Life insurance employee strength down 34,000

18% reduction in workforce aimed at lowering expenses.
Companies may be back to hiring, but private life insurers saw their employee strength fell nearly 34,000, or 18 per cent, during April-December 2009. The cut was aimed at lowering expenses.
According to data collated by the Life Insurance Council, the number of employees declined to 152,874 at the end of December 2009 from 188,645 a year ago.
However, the number of agents increased by 7.59 per cent to 2.98 million during the period as against 2.77 million at the end of December 2008.
The staff strength fell despite an improvement in sales during the nine months ended December 2009. Income from new policies rose 25 per cent during the period.
Individual companies refused to disclose the number of employees on their payrolls.
"Due to attrition, we saw some reduction in our workforce. The numbers should be marginal since hiring also took place during the period," said Abhijit Gulanikar, chief financial officer, SBI Life.
"Insurers are focusing on profitability and cutting the non-functional workforce. Productivity also went up as the number of employees decreased," said GV Nageswara Rao, managing director and chief executive officer, IDBI Fortis.
"When people do not meet their sales target, they are forced to leave. Last year was a tough one as companies increased their sales target, focusing more on efficiency," added a senior executive of a life insurance company.
Cost reduction, driven by companies such as ICICI Prudential and HDFC Standard Life, was aimed at a quicker break-even. In a recent interview, ICICI Prudential Life Managing Director V Vaidyanathan told Business Standard the company would break-even earlier than the 2012 deadline it had set for itself.
Belt-tightening — which includes relocating offices, renegotiating rentals and even lowering expenses on stationary and electricity — is already showing results in the form of a lower rise in expenses. Operating expenses of 23 life insurers dropped to 10.14 per cent at the end of December 2009 compared to 12.24 per cent for 21 insurers a year ago.
"The drop in expenses was possible due to effective cost-cutting measures adopted by the industry. Companies curtailed operating expenses and rationalised their distribution channels, while managing an increase in total premium," said Life Insurance Council Secretary General SB Mathur.

SBI Life posts net profit of Rs 199 cr in first 9 months

SBI Life Insurance, has clocked a profit of Rs 82 crore in Q3 FY10 while for the first nine-months of this fiscal (FY10), the life insurer posted a net profit of Rs 199 crore.
Its total premium collection in the first nine-months stood at Rs 6,087 crore, up 32 per cent, a press release issued stated.
New Business Premium grew by 19 per cent to Rs 4,392 crore during the period.
"Reflecting its superior efficiency in its business operations, the company maintains the lowest "expense to GWP (Gross Written Premium)" ratio in industry of 7.99," the release said.
"We remain committed to reaching life insurance solutions to customers, across socio-economic and geographical segments, enabling them for a better tomorrow," SBI Life Insurance's Managing Director and CEO, M N Rao said.
The New Business Annualised Premium Equivalent (APE), a standard measure in the industry to measure performance, has grown by 24.75 per cent to Rs 3,953 crore.
Assets Under Management (AUM) grew by 111.5 per cent, over the corresponding period last year, to Rs 24,589 crore.

Intimation to company in writing necessary for insurance claim

An insurance company is not liable for any deficiency of service if a policy holder fails to submit the information about the accident,
damage and claim in writing, a consumer court has held. "The oral approach to the insurance company for appointment of the surveyor and to determine the damages to reimburse has no meaning unless the required information of the accident, damage and claim are submitted in writing," the District Consumer Disputes Redressal Forum (Central) has said. The policy holder, Charanjeet Singh, approached the Forum, seeking insurance claim from New India Assurance Company Limited for his vehicle which suffered damage in an accident. The Forum dismissed the complaint on the ground that no surveyor could be appointed by the company to assess the insurance claim in the absence of claim form and without having any information of the accident. "Without the information of the accident and damage to the vehicle and in the absence of claim form, the company could not have appointed any surveyor to assess the damages," the Forum, comprising President B B Chaudhary, Members M Siddiqui and S R Agrawal, said. The Forum noted that the complainant failed to produce any medical evidence relating to the accident. "Singh's contention is not supported by any medical documentary evidence, which prevented him to approach the insurance company after he met with an accident. The vague plea has got no merit," the Forum said. Singh met with an accident in 2004. He claimed to have received treatment in GTB hospital. His insurance claim for damaged vehicle was repudiated by the company on the ground that they were not informed about it.

Insurance regulator may focus on small policyholder this year

2010 will see India's insurance regulator coming of age and focusing on how to provide maximum benefits to the average policyholder, industry watchers expect.

The Insurance Regulatory and Development Authority (IRDA) had a big year in 2009, coming out with several regulations including:
* the cap on charges levied by firms on their unit-linked insurance policies (ULIP),
* the solvency margin they have to keep,
* payment made to intermediaries,
* corporate governance,
* public disclosure, and
* allowing health plus life insurance policies.
In 2010 the primary action expected is to refine the game changing regulation that capped the charges levied by the insurers on their ULIPs to make it relevant for a majority of the policyholders.
'In addition, guidelines for aligning financial reporting with IFRS (International Financial Reporting Standards), risk based capital, calculation embedded value (current value of the future profits) and corporate governance are expected this year,' G.N. Agarwal, appointed actuary of Future Generali India Life, told IANS.
'This year IRDA is expected to drive the focus on customer value tweaking the cap on charges regulation,' a high-ranking official of a private life insurer told IANS on condition of anonymity. IRDA will also take a strong stand against the swelling of the insurers' kitty when a policyholder is forced to surrender his policy, he said.
R. Krishnamurthy, managing director of global consultancy firm Towers Watson's insurance and financial services division, said: 'We can expect IRDA to play an activist role in 2010. The IRDA and SEBI (Securities and Exchange Board of India) are likely to work out joint initiatives to control the mindless growth of ULIPs and demand more accountability from the players.'
Last July the IRDA was forced to come out with a regulation for capping the charges on ULIPs on the back of SEBI abolishing the entry load on mutual funds. The pension regulator unveiled the new pension scheme with very low fund management charges.
'However, life insurers have come around the regulation by offering the benefit only to policies that are held to maturity. Considering the fact that majority of the ULIPs are unlikely to be held till maturity, policyholders will not see any improvement in their value proposition,' an industry official told IANS.

Religare opts for solo entry into health insurance business

Insurers are venturing alone into the general insurance arena, following tie-ups with global players not working out.
Religare Enterprises is likely to foray alone in the health insurance space, though sources close to the development said that it had not ruled out the possibility of roping in a partner later.
In June, Religare had signed a non-binding term sheet with Swiss Re to set up a health insurance joint venture. But three months later, the two parted ways.
"We are evaluating the option of going alone and may soon apply for R1,R2 and R3 license," said Anuj Gulati, Chief Executive Officer Religare Health Insurance. R1, R2 and R3 are different stages of approval granted by the Insurance Regulatory and Development Authority, with R3 being the final go-ahead.
So far, Reliance General is the only non-life insurer to not have any foreign joint venture partner.
On the life side, Reliance Life and Sahara Life do not have partners, though the former is now in the hunt for an investor to raise funds to finance its expansion.
Insurers said foreign partners bring in expertise to run the business, which is required more than the capital. The minimum capital required for setting up both life and non-life insurance is Rs 100 crore. More capital is required as the business grows but the need for funds on the general insurance side was smaller.
Last year, when L&T parted ways with Travelers, it went ahead to seek regulatory approval for venturing into the non-life insurance space.
The company expects to start operation in another two months. Another tie-up that broke last year was Hero-Ergo and Indiabulls-Societe Generale while Edelweiss is setting up a life insurance joint venture with Tokyo Marine.
Insurance industry executives said that with the private sector present in the Indian market for nearly 10 years, local talent had been created and that will help Indian companies go solo.
Apart from the fact that general insurance required lower capital, a group like Religare could easily put in the required funds till the company achieved break-even, the sources said.

PVT INSURANCE COMPANY NEWS

Life insurance companies see expenses dip to 10.14%

Expenses of life insurance companies have dropped significantly to 10.14% for the period ending 31st December 2009, compared with 12.24% for the corresponding period last year, according to the data released by the Life Insurance Council (LIC). According to SB Mathur, secretary general, LIC, "The drop in expenses was possible due to effective cost-cutting measures adopted by the life insurance industry, by curtailing operating expenses and rationalising their distribution channels coupled with an increase in the total premium to Rs 164, 353 crore from Rs 131, 382 crore, an increase of 25%".
The renewal premium of the industry increased from Rs 79,168 crore to Rs 96,917 crore, an increase of 22% on a y-o-y basis. In case of ULIPs, the renewal premium increased by 41% to Rs 37, 543 crore from Rs 26, 638 crore. New business premium increased by 29% to Rs 67, 438 crore from Rs 52,215 crore, with private companies also showing a positive growth. Share of linked business in new business has decreased from 61% (Dec 08) to 53% (Dec 09) indicating customers' discomfort towards market volatility and opting hence opting for conventional products. The total infrastructure investment made by life companies stood at Rs 1, 30,009 crore. Equity investment of life companies was in tune of Rs 44, 358 crore for the period Apr-Dec 09.