Monday, August 22, 2011

It is bad that only 33% vehicles were insured in India during 2010

We knew the facts that:

1. No commission is being paid to insurance intermediaries on 3rd party premium as a result they do not have any interest or motivation to sell this policy.
2. Private companies generally do not insure vehicles for 3rd party risk.
3. Customers find it is wastage of time in going to branch office of PSU’s for getting policy issued for 3rd policy or even for comprehensive policy for vehicles older than 7 years.
4. If there is break in insurance then rules are so difficult (deposit the money on the same day before 3.45 pm.Assuming th survey was done at 12.30 then you should rush to insurance company branch office to stand in the queue so that premium is deposited by 3.45 pm.When some one asked that earlier the rule was insurance to be done within 24 hours then a person laughed and said “we changed the rules to harass the customers so that they do not come to our offices to insure the vehicles.”

As a result the number of uninsured vehicles has been increasing and the statistics are;

Numbers of policies issued were 3, 74, 59,868
Additional number of policies which could have been issued 750 lakhs

Total premium earned by the industry Rs.12, 041crore
Total premium which could have been earned by the industry Rs.18000 crores (assuming some of these vehicles are old and 3 rd party cover only).

We can say about Delhi as a city or state that Police is happy if the vehicle driver does not have the policy because it gives them an opportunity to make some money on the side.

We feel all insurance companies should issue 3rd party cover. No excuse to Private Companies. No pick and chose to be allowed to them.
No vehicle should be refused insurance by any insurance company. If they refuse then they should give the reason in writing.
Let us go back to issue of policies (break in insurance) within 24 hours of survey being done.

Let us respect Motor Vehicles Act 100%

Sunday, August 21, 2011

Are we wasting money/energy on Training Insurance Agents?

Are we wasting money/energy on Training Insurance Agents?

We had predicted 50000 agency managers in life insurance companies will lose their jobs

On an average 20 agents /advisors/financial advisors working for life insurance companies report to 1 agency manager. We had predicted that changes in ULIP and reduction of commission to be paid to intermediaries will result in marginal agents to lose interest opt for cancellation of their license or selling life insurance they will be left with options compelling the insurance company to cancel their license.

Yes this has happened
Source Economic Times

As you will notice from this news time in the Economic Tunis licences of 10.45 lakh agents have been cancelled. It we take the following costs.

1. Recruitment / Selection
2. Advertisement for hiring agents
3. Executive / Managers time in selection / training of agents
4. Cost of logistics – office / conference Room.

We estimate it will add up to Rs.50000/ agent. This means money spent on 10.45 lakh agents resulting in the expenditure of 10.45 Lakh X 50000 = Rs.522500 Lakhs (Rs.5225 crores) has been wasted.

or Rs.52250 crores.

It is a big loss.

Monday, August 15, 2011

Give with one hand –take it away by other hand

Give with one hand –take it away by other hand.

It is very common to hear this type of statement. The same thing was noticed in one of the news item according to which Apollo Munich is going to get approval for health insurance product for senior citizens of any age. This product is going to get approval of IRDA by end of August 2011.

This is one part of the story where it is giving with one hand. The cooling off period will be 1 year or 12 months. This is what we have called is taking away by other hand. We feel Cooling off period of 12 months is totally unreasonable. Which senior citizen will accept this while knowing it? This will encourage tendency for missselling.Let us avoid it .We do hope the regulator will look into this aspect.

Rs 10000 crores underwriting loss by our non life insurance industry during 2010-11 –it needs attention of all of us

Rs 10000 crores underwriting loss by our non life insurance industry during 2010-11 –it needs attention of all of us.

It is disappointing to know that Indian general insurance industry which touched premium figure of Rs 42000 crores during 2010-11 has incurred underwriting loss of R10,000 crore .Does it give a signal that for next 5 years these companies will go on incurring losses.
According to Mr. G Srinivasan, chairman and managing director, United India Insurance, commented that the challenges for both the industry and individual insurance companies are enormous.
Over the years, the general insurance industry may be making underwriting losses but the companies have huge investment income by which they have been able to cover up those losses and have been able to show reasonably sound balance sheet over the years, Srinivasan had said at an event in Mumbai.
“The situation will no longer continue because the quantum of losses are increasing. In 2009-10, the general insurance industry had made an underwriting loss of R5,900 crore, whereas in 2010-11 the estimates is that the industry would cross R10,000 crone underwriting losses. The general industry may have to record net losses in 2010-11,’’ he said.
It will be a good idea to know how many cases( number & Rs. Term) are pending against general insurance companies with the following;
Insurance Ombudsmen
Consumer forums at district,state and national level
Civil courts at district ,High Courts,Supreme Court
The figure will be astonishing.

What is the option before the Insurance Companies;
Refix the premium rates
Use the Insurance Broker firms in a big way
Totally do away with their direct sales force .
Strengthen underwriting team.
Merge with other company
Depending on investment income to show reduced losses or a marginal profit is not for what the promoters entered this business. A weak organization is no good for customers.

Sunday, August 14, 2011

Free Medicare to all citizens- Time to introspect.

Free Medicare to all citizens- Time to introspect.

Times of India of Aug 8, 2011 has carried a news item on the concept of free medicare being cnsidered.Part of it is:

“Working towards its aim of providing free healthcare to all, the government is planning a national health entitlement card (NHEC) for every citizen that will guarantee access to a package of essential primary, secondary and tertiary healthcare fully funded by the centre.

The proposal, finalized by a high-powered expert panel of the Planning Commission, talks of covering both in-patient and OPD services free of cost with cashless facility. The health package will focus on the most common and high-impact healthcare requirements.

While the centre will bear the cost of services offered under the national health package, state government can add more services at their own cost. The health services can be availed through public sector and contracted private facilities, including NSOs and non-profit agencies.

Service providers, be it public or private, who accept the health card will not provide any services to those willing to pay additional fees either out-of-pocket or through their privately purchased insurance policies.

This is being done to keep away those who can pay to avail health services.”

This news came on (the same day) when the world was facing crisis due to debt/ deficite Aug 8, 2011 some of the major countries USA, Italy, Portugal, Greece are facing crisis due to Social Insurance/ Social benefits which were provided by those governments to their citizens.

The question before us is we on the right track. Is there any survey on lignor consumption in localities where we have so called BPL families living. Are we supporting them so that they can spend more on lignor, panmasala and gutka.

Let us include OPD in our health insurance policies

Let us include OPD in our health insurance policies.

OPD coverage is equally important. Are we living in mid-eighties when Mediclaim product was developed with coverage for Curative treatment?

The News item as above shows the importance of Diagnostic tests where small amount would have saved pain and agony to Joshi/Mishra, their families and the claim which insurance company will have to pay. Imagine the productivity loss which the employer of Joshi/ Mishra has suffered.

The time has come when we should introduce health insurance which offers OPD coverage.