Expert Zone

Straight from the Specialists

Long-term motor insurance might just work

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

A large number of two-wheelers on Indian roads are uninsured. This is not due to high annual premiums, but because the perceived benefits of taking an insurance policy are just not apparent.

Let us briefly look at the major risks associated with having a vehicle on the roads:

The first risk is the damage to your own vehicle in case of an accident. But unlike cars, where you would run to the paint shop even if there is a small scratch, owners of two-wheelers tend to go to a service centre only if the vehicle is not functional. A paint job requirement or even a minor dent on the bumper is usually ignored.

The second is the risk of causing damage to others. This is a major risk and is covered under the third-party component of an insurance policy. This is mandatory by law as it puts others at risk. But since one generally never makes a claim for one’s own damage, the insurance policy itself is completely ignored.

LIC launches online term insurance plan, finally

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

There are 24 life insurance companies operating in India, and Life Insurance Corporation of India (LIC), the industry’s biggest player, was one of only five which did not have an online term plan, until now.

LIC had earlier tested the online waters with an immediate annuity plan, but stayed away from the most-purchased plan – online term insurance.

Health insurance sector poised for more growth

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

With the arrival of Cigna TTK, there are now five standalone health insurers offering products and services in India. Religare Health is also a recent entrant that started operations only last year.

At a time when we are seeing several exits in the life insurance sector, this is an indicator of the growth potential in India’s health insurance sector.

Taking stock of the insurance sector

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

With half the financial year gone by, it’s time to take stock of the insurance sector. Let me start with life insurance.

It was a tough year as new norms for a majority of insurance products – which were to be effective Oct. 1, 2013 but later postponed to Jan. 1, 2014 – were hanging like a sword over the business.

New ways to distribute insurance policies

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(Any opinions expressed here are those of the author and not of Reuters)

On a rainy day in Mumbai, I was chatting with the taxi driver. It was a prolonged journey, made worse by a never-ending traffic jam. We talked about insurance and I asked him about his insurance cover. I heard the familiar story of a man being cheated into buying an expensive plan; he escaped only after losing a lot of money.

When we think of insurance, it’s typically life, motor and health insurance that come to mind. These are relatively expensive and an already reluctant Indian consumer stays away unless forced into it. This ‘push’ component has become the default sales mode. Motor insurance is mandatory by law and should have ready acceptance. But a large number of vehicles on Indian roads are still not insured.

Indian insurers can now go international

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Global insurers have been participating in the Indian insurance market for nearly 12 years. We may soon see the trend reversing.

The Insurance Regulatory and Development Authority (IRDA), the country’s insurance regulator, has laid down rules for Indian companies to start overseas operations. The criteria being: net worth of 5 billion rupees for life insurance companies, 2.5 billion rupees for general insurance companies and 7.5 billion rupees for re-insurance companies. In addition, the companies should have made a profit in at least three of the last five years.

Life insurance still struggling, non-life continues to grow

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The lean half of the financial year for insurance sales is behind us and the numbers for the life insurance vertical are not impressive. But the general insurance or non-life vertical has shown a healthy growth rate. Highlights are given below.

Banks as a shop for insurance

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The concept of insurance plans being sold through banks is called ‘bancassurance’ and there is a lot of interest in this distribution channel from all the stakeholders - customers, banks, insurance companies and the regulator.

Selling insurance through kirana stores

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

India is considered to be a large untapped market for insurance products. There seems to be enough scope for improvement on the insurance density and insurance penetration counts for the country. While this is true, the challenge lies in reaching out to the large population in the rural areas where the traditional financial distribution channels just don’t make economic sense.

FDI in insurance — to hike or not to hike?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

FDI in insurance might just be increased to 49 pct. This sounds way too familiar and has been the situation for quite a long time now. Or we could do some scenario building and even see it being delayed by a few more years.

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