About Me

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Trichy, Tamil Nadu, India
Working as an Assistant in LIC of India, Rockfort BO, Trichy, TN. Having a strong belief that LIC's welfare is our welfare and always trying to work towards that. Also functioning as an office bearer of AIIEA Thanjavur Division.

Tuesday, November 19, 2013

Market Share of LIC is increased

Market Share of LIC is increased

According to IRDA figures upto September 2013, LIC's market share
in No. of policies has increased to 86.23% from 81.39% at March 2013 and
in New Premium it is increased to 75.73% from 71.25%.

As at 30th Sep. 2013,
LIC has collected Rs.37,906.36 Crores new premium and
sold 1,72,20,815 individual policies.

All the 23 Pvt. Cos.
together collected Rs.12,150.2 Crores (24.27%) and
sold 27,49,470 policies (13.61%).

Sunday, September 1, 2013

LIC Agents do Right Selling!

From Insurance Worker September 2013
FFF(For our Field Force)
LIC Agents do Right Selling!
A Harvard Business School study, “Understanding the Advice of Commissions-Motivated Agents: Evidence from the Indian Life Insurance Market” tried to show that LIC's Agents (only) are doing mis-selling.
The main accusation is, LIC Agents are not recommending term assurance products. The low and medium income households (blindly) trust LIC and because of that trust, they are misled by LIC's agents to endowment plans. According to the study endowment plans are costly. If one is able to plan insurance and investment/savings separately, then it may be true. But, it is not possible for the “worst educated consumer” or “low and medium income households”, whom the study concern about.
According to a report from Espirito Santo Securities, term insurance policies have the highest lapsation rate in India. “People want returns from their insurance policies and see term insurance as a waste of premium,” said the report titled ‘Life insurance thematic: Let’s not give up on life yet’. So, if LIC Agents are not recommending term plans, they are selling what people want.
If it is such a big crime to recommend endowment plans, all the private insurers should not sell them. Are they prepared for it? In India, nobody can sell insurance without savings component. It is LIC's success to provide proper mixture of insurance and savings in plans for decades, which are still able to compete with investment instruments in returns.
The inability of the private players to break the market domination of LIC even after 14 years (life term in India!), makes them to lament like this, calling themselves it a “study”! Whatever it may, the phrase “commission driven sales behavior”, used to describe about LIC Agents must be strongly condemned!
The study actually accept that it is unable to find much difference with private agents. But, at the same time it tries to create an illusion that LIC's agents (only) are doing mis-selling. The news and other items in media and web are also purposefully trying to magnify the illusion.
According to Irda’s Annual Report 2011-12, the highest number of complaints in life insurance related to mis-selling. RBI noted (in the Financial Stability Report) that, they mainly pertained to the private sector, though LIC leads the business with a 70 per cent share. These statements clearly expose the motive of the “study”!
IRDA now allowed Banks to act as insurance brokers. Until now banks are working as corporate agent for one insurance company each in Life and General. The new guidelines allow them to sell the products of all companies. IRDA argues that banks' relationship with the customer is fiduciary (a legal relationship of trust and confidence between two parties) and hence it is not fair for banks to act as agent for a particular company and giving no choice to their customers.
Actually this move is not to support the customers. The late entrants of insurance field are having no bank left to get a tie up and they were asking repeatedly to allow banks to sell products of more than one company.
But, RBI's financial stability report cautioned about mis-selling of insurance products by banks. It observed banks did not have a clear segregation of duties of marketing personnel from other branch functions, and bank employees were directly receiving incentives from third parties such as insurance companies for selling their products. It said that the direct incentives to the bank staff have created distortions in the sales structure.
If one company's incentives can influence what to sell to the customer, what will happen hereafter? Banks will sell the policies of the company which offers highest incentive, even it can be off the record. It will lead to even bribery instead of curtailing mis-selling.
The Irda chairman raised concerns over the health of insurance companies. "Many companies are making losses even after 10 years (in operation)," he said. On higher foreign direct investment, Vijayan said increasing capital is not equivalent to increasing stability in a company.
The requirement of having a standard proposal form by life insurance companies, with detailed information of the financial needs of the customers, has now been postponed (from August 16, 2013) to April 1, 2014. IRDA said that it has deferred the implementation, taking into account the representations of the life insurance industry.
LIC policyholders need to pay separate service tax for premiums from October 2013. While private insurers add a service tax component to the premium paid by customers, LIC has not been levying the tax on the premium. Now, IRDA mandated that service tax shall not be included in the contractual premium, but collected from policyholder separately. When service tax is charged separately, LIC may be able to pay higher bonuses on the policies, as the surplus in the policyholders' account is declared as bonus.

57th formation day of LIC!

Wednesday, July 17, 2013

How much FDI allowed now in Insurance?

Several news items today say that FDI in insurance sector had been hiked to 49% (from 26%). Is it true? Can Pvt. Insurance Cos. have 49% FDI now?
What happened actually?

Arvind Mayaram Committee was set up in March 2013 to recommend on the country’s foreign direct investment (FDI) policy.

The Arvind Mayaram committee suggested that FDI be capped at 49 per cent in nine sectors. These are FM radio, uplinking news & current affairs, print media (news & current affairs), commodity exchanges, stock exchanges, petroleum & natural gas refining, insurance, defence production and private security agencies.

The committee also suggested that clearance for the foreign investment proposals  (except for defence production and private security agencies) be through the automatic route, without referring the proposals to Foreign Investment Promotion Board.  However, the clearances from the concerned regulators and ministries will be necessary.

The cabinet approved these recommendations in a meeting today.

As can be seen from the recommendations, the committee has also proposed increasing the FDI cap for the insurance sector - from the current 26 per cent to 49 per cent.  
But that will require amendment to the IRDA Act which is pending before the Parliament.

So, no Insurance Co. can now have more than 26% FDI.
How many legs does this elephant have?
How much FDI allowed in Insurance?

But, when the parliament meets in the monsoon session from 5th August 2013, the government may try to push for the approval of the Insurance Laws (amendment) Bill.

We have to fight against it!
Be prepared!!

Sunday, April 21, 2013

Haryana bars ICICI Prudential Life Insurance

The Haryana Government has barred ICICI Prudential Life Insurance for three years from doing any further business with it or any of its departments for “intentionally delaying” the process of distribution of annuity to land owners and failure to carry out commitments. “ICICI Prudential Life Insurance Company needed to be blacklisted,” the State’s Finance Department said in a statement. “The noticee can, however, opt to pay compounding fee in lieu of entire or a part of the blacklisting period within one month from the date of this order.

“... this is by paying penal interest at a rate of one per cent for every six months or part thereof of the blacklisting period proposed to be compounded, by making a request to the government in this regard,” the statement said. Such enhanced rate of interest would be payable on the amount advanced to noticee for the period from the date of receipt of advance till the date of repayment of advance and interest at SBI base rate to the Department, it said.