QUOTE OF THE WEEK

“To be yourself in a world that is

constantly trying to make you something else is the

greatest accomplishment.“

Ralph Waldo Emerson

INSIDE THE ISSUE

Insurance Industry 2 Insurance Regulation 8 Life Insurance 10 General Insurance 15 Health Insurance 16 Motor Insurance 25 Insurance cases 28 Pension 28 IRDAI Circular 30 Global News 31

INSUNEWS Weekly e-Newsletter

17th – 23rd April 2021

Issue No. 2021/16

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INSURANCE TERM FOR THE WEEK

Auto Liability

coverage that protects against financial loss because of legal liability for motor vehicle related injuries (bodily injury and medical payments) or damage to the property of others caused by accidents arising out of ownership, maintenance or use of a motor vehicle (including recreational vehicles such as motor homes). Commercial is defined as all motor vehicle policies that include vehicles that are used primarily in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit. No Fault is defined by the state concerned.

INSURANCE INDUSTRY

Buying Insurance? Let technology simplify this for you - Financial Express – 22nd April 2021

If you’ve recently undertaken the uphill task of obtaining insurance, and found yourself struggling with picking the right policy, you’re certainly not alone. COVID-19 has made all of us health conscious. To protect themselves financially more people bought health and life insurance, driving an unprecedented growth in premium collected by Insurance companies by 16% Y-o-Y in the first six months of FY21. Individual health insurance focused companies like Star Health and United India witnessed 45% growth. But as people paid attention to their health insurance plans, it was hard to decide on which one of the 32 Insurance companies to select as your Health finance partner.

While you can easily arrive at a decision to buy the best gadget or travel package for yourself online, based on the ample information available on the internet, the same cannot be said for an insurance policy for health, property, or vehicle. Insurance terms are complicated, pay-out is slow and the offers are difficult to understand. Moreover, accessibility of the Insurer for claims and grievances is the moment of reality that you would really like to optimise for. For many policy holders, the experience at the time of claim is stressful and disappointing. To bust a myth here, contrary to popular belief, almost all insurance companies place transparent payment of claims very high on their agenda. Hence, most of the insurers moved quickly to facilitate claims from their mobile app, only 20% of such claims actually got settled purely digitally.

Even with a direct communication channel with their customers, Insurers are unable to solve issues like incomplete documentation, errors in payment deductions and settlement within 2-5 days. The insurer you need to go for are the ones who are using modern AI and digital technologies to resolve the above problems and offer better claim settlement experience in addition to online buying experience.

AI enabled automation is the solution AI powered chatbot platforms can answer any customer query 24×7, with zero wait time, and any number of times without being rude. While every company offers chatbots, few companies use the modern cutting-edge platforms that are capable of answering the queries objectively like a customer support executive would. If you don’t like the small keys on your phone, insurers like HDFC ERGO and Bajaj Allianz have introduced Alexa-based voice assistants. Moreover, insurers are providing tele-consultation for free to facilitate better healthcare at home. It is now possible to raise all your claims from the convenience of home.

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Reliance Jio recently unveiled its AI Video call assistant for customer support. Such AI powered video-bots are mostly in the early phase of development and are expected to revolutionize customer support by giving a human touch to automated responses that are available 24/7. With startups like Rephrase.AI converting text chatbots into video chatbots, customer experience is all set to become a lot more convenient with voice-based interaction.

After all, a person responding to your queries over video chat feels more personalized than talking to a chatbot, even if you know it’s a video bot. It is only a matter of time before Mr. Bachchan (his deepfake) will be on a video call with you to discuss your insurance needs and leverage his acting skills to make that apology much more genuine.

Automation brings accuracy and ensures transparency In case of vehicle insurance claims, AI can perform automated damage assessment, select the spares required for repair, and provide a fairly accurate assessment of claim amount within seconds. This, in turn, speeds up the claim approval process as no physical inspection is required. So, you can get back on the road sooner than ever before without much hassle. Some companies offer immediate pay-out of the claims even before the repairs are undertaken, helping you to decide and optimise for the best corrections for your car. The claim details can be explained in easy-to-understand terms using natural language generation technology to better engage with the customer.

Insurers like ICICI Lombard and Bajaj Allianz launched InstaSpect and MOTS, their respective AI based damage assessment services for instant renewal of motor insurance policies. By simply uploading pictures of your vehicle, you can get insurances policies issued or renewed faster than ever before. In case of health insurance, queries on missing documentation, treatment guidelines, unnecessary costs can be raised with hospitals or customers upfront on the app or portal, in order to avoid multiple back and forth exchanges. There is no reason why the claim made for the same treatment at the same hospital should need more than 3 hours, while AI can do it in 3 seconds. In India, insurers like ICICI Lombard, Bajaj Allianz, Aditya Birla Health, etc. have already implemented AI claim settlement.

Further, the customer can talk to a robo-advisor to get clarifications when only some part of the amount claimed is paid by the insurer. After all, the customers are buying “promise” from the insurers that they will pay-up when the moment of reality arrives. That faith can only be built through compassionate two-way communication, which in turn will be the reason for you stay with that insurer and renew your policies. Nobody wants to see a one-page document filled with jargon, when money is the topic of discussion.

Bridging the Payer-Provider-Customer gap Many insurers are rapidly adopting AI-driven automation over manual processing because it drastically reduces the time taken to respond to a customer from more than 4 hrs to 45 minutes. As insurers optimise their systems and add AI for claim decision making, this is expected to come down to just 5 minutes. AI never has a bad day, its decisions are consistent and it further ensures transparent claim pay-out calculations to save hassles to customers. A technology-first insurance company will be able reduce leakages due to fraud, incorrect processing of hospital tariff, etc. and then offer you a savings on premium for a comparable policy.

(The writer is Dr. Mallesh Bommanahal.)

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How enhanced 80C and 80D caps can increase insurance penetration In India – Entrepreneur – 21st April 2021

In India, insurance penetration rates are below par, unlike developed nations. Given this situation, the Centre’s proposal to hike the FDI limit from 49 per cent to 74 per cent in the Union Budget 2021-22 is welcome. At the corporate level, another essential policy reform concerns the current 18 per cent GST rate. If insurance penetration rates are to rise in India, this should be revised to 12per cent or lower. High

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hopes were entertained that some of these measures would be announced in the recent Union Budget, which didn’t happen. However, the Centre can always implement policy reforms at any stage of the year.

Corporate hurdles apart, a major one lies in the retail segment: the mindset of many people that insurance is not necessary for them. Here, the COVID-19 pandemic came out of the blue as a wakeup call for the young and not-so-young that health events, emergencies and epidemics can’t be predicted. This is all the more reason to buy health insurance and term life policies before an event hits. While tailwinds from the coronavirus outbreak boosted health insurance, institutional reforms are required to nudge various sections, including millennials, to appreciate the importance of insurance. These reforms relate to tax-savings benefits through income tax laws.

Consider Section 80C. The IT Act allows a tax deduction of up to INR 150,000 on diverse investments. These include PPF, NPS, NSC, ELSS, principal paid on home loan and insurance policies, among others. Given the string of investment options, Sec 80C is crowded and offers tax-saving avenues that are too low. To ensure tax-savings attraction on insurance policies, the deduction cap could be considerably hiked. Alternatively, insurance policies should have a separate section allowing tax deduction.

Then take Section 80D. Here again, the limit remains low. While last year’s Budget enhanced Sec 80D’s limit to INR 50,000, it had a catch. The higher limit was only for senior citizens! Though the latest Budget overlooked this, extending the enhanced limit for other taxpayers can be done at any time later this year.

Meanwhile, the pandemic has driven greater awareness among consumers about insurance policies, particularly term plans and health insurance. But this is only part of the penetration challenge. The other relates to ensuring that awareness triggers positive action via the purchase of relevant health insurance and term plans, besides others. Whereas the former is beneficial in meeting unexpected or emergency expenses on hospitalization and healthcare, the latter is crucial during any unforeseen eventuality concerning a family’s breadwinner.

Coming to term insurance, various companies, especially startups, offer these plans online. What’s more, insurance can be bought online swiftly and safely while customising plans as per personal needs. The other issue relates to annuities from insurance firms. If a pension plan is purchased from an insurance company, the policyholder is levied tax on the annuity. These products will attract more customers if annuities are tax-free. Since NPS (National Pension Scheme) is permitted an extra tax exemption cap of INR 50,000 above the INR 150,000 under Sec 80C, allowing this for annuities will create a level playing field.

In recent years, preventive medical check-ups as well as curative care in hospitals have seen escalating costs. Therefore, the current health premium limits should be increased. Simultaneously, awareness must be created in non-metro cities too about the importance of having health insurance to safeguard one’s financial future. Generally, people in tier II cities and beyond keep ignoring health insurance. But COVID-19 has transformed legacy thinking. Once the significance of health insurance and term plans in financial risk management for individuals and their families becomes clear, insurance penetration rates will increase sooner rather than later.

(The writer is Akash Anand.)

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‘Covid wave may delay privatisation, divestment’ - The Hindu Business Line - 19th April 2021

The surge in Covid-19 cases across the country is likely to impact the progress on strategic disinvestment and privatisation programme during this fiscal, which could further delay the sale of government’s stake in companies such as Bharat Petroleum Corporation and Shipping Corporation of India. Privatisation of two nationalised banks and a government-owned general insurance company could also be impeded. Officials also indicated that the initial public offering (IPO) of LIC may see some delay.

After the Budget, the Department of Public Asset and Investment Management (DIPAM) in the Finance

Ministry, along with other departments and NITI Aayog, went into a huddle to finalise the next course of action on various proposals of strategic disinvestment and privatisation. In fact, NITI Aayog has recommended names of public sector banks and a public sector non-life insurance company. Though these recommendations are yet to be made public, an official pointed out that the names do not include the six large public sector banks which have completed amalgamation during recent years. These include State Bank of India, Punjab National Bank, Bank of Baroda, Indian Bank, Canara Bank and Union Bank.

Therefore, the probable candidates have to be picked-up from the remaining six: Indian Overseas Bank, UCO Bank, Bank of India, Central Bank of India and Punjab & Sindh Bank. He added that the same cannot be said about the public sector general insurance companies. They include General Insurance Corporation of India, the New India Assurance Company, United India Insurance Company, the Oriental Insurance Company and National Insurance Company besides the specialised Agriculture Insurance Company of India. Another official said for the privatisation of the two banks and an insurance company, some legislative action is required along with road shows and other ground work. “All these cannot happen overnight and it will depend on how the governmentprioritises the work,” he added.

IPO of LIC On the initial public offering (IPO) of LIC, the official said though the legislative action has been completed, valuation will be a long-drawn exercise. Also, LIC has several real estate properties spread over the country. Due to the pandemic, physical verification of assets will be difficult. Also, once the designated actuary gives its views, it needs to be peer-reviewed. The government has said a lot of work has to be done to meet the target for the third quarter of FY22. With the current situation, the target needs to be revised.

The strategic disinvestment of BPCL has moved one step forward with the completion of the sale of Numaligarh Refinery. Interested parties are soon expected to be invited for financial bids. Same is the case with Shipping Corporation of India. However, the official was not sure when this will happen, given the uncertain times. The only strategic disinvestment that is progressing well is that of Air India, data for which has been opened to bidders. So, there shouldn’t be any problem in the completion of this disinvestment, the official said. The government has set a target of ₹1.75-lakh crore to be raised through disinvestment during FY22.

(The writer is Shishir Sinha.)

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Insurance Amendment Bill: The need of the hour - Financial Express – 19th April 2021

In yet another remarkable move, both the houses of Parliament have passed the Insurance Amendment Bill in the budget session. The Bill amends the Insurance Act 1938, increasing the FDI limit from 49% to 74%. In 2015, the Modi government increased it to 49% from 26%, and now, in 2021, it has been raised

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to 74%. In 1994, a committee headed by former RBI Governor RN Malhotra, formed by the then Congress government, recommended inclusion of private insurers and foreign collaborators. But, it wasn’t until 2000, under the Vajpayee government, that a Bill was passed to welcome private players and allow foreign investment up to 26%. This was the first time that insurance sector witnessed policy reforms.

Since 1994, in the three occasions when Congress governments came to power, they failed to pass any noteworthy reforms in the sector. The NDA government, which has persistently showcased aptitude for bold policy reforms through GST, Insolvency Bankruptcy code, Development finance institution and privatisation, has once more proven its strong political will in bringing about ground-breaking reforms through this amendment.

This amendment is an enabling provision. It is not mandatory to have 74% FDI in Indian insurance companies. However, if the company desires, then it may increase its foreign equity share up to 74%. We would be

mistaken if we assumed that companies do not require expansion in FDI limit. Five private sector companies have already reached the 49% mark and therefore can benefit from the added increase.

The Bill carries several safeguards that ensure ultimate control lies with the Indian entity. Section 27 E of the Insurance Act ensures that funds of policyholders are within Indian boundaries—“No insurer shall directly or indirectly invest outside India the funds of policyholders”. The “Indian ownership and control” requirements under the Insurance Act have been amended. Half of board members and key management members (CEO, CFO, CRO, etc) have to be Indian residents. Furthermore, a fixed proportion of the income has to be kept in the general reserve to provide for policyholder claims regardless of foreign investor’s financial situation. Effectively, management control of the company would be with the Indian promoter. The amendments have been formulated after an all-embracing consultation with 60 insurance companies carried out by the Insurance Regulatory and Development Authority of India, the regulatory body for the insurance sector in India. Apprehensions that foreign investors will invade the Indian companies can be put to rest as the insurance sector is highly regulated. IRDAI shoulders the responsibility of regulating and approving prices, products, marketing, investment and ownership.

In order to be on a par with its global counterparts, India requires healthier insurance penetration and density. The said metrics are symbolic of development of the insurance sector in the nation. Insurance penetration in India is 3.76%, which is lower than this is in countries like Malaysia (4.72%), Thailand (4.99%) and China (4.3%), and appallingly lower than the global average of 7.26%. Similarly, India’s insurance density performance is not encouraging either. India stands at $78 against a whopping global average of $818. Growing premium would aid in improving insurance penetration and density, and this can happen only if more funds are infused into the companies. India has 56 insurers, extremely low when compared to the US which has 5,965 insurance companies catering for diverse categories.

Insurance companies are plagued by high risk due to the business’s capital-intensive nature and an unusually long break-even period that can vary anywhere between 7 years and 10 years. Indian investors are not willing to capitalise companies to a magnitude that is essential to meet the solvency ratio and growth requirements of the sector. Instead, the promoters of the company are being pressurised to liquidate. Additionally, the ongoing pandemic and the ensuing state of the economy demand some financial respite. Given the complex nature of the business, it is only befitting to invite more foreign collaboration as and when need arises.

Like most other fields, privatisation in this area will go long way. The records of FY19 data suggests that 20 companies out of the 24 private life insurers that entered the market after 2000 have reported profit and only seven general insurers out of 21 reported loss. Today, the private sector insurance companies

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account for 42.2% of the premium in the insurance sector, thanks to the reform passed in 2000 by the Vajpayee government. They have recorded a solvency margin of more than 150%, an accomplishment that is held by only LIC (165%) in public sector. Public-sector United India Insurance (86%) and National Insurance (20%) are way below the minimum required solvency ratio recommended by IRDAI (150%), indicating financial stress. Besides, the private sector has engaged 24 lakh employees as of today, as against 17 lakh in public sector. More FDI will benefit private players and accentuate private participation.

In 1999, there were six insurance companies in the public sector and none in the private sector. Now, we have 70 insurance companies (including re-insurers). When the FDI limit was revised from 26% to 49% (in 2015), the sector observed an influx of Rs 26,000 crore. Nearly 40 insurers have FDI ranging from 26% to 49%. Insurance density spiked from $11.5 to $78. The demonstrated benefit from increasing the FDI limit from 26% to 49% paints a sanguine picture of the latest amendment. It is estimated that Rs 30,000 crore will get infused as a result of elevating FDI limit to 74%; Rs 13,500 crore has been set aside for the development of insurance sector because it is in dire need of funds. If foreign investment can supplant government-funding for the insurance sector, then, in future budgets, the money can be allotted to other development-focussed sectors such as infrastructure or defence.

Higher insurance penetration would imply accelerated competition, more products and services at lower costs, and amplified innovation. Insurance schemes have invariably registered long-term assets for the nation’s economy; for instance, the huge infrastructure investments made by LIC. The latest change will improve efficiency of household savings. Small insurance companies will benefit immensely from this. Boosted foreign collaborations would imply adaptation of global technology and practices. Last but not the least, this will also boost employment opportunities. With only 56 insurance companies, we have nearly 41 lakh employees including agents, signifying enormous job creation potential. To bolster the insurance sector, we need a dozen more institutions like LIC. In the 21st century, we cannot hold a mindset that belongs to the 18th century. The way to Atmanirbhar Bharat is through radical measures, as the one taken by the NDA government for the insurance sector.

(The writer is Sushil Modi.)

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Govt's draft proposals tie insurance FDI hike to solvency margin - Business Standard – 17th April 2021

The finance ministry has proposed insurance companies with foreign ownership of more than 49 per cent will have to maintain a solvency margin of 180 per cent if they declare dividend payments in a financial year. If insurance companies repatriate profit in the form of dividend to their shareholders but cannot meet the 180 per cent margin, they will have to set aside 50 per cent of their net profit in a general reserve, according to draft rules proposed by the Department of Financial Services (DFS). Currently there is no such condition on insurance companies. However, foreign insurance joint ventures typically maintain a solvency margin of 180-200 per cent, and would not face any difficulty in maintaining

this cap, said a senior government official. The condition has been included to safeguard the interests of policyholders, but at the same time “lay out the red carpet for foreign investors”, the official said.

A former official of the Insurance Regulatory and Development Authority of India (Irdai) said: “This requirement has been brought in the draft rules so that only serious players come in.” “The current guidelines on foreign direct investment (up to 49 per cent) have only one requirement -- the company has to be Indian-owned and -controlled. There is no solvency requirement and whatever is the minimum

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requirement prescribed by the regulator, it is applicable to all insurance companies,” he said. Furthermore, the draft rules point out for an Indian insurance company having foreign investment exceeding 49 per cent, not fewer than 50 per cent of its directors will be independent directors unless the chairperson of its board is herself or himself one. In that case at least one-third of its board should have independent directors. The rules also propose that an Indian insurance company having foreign investment must have a majority of its directors and key management persons as resident Indians. They also state at least one among the three -- the chairperson of the board, managing director (MD), and chief executive officer (CEO) -- must be a resident Indian.

Joy deep Roy, insurance leader and partner, PwC India, said the rules reflected two things announced in the Union Budget -- of having a majority of board members of insurance companies as Indians and retaining a certain amount of profit as a general reserve. Calling the guidelines on dividend payment “judicious”, Prakash Agarwal, head (financial institutions), India Ratings & Research, said the move would balance stability as well as investors’ returns. “The restrictions on dividend payment below a certain threshold through profit retention would help in ensuring that capital buffers are not depleted through dividend payment,” he said.

The rules come a month after Parliament approved the Insurance (Amendment) Bill, 2021, to hike the FDI limit in insurance to 74 per cent. Insurance companies will have to comply with these requirements within a year of the date of notifying the final rules. As of March 2020, foreign investment in life insurance companies -- 23 in total -- is 37.41 per cent. Only in nine private life insurers has foreign investment touched 49 per cent. In the general insurance industry, with 21 private insurers, FDI is 28.18 per cent. “One of the reasons why not many companies have seen FDI going up to 49 per cent is that in the current scenario Indian promoters are very strong and they do not want to extract value from their investment at this nascent stage. They may sell it in the future when they have a sizeable valuation for their company,” the former Irdai official said. According to insurance experts, this move by the government to increase FDI limit from 49 per cent to 74 per cent will most likely benefit the small players, where currently the Indian partner is not able to bring in more capital to boost growth. In such cases, the foreign partner will have the opportunity to bring in more capital and take control of the companies so that they can compete with the big boys.

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INSURANCE REGULATION

Hospitals can’t deny cashless Covid claims, rules Irdai - The Times of India - 23rd April 2021

The insurance regulator on Thursday directed insurance companies to take ‘appropriate action’ against network hospitals denying cashless facility to Covid-19 patients. The advisory came at a time when companies say they are seeing higher Covid-related claims because private hospitals are denying the cashless facility and are overusing antibiotics. Union finance minister Nirmala Sitharaman too tweeted about this on Thursday evening saying: “Reports are being received of some hospitals denying cashless insurance. Spoken to chairman, Irdai SC Khuntia to act immediately. In March’20 Covid included as a part of comprehensive

health insurance. Cashless available at networked or even temporary hospitals.”

She also said that as on April 20, nearly 9 lakh Covid-related claims have been settled by insurance companies for Rs 8,642 crore. “Even tele-consultations can be covered. Irdai shall direct companies to prioritise authorisations and settlements of Covid cases,” her tweet read. The Insurance Regulatory and Development Authority of India (Irdai) circular reads: “Insurers shall ensure that where the policyholder

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is notified about availability of cashless facility at the empanelled network provider, the cashless facility at such network provider shall be made available to the policyholders in accordance with the terms and conditions of the policy contract and as per the terms agreed in SLA.” Companies have also been told to ensure smooth availability of cashless facility.

A major grouse of the insurers is that hospitals charge different rates for Covid treatment across the country. Bhabtosh Mishra, director underwriting, products & claims at Max Bupa Health Insurance, pointed out that during the first wave, the average length of a Covid patient’s stay in hospital was around 10 days. It dropped to seven days by the end of December 2020.

“The average claims (in the first wave) used to be around Rs 1.3 lakh. However, in the second wave, while the average number of days of hospitalisation is still hovering around seven days, the claim size has increased to over Rs 1.4 lakh,” he added. “For instance, unlike last year, we are seeing use of high-end antibiotics, like injection Meropenem and Targocid, without providing much justification of its use. This has led to an increase in the overall size of claims,” he said.

An official of an insurance company, who did not wish to be identified, said fraud claims management has also become a major issue as they have begun to see instances of false positive reports and cases of false hospitalisations. “In times of Covid, it becomes very difficult to physically visit hospitals and verify cases where we have doubts,” the official said.

S Prakash, MD, Star Health and Allied Insurance said the lack of adherence to standardised treatment protocols is a major concern and this is not only burdening insurance players but patients as well. The head of a general insurance player also pointed out that there is a lot of panic among people as a result of which many are occupying beds when they do not need to.

Another health insurance player’s official pointed out that they have come across cases where customers, despite sharing their single occupancy rooms with other patients due to lack of beds, were being charged single occupancy room rent, resulting in higher claims. Even Sanjay Datta, chief-underwriting, claims and reinsurance, ICICI Lombard General Insurance, added that it is not only about high Covid claims. He said overall health insurance claims are rising because many who had postponed health procedures last year have started going for it.

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Irdai allows insurers to invest in debt instruments of InvITS and REITS - Business Standard – 22nd April 2021

The insurance regulator on Thursday allowed insurance companies to invest in debt securities of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). Earlier, insurance companies were only allowed to in units of InvITs and REITs.

This decision has been taken by the Insurance Regulatory and Development Authority of India (Irdai) post the passage of the Finance Bill, which had proposed permitting trusts to issue debt securities.

The regulator has said, insurers can invest in debt securities of InvITs and REITs that are rated not less

than “AA” under the “approved investment” category. In the event of a subsequent downgrade, the instrument will become part of their “other investments”.

It has also specified that the cumulative investment of insurance companies in units and debt instruments of InvITs and REITs cannot exceed 3 per cent of their total fund size at any point in time. “No insurer shall invest more than 10 per cent of the outstanding debt instruments (including the current

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issue) in a single InvIT/REITs issue”, the Irdai said. Also, if the sponsor of the InvITs and REIT is also the promoter of an insurance company then that company cannot invest in the debt instruments of such InvITs and REITs.

The regulator has also instructed that investment by insurers in the debt instruments of InvIT will be classified as “Infrastructure Investment” while investment in debt instruments of REITs will form part of industry group 'Real Estate Activities" under NIC industry classification. Also, the investment in debt securities of InvITs or REITs has to be valued either as per Fixed Income Money Market and Derivatives Association of India (FIMMDA) or at applicable market yield rates published by any rating agency registered with the Securities and Exchange Board of India (Sebi), the insurance regulator said.

(The writer is Subrata Panda.)

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Explain basis for approving insurance policies excluding mental illnesses from full coverage: HC to IRDA – The Hindu – 18th April 2021

The Delhi High Court has asked insurance sector regulator IRDAI to explain on what basis it was approving insurance policies that excluded mental conditions from full coverage. Justice Prathiba M. Singh said the Mental Healthcare Act of 2017 makes it clear that there can be no discrimination between mental and physical illnesses and the insurance provided in respect thereof.

The direction to the Insurance Regulatory and Development Authority of India (IRDAI) by the court came on a plea of a man whose claim for reimbursement of costs in the treatment of his mental illness was restricted to ₹ 50,000 by the insurance provider – Max Bupa Health Insurance Company Ltd. The court issued notice to IRDA and Max Bupa seeking their stand within two weeks, saying a large number of insured persons would be affected by such an insurance policy.

The petitioner has contended that he has been regularly paying the premium for a sum assured of ₹ 35 lakh, but when he claimed the insurance amount for his treatment, he came to know that in case of a mental illness the sum assured is restricted to ₹ 50,000. His lawyer told the court that on perusing the fine print, almost all the prevalent mental conditions, like severe depression, eating disorder, panic disorder, schizophrenia, post-traumatic stress disorder and obsessive-compulsive disorder, are restricted to a sum assured of ₹ 50,000. The petitioner has contended that such a restriction is contrary to the provisions of the Mental Healthcare Act of 2017.

After hearing the petitioner's side, the court said, "The clauses pointed out in the policy clearly show that a large number of mental conditions are excluded from full coverage of the policy and only a sum of ₹ 50,000 is reimbursable for these mental conditions.” "This matter requires consideration, inasmuch as the Insurance Regulatory and Development Authority of India ought to place on record the basis on which approval has been granted for such insurance policies." The court listed the matter for further hearing on June 2.

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LIFE INSURANCE

Here's the difference between pure term insurance and return of premium policy – Live Mint - 22nd April 2021

Term insurance plans normally come in two variants -- pure term and term insurance with return of premium (TROP). A common question on consumers' mind is 'How much return will I get when buying term insurance?’ People generally think they would get returns by investing in any financial products. However, that may not be the case for all term insurance variants. In this piece, we take a look at the difference between pure term and TROP policy.

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Pure term insurance A pure term plan provides sum assured in case of death of the life insured. The sum assured would become payable in case of death of the life insured during the policy tenure. The policy does not carry a maturity value i.e. in case the life insured survives the policy term there is no benefit payable under the policy. The premium you pay for such a policy is lesser than a TROP policy.

TROP insurance In the case of a term plan with a return of premium, if the life insured survives the policy term, total premiums paid (excluding taxes) is returned to the policyholder. The premium for these plans is higher than a pure term insurance policy.

Suresh Agarwal, chief distribution officer, Kotak Mahindra Life Insurance said, “The needs addressed by both the products are different – for someone looking for a pure risk product for providing financial security to the family, for example, to cover loss of income or to cover a mortgage – pure term plan is suitable as the product

provides high cover at low premiums. Usually, the sum assured in case of pure term products is roughly 1000 times, so the premium outlay for the customer would be very low."

Which product should you opt for? Both products are good and have different objectives. The one you opt for would depend on your specific need.

Vishwajeet Parashar, EVP & Chief Marketing Officer, Bajaj Capital said, “It is always good to go for a pure term insurance plan instead of buying TROP insurance. However, you must keep few things in mind while planning to purchase pure term insurance. When you plan to buy such insurance, first calculate the need, that is, the cover amount to protect your family in case of your demise. The need will be calculated as per your life stage and the number of family members who need to get protection. Further, you must understand your family lifestyle and the overall expenses and then accordingly decide the policy cover. Thus, the total of this will determine the cover amount you should have."

Liabilities like personal loans, car loans or home loan have to be added with your overall life cover. The accurate estimate of the need will prevent the burden of EMI repayment from falling on the family in case of death of the bread winner. It will secure the future of children's education and their livelihood.“TROP provides relatively lower sum assured (say roughly 300-400 times) so if someone is looking for the return of premiums invested then TROP is the right product for them," said Agarwal.

(The writer is Navneet Dubey.)

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Enjoy life cover despite missing premium with a new term plan but here are the watchouts - The Economic Times – 21st April 2021

During your good days you may do well to buy a term plan to protect your family financially in the bad days, i.e. in your absence. But have you wondered what will happen to this protection if you miss the premium payment and your family loses you? This scenario may have appeared unlikely until very recently but not any longer, thanks to the coronavirus crisis wherein people are facing enhanced life risk together with earning risk either due to loss of job or other financial distress.

If you skip any premium beyond the grace period during your premium paying term, the life cover ceases to work. So, a life insurance plan that is meant to give financial protection actually becomes futile in protecting you during in such a trying time. But now being offered is a term plan that works even when you skip premium payments. Max Life Insurance has launched a term product called ‘Max Life Smart Secure Plus Plan’. You can personalize this plan and its features as per your requirements. It is a pure-risk

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life insurance plan that offers policyholders multiple new benefits like the ‘Premium Break Option’, ‘Special Exit Value’, choice of Claims Pay-out for the nominee and more. Here are the first three options in detail:

Premium Break Option: This feature lets you opt for a break from paying premiums and still be covered, twice during the premium payment term. Though this is one of most desirable options, it comes with a tough condition. The first break option is available only after completion of 10 policy years. The duration of one premium break that will be available is 12 policy months. This waiver is applicable on the base cover premium, Accelerated Critical Illness (ACI) benefit premium and accident cover premium inclusive of underwriting extra, loading for modal premiums and any applicable taxes.

The second premium break can be exercised after a minimum gap of 10 years from the first premium break. During the break, the policy will remain in-force with the risk cover as per the terms and conditions of the policy. Premium Break option will not be available under joint life option. As a result, you can exercise two skips of annual premium only when your policy is into its 21 st year.

This option is available for policies with policy term greater than 30 years and premium payment term greater than 21 years. The option is available only under Regular Pay and Pay Till 60 PPT (PPT greater than 21 years). The premium payment term, policy term & premium payment mode under this option will be same as the base policy.

Special Exit Value: Under this option, the policyholder will get back the total premiums paid plus underwriting extra premiums paid plus loadings for modal premiums, if any. To avail this benefit, the policyholder should surrender his/her policy once he/she has attained the age of 65 years (age on last birthday) or a pre-defined policy year, whichever is earlier. The pre-defined policy year is 25th policy year for policy term from 40 years to 44 years and 30th policy year for policy term greater than 44 years. In case you have opted for limited pay or single pay premium payment options but later on decide to surrender your policy, you will get special exit value. However, this option will not work if you opt for the regular premium payment mode.

This surrender value will be applicable only on the base cover premium only and not to additional optional benefits like ACI, Accident cover, Joint life cover and Voluntary Sum Assured Top-Up. This feature will not work if you have taken Return of Premium variant of the policy. Choice of Claims Pay-out for the nominee: Usually, the policyholder decides what would be the benefit payment in case of his/her death. However, the policy offers this option to the nominee to opt a preferred claims pay-out mode, at the claims stage among lump-sum, monthly income, part lump-sum and part monthly income.

“Allowing customers to pay only for the benefits that suit their requirements, the ‘Max Life Smart Secure Plus Plan’ enables the freedom to design a protection plan in alignment with specific financial needs. Attuned to the rapidly evolving needs of our customers, we will remain committed to delivering the most relevant product experience for the customers,” said Aalok Bhan, Director and Chief Marketing Officer, Max Life.

The plan is available for a policy term ranging between 10 to 67 years and offers various options of different premium payment terms like regular pay, limited pay and single premium. You also get the option to choose fixed or increasing life cover option. In the latter, the sum assured increases annually by 5% of original sum assured.

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Here is the list of sample premiums applicable for a non-smoker male life, aged 30 years, getting coverage till age 70 years and paying premiums annually for the Max Life Smart Secure plus Plan online:

With the ‘Return of Premium’ variant, this plan would allow the return of total premiums paid for the base benefit at the end of the policy term upon life insured surviving through the policy term. This feature is available to customers in the age group of 18 to 65 years. The plan also offers coverage against the diagnosis of terminal illness with accelerated pay-out from the base life cover of up to Rs. 1 crore.

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Why is investment planning important for women? - Financial Express - 20th April 2021

Women today are fast making it to the forefront across various spheres of life. We have more women at the helm of corporates with a presence in multiple regions of the globe. Many are taking the initiative into entrepreneurship while other are successful athletes.

With double income families increasingly becoming the norm in the middle class, a greater number of women are joining the workforce. With women contributing towards income generation, I believe it is important for women to focus on planning their finances for meeting their long-term goals and aspirations.

Here’s why investment planning is important for the women of today.

It brings financial freedom Financial freedom translates into having economic independence. Every woman who dreams about being economically independent needs to become self-sufficient or capable of meeting her financial needs. For this, she needs to start building the assets with a sound investment plan. Depending on the financial situation, risk profile and time horizon, women can choose multiple investment products to grow their assets in a timely manner. As a rule of thumb, remember to start early to reap the benefits early.

It helps women meet their life goals Women today have many professional as well as personal life goals. It may range from travelling the world to kick starting their own businesses. And all of these goals need to be backed by adequate finances, where investment planning helps. With the right financial plan, women can ensure that they meet their goals in the timeframe needed, without relying on others to back their dreams.

It comes in handy during career breaks There’s no denying that women tend to take more career breaks than men. This could happen at various stages of life, such as when women get married, when they have kids, or even when their spouse is transferred to a different city. In recent years, women are also taking career breaks for upskilling themselves or pursuing further education. A break in career also means a break in income. During such phases, savings and income from investments come in handy.

It is important for retirement It’s no secret that women, on average, tend to live longer than men. However, both homemakers as well as working women often tend to rely on their spouses for financial security during their retirement. But with the right investment plan, women will find it easier to secure their own retirement years financially.

Investment options that women can include in their financial plan Much like how there are several reasons for women to focus on investment planning, there are also many investment options available that women can look into when planning their investments.

Life Insurance is one of the preferred choice of investment while planning for Life Goals as it brings the advantage of both insurance as well as investment. Depending upon their goals and risk profile, women can chose the type of life insurance ranging from term plans to ULIPs (Unit Linked Insurance Plans). By

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choosing ULIPs as a part of their investment portfolio, women can secure the future of their dependents while simultaneously tapping into the advantage of market-linked returns.

The bottom line My advice is simple. Do not procrastinate. Start early in your investment planning journey. Read up; speak to consultants, or your colleagues or family friends. Remember, the earlier you start investing, the sooner you will be prepared for achieving your financial goals.

(The writer is Reshma Banda.)

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Four major mistakes to avoid while buying term life insurance – Live Mint – 19th April 2021

With the covid-19 pandemic wreaking havoc, the most basic thing you can do is to secure the financial health of your loved ones by purchasing a life insurance policy. The motive behind having a life insurance policy goes beyond protecting one's financial health. It is about the family's financial protection in case of the sudden death of the breadwinner, meeting long-term and short-term financial goals like child marriage or higher education, retirement savings etc.

In this piece, we take a look at the four major mistakes one must avoid while buying a term life insurance. Non-disclosure of critical information

It is very important to disclose all the crucial information for the smooth processing of claims. These can include any pre-existing medical condition, family medical history, risky lifestyle choices like smoking and engaging in hazardous occupations. Santosh Agarwal, CBO-Life Insurance, Policybazaar.com said, “At first, it may seem that not disclosing such information will result in a lower premium. But if your death is traced back to a health condition that suffered at the time of buying the policy. The insurance company has the right to refuse the claim resulting in an undesirable situation. Hence, be truthful and transparent in your declarations."

Not checking claim settlement ratio One of the most important factors while choosing the insurer is knowing the company’s claim settlement ratio. The claim settlement ratio is a measurement used for assessing the reliability of the insurance company in terms of paying the claims. This will give you peace of mind knowing your death claim if ever it comes will be paid without any hassle to your loved ones. Moreover, the process of the claim settlement should not be tedious and the customer should have a hassle-free experience. The claim settlement ratio also helps in understanding the overall performance of the company. Hence, it helps you in making a better decision when selecting an insurance company.

Not calculating required insurance cover “Term life insurance plan acts as a blanket of protection and helps you prepare and keep your family financially stable and secured in case of premature death or any other miss-happening. Especially, when you’re the sole bread- earner of the family. You need to Estimate your required cover after a proper need-based analysis. This should not only cover your lost income but also other anticipated expenses like long term goals such as children education, marriage etc. Therefore, getting sufficient cover is necessary," Agarwal said.

Choosing the wrong policy There are several term life insurance policies available in the market. To start with, it is important to understand the features of every product available in the market. Know which policy you need, so as to cover your financial liabilities, your situation and what you want to accomplish with your policy will dictate which type of coverage is right for you and your family.

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“It’s completely normal being overwhelmed by innumerable choices out there or being unsure about how a life insurance plan can fit into your other financial goals. Speaking with a financial advisor can help you overcome the feeling of uncertainty and help you make an informed decision. It allows you to discuss what is important to you (retirement, paying for a child’s college education, etc.) to ensure you can meet those goals for your family even in your absence," Agarwal said.

(The writer is Navneet Dubey.) TOP

GENERAL INSURANCE

Motor, crop insurance biz declines, health rises 11% - The Indian Express – 21st April 2021

India’s general insurance industry narrowly missed the milestone of Rs 2 lakh crore of gross premium during 2020-21, due to the negative growth in motor insurance — the largest portfolio in the industry — and crop business.

The industry ended financial year 2020-21 with a positive year-on-year (y-o-y) growth of 5 per cent at Rs 1,98,735 crore, aided by growth in health insurance segment. While the health portfolio, propelled by the Covid-19 pandemic, has grown by 11 per cent to Rs 58,584 crore, two large business segments — overall motor portfolio and crop business — of the industry declined during FY21. Premiums in the overall motor portfolio have fallen by around 2 per cent to Rs 67,790 crore, while the crop business has fallen by 3.5 per cent to Rs 31,184 crore during FY 2020-21, according to figures compiled by GI Council and Irdai.

In the motor portfolio, motor third party (TP) premium — which has not been hiked by the Insurance Regulatory and Development Authority of India (Irdai) in FY21 — has grown 5 per cent to Rs 10,650 crore. Motor OD (own damage) segment has surged by 138 per cent to Rs 4,136 crore, while the premium out of motor package has contracted by 7 per cent during the reporting period.

The fact that premiums in motor OD and motor TP have gone up despite the pandemic — when a long period of lock down has limited the use of all kinds of vehicles — shows more people have bought automobiles and more uninsured vehicles have got insured. Despite the pandemic, which disrupted the domestic insurance industry extensively, New India Assurance (NIA) — powered by a global premium of around Rs 32,500 crore — has further scaled up its domestic market share to 14.33 per cent in FY21 from 14.11 per cent in 2019-20. It has ended the fiscal with a domestic premium of Rs 28,482 crore, showing a y-o-y rise of 6.22 per cent.

Among the top 10 general insurers that include three large PSUs, NIA is the only company which has the distinct achievement of positive premium growth, profitability and higher market share by expanding its core business organically in FY21. “It was a hugely challenging year. I am happy that we could pull it off like this. As at the end of October 2020, though the business of general insurance industry on an average was down by some 10-12 per cent, we managed to just keep our head over water by showing some business growth in decimal points but then we went into a tizzy and in subsequent five months we managed to grow our business each month by 15-22 per cent,’’ said Atul Sahai, Chairman and MD, NIA. The other PSU general insurers, United India Insurance (UII), National Insurance Company and Oriental Insurance Company (OIC), have ended the year with negative growth and lost their market shares during this period.

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Led by Star Health & Allied Insurance, all six stand health insurers — at Rs 15,720 crore — have together grown 11 per cent y-o-y in FY21. ICICI Lombard, the largest private sector general insurer, has grown its premium base by 5 per cent at Rs 14,003 crore, but its market share has almost remained flat 7.05 per cent last fiscal. The company has degrown its health portfolio by 6 per cent, while its motor business rose marginally during the year. Earlier, it had exited the crop business. However, the company will soon emerge as the second largest domestic general insurer after it takes over Bharti Axa General Insurance.

Together, the merged entity with a total premium base of Rs 17,160 crore will displace Chennai-based UII, the second largest general insurer. UII ended FY21 with Rs 16,710 crore of premium, recording a y-o-y degrowth of 5 per cent. Similarly, Bajaj Allianz General Insurance, with a gross premium of Rs 12,569 crore, has outranked Delhi-based OIC, with a premium of Rs 12,449 crore, as the fifth largest general insurer in the country in 2020-21. With a premium of Rs 12,295 crore, HDFC Ergo General Insurance — after integrating HDFC’s health insurance arm with itself — has ended FY21 with a y-o-y growth of 28 per cent. Another mid-sized general insurer, SBI General Insurance, which may go for an IPO, has rapidly grown its premium base by 21.60 per cent y-o-y to Rs 8,264 crore in FY21.

(The writer is George Mathew.)

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HEALTH INSURANCE

Covid survivors buying health cover for first time face scrutiny – The Times of India – 23rd April 2021

With nearly 1.6 crore Indians having tested positive for Covid, the number of first-time insurance buyers who are likely to face scrutiny is rising. While it is usual for insurers to inquire about pre-existing diseases before selling a health cover, Covid has made insurers turn cautious as they its long-term impact on organs is not known. While rising incidents makes it a stronger case for people to buy health insurance before infection strikes, insurers say that often it is hospitalisation that makes people realise the need for a medical policy.

The quotes that health insurers provide for various ages are for “standard proposals” or those without pre-existing conditions. In the case of Covid, insurers treat it as a pre-existing condition and acceptance of the proposal depends on each company’s underwriting criteria. While the underwriting criteria are not made public, industry sources say that these range from requiring Covid negative certificate to asking applicants to wait between two-to-six months before onboarding them. If the patient is hospitalised and suffered damage to lungs, they could face exclusions.

“Considering the rapid spread of new variant of Covid, it is hard to say anything about the long-term effects of it. Most insurers are a bit iffy about on-boarding customers who have just recovered from Covid, as a result insurer put a cooling off period of 3-6 months after Covid detection,” said Amit Chhabra, head of health insurance at Policybazaar.com.

According to Rashmi Nandargi, head of retail health insurance underwriting at Bajaj Allianz General Insurance, for 80 percent of Covid survivors, it should not be a problem because they have mild symptoms, and they are under home quarantine. “For those who are hospitalised, the acceptance will depend on how severe the infection has been, whether any organs were impacted, whether the person has been on the ventilator,” said Nandargi.

Chhabra points out that given the rate at which Covid is spreading, it is advisable for all to invest in health insurance and not wait as it may become difficult to get cover immediately after recovering from Covid.

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“Even after a person is discharged, medical protocol says that they must be tested and get a Covid negative report to be declared Covid-free. That itself takes a few weeks. After the report, the proposal is assessed based on whether there have been any other conditions and severity of the infection,” said Nandargi, adding that all should buy health insurance as a risk-mitigation tool.

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Pandemic Premium: Rather than raising premiums to create a buffer for Covid-19 claims, health insurers should better underwriting practices - Financial Express – 23rd April 2021

Health insurance companies seem to be gearing up to once again raise premiums as they expect a steep rise in Covid-19-related claims. Insurers increased the premium rates last year after meeting certain regulatory norms that were mandated. Any steep increase in premiums now will discourage people from purchasing a new policy or renew existing ones. In fact, sales of health insurance policies, including those for short-term Covid specific covers—Corona Kavach and Corona Rakshak—which were on the rise after the first wave of the pandemic last year, started falling with decline in the number of cases. As many policyholders have not renewed their short-term covers, they are been left uninsured as the second wave of the pandemic has hit the country.

As per the General Insurance Council, Covid-related claims worth Rs 14,680 crore have been made as of March and, of this, Rs 7,900 crore, or 54%, has been settled. To be sure, premiums collected by all health insurance companies rose 13%, to Rs 58,584 crore in FY21. Most notably, retail health premium increased 28% year-on-year as compared to 12% in FY20 because of a strong momentum in the sales of short-term Covid-19 policies and high risk aversion due to the pandemic. However, rising Covid-related claims shouldn’t push up premiums. Instead, health insurers should factor in medical inflation to increase premium once every 3-4 years, as has been the norm till now, and adopt better underwriting practices to keep their operations sustainable. An increase in coverage of people with comprehensive health insurance policies will not only reduce the burden of out-of-pocket expenses of policyholders but will also generate higher volumes for the industry.

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High demand for comprehensive health policies as Covid cases soar again - Business Standard – 22nd April 2021

With Covid-19 infections rising at an alarming rate in the country over the past few weeks, hospitalisations have gone up substantially. This, in turn, has resulted in a spurt in demand for health insurance products recently. However, a distinct feature seen this time around is, more and more people are opting for comprehensive health insurance products rather than Covid-specific products. Covid plans were in huge demand last year but have since petered out. Experts said the uptick in demand for health insurance products they are seeing now is not to the extent they had seen last year during the initial months of the pandemic.

Amit Chhabra, business head, health, Policybazaar.com, said, “In the last couple of weeks, as the number of Covid-19 infections increased, there has been a spurt in demand for health insurance. The demand for such products has more than doubled than what we see normally during this period. April, typically, is a slow month for health insurance but we are seeing a very rapid surge in demand. And, the demand is for comprehensive health products with higher sum assured and not so much for Covid-specific products.” “The share of younger and healthier people who are looking to buy health insurance products has increased in the past one year,” he said.

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“We are seeing some pick-up in demand for comprehensive health insurance products. But the percentage increase is not to the extent that was seen during the initial months of the pandemic”, said Sanjay Datta, chief, underwriting & claims, ICICI Lombard General Insurance.

The health insurance portfolio of general and standalone health insurers has seen considerable growth last fiscal year, driven by huge demand for retail health products. In FY21, the non-life insurance industry saw health premiums go up 18.11 percent to Rs 58,584.36 crore, compared to Rs 49,600.72 crore in FY20. Similarly, retail health has seen 38 percent growth in the same period to Rs 26,258.39 crore from Rs 19,013.97 crore. The health portfolio’s share in non-life business has gone up to 29.48 percent, an increase of almost 3 percent in the past year. Experts said, in FY22 as well, health portfolio is expected to do well.

Bhabatosh Mishra, director of underwriting, products & claims, Max Bupa Health Insurance, said, “Enquiry about health insurance and the overall conversion have gone up in the last few weeks. We are pretty much seeing the repeat of what we saw during the first wave. We have seen increased interest in Covid-specific products as well as for comprehensive health insurance products. But, this time, the enquiry about comprehensive cover is a lot more than what it was during the first wave. The reason being Covid-specific products are available for short tenures and people have realised that Covid is not just a one-time thing and it may stay longer.

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Five things to know about indemnity-type Corona Kavach health insurance – Live Mint - 21st April 2021

Corona Kavach or a standard covid-specific indemnity-based health insurance policy is being offered by insurers to provide cover for treatment cost or medical expenses arising due to Covid-19. The coverage, as well as the terms and conditions of the policy, remain identical across all insurers. In this piece, we take a look at five important things that you must know about the indemnity-type Corona Kavach health insurance.

One can purchase a cover for up to ₹5 lakh for self and family members, subject to age limit. The policy can be bought for three and a half months, six and a half months

or nine and a half months. The window for buying such Corona Kavach policies has been extended to 30 September by the Insurance Regulatory and Development Authority of India (Irdai).

Expenses Covered Policyholders are entitled to benefits of the policy on diagnosis of Covid-19 in a government authorised diagnostic centre and requiring hospitalisation. Under the base cover, following expenses are covered on indemnity basis.

Covid hospitalisation expenses Home care treatment expenses Medical expenses towards Ayush treatment Pre-hospitalisation medical expenses Post-hospitalisation medical expenses

If you opt for an optional cover, following expenses will be covered on a defined-benefit basis.

Hospital daily cash will be covered by up to 0.5% of the sum insured and is payable for every 24 hours continuous hospitalisation subject to a maximum of 15 days in a policy period for every insured member The total reimbursement under the policy shall not exceed the sum insured opted by the policyholder including the ‘Optional Cover-Hospital Daily Cash’.

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Who is covered? The minimum entry age to buy this policy is 18 years and the maximum is 65 years. Insurers may cover persons above 65 years of age as per the policy terms and conditions. Dependent children, day 1 old to 25 years of age, are covered since the policy is also available on a family floater basis.

Sum insured options The minimum sum insured is Rs50,000 and the maximum limit is Rs5 lakh. You can choose any sum insured within these limits in the multiples of fifty thousand. Besides, the policy allows you to pay premium via a single premium payment mode.

Waiting period The policy has a waiting period of 15 days when you buy it. However, at the time of renewal, this additional waiting period of 15 days is not applicable. But, during the renewal, if you increase the sum insured, the waiting period of 15 days will apply afresh for the enhanced sum insured.

Premium discount for healthcare workers Healthcare workers are defined under the Corona Kavach policy and are entitled to get a discount of 5% in the premium. Healthcare workers include doctors, nurses, midwives, dental practitioners and other health professionals including laboratory assistants, pharmacists, physiotherapists, technicians and people working in hospitals.

(The writer is Navneet Dubey.) TOP

Covid claims just Rs 1,000 crore short of standalone health insurers' premiums in FY21 - The Economic Times - 21st April 2021

Private health insurance firms came up trumps in growth in the pandemic year while the state insurers posted a decline as motor and crop insurance business de-grew.

Premiums in the overall motor portfolio fell 2 per cent to Rs 67,790 crore, while the crop business dropped by 3.5 per cent to Rs 31,184 crore in fiscal 2021. Barring New India Assurance (NIA), the PSU general insurance firms, United India Insurance (UII), National Insurance Company and Oriental Insurance Company (OIC), have shrunk and lost their market shares in fiscal 2021. Among the top general insurers, only NIA posted positive

premium growth, profitability and market share.

New India Assurance (NIA) raised its domestic market share to 14.33 per cent in FY21 from 14.11 per cent in 2019-20 while its domestic premium grew 6.2% at Rs 28,482 crore. Its domestic premium stood at Rs 32,500 crore. —

Covid claims As Covid raged, the six standalone health insurers, led by Star Health & Allied Insurance, grew their premiums 11% to Rs 15,720 crore. There were Rs 14,608 crore claims under the Covid health schemes during the last fiscal, of which insurers had settled claims worth Rs 7,900 crore. Volume-wise it is about 85% of the total claims of over 10 lakh claims made.

According to the data, the average reported claim size is to the tune of Rs 1.46 lakh but the average claim that insurers are settling is Rs 91,953. About 66% of the claims under the Covid health insurance policies are from the worst-hit five states with Maharashtra topping the chart.

For the last fiscal, Maharashtra topped the claims list with 3.58 lakh claims for Rs 4,345.39 crore, followed by Gujarat (1.30 lakh claims for Rs 1,922 crore) and Karnataka (75,938 claims for 1,136 crore).

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Delhi saw 57,184 claims followed by Telangana (52,122), West Bengal (38,021), Uttar Pradesh (33,653).

The general insurance stack

The premiums collected by ICICI Lombard, the largest private sector general insurer, grew 5 per cent at Rs 14,003 crore, though its health business fell 6%. The takeover of Bharti Axa General Insurance will make it the second-largest domestic insurer.

United India Insurance, the second-largest general insurer. saw premium shrink 5% to Rs 16,710 crore in fiscal 2021.

Bajaj Allianz General Insurance, with a gross premium of Rs 12,569 crore, pipped Oriental India Insurance, which reported a premium of Rs 12,449 crore, as the fifth-largest general insurer. At Rs 12,295 crore, HDFC Ergo General Insurance posted a 28% growth in premium collected.

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Covid-19: Centre extends insurance scheme for healthcare workers by one year after facing flak - Deccan Herald - 21st April 2021

After facing flak, the Centre on Tuesday extended the Rs 50 lakh insurance scheme for healthcare workers who die on Covid-19 duty by one year. “During the coronavirus pandemic, Pradhan Mantri Garib Kalyan Package (PMGKP) has provided a safety net to the dependents of Corona Warriors who lost their lives to Covid-19. I am glad to announce that this scheme has now been extended for a period of one year with effect from today,” Union Health Minister Harsh Vardhan said. The insurance scheme was set to expire on April 24. "Government of India, you are utterly ungrateful," Congress leader Rahul Gandhi had said referring to reports on the end of the insurance scheme. Last month, health secretary Rajesh Bhushan had informed the states about the conclusion of the Pradhan Mantri Garib Kalyan Package, the insurance scheme for healthcare workers who die in the line of Covid-19 duty.

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Covid is an opportunity to make structural changes to our largest health insurance and pension schemes - The Indian Express – 21st April 2021

Covid reminds us that a modern state is a welfare state — governments worldwide launched 1,600 plus new social protection programmes in 2020. It also reinforces the importance of resources — America’s fiscal deficit this year is more than India’s GDP. While sustainable social security lies in raising India’s 138th ranking in country per-capita GDP, we make the case for three reforms to our biggest health insurance and pension schemes: The Employee State Insurance Scheme (ESIS) and Employee Provident Fund (EPF). Both have hostages rather than clients with no option to opt out or choose a competitor. Touted as “employee welfare” schemes since the 1950s, both have failed their clients

since birthing and in COVID. Changing who wields the tool will change, for the better, what they do.

ESIS is India’s richest and biggest health insurance scheme with 13 crore people covered and Rs 80,000 crore in cash. Employers with more than 10 employees make a mandatory 4 per cent payroll deduction for employees earning up to Rs 21,000 per month. Despite covering roughly 10 per cent of India’s population, a recent working paper from Dvara Research suggests high dissatisfaction. The constraint is hardly resources: ESIC’s unspent reserves are larger than the Central government’s healthcare budgetary allocation. Painfully, its annual profits of Rs 10,000 crore persist.

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EPF is India’s biggest pension scheme with a Rs 12 lakh crore corpus and 6.5 crore contributors. Employers with more than 20 employees make mandatory 24 per cent payroll deductions for employees earning up to Rs 15,000 per month. It only covers 10 per cent of India’s labour force and 60 per cent of accounts and 50 per cent of registered employers are inactive. EPF’s 1991 creation of a defined benefit component — contested by employers then as unsustainable — can now only be made solvent with an unfair benefit cut or taxpayer haircut. EPF offers poor service and pathetic technology despite employer-funded administrative costs that make it the world’s most expensive government securities mutual fund.

This article’s title comes from a wonderful new book, What We Owe Each Other: A New Social Contract by Nemat Shafik of London School of Economics, that suggests updating the risk-sharing framework in societies because current structures are breaking up under the weight of changes in the role of women, longer careers, technology, globalisation, and much else. She suggests a more nuanced social security redistribution across time (the piggy bank function), incomes (the Robin Hood function), and financial burden-bearing (the state, individuals, or employers). These political questions require political answers for India that don’t lie in unaffordable universal basic income proposals but fixing the problems of EPF and ESIS — poor coverage, high costs, unsatisfied customers, metrics confused with goals, jail provisions, excessive corruption, low expertise, rude and unaccountable staff with no fear of falling or hope of rising, and no competition. These problems can’t be solved by bureaucrats or courts because they are not technical problems (with a right answer) but adaptive problems (with multiple options and unmodellable trade-offs). Let’s look at possible solutions.

Structure: Apart from not having clients but hostages, EPF and ESIS combine the roles of policymaker, regulator, and service provider. Splitting roles is a precondition for performance because goals, strategy, and skills are different. An independent policymaker horrified with only 6 lakh of India’s 6.3 crore enterprises covered would create competition. An independent regulator terrified by ESIS overcharging would frown on a claims ratio of less than 75 per cent. An independent service provider would invest heavily in technology, customer service, and human capital. Splitting roles would lead to competition from NPS for EPF, ending VIP opt-out by merging CGHS with ESIS, raising enforceability by making employee provident fund contribution voluntary, improving portability by de-linking accounts from employers, and targeting universalisation by simultaneously ending minimum employer head-count and employee salary contribution thresholds while introducing absolute contribution caps. The Health and Finance Ministry would be logical homes for ESIS and EPF policy roles.

Governance: The governing board of ESIS and EPFO have 59 and 33 members respectively. Such a large group can’t have meaningful discussions, make decisions, and exercise oversight. They also fail Professor Ram Charan’s evaluation of an effective board — focus on substantial issues, information architecture, and board dynamics. This governance deficit needs smaller boards (not more than 15), age limits (70 years), term limits (10 years), expertise (technology, HR, health, pensions, finance, etc), active sub-committees (HR, Investments, and technology) and real powers (appointing the chief executive, setting targets, holding management accountable).

Leadership: Health and pensions need complex skills developed over time; Malcolm Gladwell’s 10,000 hours of deliberate practice. Yet, ESIS and EPF are led by generalist bureaucrats who not only view their posting as a government backwater but their weak domain expertise feels like the cabin crew is flying the plane. Both organisations need professional chief executives. Philosopher Isaiah Berlin’s framing of the generalist vs specialist debate as hedgehogs (who know one thing) and foxes (who know many things) is important. A democracy’s generalists are its politicians and its delivery organisations must be run by technocrats. A less generalist, non-transitory, and non-cadred chief executive would create a new tone-from-the-top around performance management, technology, and service outcomes.

Equality is democracy’s fundamental premise. India and Pakistan born on the same night have had very different democratic destinies for many reasons but one is their distorted tone-from-the-top around equality; Allama Iqbal lamented people being counted rather than weighed, Yahya Khan suggested his people were too emotional to vote, and Pervez Musharraf legislated that election candidates need to be graduates. India’s democracy has been better at the complex trade-offs that create equality, though gaps

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remain. Social security — not a borrowing binge that steals from our grandchildren — can blunt structural and COVID inequality when combined with complementary policies like formalisation, financialisation, urbanisation, and better government schools. But a great place to start is three flick-of-pen, non-fiscal reforms at EPF and ESIS.

(The writers are Manish Saharawi are Rajiv Mehrishi.) TOP

Be mindful of sub-limits on mental illnesses in your insurance cover - Business Standard – 21st April 2021

In a recent case, the Delhi High Court asked the Insurance Regulatory and Development Authority of India to explain the basis on which it has approved insurance policies that have sub-limits on the coverage of mental health conditions. A person had purchased a policy from Max Bupa Health Insurance with a sum insured of Rs 35 lakh. When he made a claim, he was informed that the policy has a sub-limit of Rs 50,000 for mental health conditions. Clearly, buyers need to scrutinise policies at the time of purchase to avoid unpleasant surprises.

(The writer is Sanjay Kumar Singh.) TOP

How deductible limit affects your top-up health insurance plan – Live Mint - 20th April 2021

A top-up health insurance policy is a supplement health insurance that helps policy holder increase the insurance coverage keeping health insurance premium at affordable level. It helps the insurance policy holder in bringing down the policy premium for higher health insurance coverage. However, if we go by the investment experts' view, one should look minutely at the deductible limit and sum insured before buying a top-up health plan.

Advising top-up health insurance policy buyers to remain vigilant about deductible limit and sum insured Pankaj Math pal, MD at Optima Money Managers said, "One needs to remain extra vigilant about the deductible limit

and the sum insured while buying a top-up health insurance plan because there are two types of top-up health plans available — deductible limit applicable once in a financial year and deductible limit applicable every time the health claim is made."

Math pal said that top-up health insurance policies can be classified into two categories — top-up and super top-up. In top-up plans, the insurance company pays for the bill going beyond the deductible limit. For example, if a top plan has ₹1 lakh deductible limit, in that case up to ₹1 lakh bill has to be paid by the policy holder while the payment above ₹1 lakh will be paid by the insurance company.

He said that if a person has taken super top-up plan, then the deductible limit won't get applied after it has been applied once in a year while in the case of top-up plan, it would be applied every time the claim is raised. For example, if a policy holder has submitted two bill of ₹1.5 lakh and ₹1 lakh bill in single financial year and its deductible limit is same ₹1 lakh. Then, in the case of super top plan, the policy holder will be given ₹50,000 relief on first occasion while on the second occasion; he or she will be given entire ₹1 lakh amount of the bill as the deductible limit is applied once in a year. But, in the case of top-up plan, relief will be only ₹50,000 on first occasion as there is no payment up to ₹1 lakh deductible limit.

Advising insurance policy holder to buy both base health insurance and super top-up health policy Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "One should have both base health insurance policy and super top-up health insurance plan. It helps policy holder to pay the deductible limit from the base health insurance plan. But, in case the bill goes beyond the sum insured in

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the base health plan, then one can use the super top-up plan to pay the extra amount by using deductible limit benefit."

(The writer is Asit Manohar.)

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‘IRDAI cannot be blind’: Delhi High Court raps insurance watchdog over non-implementation of Mental Healthcare Law - Financial Express – 19th April 2021

The Delhi High Court on Monday pulled up insurance regulator IRDAI for “turning a blind eye” towards non-implementation of Mental Healthcare Act by insurance companies, saying the day was not far when action will be taken against it. Justice Prathiba M Singh said that the Insurance Regulatory and Development Authority of India (IRDAI) was supposed to supervise the insurance companies and ensure they comply with the law.

“(I am) clearly getting the feeling that IRDAI is not taking action against insurance companies and only taking steps once court issues notice,” Justice Singh said. “It is very unfair what is going on. IRDAI cannot become blind to what is happening. You (IRDAI) cannot be blind,” the court said and added “the day is not far when action will have to be taken against IRDAI”.

The court’s observations came while hearing a woman’s plea whose claim for reimbursement of costs for treatment of schizophrenia were rejected by the National Insurance Company Ltd (NICL) on the ground that psychiatric disorders were excluded from medical cover. The court said the Act came into effect from 2018 and it provides that insurance companies cannot make a distinction between mental and physical illnesses.

Therefore, it was the duty of IRDAI to ensure the insurance companies’ products or policies are in line with the Act, the court said. “IRDAI cannot turn a blind eye to the non-implementation of the Act by the insurance companies,” the court said and asked the regulator to call for reports from other insurers regarding any such claims as made in the instant case.

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COVID-19 hospital bills: Your health insurance policy will not pay these charges - Money Control - 18th April 2021

The second COVID-19 wave has hit the country hard and is clearly fiercer than the first one in 2020. Apart from the toll that it can take on our health, it can also severely dent our savings and throw all financial plans off-gear.

Now, if you have a health insurance policy, you would be financially protected, but only to an extent. This is because all health insurance policies come with exclusions – that is, expenses that they will not pay for. For example, in all health insurance policies, treatment of pre-existing diseases before the waiting period is over is not covered. Similarly, cataract and hernia surgeries are often not paid for in the first policy year.

During COVID-19 treatment, disputes between hospitals and insurers on overcharging added to policyholders’ financial burden. As per industry estimates, policyholders across the country have been receiving only around 50-55 percent of their actual claimed amount for COVID-19 hospitalisation.

COVID-19 expenses not paid by health policies The major dispute in the initial days was over the use of PPE kits – which are classified as consumables – as also their costs. Later, insurers relented and started covering a part of these costs, which had also reduced over a period of time. However, certain restrictions continue. “PPE kits have become a significant

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portion of the hospital bill and any excess kits used above the specified limit are being disallowed,” says Shankar Bali, Joint Managing Director, Vidal Health TPA. The General Insurance Council indicative rate structure specifies the cap on PPE to Rs 1,200-2,000 a day. “Multiple PPE kits are not covered in a day. Most insurance companies pay for one PPE kit per day or up to Rs 1,500-2,000 per day for a PPE Kit,” says Dr Sudha Reddy, Head, Health and Travel, Digit Insurance.

COVID-19 significantly pushed up the focus on hygiene and sanitisation standards in hospitals, which, in turn, passed on the increased costs to patients. Insurers, however, object to these charges being billed separately. “Some charges such as housekeeping, air conditioning, daily charts and infection control charges are to be subsumed into the room charges by the hospitals. These are not payable if billed separately,” says Priya Deshmukh-Gilbile, Chief Operating Officer, ManipalCigna Health Insurance. Similarly, some insurers do not pay for biomedical waste and sanitisation expenses either, if they are charged separately.

These apart, there are other expenses that your insurer might not cover. “There are certain items which are completely excluded from coverage. For instance, nebuliser kits, steam inhalers, thermometers, private nurses and attendant charges,” explains Deshmukh-Gilbile. However, you could be luckier if you are covered under a group health insurance policy, which is typically facilitated by employers. “In the case of tailor-made group mediclaim policies, insurers are open to paying non-medical expenses, depending on the internal limits,” says Aatur Thakkar, Co-founder and Director, Alliance Insurance Brokers.

Do all insurance policies have exclusions? Yes, most of the health insurance policies have some exclusions. These are expenses that your insurer has made it clear, will not be paid for. So, even if your hospital has levied such charges, your insurer will refuse to pay, forcing you to foot that part of the bills.

The insurance regulator IRDAI has standardised a whole host of exclusions – a list that all health insurers have to follow. Despite this, the COVID-19 crisis saw policyholders having to fork out a substantial amount from their own pockets, as hospitals and insurers locked horns over ‘unreasonable’ and ‘excessive’ charges levied by the former.

How are cashless claims settled? With cashless claims, the insurer directly makes the payment to network hospitals on the basis of pre-agreed tariffs. However, COVID-19 patients have faced huge deductions – expenses that were not paid for by insurers – from their cashless claims too. In January, the IRDAI stepped in to advise insurers to enter into agreements with hospitals for COVID-19 cashless claims, using state government and GI Council rates are references.

“Cashless claims are being settled as per agreed tariff rates. Any charge which is mutually agreed by the hospital and insurer in the tariffs, are honoured,” says Deshmukh-Gilbile. Though the situation seems to have improved a bit for policyholders after IRDAI’s intervention, not all insurers have cashless agreements for COVID-19 in place due to disagreements over fair pricing. “After guidelines of the GI Council to curb excessive rates due to COVID-19, a lot of hospitals are not in agreement with tariffs proposed. Hence, insurance companies are negotiating afresh or settling claims as per the policy terms and conditions,” says Reddy.

How will my reimbursement claim be settled? In a reimbursement claim, you have to submit your hospitalisation bills to your insurer, which will then scrutinise the documents and make the payment to you. “The claims in which the hospitals have themselves billed as per the state or local body rates are settled as per the submitted bills. Wherever the hospitals submit non-GI Council bills or open bills, the same are settled as per policy terms and conditions,” says Deshmukh-Gilbile. However, health insurance policies contain a ‘reasonable and customary’ charges clause. So, reimbursement as per policy terms and conditions could mean adhering to ceilings imposed by government bodies or the GI Council, leading to partial claim settlement.

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MOTOR INSURANCE

Benefits of no claim bonus protection add-on cover in car insurance and how it works - Financial Express – 22nd April 2021

A comprehensive car insurance plan not only covers the mandatory third-party insurance for your vehicle but also provides coverage for any damages to your own vehicle as well! In fact, a comprehensive car insurance plan comes with a whole lot of additional benefits as well. For starters, it offers you a no claim bonus if you do not make a claim in the preceding policy year (s). So, for every successive claim-free year that you experience, you earn a higher no claim bonus (NCB).

Now, how does this bonus help you? Simple. The no-claim bonus earns you a premium discount in the next year’s premium. So, when you renew your car insurance policy, you get an equivalent discount on the own damage premium from your NCB! Not only this, but you can also keep adding the NCB over the years and choose to transfer the policy in case you plan to upgrade your car!

Remember: NCB is given to the driver and NOT the vehicle!

What are the No Clam Bonus rates? The rate of no claim bonus starts at 20% for the first claim-free year. Thereafter, the discount keeps increasing. It reaches 50% after five successive claim-free years. Well, that is the maximum discount you can get! But isn’t that fantastic?

Here are the no claim bonus rates depending on your claim experience – Impact of claim on NCB Though the no claim bonus allows attractive premium discounts, it becomes zero if you make claim in the policy. Irrespective of the number of successive claim-free years you have had, one claim and your NCB reduces to zero. You

get no discount on the renewal premium next year. Thereafter, the NCB rate starts again from 20% from the next policy year.

So, even if you have accumulated a 50% NCB, you go back to zero if you make a claim. How do you, then, preserve your NCB if you have to make a claim?

Option 1: Don’t claim, especially the smaller ones. Option 2: Opt for no claim bonus protection add-on!

No claim bonus protection add-on – the concept Add-ons are optional coverage benefits that you can add with your comprehensive or standalone own-damage car insurance plan by paying an additional premium. The no-claim bonus protection add-on is one such optional coverage benefit that is available with most car insurance policies. If you choose this add-on, you can protect the accumulated no claim bonus in your car insurance policy even if you have a claim.

How for the NCB Protection add-on work? Suppose you have a car insurance policy wherein you have not made any claims in the last three years. The available no claim bonus that you have under the plan is 35%. Now, in the fourth year, you incur a claim of INR 65,000 that you raise on your car insurance policy. The insurer settles the claim. This is what would happen when you renew the policy next year –

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Thus, with the addition of the no claim bonus add-on, you can save INR 2975 when you renew your car insurance policy.

Moreover, there is no limit to the claims that you can make under this add-on. Irrespective of the

number of claims that you make, if you have opted for the no-claim bonus add-on, the accumulated NCB discount would remain intact.

What you should do? To avoid losing out on the no claim bonus, you should avoid making small claims. Try and pay such claims from your own pockets. However, if the claim is considerable and you want to protect the accumulated NCB, opt for the no-claim bonus protection add-on. At a small amount of premium payable for the add-on, you can enjoy higher savings on the premium if you do suffer claims during the policy year.

When buying the no claim bonus protection coverage benefit, compare the add-on premium rate of different insurers. Choose an insurer that charges a lower rate so that you can save on the premium cost as well. So, choose the no claim bonus protection add-on and protect your policy’s no claim bonus even if you incur claims.

(The writer is Dhirendra Mahyavanshi.)

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Insurers eye increase in third party motor premium rates - The Hindu Business Line – 21st April 2021

The general insurance industry is hoping for an increase in third party motor insurance rates for 2021-22. The rates are notified by the Insurance Regulatory and Development Authority of India (IRDAI) on an annual basis and had not been changed last year due to the Covid-19 pandemic.

The new rates for 2021-22 are yet to be notified by IRDAI. According to general insurers, the premium needs to be revised in order to make the segment sustainable. Further, court judgements in the recent past have also had an impact on the sector.

Impact on past claims “Our view is that last year we didn’t get a hike in rates last year. Before that in February 2020, exposure draft for an increase had come but then the first wave of Covid happened and that was put in the cold storage,” Bhargav Dasgupta, Managing Director and CEO, ICICI Lombard, General Insurance had said.

Dasgupta also pointed out that court judgements have had an impact, even on past claims. He however, did not comment on the expected quantum of hike in rates.

Subramanyam Brahmajosyula, Head Product Development, SBI General Insurance said, “The regulator has always had to perform a delicate balancing act in terms of revising motor third party premiums as they need to bear in mind the interests of both customers and insurance companies. The exercise is likely to be more complicated this year as there was no increase in TP premiums in the previous financial year while on the other hand most companies have seen an improvement in their claims experience for motor as the pandemic induced lockdown has seen fewer claims being reported especially in the first half of 2020-21.”

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The Covid -19 pandemic and lockdown had brought down motor claims in the initial months but they have started coming back to normal, according to insurers. Meanwhile, industry data indicate some traction in motor insurance premium in recent months.

In 2020-21, motor third party premium increased by 4.4 per cent to ₹10,650 crore compared to ₹10,198 crore in 2019-20. However, on an overall basis motor premium fell 1.68 per cent to ₹67,790 crore last fiscal.

“In 2021-22, along with the expected uptick in the health segment, any increase in the premium levels of the Motor TP segment, which was held steady in 2020-21, could drive the non-life premiums,” Care Ratings said in a recent report.

(The writer is Surabhi.)

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Do-it-yourself checks for motor vehicle insurance on rise amid covid disruption – Live Mint – 17th April 2021

The Indian motor insurance marketplace has made a shift towards remote do-it-yourself (DIY) checks and inspections as a service owing to covid-19, which necessitated moving away from physical vehicle inspections. During the lockdown, insurtech firm WIM WIsure, according to a statement, “conducted more than 200,000 virtual inspections for passenger and commercial vehicles through its on-demand Artificial Intelligence (AI) enabled video inspection platform in Financial Year 2020-21".

The company saw the bulk of its more than 350,000 inspections to date during the lockdown, with strong

demand from tier-II and tier-III cities for mid-range SUVs, sedans and hatchbacks. Interestingly, cars in the luxury segment, which are typically chauffeur-driven, also witnessed a surge in demand for self-service technology, indicating remote video inspections becoming popular across all categories of vehicle owners, the release said.

In the commercial segment, demand was seen from insurance providers to support front line covid workers—for trucks delivering essentials in particular. Ravinder Kumar, founder and chief executive officer, WIM WIsure, said, “The pandemic has accelerated the shift from everything manual, laborious, and time-consuming to real-time, DIY, and quick methods, especially in the insurance industry, which is otherwise a process- and paper-intensive sector. We are already witnessing a rise in demand for self-inspection services as covid continues to affect movement of people even in 2021."

The technology stack automates inspection of insurable assets in real time using photos and videos submitted by policy buyers. Over 2.5 million photos and videos have been uploaded on the platform for motor inspection in 2020-21, according to the press release. The enterprise tech is disrupting the asset insurance industry with API-enabled inspection-as-a-service to evaluate risk and losses using automation and Machine Learning (ML) and provide instant validation of information from vehicle inspections, repairs, vehicle databases and claim settlements.

Insurtech streamlines the entire value chain by eliminating manual customer onboarding, sales, physical risk inspection/surveys and underwriting decisions.

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INSURANCE CASES

Forcing to pay for insurance policy sans consent unfair - The Tribune – 21st April 2021

The District Consumer Disputes Redressal Forum, Chandigarh, has penalised a bank for forcing consumers to pay for an insurance policy which they never willingly opted for. Terming the act as an unfair trade practice, the commission directed the bank to not only refund insurance amount of Rs3,39,975 with 12 per cent interest, but also to pay Rs25,000 as compensation to the consumers for mental agony and harassment.

Deepak Agnihotri and her wife Urvashi Agnihotri approached the commission through counsel Uday Agnihotri after a bank allegedly forced them to pay Rs3,39,975 for the policy which they never opted for. In

the complaint before the commission, the complainant said they availed of a home loan of Rs24.40 lakh on March 8, 2013. They deposited all necessary documents and title deeds with the State Bank of Patiala, which was later merged with the State Bank of India with all its assets and liabilities.

The complainants repaid the entire loan within five years and intimated the bank on September 17, 2018, to return the title deed along with the NOC. However, a bank official told that in addition to mandatory house insurance, the bank also issued another insurance policy known as ‘SBI Suraksha Policy’ for which an amount of Rs3,39,975 was outstanding. The complainants opposed the demand and told that they never opted/applied for such an insurance policy nor was it ever issued by the bank. However, the bank refused to return the original title deeds, etc., unless the entire amount of premium amounting to Rs3,39,975 and interest thereon of the Suraksha Policy were first paid. Left with no alternative and under compelling circumstances, the complainants deposited the amount of Rs3,39,975 under protest and got the Suraksha Insurance Policy closed, reserving the right to claim refund of the amount and interest.

The complainants said they never applied for any Suraksha Insurance Policy from the bank nor it was ever issued to them. The bank issued the policy without informing them. In its reply before the commission, the bank stated that the complainants were given two policies and it was also mentioned in the agreement. Denying allegations and pleading no deficiency in service, the bank prayed for the dismissal of the complaint. After hearings the arguments and examining the documents, the commission noted forcing a consumer to take insurance from the specific insurer to enhance their “other income” portfolio was a clear case of breaking the sanctity of the agreement and against the “fair practice codes” implemented by the RBI under the Banking Codes and Standards Board of India.

(The writer is Ramakrishna Upadhyay.)

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PENSION

Withdrawing PF money due to covid? Know these tax rules - Live Mint – 21th April 2021

The government had last year allowed employees to withdraw from their provident fund account in case they needed emergency funds due to financial stress caused by the covid-19 pandemic. Under the provision, a member of the Employees’ Provident Fund Organisation (EPFO) can withdraw up to 75% of his/her provident fund balance or three months’ basic wages plus dearness allowance, whichever is lower.

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So, for example, in case you have a balance of ₹1 lakh in your provident fund account and your three months’ basic pay and dearness allowance add up to ₹45,000, then you can withdraw up to ₹45,000. Such withdrawals are generally processed within three days of receipt of claims. However, if you are planning to opt for such a withdrawal from the provident fund, it’s important to understand the tax implications. As these withdrawals are made due to covid-related stress, the government has made such withdrawals

tax-free in the hands of employees.

Apart from this, the EPFO allows taxpayers to withdraw partially for specific purposes such as buying a house, child’s education, marriage, etc. These withdrawals are generally allowed after five years’ service and are hence tax-free. The EPF balance can also be fully withdrawn after two months of unemployment.

Taxing times Funds withdrawn from the EPF for reasons other than covid before the completion of five years of continuous service attract tax. “If the PF outstanding balance is

withdrawn before five years of completion of service, then it is taxable under the income tax law. If the withdrawal amount is more than ₹50,000, then tax is deducted at source (TDS) at the rate of 10% under Section 192A," said Kapil Rana, founder and chairman, Host Books Ltd, a cloud-based platform for accounting and compliance purposes.

“In case of absence of PAN, TDS will be deducted at the rate of 30%. Also, in case the withdrawal amount is less than ₹30,000, TDS deduction is not required," he added. Apart from this, the taxpayer will have to show the receipt in the income tax return (ITR). The deduction claimed against the employee’s contribution under Section 80C has to be reversed.

“It is slightly complicated to show the receipts in the ITR in the absence of specific provision. However, one can show both the employee and employer contribution under the head ‘salary income’, while interest earned can be shown under the head ‘income from other sources’," said Tarun Kumar, a New Delhi-based chartered accountant.

Also, if TDS was deducted, don’t forget to adjust your tax liability by the same. There are certain other exemptions that are available to employees under which withdrawals from the provident fund account are not taxable even if they are made before the completion of five years. “If an employee has been terminated due to ill health or the employer’s business is discontinued or the withdrawal is beyond the control of the employee... then the withdrawals are not taxable even if they are made before five years of completion of continuous employment," said Rana.

If the employee transfers the provident fund balance from one employer to another in case of job change, there are no tax implications. So, if you are facing any financial stress due to covid, you can dip into your provident fund account. However, experts advise that one should refrain from using this option in case there are other alternatives available as the provident fund is meant for your retirement savings. Withdrawals in the initial years will lead to you losing the compounding on your contributions. Also, the provident fund is one of the few instruments that is giving an interest rate of 8.5%. In case you withdraw, it will be advisable to increase the contribution through a voluntary provident fund if possible.

(The writer is Renu Yadav.) TOP

PPF account maturity period should be lowered, SBI report suggests – Live Mint - 17th April 2021

The government recently rolled backed the the steep interest rate cut on small saving schemes such as PPF (Public Provident Fund) and NSC, saying it was an oversight. Economists at India's biggest bank

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SBI have welcomed the move. "We believe the government has taken the best decision of not changing the rates on small saving schemes as we are currently going through an unprecedented pandemic crisis."

In a report, SBI economists have also suggested three measures for small savings schemes. "We believe a 3 fold strategy may be undertaken which could be beneficial for all," the report said.

Here are the suggestions: 1) The economists have suggested income tax rebate on interest on Senior Citizen Savings Scheme. "The interest on Senior Citizen Saving Scheme is fully taxable. The Feb’20 outstanding under Senior Citizen Saving Scheme was ₹73,725 crore. If the amount is given full tax rebate/ up to a threshold level it will have nominal impact on the exchequer." Under Senior Citizens Savings Scheme, a senior citizen can deposit ₹15 lakh and the current interest rate is 7.4%.

2) The report also suggested that "serious thought could be given of whether interest rates offered on deposits in India are linked to an age-wise interest rate structure."

"Interest rates offered on deposits in India are also demography agnostic (barring the separate rate for senior citizens). However, going forward, in our view, this approach should shift to an age-wise interest rate structure, with rates linked to long-term bank deposit rates till a certain age group, and offering a higher than market rate over that age group. This could, in one go, serve the multiple purposes of (a) ensuring a lower lending rate structure, (b) adequate returns for senior citizens, (c) lower interest expenditure and (d) an alternative to floating rate deposits," it said.

3) Third, "PPF is a government-backed, zero-default risk, long-term small savings scheme akin to quasi floating rate deposits with the objective to provide retirement security to self-employed individuals and workers in the unorganised sectors. As small saving scheme rates are adjusted in every quarter, Government should ideally remove the 15 year lock-in period for PPF and give the investors the option to withdraw their money within a stipulated time with some sort of disincentive of course!"

"PPF is a government-backed, zero-default risk, long-term small savings scheme akin to quasi-floating rate deposits with the objective to provide retirement security to self-employed individuals and workers in the unorganised sectors. "We expect the government to maintain a parity in interest rates between organised sector/EPF and unorganised/PPF for the larger goal of social security. As SSS rates are adjusted in every quarter, government should ideally remove the 15 year lock-in period for PPF and give the investors the option to withdraw their money within a stipulated time," the report said.

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IRDAI CIRCULARS

Topic Reference Investments in Debt Securities of InvITs and REITs https://www.irdai.gov.in/ADMINCMS/cms/whats

New_Layout.aspx?page=PageNo4454&flag=1 Facilitation by the Insurers for Cashless services at network hospitals

https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4455&flag=1

New Business Statement of Life Insurers for the Period ended ended 31st March, 2021 (Premium & Sum Assured in Rs. Crore)

https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4453&flag=1

Gross premium underwritten by non-life insurers within India (segment wise) : For the month / upto the Month Of March, 2021 (Provisional & Unaudited)

https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4452&flag=1

List of Valid Insurance Brokers as on 21.04.2021 https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo2120&flag=1

List of Insurance Marketing Firms as on 06.04.2021

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

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List of active Corporate Surveyors as on 31st March,2021

https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4332&flag=1

List of active Individual Surveyors as on 31st March,2021

https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4333&flag=1

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GLOBAL NEWS

Indonesia: Regulator urges insurers to resolve unit-linked disputes – Asia Insurance Review

The Financial Services Authority (OJK) has held a meeting with several insurance companies and representatives of the Indonesian Life Insurance Association (AAJI) to ask for clarification regarding increasing customer complaints over unit-linked insurance plans (Ulips). The OJK says that if insurers and their customers fail to reach agreement on disputes involving Ulips, it can assist in mediation to resolve the problem.

"If it is proven that there is a company error in selling insurance products, OJK will ask the company to fully compensate the customer for losses," said Mr Riswinandi, chief executive of the Non-Bank Financial Industry Supervision Department of the OJK. In addition, OJK also calls for the evaluation and improvement of the marketing model for unit-linked products and stresses the importance of product transparency.

"It is also necessary to ensure that consumers correctly understand the benefits of the product, the costs charged, investment risks, claim procedures, dispute resolution, and the rights and obligations of other policyholders," said Mr Riswinandi. The sales process is to be documented with recordings. OJK also urged customers to understand the profile and risks of unit-linked products.

Taking a tough stance, the regulator plans to blacklist errant insurance agents who violate regulations governing the sale of unit-linked products. Customer complaints are mainly related to investment-linked insurance products, largely revolving around mis-selling, the decline in investment returns from Ulips, and difficulty in making claims.

The head of the OJK Consumer Protection Department, Mr Agus Fajri Zam, said, “"Business actors must ensure that agents do not ask consumers to sign blank insurance application forms.” He points out that there are also some insurance salespersons who lack the certification for selling Ulips and do not understand well the unit-linked products that are marketed to prospective policyholders.

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Philippines: Non-life insurers to establish catastrophe insurance facility - Asia Insurance Review

The non-life industry has been directed to implement sustainable catastrophe insurance premium rates and formally establish the Philippine Catastrophe Insurance Facility (PCIF), according to a circular issued by Insurance Commissioner Dennis Funa, dated 12 April.

He also announced a consultation with the sector to determine the rates, inviting companies to send representatives to a technical working group for the PCIF and help draw up the structure, governance and other implementation details of the facility.

The Philippine Catastrophe Insurance Facility Technical Working Group (PCIF-TWG) is formed, composed of representatives from the insurance Commission and representatives from non-life insurance companies and National Reinsurance Corporation of the Philippines (Nat Re) to work out the details of the PCIF.

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The Insurance Commissioner ordered: All non-life insurance companies are directed to appoint, within 15 days upon issuance of the circular (that is 12 April 2021), their authorised representatives to actively participate in the PCIF-TWG to ensure the inclusive and consultative process for drawing up the structure, governance and implementation details of the PCIF, that would include:

a. The determination and adoption of risk-appropriate and sustainable catastrophe insurance rates and rating structure.

b. The commitment of the participating non-life insurance companies to adhere to the established sustainable catastrophe insurance premium rates through the compulsory cession to the PCIF. The cession shall be based on a reasonable percentage and/or maximum limit per risk / per policy, agreed upon by the industry through the Philippine lnsurers and Reinsurers Association (PIRA).

All non-life insurance companies shall adopt and implement the new rates and rating structure and shall apply to all insurance policies which provide cover for catastrophe risks, with effective term beginning 1 April 2O22, for both new and renewal business.

ln consideration of the existing reinsurance arrangements of the non-life insurance companies on their catastrophe risk exposures, the cessions to the PCIF shall commence no later than 1 Apnl 2022.

On 28 January 2020, the insurance Commission, PIRA and Nat Resigned a Memorandum of Understanding, agreeing that the MOU shall serve as a framework for further negotiations and discussion among them and to enter into a formal agreement for the implementation of the PCIF.

The MOU provides that the general framework of the PCIF shall include, among others, the review of current catastrophe insurance rates and rating structure to one that is more risk-appropriate and sustainable; the creation of an environment to ensure adherence to sustainable catastrophe insurance premium rates; and the optimisation of inclusive access to insurance cover subject to technically sufficient and sustainable rates, terms and conditions.

PIRA, following various presentations, discussions, meetings, and materials provided to members, conducted a survey among its members to confirm support for the creation of the PCIF. More than 85% of the survey respondents confirmed support for the creation of the PCIF, and the compulsory cession of an agreed proportion of each and every Earthquake, Typhoon and Flood risk to the PCIF, which shall in turn retrocede the same risks to subscribing authorised companies.

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Australia: Cyber insurance adoption rates see steady increases - Asia Insurance Review

The Australian cyber insurance market is demonstrating transitionary characteristics, similar to those seen in the USA following large losses in the retail and healthcare sectors in past years, notes Aon in its 1Q2021 Cyber Insurance Market Insights report.

The impact of cyber incidents is being felt globally. This applies increased international pressure in Australia, where cyber insurance adoption rates are increasing steadily, though not yet equivalent to those in the US. The Australian cyber insurance market attracts GWP of more than $110m.

This is leading to a localised realignment of limits being deployed by insurers. Some Australian insurers have carefully contracted the amount of capacity they will deploy, and in some instances, insurers have withdrawn from the class of insurance. Internationally it is a similar story, with markets looking to limit the capacity they will deploy, and again in some instances, a number of smaller markets have withdrawn as they have an insufficient premium pool to manage a portfolio.

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Even more so than premium increase and limit management, markets are increasingly inquisitive of an organisation’s security posture. The market has rapidly matured as to sophistication, primarily driven by large losses, and scrutiny of underwriting has increased sharply. Markets are increasingly empowered to walk away from an organisation that cannot adequately explain their security framework and security investment strategy, both historical and future, or to provide terms that are penal or designed to force improved risk management posture.

Ransomware became an unavoidable topic in 4Q2020, with many insurers forecasting changes to portfolios and possibly coverage as a result of associated losses. Further compounding these challenges were the dual issues of evolving silent cyber, and a new cyber incident that may be considered one of the most devastating events in cyber history – SolarWinds.

Whilst there were numerous cyber incidents in 2020, SolarWinds will play a critical role in cyber risk and insurance over the next few years. The theft of investigative tools from a globally recognised cyber security and forensics firm, as part of the SolarWinds compromise, is likely to lead to improved hacking tools in the hands of cyber criminals.

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