged the IRDA to take up the issue of addressing consumer grievances with the insurance companies and direct them to adhere to the timelines stipulated in the IRDAI Protection of Policyholders’ Interest Regulations, 2017.

The CCPA wrote to the IRDA and RBI recently after analysing consumer grievances received in the National Consumer Helpline (NCH), which is being run by the consumer affairs department. The CCPA analysed complaints lodged between April and December 20.

The NCH data show that out of 6,018 grievances registered relating to the insurance sector, nearly 1,200 pertained to delay in getting the claim amount. “You may agree that the two most important factors that influence consumer satisfaction in the insurance sector - aside from the perceived fairness of the settlement itself - are the speed and transparency of the claims process,” CCPA chief commissioner, Nidhi Khare wrote to IRDA chairman, S C Khuntia. She said the insurance companies should adhere to the timelines.

Similarly, the NCH has received 2,850 complaints relating to delay in crediting money deducted in case of failed transactions during these nine months.

The CCPA has written to RBI deputy governor M K Jain highlighting that a number of grievances have been received pertaining to failed or cancelled transactions and money not refunded during the prescribed period. “While using inter-banking services by the consumers such as IMPS and UPI, transactions failed, but not not revered or transferred, although money deducted from the bank or wallet account of the consumers. Although banks are crediting the amount into the consumer’s or beneficiary’s accounts, it’s not being done in the prescribed timeline as directed in the RBI guidelines.”

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PENSION

Annuity should be tax-free for seniors: PFRDA chief – Live Mint – 14th January 2021

The Pension Fund Regulatory and Development Authority (PFRDA) has proposed to the government to make annuity or pension plans fully or partially tax-free for senior citizens in the upcoming budget. Although the commuted pension (lump sum) received from the National Pension System (NPS) by senior citizens is tax-exempt, they still need to pay tax on annuity or pension received on a monthly or yearly basis, and said PFRDA chairman Supratim Bandyopadhyay, in an interview with Mint.

Normally, the annuity or pension received from NPS (the uncommuted portion) or any other pension scheme is fully taxable. “After retirement, annuity becomes one of the important sources of income for senior citizens and it becomes difficult for them to create additional wealth as annuities get taxed as per the tax slab they fall in," said the chairman. Creating additional wealth after retirement is a big challenge for senior citizens, who still need regular income to meet their household expenses. They have several investments options to choose from, but not all of them provide regular interest payments on the deposits. The interest income from the ones that provide it regularly is, typically, taxable in their hands.

“We have also proposed a 14% contribution by employers to be made tax-free for all NPS subscribers. So, we are requesting the government to give it to all the employers, on a par, whether it is state government or other organizations, so that subscribers across the board can get this benefit equally," he said.

When the employer contributes towards the employee’s NPS Tier-I account, it is eligible for tax deduction under Section 80CCD (2) of the Income-tax Act. For central government employees, the employer contribution is 14% of the salary (basic plus dearness allowance) and 10% for others. This means that the contribution made by the employer is allowed as a deduction under Section 80CCD (2) while computing the total income of the employee. However, the amount of deduction can’t exceed 14% of the salary in case of central government employees and 10% in case of private or state government employees. This creates a disparity between central government and state government and private sector employees, which the PFRDA proposals seek to fix.

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Keeping in view the wider interest of the subscribers, steps are also being taken to widen the NPS base. “When a person retires, he/she has too many responsibilities. For example, he may need money to buy a home, for child’s wedding or higher education. Then the retirement funds he/she gets may not suffice the need as the person will also have to plan for getting regular income. We want people to plan for regular income via NPS from today so that they can get regular pension and fulfil other goals after retirement easily," said the PFRDA chairman.

Despite huge market volatility, the assets under management (AUM) for NPS saw decent growth by the end of December 2020. In March 2020, the AUM was ₹4, 17,479 crore, which swelled to ₹5, 48,913 crore at the end of December 2020. “At the end of the calendar year 2020, we saw decent and steady growth in NPS in terms of numbers. On average, we have seen 11-12% growth in overall NPS subscribers. In terms of contribution (AUM), we have seen a growth of around 31.5%," said Bandyopadhyay. The PFRDA chairman said pending issues like introducing flexible annuities and systematic withdrawal plan is being taken into consideration to provide better facilities to NPS subscribers in the near future.

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Pension regulator pitches for tax incentives in upcoming Budget 2021 - Business Standard – 12th January 2021

The Ministry of Finance has received suggestions from financial sector regulators in the run-up to the Budget. While the pension fund regulator has sought to increase the income tax deduction by Rs 50,000 per person under the new pension scheme, the GIFT city regulator has pitched for easing investment by non-resident Indians. The Pension Fund Regulatory and Development Authority (PFRDA) is of view that increasing the threshold for availing of income tax deduction to Rs 1 lakh from the existing Rs 50,000 under the new pension system (NPS) would encourage more people to participate.

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National Pension System: Now, you can exit NPS via online mode - Financial Express – 11th January 2021

In order to make the exit process from the National Pension System (NPS) easy, the Pension Fund Regulatory and Development Authority of India (PFRDA) has now enabled the online mode. Subscribers can initiate the exit request in the Central Record Keeping Agency (CRA) system using login credentials and provide the relevant details of exit: corpus allocation for lump sum and annuity, Annuity Service Provider (ASP) and annuity scheme and upload the withdrawal documents including KYC. The online submission will be further authenticated through either OTP or e-sign to make the process seamless.

Paperless exit At present, to exit from NPS subscribers have to physically approach their Points of Presence (POPs) to complete their withdrawal request process and the task is performed offline. The subscribers are required to submit the NPS withdrawal forms along with the other supporting documents for authorisation by the Pop.

The PoP will identify the bank account number of the subscriber by ‘Instant Bank Account Verification’ through penny drop and also verify the uploaded documents. For successful processing of online/offline withdrawal request of NPS subscribers, subscribers will have to pay PoPs a fee of 0.125% of the corpus with a minimum amount of Rs 125 and maximum of Rs 500.

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A subscriber will have to initiate online the exit request by logging on to the CRA system using his credentials. At the time of initiation of request, messages about e-Sign/OTP authentication, authorisation of request by PoP will be displayed. The subscriber will then have to earmark the corpus for lump sum/ annuity, nomination details, etc., as per regulations. The subscriber will have to mandatory upload the scanned images of the relevant withdrawal documents along with the KYC. Once these are done, the subscriber will authenticate the request through OTP which will be sent to the subscriber’s registered mobile number and registered e-mail Id. However, if these details are incomplete or incorrect, then the subscriber will have to update the mobile number and email ID through the associated PoP /login before initiating the request.

After successful submission of an online exit request by the subscriber, the exit request along with scanned documents will be with the associated PoP in their CRA login. The PoP will then verify the bank account and match the beneficiary details. On authorisation of request by the PoP, the request for exit will get executed in the CRA system. Also, the uploaded withdrawal and KYC documents will be made available to ASPs online for processing annuity. The regulator has advised CRAs and PoPs to develop the required technical functionalities in a time bound manner for the benefit of the subscribers.

Digital initiatives The regulator has taken a lot of digital initiatives for on-boarding, contributions and servicing. In order to make onboarding to the National Pension System (NPS) simple, faster and cost-effective, the Pension Fund Regulatory and Development Authority (PFRDA) has allowed registered intermediaries to use Video-based Customer Identification Process (VCIP). The subscriber’s verification can be done without the physical presence before the PoP. The VCIP will not only help in expanding the reach of NPS as the account opening will be paperless, it will also help in speedy account closure and any service request related to NPS.

The pension regulator had introduced OTP-based authentication for paperless on boarding in June 2019. Customers of bank-PoPs who open a NPS account through internet banking of the respective banks can authenticate using OTP via registered mobile number or by e-signature. The regulator has also introduced Aadhar-based offline paperless KYC verification process for NPS on boarding.

It launched D-Remit (Direct Remittance) for voluntary contribution through net banking by creating a Static Virtual ID linked to their permanent retirement account number (PRAN). Subscribers get the same day NAV if the contribution is made through this mode before 8.30 AM on any bank working day. The minimum amount contributed through D-Remit is `500 for both Tier I and Tier II accounts. A subscriber can set up systematic investment through auto debit instructions in net banking by which periodical and regular contributions can be made in the NPS account.

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Provident Fund 2021: Special Deposit Scheme interest rate for Non-Government PF, Gratuity Funds notified - Financial Express - 8th January 2021

The Central Government has kept the interest rate on Special Deposit Scheme for Non-Government Provident Superannuation, Gratuity Funds unchanged. In a Gazette notification dated 6th January 2021, the Department of Economic Affairs, Ministry of Finance, announced 7.1 per cent interest rate on these funds from 01-01-2021. The interest rate will be in effect till 31-03-2021.

“It is hereby notified that the deposits made under the Special Deposit Scheme for Non-Government Provident, Superannuation and Gratuity Funds, announced in the Ministry of Finance (Department of Economic Affairs) Notification No.F.16(1)-PD/75 dated 30th June, 1975, shall with effect from 1st January, 2021 to 31st March, 2021 bear interest at 7.1% (seven point one percent). This rate will be in force w.e.f. 1st January, 2021,” the notification said.

The interest rate on these funds was 7.1%. In a previous notification in July 2020, the interest rate for deposits under the special scheme was kept at 7.1 per cent. Launched on July 1, 1975, Special Deposit

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Scheme aims to provide better returns to non-government provident funds, gratuity and superannuation funds.

General Provident Fund interest rate For the January-March quarter, the interest rate on General Provident Fund has also been kept at 7.1 per cent w.e.f. 1st January 2021. “It is announced for general information that during the year 2020-2021, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 7.1% (Seven point one per cent) w.e.f. 1st January 2021 to 31st March, 2021. This rate will be in force w.e.f. 1st January 2021,” an official notification said.

The funds for which this interest rate will apply include General Provident Fund (Central Services), Contributory Provident Fund (India), All India Services Provident Fund, State Railway Provident Fund, General Provident Fund (Defence Services), Indian Ordnance Department Provident Fund, Indian Ordnance Factories Workmen’s Provident Fund, Indian Naval Dockyard Workmen’s Provident Fund, Defence Services Officers Provident Fund and Armed Forces Personnel Provident Fund.

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Higher income tax deduction on NPS likely for private sector employees – Live Mint – 8th January 2021

In the Budget 2021, tax experts expect the government to fix some anomalies in the NPS with regard to income tax benefits. They say that this will help in increasing the attractiveness of the National Pension Scheme. "For contribution towards Tier I account up to 14% of the employer’s contribution is permitted for central government employees but when it comes to other employees maximum up to 10% of the contribution from employer is eligible for deduction under Section 80CCD(2). The government should introduce amendments to take care of these anomalies to make the scheme just and fair for each category of subscribers," said Balwant Jain, an investment and tax expert.

Under the current income tax laws, if an employer is contributing towards the employee's NPS account, a deduction up to a certain percentage of salary (basic + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2). For central government employees, it is 14% of salary and for others, the limit is 10%. There is also an expectation to increase the quantum of exemption for employer contribution from 10% of salary to 14% on the lines of what is being provided to government employees, says Saraswathi Kasturirangan, partner at Deloitte.

There are many other anomalies in the NPS scheme which the government should work on in the budget to be presented on 1st February, said Balwant Jain.

"The government should immediately bring in clarity about taxation of withdrawals from Tier II account of NPS so that the subscriber is not left at the discretion of the assessing officer. The withdrawals from Tier I are tax-free and the balance 40% has to be used to buying an annuity. But there is no provision about how the withdrawals from Tier II account should be taxed since these are not the mutual fund products for which there exist exact rules. Complete clarity will go a long way in clearing the clouds around tier II account taxation," he said.

"For contribution towards tier II account only the Central Government employees are allowed to claim deduction under Section 80 C with a lock-in period of three years. The same option is not available to other subscribers," he added. Currently, a central government employee's contribution towards Tier-II account of NPS for availing income tax deduction (up to ₹1.5 lakh) per year will have a lock-in period of 3 years.

"All the eligible subscribers should be allowed the benefit of tax benefit towards Tier II account especially when this offers less risky option where subscriber can opt for a debt portion of 100% making it less risky as compared to other product available of the same time tenure i.e. ELSS or Equity Linked Savings Schemes," he said.

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Mr Jain also says that the government should bring in parity between tax treatment of employee provident fund and NPS at the time of maturity. "The maturity proceeds of EPF are fully tax-free and the subscriber is free to invest the money the way he wishes. However, the NPS subscriber can only withdraw upto 60% of the accumulated balance in his NPS account at the time of retirement and for the balance he has to mandatorily buy an annuity from any life insurance company registered with IRDA," he added.

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IRDAI CIRCULARS

List of web aggregators is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo2337&flag=1

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List of insurance marketing firms is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo2744&flag=1

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The data for calculation of motor tp obligations for the FY 2020-21 is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3646&flag=1 __________________________________________________________________________________________________________________________________________________

The circular regarding communication on settlement of health insurance claims against General Insurance Council’s instructions dated 20th June 2020 on “Reference Rates for COVID-19” is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4338&flag=1 __________________________________________________________________________________________________________________________________________________

Gross direct premium underwritten for and up to the month of December, 2020 is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4339&flag=1 __________________________________________________________________________________________________________________________________________________

IRDAI issued order regarding constitution of Health Insurance Advisory Committee.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4340&flag=1 __________________________________________________________________________________________________________________________________________________

Exposure draft on IRDAI (Regulatory Sandbox) (Amendment) Regulations, 2021 is available on IRDAI website.

Source – https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4337&flag=1

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GLOBAL NEWS

Pakistan: Regulator forms Pension and Annuity Working Group - Asia Insurance Review

The Securities and Exchange Commission of Pakistan (SECP) has formed a Pension and Annuity Working Group (PAWG) as it gears up efforts to develop the country's private pension and annuity market. The Group, comprising representatives from the SECP, asset management companies, life insurance companies and the actuarial profession of Pakistan, is tasked with preparing a roadmap to develop the private pension and annuity market, according to local media reports.

A developed pension market will help to deepen the market for long-term capital instruments, while the annuity market has been a missing link between the voluntary pension and insurance sector of Pakistan. The Voluntary Pension Scheme (VPS) framework that was introduced in 2005, still has a very low uptake from the industry. Furthermore, since the life insurance sector has not been engaged in the distribution of VPS products so far, the life-contingent annuity market is almost non-existent in Pakistan. This indicates a huge potential for the VPS market.

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Bangladesh: Regulator to issue bancassurance guidelines - Asia Insurance Review

Bangladesh's insurance regulator will release guidelines this year to allow insurance to be marketed through bank channels, according to industry insiders. The Insurance Development and Regulatory Authority (IDRA) has already drafted a set of guidelines for bancassurance which had been disseminated for feedback, reported The Financial Express. Industry insiders are hopeful that bancassurance will create a win-win situation for both the banks and financial institutions as well as insurance companies. IDRA chairman Dr Mosharraf Hossain told The Financial Express, “"Banks will get a licence as a corporate insurance agent and earn non-funded revenue."

According to the draft guidelines, banks will be granted bancassurance licences for a period of three years. A bank cannot sign bancassurance agreements with more than three insurance companies. Both insurance companies and banks are required to get approval from their respective regulators for entering into the agreements. Bangladesh Insurance Association president Sheikh Kabir Hossain said, "We have long been demanding that bancassurance be introduced, but banks weren't much interested." The insurance industry in Bangladesh comprises 79 insurers, including 33 life insurers whereas the banking industry has 58 banks operating nationwide through more than 10,000 branches. In Bangladesh, only 12m out of 160m people have life insurance policies.

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