Tag: premium

Bharti AXA Life new business premium up 33% in H1

Banking & Finance

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Bharti AXA Life Insurance, a private life insurer, on Monday said that the company’s weighted new business premium grew 33 per cent in the first half this fiscal to ₹285 crore (₹214 crore).

The company recorded 8 per cent growth in its renewal premium to ₹645 crore (₹594 crore).

Total premium income grew moderately to ₹1,024 crore in the April-September 2021 period from ₹912 crore in the first six months of the last financial year.

The company recorded growth of 53 per cent in weighted new business premium in the month of September 2021 and outperformed the private sector by 1.5X.

Parag Raja, Managing Director and Chief Executive Officer, Bharti AXA Life Insurance, said in a statement, “We have registered steady performance on many parameters and achieved one of the highest industry growth for our new business premium collection in the first six months of the current financial year. Further, our asset under management saw a strong growth of 28 per cent and has doubled over the past three years”.

Surge in business

The improvement in the Covid pandemic situation since August 2021, buoyant consumer sentiment towards the need for life insurance and the company’s investments in digital platforms to enhance customer experience and facilitate seamless services along with the suite of customer-centric products gives “us confidence about achieving our business targets and growth in the coming months.”

The 13th month persistency ratio for Bharti AXA Life insurance improved to 64.4 per cent in H1-FY22, up from 60.7 per cent for the same period last year.

The Company’s solvency ratio stood at 188 per cent on September 30, 2021, well above the regulatory requirement of 150 per cent. The company recorded a surge of 28 per cent in its asset under management at ₹10,256 crore as on September 30, 2021 against ₹7,987 crore in the corresponding period of the last fiscal.

The company has disbursed ₹106 crore in Covid related claims for the first half of the financial year 2022.

Bharti AXA Life Insurance has 254 branches and33,266 advisors as on September 30, 2021.

“We have already witnessed a strong start with our new bancassurance partners — Fincare Small Finance Bank, Shivalik Bank and Utkarsh Small Finance Bank, and are actively pursuing opportunities for strategic tie-ups and alliances to ensure sustained business growth over the next few years,” Raja said.

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Tips to save on motor insurance premium

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Do you own a four-wheeler but find commuting via public transport on a daily basis more feasible than driving? Or are you someone who owns more than one vehicle but usually drives one of them more than the others? If yes, here are a few tips for you to save on your motor insurance premium.

Pay as you go: Usage-based or telematics car insurance is a relatively new concept in India but is gradually gaining popularity. Traditionally, motor insurance is determined by the make and model of the car, and not by the driving behaviour of the customer.

‘Pay as you drive’ model emphasises the driving behaviour and usage (distance covered) of the car. Premium calculation based on this can help bring down your premium cost compared to when computed conventionally.

Insurers will shortly be looking at introducing products where premiums are based on vehicle usage, post approval from the regulator.

Evaluate claims v/s No claim bonus: No claim bonus (NCB) is granted by the insurer for each claim-free year. The NCB discount starts from 20 per cent and goes up to a maximum of 50 per cent for five consecutive claim-free years. This makes for a considerable reduction in your premium. So, make sure you opt for NCB during claim-free years.

The other important point is that you should avoid raising a claim for a minor damage that will not cost you much because if you break your no-claim streak for small repairs, you will not be eligible for NCB in the following year.

For example, let’s assume you are eligible for an NCB discount of ₹5,000 next year and face a minor damage for which the cost of repair is ₹2,000. If you raise the claim for this, you will lose your right to claim the NCB of ₹5,000.

Opt for voluntary deductible: Almost all insurance policies have a compulsory deductible — that amount of the claim which the insured has to bear. Suppose the deductible in your policy is ₹1,000 and your assessed payable claim amount is ₹10,000, it means your insurer will pay you ₹9,000 and you have to pay ₹1,000. The compulsory deductible is fixed by the insurer and has no impact on the premium.

However, if you are willing to opt for a higher deductible and are ready to bear a higher amount during any loss, then this can help lower your premium.

Choose only third party cover for older vehicle: Your car insurance comprises two elements, third party (TP) cover and own damage cover which together make for a comprehensive cover. A TP cover is mandatory and covers you against third party liability, which may arise if a third party suffers a financial loss attributable to your vehicle.

However, TP does not protect your vehicle and a comprehensive cover is highly recommended. But, if your car is older than, say, 10 years, then you can consider taking a third party cover only.

Anti-theft device: Apart from enhancing the safety of your car, installing an anti-theft device (only that approved by the Automotive Research Association of India) also helps you get a discount on insurance premium.

Now that you are aware of these smart tips, explore them to save on your motor premium.

The writer is Head – Retail Underwriting, Bajaj Allianz General Insurance

 

This is a free article from the BusinessLine premium Portfolio segment.

 For more such content, please subscribe to The Hindu BusinessLine online.)

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How you can give life to your lapsed LIC policy

Personal Finance

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LIC has announced a window of opportunity to revive lapsed life policies which will be open until October 22, 2021 for individual policies. The insurer periodically announces such opportunities for policy holders who have fallen behind. A similar offer was announced in November 2019 too.

Policyholders should utilise such opportunities, especially now, considering the heightened need for a risk cover. Reviving an existing policy with rates and terms of earlier periods can be beneficial and cheaper as well. Compared to reviving an older risk cover, the expected premium for new life covers from most insurance providers are expected to increase significantly in future. The increase in premiums is to compensate for higher claims post the pandemic and higher reinsurance costs for underwriting term, health, and life insurance policies.

Current scheme

In the current window, policies which are in the premium paying term and have not completed their policy term are eligible for revival. Lapsed policies, which are within 5 years from the date of first unpaid premium can be revived along with a concession on the late fee. According to LIC, the concession is not applicable to high risk covers such as term assurance plans and policies which are covering for multiple risks. Health and micro Insurance plans also qualify for the concession on the late fee.

For a total receivable premium of up to ₹1,00,000 (cumulative unpaid premiums), a late fee concession of 20 per cent is applicable up to a maximum concession of ₹2,000. Similarly, for receivable premium sum of ₹1,00,001 to ₹3,00,000, 25 per cent late fee concession up to a maximum of ₹2,500 and for premiums above ₹3,00,001, 30 per cent late fee concession is allowed up to a maximum of ₹3,000. While a concession on the late fee is being allowed during the specified time frame, there will be no concession on medical requirements.

Ordinary revival schemes

Most policies generally have a grace period of 15 days for monthly payments and one month for other payment frequencies such as quarterly, half-yearly and annual. Post non-payment within the grace period, the policy can lapse. The revival of such a policy is a fresh contract, with the insurer having the right to impose fresh terms and conditions. A lapsed policy can be revived by payment of accumulated premiums with interest and a penalty. You have to submit the relevant health documents too.

In an ordinary revival, upon receipt of unpaid premium plus current interest rate (around 8 per cent currently) within 6 months of the first unpaid premium, the policy is revived. A certificate of good health and medical report as per the policy demands may also become necessary. For a revival on medical basis, medical requirements based on policy specifications will be required for continuing the cover.

Even in ordinary circumstances (outside of the policy revival campaign currently underway), revival schemes are available for making a financially easier return to the insurance fold. But if one has missed more than a couple of premiums, the lump sum payment of the same can be become burdensome. LIC’s special revival scheme can be utilised in such situation. If a policy has lapsed for not more than 3 years (from the date of last unpaid premium), the scheme allows you to shift the commencement date, allowing for the payment of just one unpaid premium, calculated on the basis of age and applicable health conditions. Such an option is allowed only once in the entire policy term and the policy should not have acquired surrender value (reached after paying three full year premiums to LIC). Instalment revival, survival benefit cum revival scheme and loan cum revival scheme are other financially modified options available, if an ordinary revival or special revival are not appropriate for the customer.

In ordinary circumstances, insurance policies can be revived but only within a period of two years from the date of the last unpaid premium. The current offer allows for a five-year window to revive old policies and adds a discount to the late fees being paid as well. Amongst the many lessons taught by the pandemic, the most critical one has been the necessity of an insurance cover and LIC’s current campaign for reviving old policies could not have come at a better time.

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Term insurance premium set to rise as reinsurers tighten norms due to pandemic

Banking & Finance

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The term insurance premium is set to rise by anywhere between 15 per cent to 40 per cent after reinsurers tightened underwriting norms in the wake of the Covid-19 pandemic.

While Munich Re has tightened underwriting norms, GIC Re had hiked rates earlier this year.

“GIC, which is our reinsurance company, had hiked rates in March and it came into effect from April. While till now we have not passed on the increased rates to customers but now we feel the need to increase rates on term plans taking into consideration our profitability. We will be increasing our rates on the term side this calendar year in the range of 15 to 20 per cent, depending on age, sum assured and quality of life of the individual,” said Rushabh Gandhi, Deputy CEO, IndiaFirst Life Insurance.

Vighnesh Shahane, MD and CEO, Ageas Federal Life Insurance, pointed out that over the last 18 months of the pandemic, and especially during the second wave, reinsurers have been badly hit by the surge in claims, and there has been a lot of pressure on them to hike rates.

“We estimate that term plan prices are likely to rise by around 20 per cent to 40 per cent across the board. However, the exact rise will vary from company to company, and from reinsurer to reinsurer. It will also depend on the amount of business that the life insurance company does with the reinsurer,” he said.

Wait and watch mode

Meanwhile, some life insurers are still on a wait and watch mode in the expectation that reinsurers’ rates would come down later once the pandemic passes in six months to a year.

While the pandemic has increased awareness and demand for life insurance products, particularly term life products, insurers have also paid out high claims, especially after the second wave of the pandemic. Claims for the sector in the second wave were up by two to three times of the first wave of the pandemic.

“The life insurance sector witnessed significant claims in the first quarter of the fiscal due to the second wave of the pandemic and profitability suffered as companies made provisions or reserves to alleviate the impact of the claims,” Care Ratings had said recently, adding that the life insurance premiums are expected to witness significant movement over 2021-22.

However, key risks such as a delay in the economic recovery and resurgence of Covid cases with a third wave could negatively impact premium growth, and rise in term plan premium rates.

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Insurance cos hope for a hike in PMJJBY premium

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Life insurance companies have pitched for a re-pricing of the government’s flagship Pradhan Mantri Jeevan Jyoti Beema Yojana.

According to calculations, the premium would have to be fixed at a little over ₹400 per annum per policy from the current ₹330.

Launched in 2015, the PMJJBY scheme provides a life cover of ₹2 lakh to people in the age group of 18 to 50 years (life cover up to age 55) having a savings bank account. The scheme is available for one year, stretching from June 1 to May 31 and is renewable every year.

The government had chosen to keep the premium rate low to enable more people to take life cover and get social security.

However, insurers point out that the premium for the life insurance cover was fixed a long time ago and needs to be reviewed. Further, there has also been a rise in claims under the scheme following the Covid-19 pandemic.

“It is very, very important that the premiums for the scheme increase. It has not been hiked even once since the scheme was launched. It is not sustainable at the moment,” said an official with a life insurance company.

“We are hoping that the premium is reviewed. A large number of people have joined the scheme, especially in the last two years. Claim ratio has also increased since the pandemic,” said another insurer.

On a cumulative basis, there were 10.34 crore persons enrolled under the scheme with a total of 2.6 lakh claims by May this year.

The government is also looking to bring more people under the scheme. The Finance Ministry had recently said it would try and bring the 43.04 crore eligible account holders of the Pradhan Mantri Jan Dhan Yojana announced under PMJJBY and Pradhan Mantri Suraksha Bima Yojana. Banks have already been communicated on the issue, it had said.

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How to save on premium in life policies

Personal Finance

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The recent pandemic has shed light on the importance of life insurance. While the awareness for life insurance has increased, you may be able to save on it if you know about key factors that influence life insurance premiums.

Age

The age of the life assured plays a critical role in determining the premium. The mortality rate, i.e. probability of death, increases with age. Therefore, a person with a higher age shall be required to pay higher premium than a younger person. Based on the IALM (Indian Assured Lives Mortality) 2014-16 table, the mortality rate at age 50 is 380 per cent higher than the mortality rate at the age of 20. Additionally, as per the mortality tables worldwide and experience, women are likely to have 30-35 per cent lower mortality than a man of similar age. Therefore, women are likely to be charged lower premiums than men.

Lifestyle matters

Health parameters and lifestyle choices also play an essential role in determining life insurance premiums. Higher BMI (body mass index) indicates overweight or obesity leading to many medical complications including diabetes and cardiovascular problems. The mortality rate for an obese person is likely to be higher, and the company may charge an extra premium to cover the additional risk. Moreover, underwriters view excess weight or obesity as one of the major risks to life. One needs to make lifestyle changes to reduce the weight and thereby lower the BMI. Adopting a healthy lifestyle, controlling the intake of calories, and regular workouts will be beneficial. This will help reduce any extra premium loading, which may go up to 50-200 per cent over standard mortality on a case to case basis or may even be declined.

Similarly, smokers tend to have a higher mortality as compared to non-smokers. Therefore, smokers are required to pay higher premium than non-smokers of the same age. The premium for a smoker may be close to 50-60 per cent higher than the premium for a non-smoker.

The same is the case for the consumption of alcohol. Excessive drinking harms one’s health, and the underwriter may load an extra mortality premium of 50-200 per cent or even decline cover for an addicted heavy drinker.

Besides, a history of medical conditions, family history of illnesses (hereditary diseases) could factor into your life insurance premium and increase the cost of your coverage.

Work matters

Hobbies or jobs like skydiving, racing cars which are high risk in nature, could lead to higher premiums by the underwriting philosophy of the insurer. Certain hazardous occupations which expose a person to toxic chemicals or require one to perform dangerous duties may require a higher premium.

That said, for an individual, when it comes to life insurance, a term life cover should be of top priority. While the above are the critical reasons for premium variation, it is easier and cost-effective if a term cover is purchased early for lifelong coverage.

The writer is Chief Actuary and Chief Risk officer, Kotak Life Insurance

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How motor insurance deductibles work

Personal Finance

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For every vehicle owner, a third-party liability insurance under motor insurance is mandatory in India. However, for an inclusive coverage, that offers protection for damages other than third party damage such as theft, fire, floods and the like, an all-comprehensive coverage policy is highly recommended. The first thing that comes to mind is the “premium” for this transition of only liability insurance to a comprehensive insurance for your vehicle. But here’s one way how you can control the premium, i.e voluntary deductible.

What is

Simply put, a deductible is the expense you pay out of your pocket at the time of claim. There are two components of a motor insurance deductible: compulsory and voluntary deductible. As is apparent from the category names, the compulsory deductible, is the one which is mandated in every claim as per regulation. For four wheelers with less than or equal to 1500 cubic capacity this amount is ₹1,000, whereas for vehicles greater than 1500 cubic capacity, it is ₹2,000. Over and above this, you can choose to pay a voluntary deductible, depending upon your own assessment of risk or confidence as a driver.

The need

As vehicle owner you may wonder the need of a voluntary deductible, when there is already a compulsory deductible as stipulated by the regulator, IRDAI. Firstly, opting a voluntary deductible serves as an incentive to the policyholder to be more vigilant about the upkeep and handling of the car, as there is higher financial onus involved. Secondly, it discourages policyholder for filing small claims thus helping them save on the overhead expenses involved in claim.

Claim, premium impact

Let’s say, your vehicle is below 1500 cubic capacity and you choose to set the voluntary deductible amount at ₹5,000, and the damages are evaluated to be ₹25,000, the insurer will pay you only ₹19,000 (₹25,000 minus ₹1,000 compulsory deductible minus ₹5,000 voluntary deductible). It is important for a policyholder to bear in mind, that the deductible amount is applicable each time you make a claim on your vehicle and should not be confused as a one-time payment. It is thus evident, that the higher the voluntary quotient of motor insurance the lesser will be your premium. This is because you are agreeing to make a higher financial commitment in the event of a claim.

How to decide

A higher deductible means higher-out of pocket expenses in case of a claim. Thus, it is prudent to opt for a higher voluntary deductible only if you think you have the financial buffer to account for such costs and are looking to save money on premium. However, discount on premiums should not be the only factor to be considered while choosing a voluntary deductible, but it is important. .

The author is Head – Underwriting, SBI General Insurance

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Tata AIG hopeful to cross ₹10,000 crore premium mark in FY 22

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Private sector Tata AIG General Insurance is hopeful of expanding its footprint this fiscal despite challenges from the ongoing Covid-19 pandemic. The insurer is eyeing a premium of at least ₹10,000 crore and is set to launch new products in coming months.

“We are looking to cross about ₹10,000 crore mark overall this fiscal,” said Parag Ved, President and Head, Consumer Lines, Tata AIG General Insurance.

The company had gross direct premium underwritten of ₹8,402 crore in 2020-21 and a market share of 4.05 per cent.

Its gross premium underwritten grew by 15.29 per cent in the first three months of the current fiscal to ₹2,074.01 crore by June 30, 2021 compared to ₹1,798.97 crore a year ago.

“Despite the disruption from the pandemic, last year was a good year for us. Prior to the pandemic, we had made certain strategic investments and identified key areas two years back. Health was clearly identified as a very focussed product for us,” Ved said in an interaction with BusinessLine.

The insurer has worked out a strategy of creating a standalone health insurance kind of a set up, which has boosted its customer acquisition in the segment.

Expansion

Ved said the company has also invested in its distribution expansion in Tier 2 and 3 towns. It is now present in about 750 to 800 locations across the country from about 250 locations about four years ago.

“Now we have a resident representative either through an office or virtual office, which has helped us sustain our growth,” he said.

The insurer is also targeting the younger customer base through new products.

“We are planning to launch slightly digital first products for this segment of millennials and Gen Z, Ved said.

It is also planning to launch high sum insured products as well as disease specific products focussed at cancer care.

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Asia Gold-India prices swing to premium as easing restrictions lure buyers, BFSI News, ET BFSI

Personal Finance

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* Improvement in demand from jewellers in India – dealer

* China premiums at $3-$4 vs $3-$6 last week

* Demand muted in Japan, premium at $0.50

Gold in India this week was being sold at a premium for the first time in more than two months as demand gained traction after curbs to combat the second wave of the coronavirus were slightly relaxed.

Retail demand has been recovering slowly as people are making purchases for weddings, said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.

On Friday, local gold futures were trading around 47,400 rupees per 10 grams after falling to 46,330 rupees on Tuesday, the lowest level since April 9.

Dealers were charging premium of up to $3 an ounce over official domestic prices – inclusive of the 10.75% import and 3% sales levies – this week, compared to last week’s discount of $12.

“There is slight improvement in demand from jewellers as some of them think prices could rise above $1,800 and want to stock up,” said a Mumbai-based bullion dealer with a gold importing bank.

Premiums in top consumer China narrowed to $3-$4 an ounce over global benchmark spot prices, versus $3-$6 last week.

The growth in shipments in April and May from Switzerland was due to the local price trading at a premium rather than an improvement in gold physical demand, Metals Focus said in a weekly note.

China’s net gold imports via Hong Kong more than halved in May from a near three-year high hit in April.

Premiums in Hong Kong were at $1 versus $0.70-$1 an ounce last week. In Singapore, premiums ranged from $1.10 to $1.80 per ounce.

“Investors‘ demand for gold has marginally increased since May as they are back in the market buying the dip, seeing current prices as a good opportunity,” said Vincent Tie, sales manager at Singapore dealer, Silver Bullion.

Demand for physical gold in Japan was quiet, with premiums at $0.50 per ounce, traders said.

(Reporting by Eileen Soreng and Arundhati Sarkar in Bengaluru; Editing by Maju Samuel)



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Common mistakes to avoid in a term insurance plan

Personal Finance

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While we cannot predict the future, what we can do is stay prepared irrespective of what lies ahead. The very first step towards is to have a term life insurance policy that protects your family and provides them with financial security in your absence. Yet, only three in 10 urban Indians buy term insurance plans and even those who do, often make mistakes, which could cause hardship to their family despite all their good intentions. Therefore, here are some common mistakes one should avoid while choosing a term insurance plan:

Insufficient Sum Assured

The idea behind a term insurance plan is that if something happens to the policyholder, his/her family can continue leading a comfortable life without worry about the finances. However, if the sum assured is not carefully evaluated based on the future needs of the family, the insurance proceeds may not last long. This is a mistake that is quite common and data shows that an average Indian policyholder’s life insurance coverage would meet only 8 per cent of expenses of the family following the death of the earning member.

Ideally, the sum assured should be at least 10-15 times the policyholder’s annual income. For a 34-year old individual with a family of 4 — including self, wife and two children — earning ₹8 lakh to ₹10 lakh per annum, a sum assured worth ₹1 crore or more seems sufficient to take care of all major expenses, including child’s education, marriage, daily expenses and retirement of spouse in case of sudden demise of the policyholder.

How to get back your entire term insurance premium

Limited tenure

The financial benefit of the term plan is applicable only if the death of the policyholder occurs during the policy term. If the policyholder survives that term, there is usually no maturity benefit until you are buying a term plan with return of premiums. Policyholders often choose, to save on premium cost, to go for shorter tenure/coverage duration. This could be a major mistake as, at the end of the policy term, the coverage expires. To continue the benefit, you may have to buy a new policy at a much higher premium.

One must take coverage for the maximum term available. Since a higher term period would cover you till a longer age, this would also increase the chances of the plan benefits being paid. Ideally, one must opt for a term plan with coverage up to the retirement age that, in most cases, is 60-62 years. Until the retirement age, all the major expenses of a family would have been taken care of and one hardly needs term cover post that age, as dependents such as children would have grown up by then.

Recovered from Covid? It may be difficult to get insurance cover now

Delay in buying term plan

When you buy a term plan, you are buying coverage against the risk of death. Therefore, it is obvious that higher the risk, more will be the premium you pay to cover that risk. For example, a term cover of ₹50 lakh is available for as low as ₹5,000 per annum if you buy it at 25 years of age. However, if you buy the same policy when you are 35 years old, it would cost you close to ₹9,000 per annum. So, delaying the purchase would directly affect you in terms of how much money you pay for it. Moreover, since you have to pay the premium every year during the policy term, not locking it in at an affordable price could be a costly mistake. It is suggested to buy a term plan as soon as you have financial dependents.

Giving out incorrect information

While it is true that pre-existing conditions, and lifestyle habits like smoking and drinking, may negatively affect your term insurance premium, an even bigger mistake is not to disclose them while buying a policy.

If the policyholder’s death is found to be associated to a health condition that existed when the policy was bought, and was not declared, it could lead to outright rejection of the claim. So think of the bigger picture and keep your family’s best interests in mind while purchasing the term plan. Always disclose pre-existing conditions, if any.

Insurance for saving tax

It is true that life insurance policies come with substantial tax benefits under Section 80C of the Income Tax Act. However, saving tax should not be your main purpose to buy a term insurance policy. Yet, it is a common practice to buy insurance as a last-minute bid to save on income tax. This is a big mistake because when the goal is tax saving, all calculations tend to focus on premium in order to optimise tax outgo whereas you should focus instead on the sum assured in order to meet your family’s financial needs. In addition, when one buys insurance for tax purposes, one tends to make other mistakes as well, like buying a policy with lesser term or a lower sum assured.

The writer is Chief Business Officer, Life Insurance Policybazaar.com

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