Thursday, March 24, 2011

Is Berkshire Insurance following the right practice in India?

It is interesting to read discussion about Berkshire controversy around hosting a grand get together in a 5 star hotel to those, who buy car insurance through Berkshire India website. It means you buy policy for Rs 2000 and can have benefit of attending a get together (dinner) which may be costing Rs. 3000 to Rs. 4000

Majority of the persons from Insurance Industry have said that what Berkshire is doing is wrong.

Our compliments to Economic Times (Priya as well as Khyati) for raising this issue.

What do you feel?

Berkshire Insurance, Priya as well as Khyati, Economic Times

Tuesday, March 22, 2011

Ayurveda- The way to reach masses for health care- The time has come to include it in our health insurance Policies

According to Sam Pitroda, Adviser to the Prime Minister of India, “Taking healthcare to the masses will be India’s biggest challenge in the next two decades, and the ancient medicinal system of Ayurveda is the only reliable way of doing so. We can’t adopt the western model- the five-star culture of health delivery system. Health care has to reach the masses,” Sam Pitroda is also chairman of the National Innovation Council, and he made the above mentioned comment while inaugurating Institute of Ayurveda and Integrative Medicine (I-AIM) in Bangalore in March 2011.

Tata Group chairman Ratan Tata inaugurated the 100-bed healthcare centre that aims to integrate traditional medicine with modern health science. The centre is wholly supported by Tata Trusts (Mumbai), the group’s philanthropic arm.

In my various blogs I have covered the point that inclusion or Ayurveda in coverage of health insurance polices at the earliest is desirable. There is some progress in this regard but lot more needs to be done.

When names of Ratan Tata & Pitroda are associated with Ayurveda – what more justification is needed by our insurance companies for inclusion of Ayurveda, as a system to be covered in health insurance policies?

Sam Pitroda, Ratan Tata, Institute of Ayurveda and Integrative Medicine (I-AIM), Ayurveda

Tuesday, March 15, 2011

Will Nippon Life Insurance entry in Reliance Life Insurance benefit its customers?

Reliance Life Insurance Co. Ltd, the fully-owned insurance firm of Reliance Capital Ltd. on March 14, 2011 signed an agreement to bring in the world’s sixth biggest life insurance firm Nippon Life Insurance Co. as its 26% equity partner for Rs. 3,062 crores. This is the largest foreign direct investment (FDI) in the Indian insurance space. Our compliments to both Nippon as well as Reliance Group.

We got queries from some of the members of IFI wishing to know how they will benefit from this deal.

What I feel is that benefit to the customer will be improvement in service level as Nippon is large Japanese Company and Japanese are known for efficient service to their customers.

As far as selling of shares at premium of 62 to 80% is concerned the benefit goes to Reliance Capital as for every 100 Rs invested by them in last 10 years in Reliance Life they are getting Rs 180 so the parent / holding company of Reliance Life Insurance i.e. Reliance capital is the beneficiary as they are improving their balance sheet and this is the reason that share price of this company has gone up.

It will not affect / improve bonus calculation of the company, which is passed on to policy holders.

Thursday, March 3, 2011

Budget 2011- Impact on Insurance/ Health Insurance

Budget 2011- Impact on Insurance/ Health Insurance

Last day of February and people listen to the speech of Finance Minister of India, watch the analysis on TV and read comments in newspaper.

What does it mean to us with respect to Insurance/ Health Insurance

1. All unit linked insurance plans will attract Service Tax so depending upon company/ charges you will definitely pay more. For example, if you paid an annual premium of Rs. 10,000, the service tax (of 10 per cent) charged was Rs. 100. Now, the tax to be paid will be Rs. 150. These charges will be adjusted in the premiums and accordingly the yield will fall as far as you are concerned.

2. Senior Citizens above 80 years will pay no income tax till Rs. 5 Lakh income. It means saving of Rs. 26780 to any one who is above 80 yrs and has income of Rs 5 lakh. It could have been better for FM to give gift of Health Insurance policy for all those who are above 80 years. The same amount would have been given to Insurance Companies and it would have given boost to Health Insurance premium.

3. Service Tax @ 5% will be charged on all services/including diagnostic offered by a hospital or nursing home that has central air-conditioners and has more than 25 beds. This means that service tax will be added in one way or other to pre hospitalization, hospitalization and post hospitalization bills and you will bear it as your insurance limit will be exhausted earlier. Seeing health care inflation and impact of Service Tax the sum assured should be increased by you by 50% this year. It means if your sum assured is Rs 2 lakhs then it is desirable that you should increase it to Rs 3 lakhs.

It the payment is made by TPA/under cash less then Service Tax was already being paid, therefore this seems to be case or double Service Tax.

Let us wait for some more analysis.