Third Party Car Insurance rates hiked.

The revision of the motor third party premium rates are out and will be in effect from 1^st April 2014. Earlier Insurance Regulatory and Development Authority (IRDA) had proposed to increase the premium by up to 137 percent. However the recent revised rates released by IRDA shows a marginal addition of around 9-20 percent (depending on vehicle type) to the existing third party premium rates.

The private car category will see an increase of around 19-20 percent while the two-wheeler category will be increased by 9-10 percent. For hired vehicles with four or more wheels and carrying capacity exceeding the number of passengers and three-wheeled passenger vehicles on hire with capacity exceeding 17, IRDA has not changed the current rates. For the taxi segment (four-wheelers for carrying passengers, on hire), a rise of 19-20 per cent was announced. For auto-rickshaws (three-wheeled vehicles carrying not more than six passengers), a 10 per cent rise in motor third-party premium was announced.

The table below will explain the increase applicable to you as per your vehicle specification (Private vehicles)

Category	2013 (premium)	2014 (premium)
Private cars (not exceeding 1000 cc)	941	1129
Private cars ( exceeding 1000 cc, but not exceeding 1500 cc)	1110	1332
Private cars (exceeding 1500 cc)	3424	4109
Two Wheelers (not exceeding 75 cc)	414	455
Two Wheelers (exceeding 75 cc but not exceeding 150 cc)	422	464
Two Wheelers (exceeding 150 cc but not exceeding 350 cc)	420	462
Two Wheelers (exceeding 350 cc)	804	884

*source - IRDA

The motor insurance segment consists of two parts – the optional own damage cover and the mandatory third party cover. Third party motor insurance is mandatory for vehicles plying on Indian roads. The third party insurance cover claims from third party arising out of accidents and damage incurred by the third party.

While no hike in existing rate is good news, the people of India can rejoice the fact that the hike is marginal and nowhere close to the proposed increase of up to 137 percent.

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Private insurer Max Life Insurance reports 6% growth

The first half of this fiscal (April 2012 – September 2012) reflected healthy figure for Max Life Insurance. Although most private players were not able to grab a profitable share, Max Life Insurance reported a 6% growth. The net profit for this period was INR 398 as compared to INR 375 for the corresponding period last fiscal.  The total premium stood at INR 2900 crore against INR 2872 crore from the last fiscal. Max Life Insurance is a joint venture between Max India and Mitsui Sumitomo, a leading general insurance company in the world.

CEO and Managing Director Rajesh Sud that the growth was primarily due to their advice based sales, diversified distribution channel, comprehensive product portfolio and superior customer experience through claims and complaint management.

Apart from the premium collection other parameters like Assets Under Management increased by 30% and the sum assured increased by 7%. Solvency surplus grew to 60% and the company’s paid up capital as on September 2012 was at INR 2127 crore. Overall the figures looks impressive despite the pressing times the insurance industry is facing due to economic and regulatory challenges.

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Common Third Party Administrator for the Indian PSU General Insurer

The general insurance companies have finally decided to bring an in house solution to the mounting pressure of Third Party Administrator (TPA) that’s curbing their profits drastically. The claims ratios or the percentage of claims to the premium earned of the public sector companies is over 120% and the insurers blame the TPA for these figures.

State run general insurance companies like New India Assurance, National India, United India and Oriental India Insurance have partnered with the country’s largest life insurer “Life Insurance Corporation of India” (LIC) and reinsurer “General Insurance Corporation of India” (GIC) to set up the TPA. Although there is an initial set up cost, the insurers are optimistic that the investment would eventually lead to profitability. Moreover the 5% commission which is collected by the TPAs would now be transferred to the policyholders. This would help bring down the insurance premium. The new TPA could also result in market dominance by state-owned companies, which together account for over 80% of the TPA business


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Healthy Growth Figures for both Life and General Insurers in India

The first half of this financial year (April 2012– September 2012) has registered growth for both life and general insurance companies. As compared to the same period last year, Life insurance companies have registered a growth of 11.2 % in new business premium collection while non-life insurance premium collection grew by 24.70%. The total collection for life insurance companies stood at Rs 26,889 crore while that of non life premium totaled at Rs 34001 crore.

The growth in the life insurers was primarily driven by individual regular premium policies which showed a growth of 21% during April 2012 – September 2012 as compared to April 2011 – September 2011. On the other hand single premium policies registered a negative growth of 9.6% for the same period, the possible reason being these policies are less attractive to prevalent tax exemptions.  The frontrunner in premium collection is once again Life Insurance Corporation of India (LIC). The premium collected by LIC helped to boost the overall figures in the life category while the private players suffered a negative of 13.7%. Among the 23 private life insurers only six insurers managed to show an increase in premium collection.

On the other hand the non life insurance category had a completely different story with the private players faring better than the four state owned general insurance companies. General Insurance companies like Max Bupa Health Insurance, Bharti Axa General Insurance and HDFC Ergo witnessed a healthy growth of 65%, 48% and 40% respectively for the period under consideration. Star Health and Allied Insurance was the only private general insurance firm to report a decline of 38% in premium.



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Postal Life Insurance and Rural Postal Life Insurance initiates improvements in their schemes.

While the whole insurance industry is buzzing with competitive products and expensive promotions, the Postal Life Insurance (PLI) and the Rural Postal Life Insurance (RPLI) are working their way to glory. At least that’s what the statistics show. The PLI was introduced in the year 1884 and the RPLI was introduced 1995. These schemes are only available to Government and Semi government employees. The contract is guaranteed by the Government of India and it enjoys high bonus for a lesser premiums.   The RPLI is implemented in the rural areas.

Many technological and administrative steps are taken towards making the two insurance schemes attractive to the customers. As many as 6,000 Gramin Dak Sevaks and 1,000 Direct Agents are contributing to service procurement and taking care of hundreds and thousands of customers. Now, all the after-sales services including maturity and loan cases are handled by local divisions. Policy documents are now printed and submitted to the insurants within 30 days. Facilities that the customers can now avail of include enhanced life cover of up to Rs 20 lakh, online premium deposit for a policy in any Post Office anywhere in the country, option of a variety of products, easier revival process and customers’ care centres at Divisions, Regions and Circles to take prompt care of grievances.  Nomination change, transfer, assignment facilities can be availed at Circle/Regional office level.

These implementations would hopefully bring in more revenue from these Government Initiatives. Statistical Data from the website also shows that RPLI is gaining better ground in terms of growth. Without any promotion, these two schemes are silently adding substantial revenue to the Indian Government.

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General Insurance gets two more Companies in India

The general insurance sector of the Insurance industry grew more competitive as two new players have formally launched their operations. These new players are Religare Health, an initiative of Religare Enterprises Limited, Union Bank of India and Corporation bank, and Magma HDI General Insurance, a joint venture between non-banking financial company Magma Fincorp and HDI Gerling, a leading German Insurer. 

Religare Health had launched their operations in July 2012. In the last 3 months, it has an impressive performance of collecting around 14 crore premium, operating in 134 centers and servicing more than 34,000 customers. Although currently they have only one insurance product named “Care”, they have ambitious plans on board to launch products for critical illness, overseas student travel medical insurance and also policies for HIV patients.  Currently their health insurance product “Care” comes with certain salient features outlined below

•           It offers a sum assured upto 60 lakhs to suit the customized requirements of every consumer.
•       It has the option of availing specialized treatment anywhere in the world of sum assured over 50 lakhs
•      It offers annual health check up facility, automatic recharge of sum insured in case the claims exhaust and no claim-based loading on premiums.
•      It offers lifelong renewability and daily allowance to cover incidental expenses during hospitalization
•       It has tie up with around 1800 hospitals across India.

Magma HDI General Insurance (MHDI) would target offering a comprehensive end to end solution to customers by financing vehicles and offering insurance to the assets purchased. Magma Fincorp (one of the partners in the JV) are mostly present in semi urban and rural areas which are relatively unpenetrated markets for insurance products. Thus they aim to explore these markets and chalk out a strategy to survive in the already competitive market of insurance. They plan to launch operations in 39 locations with work strength of around 500 people.

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What the Insurers Need

The insurance business in India has come a long way since the Insurance Act of 1938. Some of the key milestones in this sector since independence of India would be the merging of all life insurance companies to form Life Insurance Company of India (LIC) in 1956, the merging of all general insurance companies to form four General Insurance Companies (National Insurance, New India Assurance, Oriental Insurance and United India Insurance) and the deregulation of the Insurance Sector in 1999 allowing foreign players to operate in the market. So is this market movement from monopoly to oligopoly really proving to be worthwhile for the Insurance Companies?

The ironclad regulations thrown by IRDA from time to time, economic and political pressures and tough competition has made it difficult for the insurance companies, especially the private players, to make any meaningful business out of it. This year we have already witnessed the exit of New York Life Insurance from Max India Limited. Others following suit might be ING and HSBC. Future group also plans to sever its ties with Generali while DLF wants to exit its tie up with Pramerica. Nine of the 23 private sector life insurers, including units of HSBC, Italy's Generali and Dutch life insurer Aegon, lost money in the year ended in March. The joint venture between France’s Axa and Bharti Enterprises, owner of India’s biggest cellular carrier, has never made money. 

So to revive and attract more investors and foreign partners certain flexibility must be introduced so that the insurers would be able to compete for higher margin and aim for higher penetration. Currently the penetration is only 4.4% in India against 8% in Japan and 9.5% in Britain. Business margin for India is also around 10-15% against 20-25% in China and 30% in Hong Kong.  A helping hand would be the recent proposed hike of FDI cap to 49%. It must be allowed to pass without any political mess up. Additionally the IRDA must have a more benevolent approach towards private players. Because of strict regulations, insurance products are mostly similar and hence competition is high. Without the option of product differentiation margins for insurers would continue to be meager. 

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IRDA to step in over cancellation of cashless cover by PSU Insurers.

On July 1st, 2011 four PSU firms for General Insurance viz. National Insurance, New India Assurance, Oriental Insurance and United India Assurance had stopped their cashless hospitalization facility. The reason was overcharging by the hospitals and non standardization of the treatment charges. Insurance companies have a network of hospitals, known as PPN, which offers health insurance services under cashless facility. The network hospitals are decided through the agreement between the Third Party Administrators (TPAs) and the hospitals and the list is amended from time to time. Insurance Companies have claimed that the cost to claim ratio was around 140 percent of the premium received under the health portfolio as on June 2012. Some 150 hospitals were scrapped from cashless hospitalization scheme. While the insurance companies complain of overcharging, the private hospital authorities maintain that they cannot conduct treatment at Central Government Health Scheme (CGHS) rates.

Initially Insurance Regulatory Development Authority (IRDA) took a rain check when their intervention was sought. They felt that the insurance companies and the hospitals need to work out an amicable solution themselves. Now with the policyholders stranded for no fault they have decided to step in. In August this year IRDA came up with a circular stating that policyholders would continue to get cashless hospitalization facility even if the hospital were delisted from cashless cover by the Insurance Companies. They are now in the process of standardizing the treatment costs as well as look into the issue of overcharging

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India First Life Insurance Launches MagicBoard

The days of cumbersome sales meeting, extended paperwork and mis selling may soon come to an end for the Indian Insurance industry. For many years now, insurance companies have been brainstorming with their IT to bring out the cutting edge technology which addresses the above mentioned hassles surrounding the insurance industry.  A solution to this would automatically lead to a drop of expenses for both parties viz. the customer and the insurer.

A leap towards this idea has been taken by India First Life Insurance, a joint venture between two of India’s largest public sector banks- Bank of Baroda and Andhra Bank along with UK’s leading risk, wealth and investment company Legal and General. They have launched MagicBoard - a one-of-its kind integrated portable fulfillment device for a fully compliant, truthful and efficient Customer sales and service process that has a potential to be a force multiplier in sales productivity, customer delight and cost efficiency.

The device is an automated sales engine where a customer, distributor, employees and the insurance organization shares an integrated platform at real time to ensure honestly, transparency and agility of the sales process. Each of these stakeholders would have a single page view in his handheld tablet PC for real time access. Thus all the business processes viz. B2B, B2C and C2B are integrated and processed together. A sales person can now complete a sale on the spot (with or without access to internet) within 15 minutes. And instantly thereafter, the sale data is picked up by the MagicBoard command center at Mumbai and a verification call is made to the customer to cross check the information and the call is recorded for future reference by the customer. Once the data is verified, instantly a PDF file of the policy is pushed into the customer email and the summary printout is given simultaneously by the sales person through his blue tooth enabled portable printer which he carries along with him. A hard copy is also couriered to the customer to ensure that he has the same document through different delivery channels for cross check. MagicBoard also allows the sales person cater to customer requests, complaints and claims instantly through live video calls, instant access to key personnel in the corporate office etc.

Summarizing the MagicBoard has the following to offer to the Sales Executive and Customer

-       Helps optimize leads

-       Recommends the right product based on the customer needs

-       Details out the product key features and risk factors honestly through pre recorded product audio visuals

-       Eliminates cumbersome procedures - instant upload of documents, collection of premiums and policy printing

-       Provides business intelligence and MIS reports on a real time basis

-       Offers instant insurance at customer door step with end to end fulfillment

-       Uniform communications visually and verbally across all customer touch points

-       Complete migration of manual sales process to an integrated, IT enabled platform

Going by the habit of idiosyncratic investments by insurance companies in anything that boosts sales, we might be on the advent of witnessing some serious and revolutionary changes in the insurance buying process.

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United India Insurance pays Rs 1.16 crore to the widow of a businessman

United India Insurance Company suffered a major blow when the Bombay High Court dismissed its petition and upheld the order to pay a compensation of Rs 1.16 crore to the widow of a businessman who died around nine years ago. On September 30th 2011, the Mumbai Motor Accident Claims had directed United India Insurance to pay an aggregate sum of Rs 69.18 lakh and interest at the rate of 8.5% per annum bringing the total to Rs 1.16 crore to Sugra Varawalla, wife of deceased business man Riyaz Varawalla.

The insurance major moved to the High Court and challenged the dictate on the following grounds:

·            - Sugra Varawalla has already received compensation from LIC and other credit card companies and these were not accounted by the Mumbai Motor Accident Claims while calculating the future loss

         - The insurance company also claimed that the woman’s income was also not included in the calculations for her future loss. Apparently she was a partner of the businesses of her husband.

However the Mumbai High Court rejected their first plea holding that if the received amount is an outcome of separate contracts and had no direct nexus with the accidental death, it cannot be deducted while computing the future loss of income. Their second contention was rejected because the court held that the woman’s earnings could not be taken into consideration to reduce the quantum of loss of annual dependency income on account of the accidental death.

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Mitsui Sumitomo Insurance to buy 26% stake in Max New York Life Insurance

Tokyo based insurance holding company, Mitsui Sumitomo Insurance, is all set to buy the 26% state in Max New York Life Insurance from New York Life Insurance Company. With this the ten year old joint venture between Max New York Life and Max India Limited would come to an end. This joint venture came during the time when companies were spearing their wings in order to be a part of the globalization movement. Along with India, New York Life had also invested in other Asian markets.

The joint venture had kicked off well and it has been profitable since its inception. They offer long term savings and protection plans for individuals as well as groups through agency distribution. They evolved to become one the four large private life insurance companies in India. However its profits mark only a minor addition to New York Life’s overall earnings. Therefore New York Life has decided to expand on Mexico operations as it currently holds out to be the strongest international market for the insurance giant. The sale would also result in some capital collection but the real strategy is to shift focus on the more lucrative market of Mexico.

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Indian Life Insurance Companies Vs IRDA

The Insurance Regulatory Authority of India (IRDA) has always been the responsible Big Daddy of the insurance industry in India. It has always tried to ensure that things are running smooth and that no one is unfairly holding an edge over the others. However of late, the relationship between IRDA and the Life Insurance Companies of India has been stained. Both sides have their own gamut of reasoning for this rift. IRDA complains of risky and unethical business by these life insurance companies. The latter on the other hand is claiming that the regulator’s tight guidelines are pushing them to adopt previously untried methods. The two major causes of frown for the IRDA are the use of foreign reinsurers by the life insurance companies and the introduction of umbrella products which offers multiple policies under one product.

Before moving to discuss the first issue it is imperative that we understand what and who these reinsurers are. Reinsurance is a form of insurance where the insurance companies redirect the risk to another insurance company for some commission. Some foreign reinsurers currently popular in India are Swiss Re, Munich Re. IRDA has no control over the foreign reinsurers. So by using reinsurers, life insurance companies are naturally making IRDA uncomfortable. IRDA reasons that the end user or the customer is not fully exposed to the risk which they face if they buy such products. For Example if the reinsurer defaults due to credit risk, it is transferred to the insurer and ultimately the customers. The reason why foreign reinsurers are popular is because they offer competitive rates. However exposure to credit risk default is also higher.

The second issue of IRDA is using umbrella products to bring in multiple policies under one. IRDA claims that when the life insurance companies submit their products for clearance, there are fewer funds. But once cleared the funds proliferate. These funds may be significantly smaller in value. Ultimately the customer ends up with a collection of funds which may actually not result in much capital gain. Interestingly though when the Mutual Fund industry had started launching similar products, the capital market regulator had asked them to bring it under one umbrella product. They claimed that this would help remove confusion from the customers.

On the other side of the coin, the life insurance companies feel that IRDA has come down harshly on every profitable idea in the past year starting from pension plans to highest NAV guaranteed products. Earlier in September 2010, the life insurance industry received a major blow due to the restrictions imposed on the ULIP products. Initially it was expected that within six months a recovery was evident. However it took much longer than that. Between April – December, 2011 the premiums collected by the life insurance companies went down 17% reported in the same period a year ago. Also the number of policies issued was down by 11%. It seems that IRDA is changing things too frequently and the life insurance companies are finding it difficult to absorb these changes in their business models. The resistance of the life insurers is meekly visible in the absence of any pension plans after the guidelines were revised to ensure guaranteed returns.

IRDA has also recommended zone-wise distribution tie-ups between bank and insurance companies. This bancassurance guideline has not gone very well with the life insurers. They feel that this would complicate things as the whole business of bancassurance is based on commitment from either side. The financial institutions still have some way to go before they can successfully implement the zone-wise distribution recommendation.

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2012 - The LIC ONGC story so far

For this fiscal ending March 2012 the Government of India had a firm target of acquiring Rs 40,000 crores through its disinvestment strategies. Part of its strategy to achieve the target was the 5% stake offer of Oil and Natural Gas Commission (ONGC). However a flurry of over expectation, bad marketing and perilous economic scenario threatened to completely pulverize this move. Once again, as we have seen in the past, Life Insurance Corporation of India (LIC) came to its rescue.

How LIC saved the day –

The average quoted price per share was Rs 303.67, which is actually about 5% higher than its floor price of Rs 290. The auction got lukewarm response from foreign financial institutions and domestic banks. The over estimation almost lead to an embarrassing flop. But when things started to look bad, LIC opted to buy about 4.6% stake (of the available 5% stake) or about 40 crore shares thus pushing its investment to about Rs Rs 12,146.80. Till the October – December quarter of this fiscal, LIC already had 3.23% stake in ONGC. With this new investment their total stake has risen to about 8%. This is of course less than the 10% cap imposed by Insurance Regulatory Authority of India (IRDA) on any insurance companies.

What was the cost of this investment to LIC?

The value of share came down to Rs 280 in just two days. That means in just two days, LIC made a loss of about Rs 912 crores. The recent Union Budget added to its woes. Finance Minister Mr Pranab Mukherjee hiked the cess on crude and petroleum oil to Rs 4500 per tone from Rs 2500 per tone. This move would eventually bring down ONGC profit before tax by Rs 5500 crore. Obviously a decrease in stock price was on its way. As I write this article, ONGC’s stock price was hovering over Rs 272 – 273. If you do the math it is not difficult to understand that the loss is around Rs. 1200 crores. The budgetary move has also encouraged Bank of America Merril Lynch to downgrade ONGC shares to “neutral” from its earlier recommendation of “buy”.

What’s ahead?

Government of India’s strategy of transferring money from one pocket (LIC) to the other pocket (Government of India) worked out in the above case. It remains to be seen what interesting episodes awaits this eco-political drama when it sets out to achieve its remaining target.

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Sahara India Life Insurance introduces new child educational plan.

Sahara India Life Insurance, the first wholly Indian-owned life insurance company in the private sector, has introduced a new child educational plan. The plan is called “The Sahara Vatsalya Jeevan Bima” and has the following features.

- The plan is available for parents aged between 20 to 50 years and for their children aged between 0 – 12 years.

- The educational benefits come when the child is 19 years old. The parents or the policyholders would receive four annual installments – 20%, 25%, 25% and 30% respectively.

- By the time the child is 22 years old, the policy matures and all vested bonuses are paid along with the last installment which is 30% of the educational benefit assured.

- In case of an unfortunate demise of the parent, the sum assured and the vested bonuses would be paid immediately to the nominee.

- The premiums paid are eligible for Income Tax Benefits. The plan also includes accidental benefit and permanent disability benefit rider.

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Motor Insurance India registers 22% growth this quarter

Motor Insurance India has had a shining last quarter as they registered a 22% growth in the topline with a total premium collected being Rs 14,046 crore. This is a direct result of IRDA allowing insurance companies to hike premium on third party cover by 10% for cars and upto 65% for commercial vehicles from April 2011, For the same period last year, the premium collected was Rs 11, 478 crore. The premium collected in the third party cover went up to Rs 2.043 crore compared to Rs 1467 crore (a whopping 39.2% increase).

In India third party insurance is mandatory for all commercial vehicles. Hence another reason for this topline growth can be ascribed to the rising number of new vehicles on the Indian roads. However with the recent hike in the interest rates by RBI, it is reported that demand for cars have dropped and ever since the car manufacturers are introducing attractive schemes to boost sales.

In times of these decreasing motor demands, it remains to be seen whether the motor insurance sector can sustain this growth they achieved this quarter.


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IRDA withdraws the controversial 4.5% guaranteed return on pension products

Life Insurance Companies in India can rejoice at the IRDA’s withdrawal from the controversial 4.5 per cent guaranteed return on pension plans. Usually these returns are fixed according to the reverse repo rate. Reverse Repo rate is the rate at which banks deposits their excess funds in the Reverse Bank of India (in simple words it is the rate at which RBI borrows from the banks). The mandatory return on these pension products was supposed to be 50 basis points more than the reverse repo rate. A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. For example, if the RBI raises interest rates by 50 basis points, it means that rates have risen by 0.50% percentage points. If rates were at 2.50%, and the RBI raised them by 0.50%, or 50 basis points, the new interest rate would be 3.00%.

However amidst this decision the Indian life insurance frontrunner Life Insurance Corporation, India (LIC) has set to offer upto 6% return on it’s unit linked pension product, Pension Plus. Even during the time when the mandatory 4.5 % return was in effect, LIC was the only company to have offered such pension plans. The private players refrained from taking such a risk. The unpopularity of this guideline has forced IRDA to revise it. This revised guideline talks about non zero or capital return instead of a fixed return. Although seeing LIC’s magnanimous premium collected (Rs 400 crore) since the last year through Pension Plus stands testimony to the fact that the guaranteed return guideline should actually work, we should not overlook the fact that other life insurance companies are far behind LIC in terms of size and penetration.

Now we shall all have to wait and see what the private insurers have to offer for pension products.

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LIC comes out with its new Single Premium Product

Not many companies remain so active during a pessimistic phase in the market as Life Insurance Corporation of India (LIC). Apart from investing heavily during these turbulent times, it now plans to launch a new product especially suited for the volatile market. The new product would be a single premium policy and is expected to be released in the month of September.A single premium policy is one where a lump sum payment is made into the policy in return for a death benefit. With this the cash invested builds up rapidly as the policy becomes fully funded. The size of the death benefit depends on the amount invested and the age and health of the insured. However these are relatively expensive.

LIC’s latest single premium policy comes after a gap of two and a half years when it launched “Jeevan Aastha”. The success of “Jeevan Aastha” clearly laid down that people prefer paying single payments against periodic payments albeit the higher costs incurred. For the records, “Jeevan Aastha” raised Rs 10,235 crore in just 45 days with around 1.8 million policies sold. With this new product LIC plans to raise in excess of Rs 10,000 crore because of the inclusion of 5-10 tenure term.

However experts and Financial Planners are skeptical of such policies. A simple math would show that investing in FD and using little bits of returns and capitals would generate better results.

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India First targets high from new business

One insurance company which has been making news these days is the India First Life Insurance. Apart from the aggressive marketing campaign for the Money Back Plan, it also has lined up a many new products to be launched in this fiscal. The motley includes a group saving product, a product for the high net worth individuals and a pension plan (to be released after the regulatory guidelines for pensions are released by IRDA).

From all these expansion, the insurance company has set an eye on achieving Rs 1,200 crore from new premium from this fiscal. Chief Executive P Nandagopal showed optimism on achieving this target. So far they have successfully achieved the target of Rs 150 crore for the first quarter this July and things are already rolling to achieve their next goal

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Hike in premium for Air India.

The woes for Air India don’t seem to wean off this year. After suffering a series of operational issues, the insurance segment now brings bad news for the airline. AI is charged 15% more for its annual insurance premium effective from the October renewal. The premium this year would be Rs 160 crore as compared to Rs 136 crore paid last year.

The reasons cited are primarily due to the increase in the fleet size and the tragic Mangalore air –crash. Apart from this some stringent norms life upfront payment of claims as well as low margin is also considered as a reason. Apart from the higher premium, AI also lost much of its charm amongst insurers as evident from a drop of bids made this year. ICICI Lombard and New India led public sector insurers have made bids for the tender of AI this year. The insurance policy would cover Aviation hull, terror and war and the deductible insurance.

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M Ramadoss faces suspension

Government has decided to take the extreme punitive measures against New India Assurance chairman M Ramadoss by suspending him over the irregularities in distribution of credit insurance cover to Paramount Airways. The cover was granted in 2009 by Oriental Insurance Company which was then headed by Ramadoss. In his absence chairman of Chennai based United India Insurance, G Srinivasan, will take charge.

The issue which involves insurance covers totaling to Rs 400 crore is currently under the scanner of Central Bureau of Investigation. These credit covers were used for sourcing loans from public sector banks. Trouble began when Paramount Airways came under a bad phase and the banks lined up to seek repayments only to discover that their exposure was not only to Paramount Airways but also to Oriental Insurance.

Earlier government has shown similar ire by denying extension to TS Vijayan owning to the numerous complaints against. The suspension of Ramadoss serves as the second example