QUOTE OF THE WEEK

“The will to succeed is important, but what's more important is the

will to prepare. “

Bobby Knight

INSIDE THE ISSUE

Insurance Regulation 2 Life Insurance 6 Health Insurance 16 Motor Insurance 32 Survey 35 Pension 36 IRDAI Circular 39 Global News 40

INSUNEWS Weekly e-Newsletter

17th – 23rd October 2020

Issue No. 2020/42

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INSURANCE TERM FOR THE WEEK

'Surrender Value'

Definition: It is the amount the policyholder will get from the life insurance company if he decides to exit the policy before maturity.

Description: A mid-term surrender would result in the policyholder getting a sum of what has been allocated towards savings and the earnings thereon. From this will be deducted a surrender charge, which varies from policy to policy.

As per a recent Insurance and Regulatory Development Authority (IRDA) directive, life insurance companies have been asked not to levy surrender charges if the policyholder chooses to terminate the cover after five years.

A regular premium policy acquires surrender value after the policyholder has paid the premiums continuously for three years. However, you need to make sure that you keep track of this policy till it matures. Once you decide to exit the insurance policy, all the benefits associated with it, including the protection cover, will cease to exist.

INSURANCE REGULATION

Hasten claim settlements in flood-hit States: IRDAI - The Hindu Business Line - 21st October 2020

The insurance regulator has directed all general and standalone health insurers to take immediate action for quick registration and disposal of claims arising out of floods in parts of Telangana, Andhra Pradesh and neighbouring States.

“The recent floods (October 2020) have caused immense loss to property in parts of Telangana, Andhra Pradesh and neighbouring States. There is an urgent need for the insurance industry to take immediate steps to mitigate the hardships of the affected insured population,” said Yegnapriya Bharath, Chief General Manager (Non-Life),

Insurance Regulatory and Development Authority of India (IRDAI), in a circular.

The insurers have been advised to nominate a nodal officer for the affected States to coordinate the receipt, processing and settlement of all eligible claims. “If there are any death claims and death certificate is difficult to obtain on account of the non-recovery of body, the process followed in the case of Jammu & Kashmir floods may be considered,” said the regulator.

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Irdai proposes changes in insurance advertising - The Economic Times – 21st October 2020

Insurance Regulatory and Development Authority of India (IRDAI) has put out an exposure draft on further regulation of insurance advertisements. The insurance regulator in a statement said,

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“Evolutionary trends in advertisements in the last 20 years coupled with technological developments which have changed the medium of advertising thereby necessitating the review of existing Advertisements Regulations.”

This potentially refers to the digital advertising done by insurers, intermediaries and ecosystem players.

The regulator is looking to modify the definition of advertisements and rationalisation of certain other definitions in IRDA (Insurance Advertisements and Disclosure) Regulations, 2000. Further the term insurance intermediary has been aligned with the provisions of the IRDA Act, 1999.

IRDAI said, “Various types of Advertisements such as Institutional Advertisements, Invitation to inquire, Invitation to contract and Joint Sales Advertisements

have been incorporated in the new regulations. Suitable provisions have been introduced for governing publication of Ranking and Awards by Insurance companies.”

IRDAI has done the changes with keeping in mind how the technology has evolved and the medium and modes being used for circulations of insurance advertisements. Further the regulator has widened the scope of the term ‘misleading advertisement’.

Onus of compliance on advertisement enclosed by third parties is on insurance companies. IRDAI also said, “Provisions have been incorporated to allow advertisements in different languages, without change in content from that of the base version, with the filing of a certificate.”

The regulator has invited suggestions and comments from stakeholders latest by November 10, 2020.

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IRDAI mulls standard Cyber Liability insurance cover – The Hindu – 20th October 2020

After conceptualising Standard Health and Life insurance covers, the Insurance Regulatory and Development Authority of India (IRDAI) is keen on evolving a basic Standard Cyber Liability Insurance product.

As a step towards such a product, a Working Group has been constituted by the regulator. The nine-member group, with Consultant-Liability Insurance P. Umesh as chairman, has been tasked to explore possibility of developing standard coverages, exclusions and optional extensions for various categories.

In doing so, the Group has been advised to study various statutory provisions on information and cyber security; evaluate critical issues involving legal aspects of transactions in cyber space; and to examine various types of incidents involving cyber security in recent past and possible insurance coverage strategies for them.

The terms of reference of the working group, which is required to submit its report within two months, include examining the cyber liability insurance covers available in the country and abroad and recommend scope of such covers for the present context and the medium term too.

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An order constituting the working group said amid the COVID-19 pandemic, there have been rising incidences of cyber attacks and a growing number of high-profile data breaches. It is felt that cybersecurity is the most important need for all sectors today to address the numerous risks posed by cyber-attacks, the regulator said.

Stating that insurance products need to adapt to the changing environment, the IRDAI communication said the General Liability policies do not cover cyber risks. Cyber insurance policies currently available were highly customised for clients in a new and quickly growing market. Thus, it was felt that a basic standard product structure is required to provide insurance cover for individuals and establishments to manage their cyber risks.

The members of the working group include have been drawn from public and private sector insurers, reinsurers, National Insurance Academy and IRDAI officials.

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Robust legal framework necessary for development of surety bonds market in India: Irdai report - Financial Express - 19th October 2020

An IRDAI working group has made a case for a robust legislation and ecosystem keeping in view the best international practices for promoting development of the surety bonds markets in the country. Surety bonds protect the beneficiary against acts or events that impair the underlying obligations of the principal.

Surety bonds guarantee the performance of a variety of obligations, from construction or service contracts, to licensing and commercial undertakings. The working group, set up by the Insurance Regulatory and Development Authority of India (IRDAI) to study

the suitability of offering surety bonds by Indian insurance industry, suggested that the exposure of an insurer under surety bond insurance may be regulated through a cap on its exposure under this business as a proportion of its net worth.

“For surety market to develop in India and keeping in mind best practices observed in other markets, a robust legislation requiring surety bonds and other non-fund based guarantees would be a necessary condition,” said the report on which the IRDAI has invited comments from stakeholders by November 9.

Surety bonds are different from corporate bonds and financial guarantees. While surety bonds refer to the performance or delivery obligations to complete the insured project, the corporate bonds refer to financial obligations to repay the debts or loans.

The report notes that surety bonds are proven risk management mechanisms with a long history that help ensure public and private owners execute their construction projects in accordance with the plans and specifications and ensure subcontractors and suppliers are paid. Surety bonds help provide owners of construction projects with guarantees of success and enhanced reputations.

The working group further said the surety bonds should be accepted as an alternative form of guarantee by the Reserve Bank of India (RBI) and government departments and accordingly reflect in the appropriate contract documents.

The Ministry of Micro, Small, and Medium Enterprises runs various schemes to aid the smaller businesses in development, such as, the credit guarantee scheme, where the businesses eligible for these schemes can approach approved banks and can get collateral-free loans up to Rs 50 lakh.

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“This can be extended for issuance of surety bonds also and in such cases, surety bonds and government guarantees can work more efficiently than banks to secure and promote the MSME sector within India,” it said. Further, the surety bonds business may be revived with offering of surety bonds to construction companies in India that covers road projects, housing/commercial buildings and other projects of government as well as private sector.

“The contract bonds may include bid bonds, performance bonds, advance payment bonds and retention money. The limit of guarantee may be limited to maximum 30 per cent of project value,” the report said. The working group has also suggested that the database of the bonds issued by all the insurance companies may be centralised at designated body to be decided by IRDAI. Every insurer should furnish the details of clients and exposures periodically to the designated body.

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Experts moot widening microinsurance sector on the lines of SFBs - The Hindu Business Line - 19th October 2020

A committee of experts on insurance has recommended to IRDAI amendments in the current regulatory framework and relaxing the entry-level rules for standalone microinsurance entities, including co-operatives.

In the backdrop of the pandemic, experts have underlined the immediate need to expand the coverage of microinsurance sector on the lines of what small finance bank have done for financial inclusion – catering to the underprivileged low-income groups.

The Insurance Regulatory and Development Authority of India (IRDAI), in February, appointed an expert committee to come up with recommendations on feasibility of standalone microinsurance through co-operatives, mutual or companies.

Mirai Chatterjee was the Chairperson of the Committee, which recommended to the IRDAI and government to relax licensing for such businesses that can cater to the low-income segment and bring down entry-level capital requirement for standalone microinsurance entities to ₹20 crore from the current ₹100 crore.

Coverage of microinsurance Dr Nachiket Mor, who headed RBI committee on Comprehensive Financial Services for Small Businesses and Low Income households, expressed the need to expand the coverage of microinsurance, considering the devastating financial impact on the low-income groups due to the ongoing pandemic.

“We want as many players to come in as possible. They have to be community-focussed institutions and they need to be interested in serving micro communities. To make all these happen, first of all we need the amendments in the Act, which will facilitate more players to get into it,” commented Mor, a member in the IRDAI-committee on the recommendations.

On the lines of Small Finance Banks that provides banking and credit, microinsurance is a mechanism to protect low-income families from financial risks during sickness, accidents, death or loss of assets.

Despite IRDAI’s efforts to promote insurance for low-income families, the outreach by the insurance companies has remained very limited. Even the Centrally-supported, Pradhan Mantri Jeevan Jyoti Yojana and PM Suraksha Bima Yojana are found to have their own limitations on servicing, besides limited awareness among the beneficiaries for claims settlement.

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“The data show that in last 6 years, these Central insurance products have not been able to make member education about the products. Second, there are gaps in servicing, and third, the premiums and claim settlement are not sustainable. But this microinsurance push will only facilitate and strengthen the overall purpose of bringing more and more people under insurance coverage,” Shreekant Kumar, CEO, of VimoSEWA told Businessline.

VimoSEWA – an insurance cooperative of the Self-Employed Women's Association (SEWA) – providesmicro-insurance to women in the informal sector. Having about 1 lakh policy-holders across five States, including Gujarat, Madhya Pradesh, Bihar, Delhi and Rajasthan, it is among the first and the largest microinsurance providers to underprivileged classes.

Data suggest that microinsurance accounted for less than 1.8 per cent for life and 1.16 per cent for general insurance in 2019-20. In its report, the committee found that while India’s population coverage under microinsurance in absolute terms is at 11.11 crore it covers only 9 per cent of the overall population. The potential market for microinsurance is 14.7 per cent of the population – about 50 crore in India. For other Asian countries such as Philippines and Thailand, this ratio stands at 20.6 per cent and 13.9 per cent, respectively.

The other recommendations include defining microinsurance and micro-insurers, providing end-to-end digital technology for transparency, accountability and monitoring, facilitating reinsurance of microinsurance through the existing licensed insurance/reinsurance companies, and setting up of an appropriate supervisory structure to enable fast-track product approvals, among others.

(The writer is Rutam Vora.)

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LIFE INSURANCE

Basic checks to ensure hassle free life insurance claim settlement – Live Mint – 22nd October 2020

The purpose of life insurance is often addressed using buzz words such as ‘protection’, ‘secure your loved ones’ and ‘safeguard your future’. All of this is true when it comes to understanding life insurance but the moment of truth for any insurance company and its customers is 'Claims'. Insurers take pride in having a high claims settlement ratio and constantly aim at making the claims process easy and convenient for their customers.

Despite this, there is a perception that getting claims settled is a cumbersome task. While insurers settle all

genuine claims at the earliest, there are a few measures that customers can take to avoid disputes or repudiation.

Firstly, understand the nature of the policy you are buying, the features and benefits and the premium amount and payment term of the policy. It is important that you pick the appropriate sum assured and tenure based on your current age and financial commitments. Ensure that the sum assured is in line with your income levels and standard of living. Also,make sure the renewal premiums are paid timely and policy is kept in force, as typically claims will not be entertained if the policy has lapsed.

Secondly, insurance contracts are solicited on the principle of ‘Uberrimae Fidei’ (Utmost Good faith), which assumes that customers disclose all material facts accurately at the time of completing the

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proposal form. At the industry level, a large portion of insurance claims are rejected due to non-disclosure of pre-existing medical conditions or misrepresentation of material facts. Hence, once you have zeroed in on the product you want to buy, disclose all details to the best of your knowledge. Details about income and education, occupation, health (including pre-existing diseases), family history and habits such as smoking and drinking should be shared upfront. If all the material facts are disclosed truthfully, then chances of repudiation of the claim are negligible.

Thirdly, many customers prefer to purchase the policy from an insurance agent (or the relationship manager at the bank), rather than to buy online. While the agent can help you zero down on the policy to be purchased and complete the paperwork, it is advisable to fill the proposal form yourself and/or ensure all the details mentioned in the form are correct.

Finally, to facilitate the processing of claims, do provide the details of nominees and the share of sum assured they are entitled to. If required, you may change the same at any point in the future. Do also keep your family (or a close friend/relative) informed about the insurance policy, sum assured and the process of filing the claim.

In the unfortunate event of death of the life insured, it is important for the nominee/claimant to inform the insurer at the earliest. This can be done by sending an email or calling the customer help line number, with details such as policy number, name, date, place and cause of death. This will help the insurer expedite the claim settlement process.Once the insurer is informed, they will typically ask for the claim form (provided by the insurer) to be filled and submitted along with some documents such as the policy bond, death certificate, as well as the KYC and bank details of the nominees. In case of missing persons or accidental death, a few additional documents would be required.

To sum up, it is important for customers to maintain transparency with their insurer and also understand the terms and conditions of the policy. Insurers strive to settle all genuine claims and pay out the claims expeditiously. At Exide Life, we have just launched ‘Insta Claim’ whereby claims are settled within the same day, if all requisite conditions are met. Getting a claim settled is not a complex process and a few basic checks is all it takes to ensure hassle free claim settlement!

(The writer is Ashwin B.)

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The new Saral Jeevan Bima standard term insurance plan: Should you buy? – Moneycontrol – 21st October 2020

After standard regular health insurance and COVID-specific covers, you will get to buy an insurance regulator-mandated standard term insurance policy from January 1, 2021.

The Insurance Regulatory and Development Authority of India (IRDAI) has come up with a standard term insurance plan that will have to be mandatorily offered by all life insurers. They will have to start selling these policies, to be named Saral Jeevan Bima and preceded by the life insurer’s name, on or before January 1, 2021.

This is in line with IRDAI chief Subhash Khuntia’s announcement earlier on the launch of such plans.

What will it offer? The policy will be offered to individuals between 18 and 65 years of age, with the policy tenure ranging from five to 40 years. The minimum sum assured that you can opt for is ₹5,00,000, while the maximum is

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₹25,00,000. However, insurers can choose to offer higher sums assured, provided the Saral Jeevan Bima policy wordings are retained.

You can choose from regular premium paying terms, limited paying periods of five or 10 years and single premium payments. The premiums can be paid in monthly, half-yearly and annual frequencies in the case of regular and limited pay policies. Death benefit will be the highest of ten times the annualised premium, 105 per cent of all premiums paid until death and the absolute amount assured to be paid on the policyholder’s death.

For single premium policies, the death benefit to be paid out will be the higher of 125 per cent single premium and absolute amount assured to be paid on death. Insurers are permitted to offer two riders – accident and permanent disability benefit options – for additional premium.\

The cover will come with a waiting period of 45 days from policy issuance – only death claim due to accident will be payable during this period. In case the death occurred due to other reasons, 100 per cent of the premium, excluding taxes, if any, will be paid out to the dependents.

Will other terms plan not work? The demand for pure protection term insurance has grown over the years. A term plan is the purest and simplest of all insurance policies. It gives your heirs a lumpsum amount after your death and thereby provides crucial financial support after you’re gone. Unlike traditional endowment

plans, term covers do not offer any return on capital if you survive the policy period. Hence, the premiums of term plans are also low.

But multiple term plans in the market can cause confusion. “There are many term products in the market with varying terms and conditions. Customers who cannot devote adequate time and energy to make informed choices find it difficult to select the right product,” the IRDAI said, explaining the rationale behind introducing a standard term product structure.

The insurance regulator believes that a standard product will reduce mis-selling. “…will make it easier for the customers to make an informed choice, enhance the trust between the insurers and the insured, and reduce mis-selling as well as potential disputes at the time of claim settlement,” IRDAI said.

While it has laid out features and policy wordings that will be uniform, life insurers will determine premiums, as in case of standard health insurance plan Arogya Sanjeevani, Corona Kavach and Corona Rakshak standard policies. The pricing will depend on factors such as expected customer segment and sum assured and will be as approved by the regulator,” says Bharat Kalsi, Chief Financial Officer, Bajaj Allianz Life.

Is the standard term plan any good? The uniformity in features and policy wordings will aid easy purchase of term plans, believe experts. “For first-time buyers of life insurance, the plan will be a boon. It will have the same features, benefits, inclusions and exclusions across all life insurers though the prices may differ,” says Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com.

You will have to wait and watch for premiums that insurers come up with. Since IRDAI has left premium determination to insurers as per their board-approved policy, your age, income and health history are likely to be taken into account. Like in the case of most term policies, they could also come up with smoker and non-smoker rates, where the latter is far cheaper.

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Fewer exclusions and clear definition of waiting period are a plus. "The death benefit seems to be more beneficial since it takes care of livelihood protection policies (LPP). Besides, the exclusion is only suicide (in the first year),” says Saroj Kanta Satapathy, Chief Operating Officer, JB Boda Insurance and Reinsurance Brokers.

Moneycontrol’s take Unlike health insurance policies, pure protection, regular term insurance policies are fairly simple products. Policyholders pay the premiums and in case of death, the insurer hands out the sum assured to their family members.

Life insurers have, over the years, indeed introduced newer features such as staggered claim pay-outs, lump-sum plus staggered pay-outs and inflation-linked increasing pay-outs, besides riders. This might have complicated the choices for some. However, insurers continue to offer simple term products that hand over the sum assured to nominees after the policyholder’s death.

Therefore, compared to health policies with uniform features and clauses, which helped reduce ambiguities, a standard term plan’s utility will be limited. However, if you are a first-time buyer, this product will help you make an anxiety-free start as features will be same across all life insurers. Uniform wordings and exclusions will leave little scope for disputes in future.

Once the products are launched, you need to choose your insurer based on the premiums and, more importantly, the claim settlement track record. If you are looking at a high-value term cover, specifically compare the companies’ claims paid record in terms of benefit amount settled.

(The writer is Preeti Kulkarni.)

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Insurance companies to see more business and renewals in H2: Kshitij Jain, Exide Life - The Economic Times - 20th October 2020

On one side there was a significant decline in the insurance sell but on the other hand people also realized the importance of the protection products or in general insurance in the last six months. After a big drop, now the life insurance companies are expecting a pick up in renewal and new business. Kshitij Jain, MD&CEO, Exide Life Insurance said, they received 200 claims pertaining to Covid-19. He also added that going ahead, revolutionary changes are happening in the face to face selling and H2 will show better improvement. Edited Excepts:

Amol Dethe: How much was the decline in the premium in the last six months?

Kshitij Jain: There has been a decline in the industry which is not unexpected because our industry has been dependent on face to face selling for a long time. Given the fact that the movement of people has been tampered, naturally the sale of policies has decreased. Compared to last year, the industry is down by 20% as far as sale of policies is concerned.

The first quarter was terrible, but improvement can be seen every month after that. Things have finally started to turn around. There is a hope of decent growth in the industry going forward. The industry is expecting growth in October-December.

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AD: How much improvement do you see, will you reach to pre-covid era? KJ: Achieving the pre covid era would be overstating the case. If I look at the standard thumb rule of the industry, the individual premium has been down for the first 6 months by 7-8 percent since April. If we can make significant improvement in that, it could be a turn around.

AD: How many claims have you received in the past couple of months? KJ: We have over 200 claims which is actually quite large considering the pandemic situation. The organization is doing almost everything to ensure that the claims are paid out expeditiously and try to settle Covid claims without any problems.Roughly we receive 4000 claims in a year.

AD: Considering the improvement, how do you see the next six months (or H2)? KJ: I see three things happening- New business is ok, but, the biggest thing is renewals coming back. From March to June, our company as well as the industry was affected because the renewal collections stooped down. It is damaging for the industry as far as long run is concerned. Persistency of the pre-Covid era may bring a certain comeback in H2. The entire perception of the customer for life insurance has changed.

The first thing is going to be an uptick in the renewals. The second is the increase in protection policies. The third is really interesting and has nothing to do with Covid. The interest rates are quite low now. The proposition that the life insurance industry is offering to the customers is relatively appropriate from a customer’s point of view. Given the fact that a large portion of premiums that we collect are towards savings and long term investments, my expectation is that we will see an improvement in the new business premiums as well.

AD: What kinds of changes do you see in the distribution model, and use of digital there? KJ: A lot of people confuse digital with completely unassisted sales over the internet. We are while away from having unassisted sales that will become a significant part of the industry. The combination of click and call will become much larger, but only click will take some time to become a significant part of the industry. In face to face selling, where the biggest transition is happening, revolutionary changes have come in the industry. You have the benefit of personalized advice and of buying the policy digitally without having to sit face to face with an agent. With the exception of one simple document that requires web signature, the entire process is done without pen and paper, where the customer can now interact with an expert in the company. 90% sales are E-sales in our company accelerated by covid.

AD: Can you share a breakup on how many policies are sold on digital and other platforms? The pure online business for the industry is under 5%. Direct sales do not mean online sales. Direct sales where the company and employees sell directly to customers is 15% in the private sector.

(The writer is Amol Dethe.) TOP

Life insurance: How to calculate returns on insurance policies - Financial Express – 20th October 2020

Many insurance products such as child plans and pension plans can take on the flavour of investments based on your objective of buying them. You may therefore want to compare the payouts to other investment products in the market, or even compare between insurance plans.

However, not only can the premiums vary, but also the amount, frequency, the start, and duration of payouts can all differ.

Let us see how we can compare insurance plans and their payouts. What is the Internal Rate of Return (IRR) The Internal Rate of Return (IRR) is a financial analysis tool to compare the returns from two different cash flow streams. The IRR involves the concept of Net Present Value (NPV), which is the present value of all cash flows in the present and future expected from an investment.

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The present value of money is always higher than the same amount in future. This is due to uncertainty in the interim period and price inflation, which reduces your purchasing power. Any future value (FV) of

money must be “discounted”, or reduced, at some discounting rate to arrive at its present value (PV). However, any amount in the present need not be discounted.

PV = FV / ( 1 + r )n where ‘r’ is the discounting rate and ‘n’ is the discounting period (usually years)

For example, if a present value of Rs 1,000 is invested at an interest rate of 10% per annum, the amount at maturity one year into the future will be Rs 1,100. Working backwards, Rs 1,100 one year from now is worth Rs 1,000 today—this is by discounting it at 10% to arrive at the present value.

PV of Rs 1,100 at a discounting rate of 10% = 1100 / (1 + 10%)1= Rs 1,000

How to calculate IRR of any cash flow stream When you pay an amount or a premium, it represents a negative cash flow (outflow) while calculating the IRR. Similarly, when you receive an amount or a payout, it represents a positive cash flow (inflow). When you discount these cash flows at a particular rate and add them up, you get the Net Present Value of the cash flow stream.

The IRR is that discounting rate which sets the NPV of a cash flow stream to zero. In other words, the IRR represents the interest rate at which the amount(s) you invest will get compounded to fetch you the maturity amount(s).

NPV = 0 = PV of all negative cash flows + PV of all positive cash flows

Applying the IRR concept to evaluating insurance plans In insurance plans, the premiums you pay become negative cash flows and the payouts you get become positive cash flows. Say, you pay a lumpsum premium of Rs 10,000 today and receive two payouts in the future: Rs 5,250 after one year and Rs 5,512 after two years. The Rs 10,000 becomes a negative cash flow since it is an outflow of cash, and is not discounted since it is in the present. The two payouts become positive cash flows since they are inflows of cash, and need to be discounted at the IRR so that:

NPV = 0 = — PV of Rs 10,000 + PV of Rs 5,250 + PV of Rs 5,512 = — 10000 + 5250 / (1 + IRR) 1+ 5512 / (1 + IRR) 2

Any future premiums to be paid can be included by discounting them at the IRR and with a negative sign. Usually, the IRR is obtained by trial and error. The IRR in the above example will turn out to be 5%. Microsoft Excel also provides functions like IRR() and XIRR() to calculate the IRR. Applying similar reasoning, one can compare different insurance plans with different premium and payout amounts and frequencies to get their internal rates of return.

(The writer is Hemanth Gorur.) TOP

Prashant Tripathy:‘Not good to say Covid has been good for life insurance … but it has created awareness’ - The Indian Express – 19th October 2020

Predominantly savings-oriented in India, the life insurance industry has seen a sudden shift of focus towards protection not only by the industry players but also by customers. Prashant Tripathy, MD and CEO, Max Life Insurance, told Sandeep Singh that over the last six months, there has been a massive rise

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in awareness and demand for protection products. He said going forward, the industry will come out with universal protection designs for masses who can’t afford expensive products. Edited excerpts:

How is the impact of Covid on industry now? Things are better than expected. In April and May, the industry was down by around 40 per cent, but things have been improving with every passing month and for us the numbers have been better than the broader industry. We have seen 4 per cent growth as compared to 11 per cent decline for private sector in September. But the overall industry is coming out of it and I am more hopeful for the second half. As far as claims are concerned, while there was a surge over the last couple of months, it not alarming. I also think that we hit a peak in September and so the claims too will settle down.

Though it is not good to say that Covid has been good for life insurance, but in the truest sense, it has certainly created far higher level of awareness. Historically, the industry has been predominantly savings-oriented — almost 95-96 per cent — but over the last six months we have seen a big growth in protection part. Last year, protection accounted for 8.6 per cent of our total sales, but in the first five months of this year it went up to around 15 per cent. Honestly, I thought it would take us 4-5 years to reach that level.

So there has been a big jump and it is leading to higher level of protection across the industry. I think moving towards protection is the right direction.

Even in the health insurance space, some standalone health insurance companies have seen 30 per cent growth and that too is a reflection of fear leading to right decisions being made. It will create a quantum shift with respect to where the market has been and there is higher level of acceptance for protection plan. Equally for providers like us it will be much easier to convince the customer.

If you see awareness and fear converting into outcomes, it is happening. However, the level of fear has subsided quite significantly over the last couple of months. Even as numbers are increasing, as people realised that mortality is moderate at around 1.2 per cent, the fear is going down and Google searches are subsiding.

In the past there have been SARS and Ebola, but Covid has hit the way nobody ever thought. How do you see this will shape the industry in terms of innovation and customer orientation?

There are shifts that are taking place. Some are more tactical or short-term and some long-term. Both the regulator and ministry have been very conscious and driving things that cater to Covid needs. We launched Covid riders that can go with our products and where customers get a part of the sum assured if they test positive.

Irdai has been pushing general and life Insurance companies to come up with Covid plans and that is going to remain for at least 18 months. Also, there has been a shift towards selling more non-participating kind of offering which is savings-oriented — guaranteed savings benefit— because interest rates have come down. Life insurance companies have unique advantage of leveraging the longer term interest rate.

What in the long term? Protection as a need is becoming more and more prevalent. Slowly, regulatory and other bodies are realising that protection is not only the need of the top of the strata, it is the need of everyone.

Hence, there will be push towards universal protection designs — simplified products that may have same features but will cater to segments that can’t afford expensive product designs. I think life insurance companies will also slowly start venturing into health. There is (a) committee which has been set up to review that. Even if the committee doesn’t (allow) life insurance companies to operate in indemnity space, I think they will have the riders space. Also, because of social security concerns, immediate annuity or annuity related plans will become prevalent. While a life insurance license allows companies to operate in multiple zones, but because of legacy reasons etc, we have operated only in equity and savings. I think that will get expanded further and will become much sharper.

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Do you think there should be focus on the retirement aspect too? We have been lobbying for some bit of change around regulation, the tax treatment of annuity, we have also made request on treatment of commission with our own regulator. So there are some structural issues that we are working through. Also, the level of awareness on these products is low. My sense is that there has been supply side constraints too. So there are issues on all fronts — structural, demand and supply side and as things evolve, all of that will start getting fixed.

(The writer is Sandeep Singh.) TOP

'Insurance is much more than only income tax benefits' – Live Mint – 17th October 2020

Over the years, life insurance has emerged as one of the many tax-saving instruments that people prefer. Many of us have purchased our first life insurance policy, only to save tax. While, this financial instrument acts as a rewarding tax shelter, one must not forget that the main objective of a life insurance policy is to provide financial protection to an individual and his/her family, in the face of uncertainties.

There are host of life insurance plans available in the market today, catering to various financial needs of an individual. Besides, financially protecting one’s

family in their absence, life insurance acts as a risk protection vehicle, as well as means to save and grow money. Life Insurance offers wide range of solutions that can come in handy to meet one’s financial goals such as child’s education, marriage, future financial goals, retirement or for protecting against loss of assets. Many life Insurance policies offer guaranteed return on investments while, some are designed to provide much needed finances against the risk of various illnesses such as cancer, heart, renal etc.

It is evident that life insurance policies are not only about tax saving or death benefit alone, but they are about long-term survival as well. They are a reliable financial instrument which one can opt for to build a corpus for various future money needs.

Even today, many individuals purchase life insurance plans primarily as a tax-saving product, without evaluating its features or understanding the benefits such a plan can offer. Like any other important purchase, one must be extremely prudent while purchasing a life insurance policy, too. As a rule of thumb, it is always advisable to choose a financial option that offers the mutual benefits of wealth protection, flexibility, value appreciation, and tax savings.

A life insurance plan does it all. To select the appropriate insurance policy, it is important to map it with one’s individual profile. Also, it is important to make note that the main purpose of a life insurance plan is to act as an income replacement tool. Therefore, if the sum assured is too small, it might not suffice the future financial requirements of your loved ones. It is thereby wise to consider various factors such as age, income, liabilities, age of retirement etc. before arriving at the adequate sum insured value.

It is a myth that life insurance provides only tax benefits, conversely; it is much more than that.

(The writer is Anil Kumar Singh.)

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The dawn of AI is upon Insurance industry - The Economic Times - 16th October 2020

We’ve all experienced pesky calls from strangers trying to sell us insurance. If you’ve noticed, such calls are already on the decline and it is rare to get unsolicited emails, messages etc for an insurance offering for a car when you don’t even own one.

No, the insurance companies haven’t stopped doing business, they’ve just got smarter, all thanks to artificial intelligence, which is helping them understand you better, sell in more innovative ways and serve the customers better. AI is also helping improve claims disbursements and fraud detection.

Take for instance, Max Life Insurance, which is using a number of AI technologies including vision, speech and NLP to develop a host of predictive models and cognitive applications. These tools are designed to help the insurer provide a hyper personalized customer experience.

“With our increased focus on ML and AI, Max Life has created a dedicated and specialized team “AI works” which will be responsible for developing and delivering cutting edge 'Business First' AI solutions. We are also working with a number of niche startups in this space through several AI accelerator programs,” said Suhail Ghai, EVP & Head- Information Technology, Max Life Insurance.

Max Life Insurance also has several other AI driven initiatives currently underway in the operations area and the company is planning to implement them soon to further enhance operational efficiencies. These initiatives, as Ghai said, range from enabling instant purchase experience with least involvement from both sellers and customers, to leveraging AI-enabled automation of decisions for claims processing.

These processes are also helping Max Life with upfront risk detection, shifting towards more and more self-service with the help of automated and fully conversational chatbots. A hyper customized customer experience then helps them reach out to customers at the right time, with the right product and fastest claim support while gathering more information about spurious claims.

While some cases of AI are already making the insurance sector advanced, companies are trying to tapp full potential of AI by investing in robo-advisors, data powered systems and much more.

“Insurance companies are heavily investing in technologies like Robo advisory powered with Artificial intelligence. The insurance portals are being powered with powerful bots which provides financial advice tailored to the policy holder’s income and needs. Data and analytics powered with artificial intelligence are used for writing algorithms for robotic advice and for configuring products as per customer’s needs,” said Feroz Khan, Partner and Head - Digital advisory, at KPMG in India.

It is not only the backend processes that the insurance sector is using AI for. AI is being celebrated for the advances it has made in customer experience. From providing real time updates to the customers to one-tap information, AI is doing it all for the insurance players.

Take for instance, Bajaj Allianz Life that has a Whatsapp bot and a chatbot called BOING through which customers are able to engage with the company in real time, get responses to queries on several services they may need with respect to their policies – like premium payment or fund value, amongst others.

“Similarly, AI in our video KYC helps us identify if there is a real human in front of the camera and her/his face is visible (and not a photo) before starting the KYC process. Or while onboarding a customer AI clearly highlights if the document is correct and name and other details are matching with what has been entered prior to uploading documents. These clearly showcase the confluence of intelligent tech offering seamless, safe and simple solutions to respond to several customer needs,” Goutam Datta, Chief Information & Digital Officer, Bajaj Allianz Life.

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Focus on core operations As AI integrates more deeply within the insurance sector, the companies need to position themselves to respond to the changing business landscape. While all the exciting and innovative parts are taking place, Feroz Khan, KPMG believes that 75 percent insurance companies are still struggling with their core legacy applications and infrastructure, which hinders their ambition of digital technology based innovation.

However most of the insurance players have already started using emerging technologies and innovating around policy issuance, claim management and underwriting process through digital technologies like telematics, blockchain, machine learning and cognitive computing.

Going forward, Khan feels that technologies such as service oriented architecture, API gateway and cloud computing will make an impact for the insurance industry by integrating various systems and applications for real time data transfer. This will lead to adoption of emerging technologies like blockchain and big data powered with artificial intelligence.

(The writer is Riya Pahuja.)

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Life insurance sales bounce back after 6 months of straight declines – The Times of India – 16th October 2020

After six consecutive months of decline, September saw 20 percent-25 percent growth for private life insurers like SBI Life, HDFC Life, Bajaj Life, Max Life and Tata Life. Insurers say growth in some part driven by pandemic, which has shown consumers the fragility of life and need for financial protection.

"The overall industry, which has reported decline since the COVID-19 outbreak, has thus reverted to the positive trajectory for the first time since January 20. Among the listed players, HDFC Life reported the most robust growth of 43 percent year-over-year," said Nitin Aggarwal, equity analyst, Motilal Oswal.

Insurers point to pandemic fears among the reasons leading to a boost in sales; particularly in individual protection plans. "At Tata AIA, we grew 25 percent for September and 22 percent YTD. Our market share is at 8 percent YTD as opposed to 5.8 percent last year same period. This growth is largely owing to our continued focus on protection which has seen a surge in the last few months, propelled largely by the ongoing pandemic. The uncertainty that has come with the current situation has prompted consumers to seek options that bring security and risk mitigation," said Samit Upadhyay, executive vice president and chief financial officer, Tata AIA Life Insurance.

Ravi Krishnamurthy, president – Zone I, SBI Life Insurance adds, “While personal and family safety is the biggest concern in the current situation, the pandemic has re-emphasized the importance of immunity for each one of us. While, the consumer’s current state of financial preparedness towards any health emergency is inadequate, there is an encouraging newfound awareness on the need to build a robust Financial Immunity to safeguarded one’s future.”

(The writer is Rachel Chitra.) TOP

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HEALTH INSURANCE

Here’s your guide to understanding fixed benefit and Indemnity based health insurance - The Times of India – 22nd October 2020

In the last decade, health and wellness became big buzzwords in India. The pursuit for a healthier lifestyle encouraged people to adopt cleaner diets, exercise regularly, and make changes that were long pending. In fact, this boom was so huge that the fitness industry, which was erstwhile waiting to be organised, witnessed phenomenal growth and geared up for inflating demands. As per a CII-Deloitte India report [1], the fitness industry in India was expected to cross USD 1.1 billion by 2017. But despite this increased awareness, the road to holistic health remains an uphill climb- thanks to India’s lack of preparedness when it comes to health exigencies [2]. Working out and eating right might have scaled to the top of the

priority list, but most Indians are still hesitant about taking the extra step of buying health insurance* cover to protect themselves from mishaps.

In fact, a 2017 study by actuarial and consulting firm Milliman, titled ‘Indian Life and Health Insurance Sectors,’ revealed that only 44% of the 1.3 billion people in India have a health insurance policy (as of 2017). It further revealed that while 76% of the population didn’t have any health cover in 2013-14, the number dropped to 56% during 2016-17. A huge chunk of the population thereby rely on their 'income or savings' or 'borrowings' to fund their treatment, leading to financial crises on many occasions. The situation gets worse in case of critical illnesses, considering India has one of the most privatized healthcare systems in the world, and 'out of pocket' expenses account for the bulk of medical spending. Substantiating this is the Call for action: Expanding Cancer Care in India report by Ernst & Young (July, 2015) that reveals that the baseline cost of cancer treatment is higher than the annual household income for over 80-85% of households in India. Further, cancer mortality rate is four to six times higher in India than the US. In a health ecosystem as volatile as this, insurance is second to none to gain a greater sense of control over our physical and financial health.

The need to buy Insurance tailored to one’s lifestyle requirements In India, the lack of insurance penetration can be largely attributed to misinformation. A large section of the population, including people who are health-conscious, are clueless about what they should be looking for before purchasing health insurance or choosing the right insurer. Therefore, to avoid financial hardships related to medical expenses, it is important that we explore the various types of health insurance such as family health insurance, critical illness insurance, health insurance for senior citizens and more to consider a policy designed as per our age and lifestyle. Further, as we grow old, stress levels also increase and lifestyle diseases such as heart disease, diabetes, hypertension, stroke, and cancer among others could creep in. To smoothly tide over these issues, it is important to consider factors like age, the right combination of premium and coverage, hospitalization benefits, no-claim benefits, co-payment clause, claim benefits, and preventive health check-ups among others.

‘Indemnity Plan’ or ‘Defined Benefit Plan?’ Which is the way to go? Due to the unpredictability associated with health ailments, simply buying health insurance might not always provide us with the safety net that we are looking for. For instance, our requirements from a health insurance policy changes depending on the seriousness of the medical emergency- whether it is a minor ailment or is life threatening, hospitalization duration, ailment management after being discharged from the hospital, etc. This rings the alarm bell to buy health insurance that covers both hospitalisation

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expenses and disease-related expenses. The best way to go forward is to customize your health insurance policy with the benefits of Indemnity Plans and Defined Benefit Plans.

As a textbook definition, an Indemnity Plan is a form of health insurance plan that reimburses the actual expense incurred during hospitalisation upto the pre-defined limit under the scheme. The amount that is reimbursed depends on the sum insured by the policyholder, which is the maximum amount of claim that the insurer reimburses subject to the policy conditions. The unutilized amount after an indemnity claim is made can be leveraged for medical needs in the future.

Making private hospitalisation cheaper: Health insurance experts recommend Indemnity Plans as an essential form of health insurance for a variety of reasons. In India, the cost of healthcare is dear and private hospitalisation is enough to blow a hole into one’s lifetime savings. To add to it, the longer the hospitalisation, the heftier is the medical bill. This is one of the biggest reasons where an Indemnity Plan can come handy and ease the financial burden to a great extent.

More flexibility: By letting the insured choose the hospital, doctor, or the healthcare service provider of their choice, Indemnity Plans offer flexibility. This is because insurance companies that offer indemnity plans collaborate with a wide network of hospitals and doctors so that policyholders don’t have to compromise on their needs and choices by simply choosing a primary care doctor. Without the additional process of obtaining referrals, they can self-refer to specialists as well. In many cases, cashless indemnity health insurance plans also do away with the bill submission process which is performed by the hospital in question.

Wide range of hospitalisation pay-outs: An Indemnity Plan keeps policyholders at the forefront and covers the hospitalization treatment cost for several ailments. Because these plans cover the actual expense incurred during hospitalisation up to the sum insured, a policyholder can seek the best treatment depending on the payout that his/her policy offers.

Choose between family floaters or individual plans: Indemnity Plans are further divided into two categories- Individual Plans and Family Floater Plans. Individual plans have to be bought in the name of one individual- whether it is yourself, a parent, a spouse, or a child. The premium is based on the individual’s age and the sum insured. Many insurers also offer discounts if more than one member of the family is insured simultaneously. On the other hand, Family Floater plans allow more than one member to be covered under the same plan, with the premium being based on the age of the eldest member. Depending on the family medical history, including critical illness history, the right policy should be chosen. For instance, a family with no major history of chronic illnesses can opt for a family floater, but if the family has a critical illness history, or one individual has a serious health condition, individual plans are the right way forward.

Low premiums The low premium rates of Indemnity Plans also make them popular among the masses. The insured usually avails a certain percentage of total cost incurred which reduces the risks for the insurer and allows the delivery of plans at lower premiums.

SUM INSURED AMOUNT CLAIMED REMAINING AMOUNT STATUS OF REMAINING AMOUNT

To encourage people to invest in Indemnity-based health insurance plans, many health insurance companies are revising their policies to offer the best to prospective policy buyers. Bajaj Allianz General Insurance Company, for instance, is at the forefront with a diverse range of affordable health insurance

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plans in India that are customized to take care of hefty hospital bills. Bajaj Allianz’s offerings have been curated based on the rising cost associated with medical care and come with a slew of benefits like cumulative bonus, free health check-ups, lifelong renewability, cashless treatment, and tax benefits among others.

Defined Benefit Plans: The Extra Booster While Indemnity-based health insurance plans go a long way in easing the burden during a medical emergency, your health insurance coverage shouldn’t end there. For a 360-degree cover, it is necessary to further insure oneself with Defined Benefit Plans, a type of health insurance cover designed to provide financial safety against critical illnesses. Here, the entire sum insured gets paid to the policyholder if a predefined ailment sets in. This plan doesn’t include hospitalisation charges and offers a lump sum payment to the policyholder. This pre-defined payment is independent of the expenses incurred during treatment and requires the policy holder to submit only the diagnosis report by a certified doctor to claim the amount. This plan gives the insured the flexibility to use the lump sum amount as per one’s convenience. Hospital Daily Cash plans are also based on the ‘Defined Benefit’ model and payout for the number of days a policy holder has been hospitalized.

If you are looking for all-round health insurance, it is necessary that you supplement your Indemnity Plan with a Defined Benefit plan. This way, you stay financially protected regardless of the type of medical emergency that you might face. Most of the time, when a critical illness occurs, a patient needs to stay at a hospital for a substantial period of time, post which recuperative treatment begins. A combination of Indemnity-based and Defined-benefit health insurance plans comes handy at a time like this when the money required to cope with the loss of income during the recovery stage is high. In addition to the lump sum paid, a critical illness insurance plan or a Defined Benefit plan also helps in combating non-medical expenses like treatment cost and other domestic expenses etc. Further, the premiums for defined benefit plans is also tax-free under section 80D of the Income Tax Act. It is important to note that various factors like age, medical history, body mass index, occupation etc. go a long way in affecting one’s health insurance premium- whether it is indemnity based or defined-benefit based. It is important to consider one’s personal, family, and medical history before choosing the appropriate plans. You can use a health insurance premium calculator online before taking the step ahead.

Leading insurance companies like Bajaj Allianz also offer a slew of critical illness insurance plans or Defined Benefit Plans that you can consider. Your Indemnity Based plan can be topped up with a Defined Benefit Plan to yield the best health coverage and pave the path towards a healthy and secure life. Most financial experts are of the opinion that health insurance should be bought the day you start earning. And why not, if it helps you take the leap towards a protected future?

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New age health insurance plans to increase fitness levels amongst consumers - Financial Express - 21st October 2020

Considering the strenuous way of life, we all live today, staying covered under a comprehensive health insurance plan has become a pivotal need. Moreover, over the last couple of years, even the structure and features of health insurance plans in India have evolved to cater to the specific needs and requirements of the customers. Many people have now started to practice a healthy lifestyle that is backed up with efficient and effective wellness and preventive programmes. And with customers showing keen interest in becoming health and fitness conscious, it is important for insurers to

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come up with plans that focus on making customers fit and health. Fortunately, the Insurance Regulatory and Development Authority of India has like always come out in support of the consumers and have issued guidelines on wellness and preventive features.

The regulatory body has directed all life, general and specialised health insurers to include features and benefits in their health insurance plans that drive policyholders towards maintaining a good health. As per the circular, the insurers have been suggested by the IRDAI to offer reward points to customers who follow and meet the set criteria of wellness and preventive features. Though, it is mandatory for the insurers to only offer such features after filing or incorporated them in the product in line with the product filing guidelines. It will be compulsory for the insurance companies to reveal the entire methodology and the criteria used for arriving at the reward points. For family floater plans, insurers shall need to clearly define and disclose to the policyholders the way in which accrual and redemption of rewards would be considered.

Most importantly, the wellness features that the insurer plans to offer may either be offered either as optional or as add-on covers to the policyholders. The issued guidelines are aimed at helping insurers focus on preventive aspects. With the introduction of such products, consumers will now be able to compare the various health insurance products not only on aspects like prices and extent of coverage but also on the wellness and preventive benefits that they offer. Further, the cost of implementing the wellness features will have to be factored into the pricing and costs of the insurance policies and shall be rightly disclosed to the policyholder in the prospectus.

Rewards for the Policyholders The regulator has listed a plethora of exciting benefits that insurers may consider offering to the policyholders. Some of such benefits include discounted OPD consultations or treatments, Pharmaceuticals, Health check-ups/ diagnostics, redeemable vouchers to obtain health supplements, memberships in yoga centres, sports clubs and many more. Under the guidelines, the insurers are even allowed to translate wellness parameters into fitness challenges and engage customers to improve their health outcomes. Formats can be decided on various parameters that include steps taken, sleep patterns, weight tracking, diet regime, participation in marathons and many others. For tech-savvy customers, insurers may even incorporate more advanced features like use of wearable products which can collect data throughout the day on activities of the customer and help the insurer better understand the specific health needs of the customer. This will help insurers offer their customers customised products that focus on specific disease management programmes or doctor consultation for a specific reason.

What Insurers Are Offering Numerous prominent insurers like Max Bupa, Aditya Birla Capital, ICICI Lombard, Bajaj Allianz and ManipalCigna are already offering health insurance plans with wellness features that reward the customers for maintaining a good health. The policyholders are given rewards provided they participate in the wellness programme run by the insurers. Mostly, the rewards are in the form of points which customers can accumulate while completing various tasks say for instance running 3 km/day or walking 10,000 steps/day. The accumulated points can be later redeemed against availing services like outpatient consultation (OPD), pharmaceutical expenses, diagnostic services and health check-ups.

Renowned insurer Aditya Birla Capital runs a health plan under which customers can earn health returns (reward points) through accumulation of ‘Active Dayz’. A policyholder earns one Active Day by burning 300 calories in a day through different physical activities. Similarly, ICICI Lombard also operates an iHealth Plus insurance policy under which the policyholder earns 100 points to quit smoking. The policyholder can even earn up to 1,000 points by undergoing a medical check-up at one of the network hospitals. The accumulated points can be later redeemed against OPD, dental expenses etc. Under Bajaj Allianz General, you can redeem the accumulated points for co-pay waiver at the time of claim or enhance the sum insured in case of no claim.

(The writer is Amit Chhabra.) TOP

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Rajasthan: Revised health insurance plan launch in November – The Times of India – 21st October 2020

While the state government is implementing Bharat-Mahatma Gandhi Rajasthan Swasthya Bima Yojna (AB-MGRSBY), a lot of beneficiaries are facing difficulties in getting treatment. The health department claimed AB-MGRSBY will be launched fully in the first week of November.

“We are finalising things such as software and the process of empanelling of hospitals. So far, 160 hospitals have been empanelled,” said a senior health department official. Patients have been facing difficulties in getting treatment under the government-run insurance scheme for BPL.

Rubina (30), whose kidneys have failed, is getting her dialysis done regularly. “Till last year, I was the benefit under the scheme. The coverage under the scheme. The coverage under the scheme was Rs 3lakh but that amount exhausted in November-December last year and since then I have been paying for dialysis. I tried a lot of times but my coverage has not been increased. My husband has disowned me and I have two daughters. My dialysis is possible only because some relatives are helping me,” said Rubina, a resident of Walled City.

The hospital has also agreed to give her discounts because of her financial condition. The hospital is providing dialysis at Rs 750 per visit and it is being done twice a week. Tonk-based farmer Rajesh Saini is also undergoing dialysis. Earlier, he was getting benefit of insurance scheme, but for the last 6 months, he has been paying from his pocket. He said his insurance amount has exhausted and its coverage has not been enhanced despite repeated attempts. However, health department officials claimed that they are regularly raising the coverage of beneficiaries whose Rs 3 lakh have been spent.

Indian Medical Association (Rajasthan-branch) president Dr MN Thareja said, “Since a lot of hospitals dues have not been cleared, they are not showing interest in the scheme.”

(The writer is Syed Intishab Ali.) TOP

How insurance companies are profiting off the coronavirus pandemic – WION - 20th October 2020

Who is gaining from the coronavirus pandemic which has now infected over 40 million people worldwide?

Insurance companies Insurance companies are making windfall gains. In the US alone, insurance companies doubled their profits in August. America's largest health insurer - The United Health Group reported a profit of 6.7 billion dollars in the second quarter of 2020. Other companies - like Anthem and Humana doubled their profits too.

The United States has a for-profit healthcare

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system. The system operates to earn profits, not for public service. Patients are at the mercy of insurers. And if you don't have a health cover, you'll have medical debt.

What about India? Last year, a report claimed that 55 million Indians were pushed into poverty due to patient care costs. Between 2011 and 2012, more than 80 per cent Indians were paying for healthcare out of their pocket. As of three years back - 56 per cent of Indians didn't have any health cover.

Consider the treatment costs for COVID-19 in private hospitals in India. In the month of May, a report scrutinised the bills of six patients in India's top private hospital chains. The cost of treatment is between three lakhs to 16 lakhs in cities like Delhi, Kolkata and Mumbai. This means that you end up shelling out more than 20 thousand dollars for treatment, for one person. The per capita income of India is 1837 dollars, a little over 1.35 lakhs. How can someone who barely earns more than one lakh a year afford to pay a hospital bill that runs beyond 20 lakh rupees?

Why so much attention on private care? As of 2015, more than 72 per cent of the rural population, and 79 per cent of the urban masses relied on private hospitals for treatment. India's public health care system is in dire straits. The quality of healthcare remains poor, with only one allopathic government doctor for every 10,929 people in India.

Many are compelled to choose private healthcare, and forced to pay through their nose. This is where insurance companies come in. The idea of insurance is to pay a little to mitigate the risk of major financial loss in the event of a serious illness. Insurance companies are supposed to bridge the gap in affordability. Unfortunately, companies in America are profiting during the pandemic. Meanwhile, companies in India are being accused of denying claims.

Since the outbreak of COVID-19 in India, several reports have accused different companies of denying payments. In August, the matter reached the Supreme Court. A bench led by Chief Justice of India SA Bobde asked the centre to examine why insurers are not reimbursing the entire amount of treatment. Back then, the bench had said: “At a time of pandemic, the insurance companies cannot adopt a hands-off approach, especially when people are facing hardship."

Indian insurance companies are earning significantly more from premiums. According to one claim in October, the annual premium on health covers has risen by 40 to 70 per cent. By August, standalone health insurance companies collected Rs 6,268 crore worth of premiums. During the same period last year, the same companies earned Rs 4,981 crore in premiums.

The growth in premiums is of close to nine per cent. By September, insurers had received a little more than two lakh claims, amounting to more than Rs 3,000 crores. The pandemic has led to the birth of new business models. Insurance companies are now offering new products - policies that specifically cover COVID-19, turning the pandemic into a business opportunity.

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Insurance claims related to COVID-19 treatment rise in September - Financial Express - 20th October 2020

The number of insurance claims related to treatment for COVID-19 rose to 40 per cent of the total health insurance claims in September, according to an analysis.

Based on its analysis of industry data, insurance aggregator Policybazaar.com said “most people filing the claim for COVID-19 treatment are senior citizens of age group 60 years and more, followed by people in the age bracket of 41-45 years”.

In September, the insurance aggregator said COVID-19-related claims accounted for 40 per cent of the total health insurance claims. It has been steadily increasing from 8 per cent in May. In July and August, it stood at 23 per cent and 34 per cent, respectively.

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Overall, coronavirus cases have been on the rise, especially in few states. The recovery rate is also high.

During the April-September period, COVID-19 claims accounted for 26 per cent of the overall health claims pie while the non-COVID-19 claims stood at 74 per cent. Other claims were mainly related to cardiovascular and respiratory diseases, nervous system disorders, and other infectious diseases, Amit Chhabra, Head (Health Insurance) at Policybazaar.com said.

He said that the average claim amount for COVID-19 was Rs 1,18,000 and the highest claim amount was Rs 2.19 lakh for the age group of 46-50 years.

“In the initial months, when IRDAI introduced COVID-19-specific policies there was a rush to buy those. But now, more people are realising the need for comprehensive health covers.

And that way IRDAI’s move allowing people to migrate (from) a COVID-19-cover to a more comprehensive plan is welcome,” Chhabra said.

Also, IRDAI has now made it more affordable for the customers by allowing the monthly premium payment mode. Now a 35-year-old male can get a Rs 1 crore health insurance at around Rs 1,000-1,500 per month, as per the portal.

About non-COVID-19 claims, Chhabra said utilisation of beds for non-COVID-19 cases is now increasing, because post unlock, people are going for their planned treatment and surgeries, which were on hold earlier.

Further, the analysis showed that “eye-related problems are becoming quite common” amongst the elderly people as almost 20 per cent of those over the age of 61 years made health insurance claims for problems related to eye and adnexa. The average claim for eye-related conditions stood at Rs 22,216.

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Should you renew Corona Kavach, Corona Rakshak insurance policies or buy a new plan? – CNBC - 19th October 2020

The Insurance Regulatory Authority of India (IRDAI) has decided to give consumers the option to renew the Corona Kavach and Corona Rakshak policies. While Corona Kavach is a standard indemnity-based COVID-19 policy, Corona Rakshak is a fixed benefit plan.

According to the latest circular, these policies can be renewed for 3.5 months, 6.5 months and 9.5 months until a maximum of March 31, 2021.

These COVID-19 specific health insurance plans were launched in July and gained popularity due to low premium, short policy terms and waiting

period of just 15 days. Experts believe that the decision to renew these policies is a welcome move by the regulator.

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Rakesh Goyal, Director, Probus Insurance -- an insurtech broking company --suggests that people should go for renewal as there would be no additional waiting period applicable to the current policy, which otherwise would have been for the new policy.

"Additionally, the IRDAI is allowing the customers to change the sum insured during the renewal and offering a waiting period only for the enhanced portion. This step seems to be a helpful move as it would provide the flexibility for the insured to use the already existing sum insured without the need of waiting for the entire sum insured to be used," he opines.

Anand Roy, Managing Director of Star Health and Allied Insurance believes that continuity privileges for these policies will motivate policyholders to migrate to comprehensive health insurance policies. "This will ensure that the insured and their families remain protected even after the pandemic is over," he says.

While 'Corona Kavach' and 'Corona Rakshak' policies provide only specific cover with regards to the treatment of COVID-19, a comprehensive health insurance plan may protect the policyholder against a wide range of illnesses including COVID-19.

Ajay Shah, Head- Retail Sales, Care Health Insurance calls the renewal provision a favorable one for individuals who’ve found value in short-term COVID-19 specific health insurance. “With the renewal, one can stay covered for a longer period of time," he believes.

However, the decision to renew the current policy or buying a comprehensive policy that offers coverage for a wide range of medical ailments including coronavirus is entirely a customer’s choice.

"It is recommended that one should look at opting for a more comprehensive cover, but in case an individual is still not sure then it is always ideal to at least renew the existing policy to remain protected," he suggests.

(The writer is Anshul.) TOP

Tweaks expand health insurance cover, but premiums now costlier - The New Indian Express – 19th October 2020

This month has seen a large scale revamp of the Indian health insurance sector, resulting in, among other things, higher premiums due to mandatory coverage for conditions excluded earlier, EMI-based premium payments, and a major change to the pre-existing conditions clause.

The Insurance Regulatory and Development Authority of India (IRDAI) has over the past few months, announced several tweaks to health insurance guidelines, a process accelerated by the outbreak of the Covid-19 pandemic. All these changes have gone into force beginning October 1 on all new and existing health insurance policies.

Among the more significant changes is the one where previously uncovered conditions are now mandatory under a general health insurance cover. Insurers are now barred from excluding conditions such as those arising due to hazardous activity, treatment for mental illnesses, age-related conditions such as cataracts, internal congenital diseases, artificial life maintenance, etc.

A comprehensive health insurance plan has to cover all these, besides others such as behaviour and neurodevelopment disorders. The flipside, of course, is that this has resulted in health premiums rising

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sharply-upto 45 per cent in some cases. Industry analysts say that the average price rise is likely to be around 15-20 per cent across products.

But, the tweaks have also standardised exclusion policies. Insurers now have to spell out specifically the conditions that are not covered under the insurance policy to the customers, with detailed guidelines on specific words laid out by the regulator. No insurers will be able to reject claims on an insurance policy that has completed eight years where the customer has paid premiums continuously, except in cases of proven fraud and permanent exclusions.

The definition of pre-existing disease/conditions (PED) have also been modified. Now, any condition diagnosed by a physician 48 months before the policy is issued will be classified as a PED. As will any condition for which any medical advice or treatment was recommended by a qualified doctor 48 months before issuance. Conditions whose symptoms have resulted within three months of the issuance are also PEDs. However, the regulator has also issued a list of exclusions that will be allowed, and insurers are not allowed to exclude any condition which does not feature on this list.

EMI premium payments Changes include provisions for insurers to allow customers to pay premiums as EMIs This can vary between monthly, quarterly, or half-yearly, according to the PFRDA circular. However, this is just an option provided to the insurer and not mandatory.

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All you need to know about health insurance waiting periods - The Hindu Business Line - 18th October 2020

Insurance regulator IRDAI has mandated that the waiting period for pre-existing diseases should not go beyond four years (48 months) in any health policy, effective October 1. But this is not the only waiting period component in a health policy.

For instance, if you sign up for a new health policy, you will have to wait for a minimum period before your health cover starts.

Maternity covers and some other specified diseases also have a waiting period before claims can be entertained.

Waiting period ensures that insurers do not cover for claims that are certain and predictable. The clause helps prevent their losses. Waiting period is an important clause and every policyholder should be aware of its nuances to avoid unnecessary hassles at the time of claim.

Waiting period, which is applied from the date of policy commencement, varies depending on the ailments, and differs from one insurer to another.

Varying time-frames If you buy a health plan, you have to mandatorily wait for a period of 30 days, known as initial waiting period, from the date of commencement of the policy. During this period, the insurance company will not admit claim for diseases or hospitalisation except for accidental injuries, provided the policy covers such accidental injuries.

Now, if an individual has an existing medical condition (known as pre-existing medical condition) before the commencement of health policy, he/she has to wait for a few years before the cover begins. However,

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excluding that particular medical condition, the policyholder will be covered for other illnesses/accidents, post initial waiting period.

The ‘pre-existing waiting period’ is usually 48 months among most insures but some insurers have only 24-36 months as pre-existing waiting period. For instance, for Optima Restore policy from HDFC Ergo Health, the pre-existing waiting period is 36 months.

There is another type of waiting period for specific diseases or specified procedure and this, too, varies from one insurer to another. Insurers usually have a common list of specific diseases or a list of medical treatments for which this waiting period will apply.

For instance, ManipalCigna’s ProHealth policy has a disease/procedure-specific waiting period of 24 months (two years), after which the expenses for the same will be covered. The list of specific diseases/procedures includes cataract, knee replacement surgery (other than caused by accident), and varicose veins or ulcers.

But keep in mind that if these diseases exist at the time of taking the policy or it is subsequently found that they are pre-existing, the pre-existing diseases waiting period will apply. Insurers usually have a waiting period of 90 days (from the date of commencement of policy) in case of critical illness or lifestyle-related diseases, including cancer, hypertension and cardiac conditions.

Health policies that offer maternity covers also have waiting period (for mothers and new-borns). Any treatment arising from pregnancy to childbirth including Caesarean sections will be covered under a policy only after the expiry of the waiting period. For instance, ProHealth policy from ManipalCigna covers maternity expenses only after expiry of 48 months. Similarly, Digit Insurance’s health policy, too, has a two-year waiting period for maternity cover.

Lastly, most insurers have personal waiting period which may be applied (from the date of policy commencement) to individuals depending on the declarations made by him/her at the time of taking the policy and the existing medical conditions. Factors including medical history, pre-existing medical conditions, medical test results and current health status will be taken into account by the insurer for applying this waiting period.

In Max Bupa’s ReAssure policy, for instance, personal waiting period is applicable for a maximum of 24 months, while in ProHealth policy (ManipalCigna), it is applicable for a period of 48 months. Personal waiting period will be specified in your policy document and will be applied only after you give your consent. If you decline, your application will be cancelled and premium, if any paid, will be refunded.

But most of the time, personal waiting periods are not applied by the insurers.

Points to note There are a few points to keep in mind about the waiting period clause in health insurance. One, you can reduce your waiting period. If you feel the pre-existing or disease-specific waiting period is too long, some insurers let you reduce the same.

But you might have to cough up additional premium.

For instance, in the case of ICICI Lombard’s Complete Health insurance policy, you can reduce the pre-existing waiting period if you opt for sum insured (SI) over ₹2 lakh.

The waiting period comes down to 24 months from 48 months. Similarly, in ProHealth policy (ManipalCigna), you can reduce your waiting period if you opt for a higher variant of the policy.

The pre-existing waiting period is reduced to 24 months in ‘Plus’ and ‘Accumulate’ variant while it is 36 months for the ‘Protect’ variant and 48 months in other variants.

Two, if you renew your health policy without any break in premium payment, the policy continues to cover you.

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But if you renew your policy after a break, you may have to undergo another waiting period similar to what a new policy entails.

At the time of porting, too, if you continue the policy without any break, your waiting period will be as per the new policy or as per your health status at the time of porting.

However, if you enhance your SI (at the time of porting as well as in an existing policy), the waiting period shall apply afresh to the extent of increased SI.

(The writer is Bavadharini KS.)

TOP

Homecare Covid-19 benefits yet to click with policyholders - The Times of India – 18th October 2020

Over three months after the insurance regulator brought homecare under the ambit of health insurance due to Covid-19, insurers are seeing barely any claims from this segment. Earlier, an insured person had to be hospitalised for at least 24-hours to avail its benefits.

While many private players confirmed that less than 1 percent of their total Covid-19 claims have come from the homecare segment, those who have reported slightly better rates attribute it to group policies. Insurers feel that in addition to the lack of awareness, the unavailability of cashless facility as well as low cost of home

treatment is resulting in such meagre claims from policyholders.

Star Health and Allied Insurance Co Ltd MD S Prakash said that despite its sales team hard-selling the concept of homecare, less than 1 percent of the Covid-19 claims have come in from this segment. The insurance player gets, on an average, 28,000 Covid-19 claims in a month, of which only 150-160 are from the home segment.

“The average claim amount from homecare is Rs 22,260 for us. I feel for homecare to take off, it will require effort from the public authorities and the healthcare sector to train their personnel and offer it as a trustworthy healthcare offering.”

Bhabatosh Mishra, director of products, underwriting & claims, Max Bupa Health Insurance, too pointed out that the insurer has so far sold around 25,000 Corona Kavach policies till date and a majority of the claims are primarily for inpatient hospitalization whereas the claims for homecare treatment are negligible as of now. “In most Covid cases, customers who don’t need hospitalization, don’t really need any specific line of treatment and are asymptomatic in many cases. Hence it is unlikely to drive a significant volume of claims,” Mishra said.

Insurers across the board pointed out that the claim size from the home segment in Covid case is much lower than hospitals. However, this segment is at a nascent stage in the country with very limited organised players. As per data compiled by Policybazaar, as of September, Covid now forms 40% of the total health claims and Covid patients needed more intensive care with an average claim of Rs 1.18 lakhs versus non-Covid claims average claims of Rs 57,000.

Bhaskar Nerurkar, head of health claims, Bajaj Allianz General Insurance pointed out that out of the total Covid-19 claims the insurer received in September 2020, only around 7% pertained to homecare treatment. Most of these claims were from GMC (Group Medical Coverage) customers rather than retail

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health policyholders. “This can be due to lack of awareness among retail customers. In the case of GMC, HR usually guides employees towards this option, whereas retail customers may not be aware about it,” he said.

He explained that it’s difficult to gauge a proper uptake for homecare treatment because most of these claims are on reimbursement basis.

(The writer is Swati Rathor.) TOP

How color coding will help consumers in health insurance - The Economic Times - 17th October 2020

Health insurance is a must have investment which covers one of the most important aspects of our life. Hence, it is important to buy the right insurance to avoid unexpected medical emergencies.

The COVID-19 outbreak has boosted growth in the sector in a relatively under-insured market by increasing the health insurance penetration rate. More and more people have started investing in health insurance products; health insurance related queries have increased by more than 50% in the last few months.

However, there still lies a gap in the consumer segment when it comes to understanding the product offerings. To further simply the buying of insurance plans, The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to introduce colour coding in health plans. For insurers, the colour coding will help in explaining consumers various product offerings in a simpler and easy to understand way. For consumers, the colour coding will help them understand the right product for their family.

Below are ways how colour coding will help buyers invest in health insurance products.

Understand the complexity of the product: In its draft guidelines, IRDAI has suggested three colours—green, orange, and red that will denote product complexity. Green is the colour which most health insurers will desire as it indicates that the product is simple. Orange will indicate moderately complex product and red will indicate the most complex product. Seeing the colours, a layman can understand the product parameter at the very first glance.

Encourage consumers to ask questions: Colour coding will encourage consumers to ask questions about the products, which in turn will give them more clarity. For example, if a consumer is investing in a plan which is in the red category; he can ask the insurer questions about the complexities in the product. The investor would thus be able to take a more informed decision before putting his money into the insurance plan.

Curb in mis-selling of products: IRDAI understands the fact that health insurance is a relatively complex subject for a common man to understand. This goes especially for people buying health insurance for the first time. Colour coding will thus help customers understand the products in a better and simpler way and the insurers in selling the best suited health insurance plan to the consumer.

Bridge the gap in understanding: Many a times, consumers do not understand the terms and conditions at the time of investing in the insurance plan. Different consumers have different needs from

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their insurance plans, and they should know if their needs are addressed in the plan that they are buying. Colour coding will also help in bridging the gap.

Though colour coding has been proposed to make health insurance investment a comparatively simpler process; it is important to understand that colour coding is only like the first step. It is important to check all the information, clauses, disclaimers mentioned in the insurance plan before investing. People have a tendency of investing in hurry without reading and understating the terms fully. A thorough understanding from the consumer end is a must before investing into any health insurance plan.

At any given day, health insurance helps in meeting the rising cost of medical care, whether it is related to Covid or any other disease. Prior to Covid, there have been other deadly virus attacking people worldwide. While life expectancy of people has increased, there is equivalent increase in the number of high-risk diseases across the world.

Hence, health insurance is a must for all age group of people.

TOP

Corona Kavach insurance policies cross 1 crore milestone - The Economic Times - 17th October 2020

The market for Corona-Kavach policies has grown 10-fold in a month to 1.1 crore from 15 lakh. A record sales figure that makes it the hottest selling insurance product in decades.

Irdai chairman S C Khuntia announced the figure while addressing a CII meeting on Thursday. While there have been a few group health purchasers, the overwhelming majority of sales is coming from individual retail customers. “Growth in corona-specific policies are driven by rising Covid-19 cases, with continuous uncertainty and a surge in related medical expenses,” said Subrata Mondal, EVP and head underwriting, IFFCO Tokio General Insurance.

Media reports on hospitals’ bills have played a role, say insurers. “About 75% of customers are preferring to take sum insured of Rs 2-5 lakh. Only a quarter are taking coverage below Rs 2 lakh,” said Gurdeep Singh Batra, head - retail underwriting, Bajaj Allianz General Insurance.

Insurers also say that many customers are first-time buyers. “More than half the customers who have approached us for Corona Kavach are new to insurance. Since Corona Kavach only has a maximum sum insured of Rs 5 lakh, if people feel that is not sufficient then they take a comprehensive family plan,” says Batra.

As Corona Kavach policies have a maximum sum insured, most people were buying it as an individual cover and not family floater (as only one person’s hospital bill could exhaust Corona Kavach). But with heightened insecurity, people are now turning to comprehensive insurance plans with family floater option, said insurers.

(The writer is Rachel Chitra.) TOP

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Covid forms 40% of total health insurance claims – The Times of India - 16th October 2020

As of September, Covid now forms 40 percent of total health claims for the general insurance industry. It has been steadily increasing from 8 percent in May to 23 percent in July to 34 percent in August - as cases rise and reliance on private healthcare increases.

"This is scary - Covid claims now nearly form half of total health industry claims. And one must remember that non-Covid claims have also been increasing. In March and April when the lockdown was severely enforced, we saw people postponing planned surgeries like a cataract operation or knee-cap surgery. But in September, non-Covid claims had risen because

of the pile-up; caused by people postponing necessary treatment in the first half of the lockdown," says Amit Chhabra, business head - health, Policybazaar.com.

Analysts also worry rising Covid claims could put more pressure on the books of insurers, particularly the three PSUs - United India, Oriental and National; whose solvency ratios have been of concern. Higher health loss ratios could put pressure on general insurers in the second half of fiscal 2021, said Ansuman Deb, equity analyst, ICICI Securities.

Besides, it may put pressure on premium. "Rising Covid claims is an industry concern. This could lead to price hikes for health insurance products," said Nitin Aggarwal, equity analyst, Motilal Oswal.

(The writer is Rachel Chitra.) TOP

The group health insurance policy offered by banks has just become more attractive! - Financial Express - 16th October 2020

With the Covid 19 still lurking on your shoulders and heavily breathing on our necks, health insurance is surely something that one wants to ignore or even delay. So, if you had been contemplating a health insurance plan, you can consider the group health plans offered by your bank.

Group Insurance is not just offered by your employers only however even banks can offer a group health insurance plan to all its account holders and most private and public sector banks do offer the facility of group health insurance schemes for their account holders.

These schemes are usually for a specific coverage and not as customizable as an individual health insurance plan would be, but the premiums are definitely cheaper and often have pre-existing coverage from day one. This is what makes a group health plan offered by a bank very attractive. There is also a tax benefit under section 80 D for the premium paid.

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For the last few years, banks had been allowed to partner with 3 insurance companies in the life, general and health insurance sectors respectively. So, there are multiple insurance partners for all bank account holders to opt for the group health insurance plan.

Recently, the Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of portability in such group health insurance schemes offered by banks. This is good news for account holders as the facility of porting would allow them to choose between the available plans offered by various insurers partnered with the same bank. But, before delving into the latest guidelines issued by IRDAI in this context, let’s have a look at some of the common features of such group health insurance schemes –

Features of group health insurance plans offered by banks The group health insurance plans offered by public and private sector banks have the following salient features –

The coverage is usually fixed by the insurance company. In some cases, the customers might also be allowed the choice of the sum insured from the options available only

The premium of the policy needs to be paid by you, i.e. the account holder for which you can claim an income tax deduction under section 80D

The coverage is available only for the existing account holders of the bank and you can enjoy coverage for as long as you hold an active account with the bank

The premium rates are quite low as compared to individual health plans Coverage can be extended for dependents too at an additional premium Pre-existing conditions are, usually, covered from the first day itself without any waiting period.

However, some plans might have a waiting period which is usually low There is no pre-policy medical check up, as it is usually based on a declaration of good health

Now, after the new change in regulation, what’s in it for the account holders?

The new IRDAI regulation In a circular dated 7th October 2020, IRDAI allowed the benefit of portability in group health insurance schemes offered by banks. In its guidelines, IRDAI has stated that account holders can choose to change the insurance company of the group health insurance policy which they hold with their bank.

This portability benefit, however, is subject to the following terms and conditions –

You can port or change your existing health insurance plan to another insurer only if the insurer offers a group health insurance policy to the customers of the same bank.

Porting is allowed between indemnity oriented health insurance plans only.

What are indemnity health insurance plans? Indemnity plans are those which cover the actual medical costs suffered.

So, if you are covered under an indemnity oriented group health insurance scheme provided through your bank, you can port to another indemnity oriented health insurance scheme with the same bank but with another insurer.

The porting of the policy would be voluntary on part of the account holder. Porting would be allowed only if the policyholder sends an application to the bank and/or the insurance company to port the existing policy.

Porting is allowed only at the time of renewal. You would have to submit a porting request at least 30-45 days prior to the renewal date of the policy.

Since these guidelines have come into effect immediately and you can choose to port your existing group health insurance policy if it comes up for renewal.

Time for good news for bank group health customers?

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Yes. The new guidelines stated by IRDAI have made group health schemes offered by banks more attractive for account holders. Now, account holders can choose a suitable insurance plan offered by another insurer if they are dissatisfied with their current coverage or their service. This porting is free of cost and gives policyholders a choice in the policy that they can buy so that their coverage doesn’t cease. Also this change might give an impetus to the health insurance penetration in India so that more people can avail the coverage without having to worry about continuity.

(The writer is Dhirendra Mahyavanshi.) TOP

Importance of having a heart care insurance policy - The Indian Express – 16th October 2020

Cardiovascular Diseases (CVDs) are today a primary cause of mortality in India and in the coming few years, it is expected that CVDs will carry a much significant economic and social burden on the Indian population. Cardiovascular diseases are a combination of various kinds of heart-related disease, stroke and ailments of blood vessels nourishing the body parts.

Indians most prone to CVDs As per a study published in the popular health journal ‘The Lancet’, until the year 2016, the estimated frequency of CVDs in India was 54.5 million. However, deaths due to CVDs in India have increased

from 1.3 million in 1990 to 3.7 million in 2019.

Today, one in four deaths in India is because of CVDs with ischemic heart disease and stroke responsible for more than 80 per cent of this burden. Unfortunately, more than half the deaths caused by heart-related ailments are in individuals less than 70 years of age.

Lately, it has been observed that CVDs tend to affect people in the most productive years of their lives and result in catastrophic social and financial consequences.

As per the study findings, Indians are 10 times more likely to die of CVDs than people in other parts of the world, and this primarily because of the genetic make-up of the Indians. Another leading factor why Indians possess the highest risk of CVDs is the consistent lifestyle change they have undergone over the last few decades.

Some major reasons for the ongoing cardiac disease crisis are unhealthy diet, air pollution, high cholesterol, hypertension, diabetes and obesity. Considering the given factors, it is crucial that each one of us must take a step back and start working towards ensuring a healthy heart.

Cost for treatment of CVDs Ensuring a healthy heart not only means living a healthy lifestyle but also means securing yourself against the massive expenses of unexpected CVDs. And this is because it is not always important that a person living a healthy lifestyle will never be affected by a CVD. Though chances are quite low that people living a healthy lifestyle will get a CVD but there have been several incidences where people following a strict lifestyle have also become prey to the cardiac disease crisis. Over this is the exaggerated cost of treatment for heart-related ailments.

In order to undergo angioplasty to unclog the arteries may cost you anywhere between Rs 3 Lakh to Rs 5 Lakh in a metro city. Similarly, an open heart surgery costs Rs 5 Lakh to Rs 8 Lakh while valve-related

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surgeries cost anywhere between Rs 4 Lakh and Rs 7 Lakh. It is not always possible for everyone to have enough finances to cover this huge cost and take the best possible treatment.

Get a Health Insurance Cover It is only possible to easily cover these costs by financially protecting yourself through a comprehensive health insurance policy. Your health insurance policy will cover you against all possible health care expenses for the treatment of CVDs and every other disease as well.

A health insurance plan covers you for all hospitalisation expenses along with pre- and post-hospitalisation expenses as well. Moreover, considering the rising incidences of cardiac disease in India, numerous insurers have even come up with customized fixed benefit health plans that only cater to conditions related to the heart.

These plans provide financial protection in case you are diagnosed with a cardiac condition. Just like a fixed benefit plan, under these plans as well the entire sum insured is paid out to the insured on diagnoses of a CVD. The payout amount can be used for the treatment of the illness and even compensate for the loss of income due to the recovery period.

(The writer is Amit Chhabra.)

TOP

MOTOR INSURANCE

AI to transform auto insurance in India - Analytics India Magazine – 19th October 2020

Insurance in India is penetrating at 3.7% of the Gross Domestic Product (GDP) as against the world average of 6.3%. Where life insurance is growing at 11 – 12%, general insurance is growing at 18% per annum in India. As the market for automobiles increases, the insurance market for automotive is also increasing. Though there is a massive market for auto insurance, the challenges in India for auto insurance renewals are still challenging, enforcing a greater need for improvements in the process.

The challenges like renewals, retention and claim settle in auto insurance exist for a long time now. However, the emergence of technologies like

artificial intelligence and machine learning are being applied to solve and simplify these processes. As a matter of fact, some of the insurance giants like ICICI and Reliance in collaboration with Microsoft have started introducing AI-based apps for auto insurance activities like the new policy, renewals as well as vehicle inspection. The apps make buying and renewing policies easy for the customers, anywhere. And soon the app will also be able to simplify the process for users to make a repair claim.

In the case of lapsed policy instead of a physical inspection, customers can now simply take images of their vehicle and upload them with Insure. The app then uses AI and ML to divide the images into frames, which would allow it to evaluate the various parts of the vehicle to identify the damages.

Such an advancement would allow the AI module to make a judgement of the damages on the car/vehicle very quickly, which, in turn, reduces the processing time from days to mere minutes. The system leverages the Azure platform, along with computer vision and machine learning technologies, which makes the process accurate making it right for such purposes. Launched in December of 2018, the system

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worked fine with the customers, where the real-time renewal of expired policies makes the customer experience consistent and convenient.

Post-filling policy details click on the self-inspection button on the Insure app. Capture the vehicle photographs and upload at the numbered areas.

After uploading the images, the cloud-based AI module analyses each photo, and post that provides a confirmation immediately. Once the AI module confirms the damages on the car/vehicle, under the guidelines, the policy is

then processed for issuance. Alternatively, the vehicle is recommended to technical experts, who review the damages and decide on the proposal.

The Next Challenge: Though most of the challenges are being figured out and resolved, one of the critical aspects of auto-insurance is claim settlement. Claim settlement post-accident is a crucial part of auto insurance — not only can it be very subjective and biased at the same time but can also have a great deal of false claims.

The implementation of an AI-based system which can help in finding a robust solution was imperative. Therefore, in recent news, it has been learnt that the South Korean government has been working on introducing such AI-based car insurance services by the coming year. The purpose of having such an advanced system is to calculate the cost of the repair automatically, which would also analyse the amount of damage on the vehicle as well as the required repair parts based. All these judgements are done on the basis of the pictures uploaded of the damaged vehicle.

This system is a combination of AI, and the Automobile repair cost On-line Service (AOS) currently in use by insurers and auto repair shops. Specifically, the pictures are transmitted to the AOS server of the Korea Insurance Development Institute, the AOS analyses the pictures and automatically calculates repair costs, and then the data is transferred to an insurer, an auto repair shop and the owner of the vehicle.

The owner can immediately receive the repair cost data in the event of an accident. On the insurer’s part, more accurate claims adjustment is anticipated, and its work can be expedited as no on-site process is required. The AOS is capable of identifying duplicate pictures, and thus double insurance claims can be prevented. Quicker repair cost claims are possible for repair shops, too.

“The AOS analysed one million pictures of damaged cover panels from April 2019 to April this year to record a matching rate of 70% to 80% for those cases with a repair cost of less than 900,000 won,” the Korea Insurance Development Institute explained. He further added, “The AOS is equipped with algorithms applicable to 170 models of sedans, SUVs and so on and is capable of covering 90% of all vehicles.”

The Future: With this kind of AI-based insurance service, in future, most of the critical processes of the services can be made interactive and straightforward. The agenda of introducing technologies like ML, CV and sensors is to automate and make complex processes simple, interactive and as accurate as possible.

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Although these introductions of new technologies improve the processes in terms of customer acquisition, retention and interaction, it indeed comes with a particular set of challenges.

To name a few — How far do these emerging technologies sustain in auto insurance in India and bring robust systems? What will be the future of auto-insurance in India with the introduction of AI-based services? Will it be able to increase the market share of the companies spending huge on these technologies? How do the customers respond to the non-human based services in auto-insurance? Will these systems reduce frauds and false claims? These are some of the critical questions which one need to discuss before implementation.

(The writers are Dr. Raul V. Rodriguez and Dr. Samala Nagaraj. )

TOP Shortage of labour, parts delays motor insurance claims – The Times of India – 17th October 2020

Labour shortage and gaps in spare parts availability due to supply chain issues resulted in delays in settling motor insurance claims, particularly for repairs. Time taken to settle claims went up from an average of 3-4 days to 15-20 days between June and September.

Bajaj Allianz General Insurance business head (motor) Aditya Sharma said, “Such delays are mostly seen among large-value motor claims, where vehicle owners decide to repaint or change vehicle parts after not using the car for many months due to lockdown. Even the cost of labour and paint has gone up by 7 percent-8 percent since June and the average size of motor claims

increased by 5 percent-10 percent. Besides, delayed supply of vehicle parts, further delay seen in the logistics segment too.”

Chennai-based auto component maker, which produces sheet metal pressing, Sri Hari Industries’s MD & CEO VN Sujeesh said, “We have seen a huge demand for sheet metal pressing since August, as it is used in the production of transmission, brake, suspension and many more vehicle parts. However, there is a supply gap caused by various reasons, from shortage of supervisory staff and semi-skilled labourers, increase in cost of raw material by 10 percent-12 percent. It is not easy to go for new recruits as that would mean an additional cost for training them.”

ICICI Lombard General Insurance also has seen a delay in settling motor insurance claims due to supply chain disruptions faced by OEMs (original equipment manufacturers), component makers and auto sub-system assemblers. ICICI Lombard head of underwriting, claims & reinsurance Sanjay Datta said “Most claims settlements for private cars are cashless, and don’t see why there should be a delay. However, there has been delay in repair of vehicles due to lack of labour. Hence, the repair time has increased and caused a 10 percent-15 percent delay in settling claims compared to pre-Covid time.”

Insurers say motor insurance claims applications coming in have reached to pre-Covid levels of 100 percent in September. ICICI Lombard said it settles over 1 lakh motor insurance claims a year.

(The writer is Mamtha Asokan.) TOP

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SURVEY & REPORTS

Indians invest primarily in life insurance, FDs for retirement: Survey - Financial Express - 20th October 2020

The notion of India as a country of savers may be outdated as Indians are focusing more on current expenses rather than saving and planning for the future, reveals a survey by PGIM India Mutual Fund.

The survey, titled ‘Retirement Readiness Survey 2020’, states that retirement planning rates low on people’s priorities, while children and spousal security and even fitness and lifestyle rank higher.

So far as saving for retirement is concerned, Indians invest primarily in life insurance and fixed deposits. In fact, during the survey, 41% of respondents said they had focused their retirement

investments on life insurance, while 37% preferred fixed deposits. This underlines the essential conservatism of most retirement planning, and the preference for solid investments that minimise risk. Other popular retirement investments include health insurance (favoured by 15% of respondents), gold (15%), recurring deposits (14%), POSS (14%), NSC/ NSS (9%) and property (9%).

Indians with retirement plans invest relatively more in POSS (Post Office) and stocks, among other investments, compared to those without retirement plans. 29% of those who have retirement plans also happened to invest in POSS, compared to 20% for those without a plan, while stocks were favoured by 22% of those with a plan, compared to 10% of those without one. The other investments more favoured by those with a plan (compared to those without one) were stocks (22% to 10%), NSC/ NSS/ SCSS (16% to 7%) and debentures (15% to 5%).

On the other hand, life insurance, fixed deposits and property proved more popular with those who didn’t have a retirement plan, than with those who did. Life insurance was favoured by 55% of respondents without a plan, compared to 48% of those with one. Fixed deposits were favoured by 50% of those without a plan, compared to 47% of those with one, while property was favoured by 11% of those without a plan, compared to just 8% of those who had one.

The percentage of people investing in mutual funds is twice among those who have a retirement plan v/s those who don’t have a retirement plan. This indicates that those who engage in retirement planning are more likely to recognize mutual funds as good investment vehicles.

Another interesting finding of the survey was that retirement planning is linked to surplus income, not age. The incidence of retirement planning, therefore, increases as incomes rise. 62% of those earning Rs 50,000-75,000 have retirement plans mapped out,

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whereas only 44% of those earning Rs 20,000-50,000 have a retirement plan. This underlines how Indians may be willing to fund their retirement corpus from surplus income, but are less likely to do so by sacrificing current expenses.

(The writer is Sanjeev Sinha.)

TOP

PENSION

Parliamentary panel to scrutinize EPFO corpus, benefit to workers - Live Mint – 19th October 2020

The parliamentary committee on Labour is set to scrutinize the Rs10 trillion corpus under the Employees' Provident Fund Organization (EPFO) in its upcoming meeting and it will also look at the performance of the fund management and investments made. This is the first time in the last one year when EPFO will come under parliamentary scrutiny.

The standing committee on Labour, scheduled to meet on 21 October, is also planning to look at ways to make EPFO more fruitful for working class, organized and unorganized sectors. Earlier EPFO

was confined only to workers of the organized sector but the National Democratic Alliance (NDA) extended this scheme to the unorganized sector by introducing the Pradhan Mantri Shram Yogi Maan-dhan Yojana. The central scheme gives an opportunity for people to choose between EPFO and National Pension Scheme (NPS).

“There has been no scrutiny of the EPFO, fund management of the corpus of Rs10 Lakh crore in the past one year. Since fund managers have now started investments in stock markets, we want to assess the performance of these schemes," said a person aware of the development.

The Pradhan Mantri Shram Yogi Mann-dhan Yojana is an ambitious scheme of the Union government under Prime Minister Narendra Modi, which is specially meant for old age protection and social security of unorganized workers, mainly engaged as rickshaw pullers, street vendors, head loaders, brick kiln workers, cobblers, rag pickers, domestic workers, agricultural and construction workers, along with handloom workers and workers in the leather industry.

The parliamentary committee on Labour has invited representatives of the ministry of labour who are expected to first hold discussions which will lead to multiple meetings between the two sides. This is the first time parliamentary committee members would also assess what was the impact of EPFO during nationwide lockdown and the impact of covid-19 pandemic on EPFO.

“EPFO was earlier only for the organized sector but the Union government has extended it to the unorganized sector also. The management of the fund is a cause for concern for the members of the parliamentary committee and it was unanimously decided to take it up for discussion. We plan to finish the series of meetings and submit a detailed report in the winter session of Parliament," a person in the know of development added.

Members of the standing committee have also asked the representatives of the ministry of labour to look at the provisions made for both organized and unorganized sector workers in other countries and the committee is expected to take it up for discussion in its meeting on Wednesday.

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According to people aware of developments, members in the panel are keen on raising a series of issues related to the EPF and pension schemes, including raising the minimum pension money under the Employees’ Pension Scheme (EPS) and ensuring better access of funds to families in case of death of an account holder.

“We have been demanding that the minimum pension under the EPS be raised to Rs5,000 a month. This is a demand that several trade unions and labour organizations, too, have been making for a while. We were told that it has been decided to give Rs2,000 monthly but we feel the amount should increase," another person aware of developments said requesting anonymity.

“There were some cases in the Supreme Court and state courts such as Kerala over capping the salaries at Rs15,000 for quantifying pensions. People want more pensions and for that they are ready to give contribution also. But Rs15,000 is the ceiling and there is no room for flexibility. We want to raise this issue in the committee as well," the person quoted above added.

The significance of the subject for the committee can be understood from the fact that this is the first issue it is taking up after all the parliamentary panels got reconstituted a month ago. The agenda for Wednesday’s meeting is “Functioning of the Employees' Provident Fund Organization with special reference to EPF Pension Scheme".

(The writers are Gyan Varma and Anuja.)

TOP

NPS gave 12% returns in one year. Should you expect similar earnings in future? – Live Mint – 18th October 2020

Debt schemes of National Pension System (NPS) have given wonderful double-digit returns while the returns from most other fixed income investments are muted. Scheme G of NPS is topping the charts with an average return of 12% in the last one year. Scheme G of NPS invests in government bonds and related securities. It is a low risk investment option. These returns are luring naive investors to invest in such schemes of NPS without understanding the rationale. Before we proceed to if you can expect similar returns in future as well, its imperative to know distinguishing fetures of NPS. It is a low-cost retirement product offered by the government.

While NPS was launched to replace the old pension system in 2004 for government employees only, it was opened up for all citizens of the country in 2009. The low-cost structure and the tax efficiency makes it a great investment for retirement planning.

How did Scheme G of NPS give superior returns? Let's brush up the basics, bond yields and prices of the bonds have an indirect relationship. As yields move down, prices of existing debt schemes go up, and these securities become more favorable due to higher interest rates. That means, the NAV of the debt scheme goes up when the yields of securities go down and vice versa.

This fundamental theory explains the double-digit returns in the Scheme G of NPS in the last one year or so. The benchmark 10-year G-Sec yields have gone down from 6.70% to 5.94% which favored the government scheme portfolio of NPS. Scheme G of NPS is giving an average return of 12% in the last one year. These are point to point to returns.

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HDFC Pension Management Fund has been the best performer in the last one year with 13.43% returns, followed by LIC Pension Fund which has delivered 12.49% returns and ICICI Pru Pension Fund Management with 12.25% returns in the same time period.

Scheme returns for more than 1 year are annualised, Returns as on October 9,2020, Source:

NPS Trust Apart from the government bond scheme of NPS, long term debt mutual funds-- gilt funds, long duration debt funds, corporate bond funds, etc. are also giving great returns due to the fall in bond yields.

Should you expect similar returns from NPS schemes in future? NPS is a market-linked product. The returns in NPS schemes will be volatile. The returns could be lower or even higher that those offered currently. However like any other long term investment, the advise remains the same. Focus on your goal and do not get carried away by the short term volatility. Do not blindly move from equity to these debt instruments by merely by looking at the superior returns at this point. Understand the product well. Don't invest in NPS only for returns. The aim of this investment should be to save for your retirement for a long term. NPS offers various investment options- equity, corporate bond, government securities and alternative investment funds.

It also allows to invest in a mix of asset class. While deciding to invest in NPS, apart from looking at the performance of various schemes, match your risk profile with the schemes on offer.

NPS as an investment product is continuously evolving. Soon it is going allow investors to invest via SIP as well. NPS is also looking at bringing out a guaranteed return product by this fiscal end.

(The writer is Avneet Kaur.)

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2.5 crores subscribers enrolled under Atal Pension Yojana: PFRDA – Live Mint - 16th October 2020

Pension Fund Regulatory and Development Authority (PFRDA) today said that a total of 2.5 crores subscribers are enrolled under the Atal Pension Yojana(APY) scheme.

PFRDA also announced the crossing of ₹5 lakh crore Assets Under Management (AUM) mark. The subscriber’s contributions under the National Pension System (NPS) and Atal Pension Yojana (APY) have jointly contributed to this landmark figure, over a period of 12 years.

In a statement issued by the PFRDA, it said " The

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growth in NPS subscribers has also been remarkable over the years with 70.40 lakhs employees joining the scheme from the government sector and 24.24 lakhs from the non-government sector."

It further added that,"In its endeavor to make the subscriber registration, the exit process and processing other service requests seamless and subscriber friendly, has been regularly introducing new methods of subscriber authentication such as OTP/ eSign based onboarding, Offline Aadhaar-based onboarding, third party onboarding after KYC verification, e-nomination, e-exit for NPS Subscribers etc."

Shri Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), said that achieving ₹5 lakh crore AUM is a major achievement which reflects the subscribers have faith in PFRDA and NPS.

He also added that," A robust and unique architecture with efficient systems and professional fund managers delivering market based returns enabling our subscriber to accumulate their retirement corpus. During this pandemic, a growing realisation of both corporates and individuals has emerged that retirement planning is not a mere saving or tax benefit choice, witnessed by NPS enrolment growing almost 14% during this challenging period."

As on 10 October, the total number of subscribers under NPS and Atal Pension Yojana has crossed 3.76 crores and the Asset under Management (AUM) has grown to ₹5,05,424 crores.

PFRDA has been regularly introducing new methods of subscriber authentication such as OTP/ eSign based onboarding, offline Aadhaar-based joining, third party onboarding after KYC verification, e-nomination, e-exit for NPS subscribers, among others.

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IRDAI CIRCULARS

IRDAI issued circular regarding guidelines on insurance claims of victims of floods (oct 2020) in the calamity affected districts of Telangana, Andhra Pradesh and other Neighbouring States.

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IRDAI issued exposure draft on irdai (insurance advertisements and disclosure) regulations.

TOP Terms and Conditions of Life Products for F.Y. 2020-21 are available on IRDAI website.

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IRDAI issued exposure draft on report of the working group (WG) on suitability of offering of surety bond by Indian insurance industry.

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IRDAI formed working group to study cyber liability insurance to examine the need for standard Cyber Liability Insurance product.

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GLOBAL NEWS

Japan: Non-life insurers' show higher operating efficiency – Asia Insurance Review

Japan's non-life insurance companies have increased operating efficiency since liberalisation of the insurance industry in 1996, and have conducted mergers and business integrations since 2000. As a result, for all non-life companies, the underwriting expense ratio (other than commission and brokerage) in the financial year ended 31 March 2020 (FY2019) decreased to 15%, compared with 21% for FY1995, prior to liberalisation.

These comments were made by the Underwriting & Planning Department of Toa Re in a section entitled “Trends in Japan’s Non-Life Insurance Industry “ in

the reinsurer's annual report, “Japan’s Insurance Market 2020”.

Trends in business results of non-life insurers The Toa Re report notes that earnings decreased in FY2019 for Japan’s non-life insurance companies because of additional provision for catastrophe loss reserves, even as the amount of natural disasters decreased year on year.

Net premium income in all lines of business increased by JPY216bn from the previous fiscal year to JPY8,609bn. Net claims paid (paid basis) decreased by JPY297bn to JPY5,026bn yen because claims of typhoons and other natural disasters that impacted Japan decreased. As a result, the loss ratio for FY2019 decreased by 5.2 percentage points to 63.9%.

Profits Underwriting profit (earned/incurred basis) decreased by JPY98bn to JPY94bn year on year because of additional provision for catastrophe loss reserves despite the positive factors mentioned earlier.

Ordinary profits, calculated as the sum of underwriting profit and investment profit, decreased by JPY267bn to JPY596bn. The decrease reflected the downward trend of the sale of subsidiaries and strategic equity holdings by several insurance companies in the previous year, along with the decrease in share prices related to COVID-19. After deducting tax expense, net income decreased by JPY218bn yen to JPY457bn.

Looking ahead Automobile insurance currently accounts for about half of net premium income of direct non-life insurance companies. Factors including new advances in automated driving technology are projected to change the structure of the industry.

Non-life insurance companies in Japan are targeting further growth by accelerating overseas business, developing new markets by providing new products and services, and implementing initiatives to increase operating efficiency.

Japan’s non-life insurance industry comprises 28 Japanese non-life insurance companies that are members of the General Insurance Association of Japan (GIAJ) and 19 companies that are members of the Foreign Non-Life Insurance Association of Japan (FNLIA).

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Australia: About 50% of insurance brokers place business directly with insurers - Asia Insurance Review

Almost half (47%) of insurance brokers in Australia placed client's business directly with insurers, according to data collected by APRA for the half-year to 30 June 2020.

The data, published at the end of September 2020, showed that there were 1,662 intermediaries licensed to conduct general insurance business in the country. Of these:

• 776 placed client’s business directly with insurers • 25 placed client’s business through other Australian intermediaries • 861 did not place any business during the six-month reporting period. Of the 776 intermediaries that placed business directly with insurers, 741 placed business with APRA-authorised general insurers. Other findings are: • 277 of the 776 placed business with Lloyd’s underwriters. • 82 placed business with unauthorised foreign insurers. • 467 (60%) are subscribers to the Insurance Brokers Code of Practice. These data are published in the “Annual Review 2019-2020” of the Insurance Brokers Code Compliance Committee.

Premiums Furthermore, they show that between 1 July and 31 December 2019, intermediaries invoiced A$12,983m ($9,257m) in premium. Of this: • A$10,659m was placed with APRA-authorised general insurers • A$1,598m was placed with Lloyd’s underwriters • A$726m was placed with unauthorised foreign insurers.

Statistics show that almost half of all insurance policies in Australia are placed by intermediaries. Of the $21,877m of gross written premium for direct business written by APRA-authorised general insurers, intermediaries placed 49%.

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Global: Number of insurer-MGA relationships will hold steady or increase in 2020 – survey - Asia Insurance Review

Two thirds of carriers and managing general agents (MGAs) polled in a recent survey think the number of insurer-MGA relationships will hold steady or increase in 2020, even in a hardening market, according to international law firm Clyde & Co in a report.

The report “Proceeding with caution: A survey of MGA and insurance carrier opinion on the state of the MGA sector” is the second on the MGA market by Clyde & Co. The survey was carried out with more than 100 insurers and MGAs in early 2020.

Last year, the first research among MGAs and carriers made it clear that the Lloyd's market reform programme was having the desired effect. The market, which had been perceived by many as supporting under-performance and inflated costs for far too long, had a sense of increasing caution. Over two thirds of MGAs and carriers agreed that they were heading into a more competitive environment. A tight focus on quality also meant that capacity was in short supply, and for many small MGAs, Brexit still loomed large.

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This year's report, which is based on a survey and interviews with leading insurance carriers and MGAs, provides an update on the state of the market and the insurer-MGA relationship. It looks at the impact of COVID-19 on the sector and the future of London and Lloyd's as the preferred markets for growing and developing an MGA business.

Some findings include: Proceeding with caution

Although 88% of carriers and 83% of MGAs agree that setting up a new MGA will be harder this year, existing players feel secure

64% of carriers and 66% of MGAs think the number of relationships will hold steady or increase in 2020, even in a hardening market

Over half (51%) of carriers say the impact on capital availability will be positive or neutral post COVID-19

Becoming more demanding Carriers will use MGAs to give access to new markets and provide technical insight and capability Cost is no longer a top priority for carriers, cited by only 18% Carriers have three 'top asks' of MGAs, cited by over 50% of the sample: access, insight and

conduct MGAs have one outstanding priority — market reputation, cited by 67% 96% of carriers and 84% of MGAs believe the shift to electronic placement and data

standardisation will accelerate as a result of COVID-19

Lloyd's reform agenda sees choices crystallising Lloyd's has become less desirable as a home for developing MGA business over the last year as market reforms take time to bed in.

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Japan: More elderly cannot afford public nursing care premiums - Asia Insurance Review

A growing number of elderly people are having their savings or property seized for failing to pay their insurance premiums to the public nursing care system, according to government research.

The trend is expected to continue as Japan’s population ages, putting more demand on the service and pushing premiums up even higher, resulting in even more people unable to make the payments, reported The Asahi Shimbun.

The number of people who had their savings or property seized because they defaulted on payments reached a new high of 19,221 in the

fiscal year ended 31 March 2019 (FY2018), according to a recently released health ministry survey.

A key reason behind the trend is that the payments are weighing heavily on those aged 65 or older. Premiums have almost doubled since FY2000, when the public long-term care system kicked in.

The survey by the Ministry of Health, Labour and Welfare involved all 1,741 local governments across Japan.

The number of people aged 65 or older who had their savings or property foreclosed on hit the 10,000 mark for the first time in FY2014.

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At the end of FY2018, 35.25m people aged 65 or older had public nursing care insurance. Of these, 90% had their premiums deducted from their national pensions. But the remaining 10% are billed directly for the service because they receive less than JPY180,000 ($1,705) annually from their national pensions--not enough for the deductions.

Under the current setup, welfare recipients are provided both welfare benefits and money to pay for nursing care insurance premiums.

Most of the people whose assets were seized are believed to not have access to welfare benefits and additionally cannot pay their premiums due to their small pensions, according to the ministry.

People join the public nursing care insurance system at age 40, when they start paying premiums. TOP

Malaysia: Non-life business will shrink this year - Asia Insurance Review

The Malaysian general insurance industry is expected to contract by 2.2% in 2020 primarily due to weak consumer demand and suspension of economic activity brought about by lockdown restrictions in the aftermath of COVID-19 pandemic.

Data and analytics firm GlobalData revised Malaysia’s general insurance forecast in the aftermath of COVID-19 and as per the latest data, the sector is expected to grow at a compound annual growth rate of 2.4% during 2019-2024 compared to the earlier forecast growth of 4.9%.

“The Malaysian economy is projected to contract by 4.9% in 2020, which will adversely impact consumer spending. The recent floods in the country will further dampen economic growth, resulting in lower premiums for general insurers,” said GlobalData insurance analyst Sangharsan Biswas.

The slowdown is most evident in the motor insurance business, which accounted for 48.3% of the total general insurance premium in 2019. Lockdown restrictions and stalled production led to new vehicle sales registering a decline of 41.1% during January to June 2020 compared to the same period in 2019 according to the Malaysian Automotive Association.

Despite government efforts to improve automobile sales through sales tax exemptions, the uncertainty related to economic recovery and a weak domestic demand is expected to affect new premium collections for motor insurers.

A similar decline is observed in property insurance, which was already facing stagnancy. As per the National Property Information Centre, property sales by value recorded a 31.5% decline in the first half of 2020.

A decline in construction activity and negative sentiment for purchasing residential property has impacted the growth of property insurance business.

Bank Negara Malaysia (BNM) is therefore exploring options to improve the business potential of the country’s insurance business by introducing measures such as detariffication of fire and motor insurance business lines. It is also promoting digitisation to enhance customer interaction and improve operational practices of insurers.

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Despite the regulatory push, Mr Biswas noted that the recent surge in infection rate across the country is expected to dampen growth prospects further.

“Weak export demand and uncertain economic scenario are expected to limit the short-term growth potential of the general insurance business,” he said.

TOP Disclaimer:

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