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Volume I, No.

APRIL 2003
April 6 – 8, 2003
Venue: Baltimore, Maryland
The Annuity Conference
This annual spring conference is by LOMA, LIMRA International May 7 – 8, 2003
and the Society of Actuaries. Over 400 financial Venue: Taiwan
services professionals meet to discuss important issues related to Conference on Catastrophe Insurance in Asia by Asia Insurance Review
income annuities, qualified plans, product design, product Seeking Real Solutions to CAT Exposures in Asia
management, conservation and about everyday issues that affect
the annuity professional. May 5 – 9, 2003
Bonus – Registered attendees of The Annuity Conference can Venue: Beirut
also attend sessions at The Pension Conference at no additional Financial Stability Forum’s Special Seminar with the World Bank
charge. Topic: Anti-Money Laundering

April 6 – 8, 2003 May 7 – 9, 2003

Venue: Baltimore, Maryland Venue: New Mumbai
The Pension Conference Actuarial Society of India (ASI) in collaboration with
LIMRA is joining forces with LOMA and the Society of Actuaries to English Matthews Brockman (EMB), General Insurance
organise this comprehensive conference dealing with the Actuaries and Consultants, the UK, is organising a General
marketing, sales, operations and development of pension plans. Insurance Actuarial Training programme.
The Pension Conference provides the latest information and ideas Appointed Actuaries in general insurance companies, senior
that can be implemented right away. and middle level staff of general insurance companies
Bonus – Registered attendees of The Pension Conference can also dealing in reserving, reinsurance, MIS etc, IRDA, TAC
attend sessions at The Annuity Conference at no additional charge. officials and Actuarial students interested in general
insurance are prospective participants.
April 6 – 10, 2003
For further details and registration form please contact
Venue: Chicago
Ms Anitha Ravi at
41st Risk and Insurance Management Society (RIMS)

The Actuary in India

Annual Conference. May 19 – 23, 2003
Theme: “Specialist solutions in the face of shifting risk.” Venue: Vienna
Financial Stability Forum: Selected IAIS Insurance Core Principles
April 7 – 11, 2003 K.P. Sarma
Venue: Kathmandu May 26 – 30, 2003

Getting the Price Right

Financial Stability Forum’s Regional workshop with SEANZA. Venue: Vienna
Topic: Risk Management: Consolidated Supervision Financial Stability Forum: Core Supervisory Issues

April 15 – 16, 2003 May 26 – 30, 2003 Venkatesh S. Mysore

Venue: Mumbai Venue: Beatenberg

Data Mining & Detariffing

4th Conference on Bancassurance, Wealth Management & Financial Stability Forum’s Focused Seminar. Topic: Risk Management
Alternative Distribution Channels by Asia Insurance Review
Leveraging on Distribution As a Key Driver To Get Ahead May 27 – 28, 2003
Venue: Singapore Anup K. Mathur
5th Conference on Alternative Risk Transfers by Asia Insurance Review
ART As an Effective Risk Management Tool Today
Many Roads to Health Insurance

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IRDA_April_Cv_PAP.pmd 1 1/04/2003, 1:28 PM
“ ”
We are formulating detailed guidelines
for quick settlement of claims by the
state-run general insurers… It is
necessary to settle claims if the industry
is to create faith and confidence in the
minds of the public.

Minister of State for Finance, Mr. Anandrao Adsul,

speaking about pending motor claims.

I have never come across an industry as

paper-bound as the London insurance
market, and I have to say that it even
surpasses the Civil Service in its volume of
paper. It’s odd to think that the Four years ago we took contrarian
fundamentals of the insurance industry positions in four major areas: to stay focused
Editorial Board: have changed so little since the days of on
N. Rangachary Edward Lloyd’s coffee shop. life insurance when others were venturing into
R.C. Sharma
other financial services; to maintain our career
S.V. Mony Lord Peter Levene, Chairman, agency system when some claimed it was too
K.N. Bhandari Lloyd’s of London, on technology. expensive; to remain a mutual when others
A.P. Kurian were going public; and to go global when
Nick Taket others feared the risk. All four of these
Ashvin Parekh decisions are paying off. In a year of sales
Nimish Parekh and earnings duress in our industry, New York
Hasmukh Shah Life set records for both operating earnings
A.K. Venkat Subramaniam and life sales.
Prof. R. Vaidyanathan
Sy Sternberg, Chairman and CEO,
With the landmark announcement New York Life
K. Nitya Kalyani (of the Universal Health Insurance scheme
in the Budget 2003-04), we expect as many
Hindi Correspondent:
Sanjeev Kumar Jain as 40-45 per cent of the population to avail
a health cover in the medium term itself,
Design concept & Production:
with the figures going up subsequently.
Imageads Services Private Limited
Art Director : Shailesh Ijmulwar While this move is significant on the health
Production : Anand and Usha insurance front, we believe that mandatory
health insurance is the complete solution
Printed by P. Narendra and and the nation
published by N. Rangachary on behalf of No doubt competition is one factor
must opt for it at the earliest. which is driving us these days.
Insurance Regulatory and Development Authority.
Editor: K. Nitya Kalyani We cannot be complacent now...
Dr. Prathap C. Reddy, Chairman, Competition is not the only factor. During
Printed at Pragati Offset Pvt. Ltd. Apollo Hospitals this period, stock markets were in bad
17, Red Hills, Hyderabad 500 004
and published from shape and interest rates were falling....
Parisrama Bhavanam, III Floor there was no other suitable and safe
5-9-58/B, Basheer Bagh investment avenue.
Hyderabad 500 004 We don’t provide (board members) with
Phone: 5582 0964, 5578 9768 officers’ and directors’ liability insurance. Mr. S. B. Mathur, Chairman, LIC
Fax: 91-040-5582 3334 Basically, we want the behavior of our
directors to be driven by the effect their
decisions will have on their
family’s net worth.
© 2003 Insurance Regulatory and Development Authority.
Please reproduce with due permission. Mr. Warren Buffet, CEO, Berkshire Hathaway Inc., which itself is
an insurer for other companies’ D & O risks.

IRDA_April_Cv_PAP.pmd 2 1/04/2003, 1:28 PM

From the Publisher

By the time this issue of the Journal is in your of the management of his company in cases where
hands, the Authority would have finished three years the management, according to the actuary, was not
of its existence. In this period, the Authority had carrying on business in public interest.
succeeded in establishing a transparent and
These measures to my mind have been very
responsive organisation.
productive and have now created a situation where
Over this period of time, the Authority had brought the profession of actuarial sciences is being talked of
into existence a number of regulations which deal as the next area where development will take place.
with the establishment of insurance companies, the We have a very limited number of actuaries in this
setting up and regulation of various professional country. The profession of actuarial sciences deserves
intermediaries like agents, brokers, surveyors, loss our support and encouragement not only because we
assessors and third party administrators. The want the profession as such to develop, but because
purpose of all these regulations was only to sub-serve we also want them to take care of the interests of the
the cause of the Indian consumers and to bring to Indian insureds.
them a service from an industry which they richly
Elsewhere in this Journal you will find articles
merit. If these activities have resulted in improving
contributed by very senior and respected members of
the service standards in the insurance industry and
the profession of actuaries. I do hope that readers
had awakened a consciousness in the minds of the
would find the articles interesting and I am sure that
Indian consumers, the Authority considers itself lucky
they will respond to us in good measure pointing out
to have done something.
to us their perception of how the market has developed
One of the wholesome measures that we thought over the last two years and how they consider actuaries
the nascent insurance industry required, moving from to be important in that respect.
the rigidity of a controlled regime to one driven by
We are starting a new financial year with this issue.
market forces, was an assurance to the Indian
The Authority has decided to continue this Journal
consumers that the product that he buys, and the
on a permanent basis and, therefore, requires support
premium he pays periodically, are safe and sound.
from the readers in the matter of suggestions for
We, therefore, adopted the practice of the Appointed
articles to be carried as well as by way of articles etc.
Actuary system in this country much ahead of that
The Editor of the Journal will be willing to accept
system being introduced in some of the developed
articles, of topical interest, for publication in this
The Appointed Actuary of a life insurance company
is the eyes and ears of the Authority in regard to the
functioning of the company. We have also given him
the powers to approach the Authority over the heads N. RANGACHARY

IRDA_April_PAP.pmd 1 1/04/2003, 2:39 PM

G etting The
Price Right

Institutes for Motor Data, Road Safety 6

Venkatesh S. Mysore 4 COVER
IRDA Warns Brokers Against Rebating 6
Guidelines Investing in Mutual Funds 7
No Brokers for Government, PSUs 8
Statistics – Life Insurance 9
How the Ombudsman Works – Samiran Bhattacharya 11
Ageing Society: Whose Baby? – R.C.Sharma 13
Train the Trainers First! – Vijay Vora 15
Beyond The 100 Hours! – Rohit Grover and Ashita K. 16
Data Management and Detariffing – Anup K. Mathur 17

The Actuary in India – K. P. Sarma 21
Life Breath – S.P. Subhedar 23
Long Way to Go – Arpan N. Thanawala 26

the Actuary
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Statistics – Non-Life Insurance 38
Brass Tacks – R. Anand 40
News Briefs 42
Round Up 46

You Said 48

Many Roads to Health Insurance

G.V. Rao

IRDA_April_PAP.pmd 2 1/04/2003, 2:39 PM


Business by Mandate
We are happy to focus this month on the profession of actuaries, the unsung backroom boys of the insurance industry
who make profits happen. If those who market insurance are the face of the industry, it is the actuaries who are the brains,
and this issue presents their role and place in today’s industry and makes an attempt to discern a vision for their future.
Except for actuaries and some others, the mysteries of creating and pricing insurance products are not known to all. But
anyone can do it wrong. One of the wrong ways of doing it is by mandate. We have the living example of Mediclaim, a
government mandated policy which has suffered much abuse and caused much loss over the decade and a half that it has
been in existence. It sprang into existence not from the calculations of the actuaries or an intimate and masterly knowledge of
the healthcare market, its dynamics and costs. It happened – or was made to happen – through an announcement in
Parliament by the then Prime Minister, Mr. Rajiv Gandhi, that the nation would have a health insurance policy soon.
The industry had to create the product following a say-so and not from its own know-how. And the path of the product
was sadly predictable.
Mediclaim has not been the only product thrust on the industry, there was the poor man’s Mediclaim or the Jan Arogya.
Laudable as both were, there is no substituting dreams for a business backed by simple hard-headed numbers.
We are back again staring at another couple of mandated schemes, this time by the Union Minister for Finance,
Mr. Jaswant Singh. In his budget 2003-04, he announced a universal health insurance scheme and an assured return pension
scheme, both of which seem less than likely to succeed commercially.
There is no basis for a Rupee-a-day premium for a health cover of Rs. 30,000 a year, except perhaps the attractive sound
of it. And if the policy is to be offered for treatment at community hospitals, then the scope for fraud can easily be imagined.
The general insurance companies in the public sector – who presumably are the ones who will be offering this cover – are
already reeling under the pressure of the bottom line due to various acts of omission and commission and not all of their own
making. This would add to their woes at a very wrong time, not that there is a right time for it.
This is simply because the health sector is in a massive chaos. Not just data about the healthcare industry, but even basic
information on health status in India is not readily available in any satisfactory measure, and the less said about the
retrievability and reliability of individual health records the better.
The Government is the owner of the PSU general insurers and can indeed impose such measures on them. But the question
is whether they should do this when the products or schemes fly in the face of scientific product development and its critical
component, remunerative pricing and feasible administration, and thus place obstacles in their path to profitability in a newly
competitive environment.
Equally worrisome is the Varishta Bima Pension Yojana. A guaranteed return, at a time when the industry is finally
following with alarm IRDA’s repeated advice to phase it out, is anachronistic to say the least. Even if the LIC, which has been
named as the sole administrator of the scheme to be subsidised by the Government, manages a seven per cent return in these
soft interest days net of its administrative expenses, the remainder, the subsidy, could well arrive a couple of years later.
If the scheme garners about Rs. 25,000 crores, which has been indicated by the LIC management, then the interest
burden on that would be Rs. 2,250 crores. And if the LIC has to wait for a fourth of this for a couple of years, the least we could
say is that it would be out of pocket.
Private players need not feel envious but can breathe a huge sigh of relief that they were left well out of this scheme. It is
the LIC that one should be concerned about. The strongest insurance player today that has reinvented itself to suit the new
era, could find itself wasting away slowly. Let us hope it does not come to that.
We also present in this issue an entry into the subject of our May issue – remuneration to intermediaries and the cost of
doing business - with an article by Mr. Venkatesh Mysore, Managing Director of MetLife India. An article on data mining and
warehousing, outlines the remedy for the industry today. There is also an unconventional approach outlined to spreading
health insurance, by Mr. G.V. Rao, which has all sorts of common sense reasons to succeed.
We hope you enjoy the issue!
K. Nitya Kalyani

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Getting the Price Right

Venkatesh S. Mysore
Since opening up Selling life insurance products has Another important factor that has
the insurance always been a difficult profession. The been created by the increase in
sector, the IRDA choice available to consumers has made competition is the pressure on expenses.
has established this work even more difficult. To that extent, more and more
as its primary goal Companies have focused on substantial companies are rewarding their agents
the protection of additional training to make agents based on incentives for higher
policyholders. As much more than just product sellers and productivity, persistence and
part of its to develop them instead to provide consistency of the business. Companies
developmental financial advice and planning. As more have realised that unproductive agents
objectives, the life insurance products like term are very costly and bring in low quality
IRDA has been attempting to insurance have become commodities, of business as well. Maintaining agents
professionalise the industry and agents have been forced to provide that are unproductive in the agency has
facilitate its growth and development. better, and more value added, services also brought a culture that is difficult
to their clients. to change unless some drastic measures
This paper highlights some of the are taken.
principles behind developing a Global statistics show that
successful and fair compensation customers prefer doing business with Therefore, developing a professional
system for life insurance agents and agents ‘eye ball to eye ball’ as reflected sales force has become a major goal for
providing the consumers with quality in the fact that two-thirds of the most insurance companies around the
advice for their financial decisions. world. Consistent with this goal, the
There is also a brief overview of some of support mechanism in the form of good
the trends in the life insurance training and development and a sound
In the past the compensation plan becomes imperative.
industry’s compensation systems.
insurance industry has
We are familiar with the breaking often made the mistake Given these factors, here are some
down of barriers and open competition principal recommendations for the
taking place around the world. The
that a higher commission Indian market place with regard to
WTO has become a household name and structure is bad for the developing a productive marketing force
the trend suggests that we will see more consumer. A low and through correct compensatory practices.
opening up of the financial markets in exclusive commission Do not eliminate the maximum level
the next few years. The impact on the system like the one of commissions payable to agents as of
insurance industry has also been felt. currently existing in now. The market needs time to adjust.
One such impact is the changing India makes it very It is, however, recommended that the
compensation structure itself. Many cap is measured on an aggregate basis.
difficult to recruit quality This means that companies should be
countries like the UK, Korea, Singapore
and Europe to name a few, used to have
people to the profession. allowed to compensate the agents as
maximum commission levels payable to they deem fit within the cap. The impact
agents. Gradually, they have abandoned on the premium would be limited.
maximum limits since market business, or more, comes through the In the past the insurance industry
competition and opening to foreign agency channel. It is safe to say that in has often made the mistake that a
players have readjusted commission India almost hundred per cent of the life
higher commission structure is bad for
levels automatically to assure business comes through the agency
the consumer. A low and exclusive
competitive pricing of products for the force.
commission system like the one
consumers. They have seen the There is also evidence that it takes currently existing in India makes it very
redundancy of setting maximum limits approximately two to three years for an difficult to recruit quality people to the
and have left commission levels to agent to develop in this industry as profession. In general, the industry ends
market forces. (See table for some borne out by the retention rates of up recruiting low quality agents and
sample commission structures). agents in the first three years compared part timers resulting in poor customer
The Internet has made consumers to later in their careers. service and huge attrition. This will
much more aware of their choices Due to the market forces at play, inevitably lead to bad sales practices.
regarding financial products. It has also there has been a need to provide fair These costs are ultimately passed on to
created downward pressure on the compensation for the work of an agent/ the customers in the form of pricing
pricing of life insurance products. financial advisor. assumptions.

irda Journal, April 2003

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Some commission structures There should be penalties imposed And finally, consideration should be
on agents for policy lapses through a given to introducing a Risk Based
Country Commission Cap charge-back system with some Capital system (RBC) as soon as
measures and controls to maintain possible. The RBC system would make
UK No cap companies more accountable and would
integrity and quality. It would be
US No cap indirectly force them to pay attention
important to have all field managers to how they pay commission on their
Ireland No cap
accountable for uncollected charge-back products, which products they sell or
China Cap only on by their agents so that they are strongly encourage agents to sell and how they
encouraged through the commission invest their money to support those
loading. No cap on
system to recruit quality people and to products through better asset-liability
focus on making sure that the business management (ALM) systems.
South Commissions
is of good quality. RBC could be an important part of
Africa capped
establishing a strong foundation for the
Commission caps should be lower for industry with solid financial discipline.
Source: LIMRA International, US
investment type products and mutual We have seen companies that have
funds. Consistency of rules across the withdrawn products or reduced
A higher commission system with financial industry (banks and mutual commissions in order to comply with or
some decent incentives for quality and funds) will also be required. improve their RBC ratio. It is a very
good management of the field force can good way to make the industry
make the industry very professional and The focus must be on maintaining accountable and self regulated.
provide clients with value added service. strong licensing and training
The author is Managing Director, MetLife
We have to enforce strictly laws programmes for agents with continuing India Insurance Company. He is part of
related to rebating and other similar educational requirements. Strict the committee set up by the IRDA to go
practices. We should discourage disclosure and compliance rules into life insurance agents’ compensation
introducers of business, selling without regarding sales practices and and this article is a compilation of the
licence and part timers. illustration systems are part of this. views he had presented to the committee.




The agency commission structure has come in for review recently, and productivity and quality of
portfolios have become important concerns of the insurers as has the high attrition rate among agents.
There are worries about the cost of doing business too, and some of these relate to the new system of
brokers vis-a-vis legacy practices. What do we need to do with the marketing compensation system in the
life and non-life industries to serve the need for rapidly acquiring new business of acceptable quality,
while at the same time not tilting the balance in the matter of the cost of doing business?
Please write to us your views too, we would be delighted to publish them!

irda Journal, April 2003

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Institutes for Motor Data, Road Safety

The IRDA has received and accepted is crucial to an industry which has been Another reason that makes a data
the report of the committee set up to go suffering huge losses on this business. research outfit an urgent imperative is
into devising the means for data that the loss making Motor portfolio is
Mr. Rangachary said that the also the single largest class of business
collection and research for motor
unanimous view of the members of the contributing almost 40 per cent of non-
insurance and for road safety research.
committee was that the automobile and life premiums. Also, detariffing is going
Announcing this at the valedictory insurance industries need to have better to become a reality in the next few years
function of the Workshop on Vehicle co-ordination and co-operation as both in line with the trends of liberalisation
Safety Testing held by the IRDA and depend on feedback and have to create and building up of a competitive market
Concert, a Chennai-based consumer an adequate database. place.
body, at Chennai on March 21 and 22,
Data, the lifeline of the insurance As for road safety, it is also of critical
Mr. N. Rangachary, Chairman, IRDA,
industry, he said, was buried today importance to the industry and to the
said that the exact form of the institute
inside the books of the insurance society at large. India has the fourth
and how it will be brought into existence largest accident rate in the world even
will be decided by the end of April. industry and no attempt has been made
to analyse and read what was available. though the vehicle population is
The committee was formed following nowhere near the developed countries.
a National Workshop on Data Collection “If there is a charge that could be
When it comes to road accident
and Research for Motor Insurance held made against the Tariff Advisory fatalities our country presents an even
under the aegis of the IRDA and the Committee (TAC) and the IRDA, it is more alarming picture with the highest
Tariff Advisory Committee (TAC) on that we have not brought in a market- number fatal accidents in the world.
January 28 and 29 at Hyderabad. (See driven regime on auto insurance, and This figure was over 88,000 in 1999 and
IRDA Journal, February 2003, page 7). this is because the industry as such has many factors including weak
not taken care of itself,” he said. enforcement of traffic rules, lax
Both the institutes will work in close licencing procedures, overloading and
collaboration with the insurance It has been difficult in the past for drunken driving contribute to it. The
industry and its various stakeholders the insurance industry to plead its case institute for road safety is mandated to
as collecting, analysing and retrieving for upward revision of premiums due to study the situation on an ongoing basis
data related to motor accident losses a lack of data to back its demands up. with a view to improving the systems.

IRDA Warns Brokers Against Rebating

The IRDA has issued a warning to issuing letters to clients not only conduct, the Authority would not only
the newly licensed brokers against seeking support, but also “promising intervene but also see to it that the
rebating by passing on part of their the payment of a sum of money which licence granted to such broker(s) would
brokerage to customers. would be part of the compensation or be withdrawn and cancelled.
brokerage you are likely to get when the
It has also called for detailed returns The letter also calls upon the
transaction is through.” brokers, under Regulation 28 of the
from the brokers relating to business
placed by them, brokerage received and ‘This” he adds, “is a very deprecative Brokers Regulations, to file within 30
payments made out of this brokerage on move on the part of the brokers.” days of the end of every month a
a monthly basis. statement indicating the names of the
Provisions of Section 41 of the clients on whose behalf the business has
In a letter to the brokers, Insurance Act, 1938, he has pointed out, been placed by the broker with the
Mr. N. Rangachary, Chairman, IRDA, prohibits the offer of any direct or insurer, the type of business that has
has said that as professionals they were indirect inducement, including been contracted, remuneration received,
responsible for adhering to the rebating, to procure insurance business. payments made out of such brokerage
regulations and for transparency in and persons to whom payments have
He has also pointed out that a code
their behaviour. been made.
of conduct has been prescribed for
Some reports had been received by brokers to act with ethical and moral Failure to submit this information
the Authority that some brokers had standards and has cautioned that if would lead to penal consequences, the
been, in order to secure business, there were persistent reports of such letter concludes.

irda Journal, April 2003

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Investing In Mutual Funds investment, if any, is made by the
The IRDA has set out the following
guidelines for investments in mutual funds
mutual fund.
Overall investment / exposure limit
by insurers.
Since the term ‘mutual fund’ is neither The investment in mutual funds at any DEFAULTS
covered under the Insurance Act, 1938, nor point of time shall not exceed 50 per cent In view of the prevailing market
by the IRDA (Investment) Regulations, (10 per cent for public sector insurers) of conditions for investments which have
2000, any investment made in mutual investment falling under ‘Other than seen defaults in interest and principal,
funds will fall under the residuary category Approved Investments’ for both life and including in cases of state government
of investments namely, ‘Other than general insurance companies. guaranteed debt instruments, it has
Approved Investments.’ These exposure limits will be reviewed become important for the correct
Hence they will be subject to the limits by the Authority annually. picture to be obtained about investment
prescribed in the IRDA (Investment) portfolios of insurance companies. The
Valuation of mutual fund
Regulations, 2000, and also to the norms reason is that investments are
as follows: policyholders’ funds and their
Mutual fund units shall be reported at impairment could have an impact on
The investment shall be restricted to Weighted Average Cost each quarter. Also, the ability of the insurance companies
investment of temporary surpluses of the the insurer shall mention the market value to meet their claims.
insurer which may be placed in schemes of of such mutual funds (which shall reflect
mutual funds comprising liquid funds, gilt the increase/ decrease in the net asset value With this in mind, the IRDA has
or debt funds. The investment will be [NAV]) in Form 3B as per IRDA announced that insurers have to submit
governed by the following norms: (Investment) Regulations, 2000. the following additional information on
1. The mutual fund should be registered a quarterly basis relating to defaults
A separate Fair Value Change Account
with the Securities and Exchange in their investment portfolios.
segregated for each of the mutual fund
Board of India (SEBI) and be governed investments shall be maintained. g Details of Approved Investments/
by the SEBI (Mutual Funds) Other Investments which have
Regulations, 1996. The unrealised gains / losses arising
due to changes in fair value of the mutual matured for payment and maturity
2. The insurer shall at all times ensure funds shall be taken to ‘Fair Value Change amount is outstanding along with
that the investments in mutual funds – Mutual Fund’ account. The Profit / Loss particulars of defaulted amount and
are diversified among various mutual on sale of mutual fund units shall include period for which the default has
funds. accumulated changes in the fair value continued.
3. The board of the insurer shall lay down previously recognised in mutual funds g Any investment where defaults
proper guidelines for selection of under the heading ‘Fair Value Change – have occurred which, subsequent to
permissible mutual funds and schemes, Mutual Fund’ in respect of a particular maturity, have been rolled over.
including exposure norms, to any single mutual fund and being recycled to Revenue
/ Profit and Loss Account on actual sale of g In respect of investments where
mutual fund and to each scheme of
mutual fund units. periodic income has fallen due,
mutual fund, so as to avoid
details of interest payment in
concentration of investment. The insurer shall assess on each default, along with the period for
4. Where the schemes of mutual funds in Balance Sheet date, whether any which such defaults have persisted.
which such investment is made by an impairment has occurred to the
investment. An impairment loss shall be g Details of steps taken to recover the
insurer is managed by an investment
recognised as an expense in Revenue/ Profit defaulted amounts, and the
manager who is under the direct or
indirect management or control of the and Loss Account to the extent of the provisioning done/ proposed in the
insurer or its promoter, the investment difference between the re-measured fair accounts against such defaults.
shall not exceed 20 per cent (four per value of the investment and its Weighted This information is to be filed with the
cent for public sector insurers) of the Average Cost as reduced by any previous Authority along with the other
amount of investments falling under impairment loss recognised as expenses in Quarterly Investment Returns
‘Other than Approved Investments’ Revenue/ Profit and Loss Account. Any beginning with the last quarter of the
subject to provision referred under reversal of impairment loss earlier current financial year, the statements
Clause 5, pertaining to ‘Group’ under recognised in Revenue/ Profit and Loss for which period are due 21 days after
IRDA (Investment) Regulations, 2000. Account shall be recognised in the Revenue/
the quarter ends.
Profit and Loss Account.
5. The insurer shall not make any
investment in shares or debentures of In the case of unit-linked business,
any private limited company in which mutual fund units shall be valued at NAV.

irda Journal, April 2003

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for Government, PSUs The following 11 entities have been licensed by the IRDA to operate as
The IRDA has issued the following insurance brokers for a period of three years. The last issue carried a
new guidelines for payment of brokerage list of 17 licensed brokers.
to insurance brokers carrying on direct Here is a list of newly licensed brokers with the names of the Principal
non-life insurance business in India. These Officers and contact information.
guidelines will not apply to reinsurance
broking contracts where in terms of Ashok Dalvie Vivek Kuhadas
regulation 19(c) of the IRDA (Insurance Pioneer Insurance Services Pvt. Ltd. Alankit Insurance Services Ltd.
Brokers) Regulations, 2002, market 205-208, Anarkali Complex,
1219, Maker Chambers V,
practices will prevail.
Nariman Point, Mumbai-400 021 Jhandewalan Ext., New Delhi-110 055
The scales of remuneration as Ph: (011) 23611846-50, 23610220-24
prescribed in regulation 19 will stand Ph: (022) 22021171
modified as under, in the following cases N. Raveendran
in respect of fire and engineering classes
Neil Mathews
Alegion Insurance Services Ltd.
of business controlled by a tariff prescribed Aon Global Insurance Services Pvt. Ltd.
#50, I Floor, Kasturi Ranga Road,
by the Tariff Advisory Committee (TAC). Gresham Assurance House, 4th Floor, Alwarpet, Chennai-600 018
There will be no brokerage allowed on Sir P.M. Road, Mumbai-400 001 Ph: (044) 24983059, 24980152
business of government and public sector Ph: (022) 22660771/ 56308731
undertakings (as per Section 617 of Sohanlal Kadel
Companies Act, 1956), and business from Sanjay Kedia Kadel Insurance Services Pvt. Ltd.
these customers will be placed directly by Marsh India Pvt. Ltd. 402, 4th Floor, Mugul Apartments, Deccan Towers,
them with the insurance companies. This Essar House, 8th Floor, Basheer Bagh, Hyderabad-500 029
category of customers will continue to get
11, Keshav Rao Khadye Marg, Ph: (040) 23237563, 23296634
a five per cent discount on the basic tariff
applicable. Mahalaxmi, Mumbai-400 034
M. Srinivas Reddi
The IRDA has allowed insurers to Ph: (022) 24954675 MFL Insurance Services Pvt. Ltd.
choose between brokerage and the five per 402, M.G.R. Estates,
cent special discount in respect of other B.P. Mathrawala
Mathrawala & Sons (Brokers) Pvt. Ltd. Panjagutta, Hyderabad-500 082
insureds such as:
Ph: (040) 55668679, 55638679
a) companies with a paid up capital of Suite No. 3 & 4, 3rd Floor,
Rs. 1 crore and above Bombay Mutual Building, J.H. Parekh
b) co-operative societies with a paid up P.M. Road, Mumbai-400 001 Prman Reinsurance Brokers Pvt. Ltd.
capital of Rs. 5 lakhs and above (Reinsurance) 113, Bhaveshwar Complex,
c) public charitable trusts which are Ph: (022) 22614513/ 22661766 Near Vidyavihar Railway Station,
exempt from income tax and Vidyavihar (W), Mumbai-400 086
Ketan M.Boda (Reinsurance)
d) business under the direct control of the
government where the policy of M.B. Boda Reinsurance Brokers Pvt.Ltd. Ph: (022) 25140564
insurance shows the interest of the 134-136/C, Mittal Court, 13th Floor,
governor of a state or the President of C-Wing, Nariman Point,
U. Singaravelu
India. S & S General Insurance Professionals of (India) Ltd.
Mumbai-400 021
(Old No. 19), New No. 52,
The brokerage structure for them is: (Reinsurance) North Crescent Road,
Paid up capital Commission/ Ph: (022) 22043894/ 22875836 T. Nagar, Chennai-600 017
of insured brokerage ceiling Ph: (044) 28156813
Upto Rs. 1 cr. 12.5% of premium
T.R. Balan
10%(compulsory business)
Chawla & Associates Insurance Services Pvt. Ltd. Toral G. Upadhyay
“Kamalja” 1306, Shivaji Nagar, Rajkot Insurance Services Pvt. Ltd.
Rs. 1 cr.-Rs. 25 cr. 7.5%
Off J.M. Road, Pune-411 005 201, Arihant Plaza, Subash Road,
Above Rs. 25 cr. 5% Near Moti Tanki Chowk,
Ph: (020) 5534961/ 5444561
In respect of insureds other than those Rajkot-360001, Gujarat
covered above, the rates as prescribed in A. Murali Mukund Ph: (0281) 2480825-26
regulation 19 will apply. Strategic Ins. Services Pvt. Ltd.
Jatinder Mehta
For the purpose of this notification, 604, Riviera Apartments,
brokerage/ commission shall include (as Imperial Insurance Brokers Pvt. Ltd.
Dwarakapuri Colony, 212 B, Hemkunt Tower,
indicated in regulation 19) any royalty,
licence fees, administration charges or any Punjagutta, Hyderabad-500 082 98, Nehru Place, New Delhi-110 019
compensation which any agreement Ph: (040) 55669419/ 23371796 Ph: (011) 51619692/ 51619693
between the parties provide for

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Report Card: LIFE

Analysis of new business figures for the 1,69,35,090 policies under a host of premium was collected under
period ending February, 2003 (FY 2002- products, collecting premiums of endowment at Rs.244.39 lakhs,
2003) . Rs.4,04,920.94 lakhs and sum assured followed by money back plan at
of Rs.1,14,13,615.00 lakhs. The Rs.102.51 lakhs.
A brief analysis of the information
maximum policies were underwritten As against the private players, LIC
furnished by life insurers for the new
under the endowment plan followed by underwrote 35,94,554 policies in the
business underwritten during the 11
the moneyback plan, being 1,07,62,134 rural sector, with premium amount of
month period ending February, 2003,
policies and 50,44,681 policies, Rs.61,101.51 lakhs and sum assured of
in the financial year 2002-2003 is given
respectively. The premium Rs.17,92,559.02 lakhs. Maximum
underwritten under the two plans were policies were underwritten for the
Life insurers were required to Rs.2,52,389.76 lakhs and endowment plan at 23,82,455 policies
furnish the information under two Rs.1,21,056.84 lakhs, respectively. at a premium of Rs.36,777.79 lakhs,
broad heads, viz., Individual Business
Single Premium New Business followed by moneyback plan at
and Group Business. They were
During the period up to the month 10,45,907 policies at a premium of
required to give details of the premium
of February, 2003, the private players Rs.21,599.40 lakhs. Under the unit-
underwritten by them under individual
offered a host of products under single linked plan, two policies were
business and to indicate broadly the
premium new business. During the underwritten.
data under individual new business,
single premium new business and said period 44,676 policies were Single Premium Rural Business
individual pension business. underwritten by the private players A number of products were offered
garnering premiums of Rs.25,805.01 to the rural sector under single
The information was also required
lakhs, and sum assured of Rs.38,702.73 premium business, by both the private
to be furnished for the rural sector.
lakhs. Under this category as well the and public insurers. 25,136 policies
Similarly, information about group
private players underwrote the were underwritten by the private
business underwritten was required to
maximum of 32,886 policies under players in the rural sector for a
be furnished incorporating group
endowment at a premium of premium of Rs.101.37 lakhs and sum
insurance business, group gratuity
Rs.18,699.1 lakhs with sum assured of assured of Rs.1,107.46 lakhs.
business and group superannuation
Rs.19,924.84 lakhs.
business. The details of social sector LIC underwrote 12,648 policies for
business underwritten in these As against this, LIC underwrote a premium of Rs.7,231.18 lakhs and
segments were also required to be 2,79,962 policies for a premium of sum assured of Rs.9,096.25 lakhs
furnished. Rs.2,44,232.28 lakhs and sum assured during the period ended February,
of Rs.3,04,747.00 lakhs. Maximum 2003. The maximum number of policies
The statistics received from
business was written under the was underwritten under the “Others”
insurers have been compiled to present
‘Others’ category at 2,35,359 policies category at 10,314 policies, and
a comparative view of the performance
and premium underwritten of premium underwritten of Rs.5,534.11
of private players and the public sector
Rs.1,94,077.19 lakhs, followed by the lakhs. No policy was underwritten
insurer, i.e., Life Insurance
endowment plan at 44,180 policies and under the Unit-linked Single Premium
Corporation of India (LIC). Private
Rs.50,101.83 lakhs premium. Rural Business.
insurers comprised all 12 players in the
industry other than the LIC. Individual Pension Business Individual Rural Pension Business
INDIVIDUAL BUSINESS Under the individual pension Under the Individual Pension
business, private players offered single Business for the rural sector, 640
Individual New Business
and regular premium policies and
policies were underwritten by the
During the first 11-month period of personal pension plans. A total of
private insurers with premium
the financial year 2002-03, 4,99,704 68,427 policies were written at the
underwritten of Rs.95.48 lakhs.
policies were underwritten by the premium of Rs. 7,911.07 lakhs.
private players for a premium of LIC underwrote 3,492 individual
As against the private players, LIC
Rs. 36,459.29 lakhs and sum assured pension policies in the rural sector for
wrote 1,14,709 policies for a premium
of Rs.12,67,643.98 lakhs, inclusive of a premium of Rs.465.41 lakhs during
riders. Maximum policies were of Rs.17,561.20 lakhs.
the period under reporting.
underwritten under endowment at Individual Rural Business
2,54,203 for a premium of Rs.18,074.2 GROUP BUSINESS
The private players underwrote a
lakhs and sum assured of Group Insurance Business
total of 34,501 policies for a premium
Rs.4,00,884.64 lakhs.
of Rs.407.71 lakhs, and sum assured The private players offered 361
As against this, LIC underwrote of Rs.13,923.50 lakhs. Maximum schemes under group insurance

irdairda Journal,
Journal, April 2002
December 2003

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business during the first 11 months of Group Superannuation Business schemes, covering 4,11,965 lives, and
the financial year, covering 6,66,332 underwrote premium of Rs.500.58
Under 10 different schemes offered
lives. The premium underwritten lakhs. As a rider, under the Shiksha
by the private players, 831 lives were
during the period was Rs.2,753.06 lakhs. Sahayog Yojana 25,567 lives were
covered, and Rs.590.12 lakhs premium
LIC offered the term and the group was underwritten during April, 2002, to covered for a premium of Rs.88.61 lakhs.
savings linked insurance schemes February, 2003.
Group Gratuity Social Sector
during the period. Under these two LIC offered three products under Business
options, 5,426 schemes were Group Superannuation, namely Group
underwritten covering 11,19,537 lives. Superannuation (GS), Group Annuity None of the players – private or
The premium underwritten was (GA) and VRS, covering 235 schemes. public - reported any business during
Rs.2,608.77 lakhs. Under the schemes, 83,237 lives were the 11 month period under this category.
Group Gratuity Business covered, and Rs.77,527.91 lakhs
premium was underwritten during the Group Superannuation Social
The private players were operating first 11-month period of the current Sector Business
21 schemes during the year, covering financial year. None of the private players reported
2,698 lives. Premium underwritten
Group Social Sector Business any business under this category,
during the period was Rs.1,040.59 lakhs.
during the period under consideration.
The private players offered 17
As against this, LIC offered 1,580
schemes, covering 33,897 lives under During the first 11 months of the
schemes during the period covering
the social sector, and garnered Rs.12.81 current financial year, 2,498 schemes
1,80,853 lives. New business premium
lakhs premium. were offered to cover 93,519 lives with
underwritten during the period was
Rs.24,706.04 lakhs. This includes group As against this under the Janashree underwritten premium of Rs.168.23
leave encashment business also. Bima Yojana, LIC offered 2,765 lakhs by the LIC.

New business done in the first eleven months of 2002-2003

(Rs. in lakhs)

Individual Business Premium Policies Sum Assured

Individual New Business* 4,41,380.23 1,74,34,794 1,26,81,258.98
Single Premium New Business* 2,70,037.29 3,24,638 3,43,449.73
Individual Pension Business* 25,472.27 1,83,136
Individual Rural Business 61,509.22 36,29,055 18,06,482.52
Single Premium Rural Business 7,332.55 37,784 10,203.71
Individual Pension Business - Rural 560.89 4,132
TOTAL - Individual Business 7,36,889.79 1,79,42,568 1,30,24,708.71
* Inclusive of Rural Business
(Rs. in lakhs)

Group Business Premium Schemes Lives

Group Insurance Business** 5,361.83 5,787 17,85,869
Group Gratuity Business** 25,746.63 1,601 1,83,551
Group Superannuation Business** 78,118.03 245 84,068
Group Insurance - Social Sector Business 513.39 2,782 4,45,862
Group Gratuity - Social Sector Business
Group Superannuation - Social Sector Business 168.23 2,498 93,519
TOTAL- Group Business 1,09,226.49 7,633 20,53,488
** Inclusive of Social Sector Business

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How the Ombudsman Works

Samiran Bhattacharya
The introduction borne by all the insurance companies as
per laid down procedures later), and
1963, whichever is applicable.
of the system of providing non-life insurance officials to If any complaint does not comply with
Ombudsman in the offices of the insurance ombudsmen the provisions of the RPG Rules (Rule 12
different fields of of each zone is the responsibility of and 13), the Office of the Insurance
public life for respective public sector non-life Ombudsman communicates its inability
redressal of insurance company whose head office is to register the complaint. For example,
grievances is a in that particular zone. if any complaint is pending before any
relatively new consumer forum under the Consumer
concept in India. Practicalities Protection Act, 1986, (Section 12), or a
Many of our state On the receipt of any complaint, the suit is filed before any civil court
assemblies have Office of the Insurance Ombudsman sees governed under the Civil Procedure Code
already passed legislations introducing whether it can be registered in terms of or before any Arbitrator governed under
the system of Lokpal for redressing of Rules 12 and 13 of the RPG Rules. If yes, The Arbitration & Conciliation Act, 1986,
grievances relating to various a notice is served on both the then the complaint cannot be taken up
departments. In different specialised complainant and the respondent asking by the Insurance Ombudsman.
fields too the system of Ombudsman has for submission of relevant information
been introduced. There is a time limit of one year
and copies of documents within a from the date of the final reply of the
For example, the Ombudsman stipulated date. If necessary, either or insurance company before which a
system was introduced in the banking both the parties are invited for oral consumer may bring his complaint
sector in 1995 with an amendment in deposition. before an ombudsman. ‘Final Reply’
2002. In the insurance sector, in exercise means the disposal of the
of powers conferred upon it under Section representation of the insured, or his or
114 (1) of The Insurance Act, 1938, the her heir, on the decision of the
Union Government framed The The reason for the insurance company.
Redressal of Public Grievances Rules, mounting numbers of
1998, (RPG Rules) which became The Office of the Insurance
complaints is primarily Ombudsman is not the claim settling
effective from November 11, 1998. The
provisions relating to Insurance the very fast final department of the insurance company.
Ombudsman has been laid down in these redressal and, (as far as Hence, the insurance company is to
rules. decide on the claim first and thereafter
respondents are as a second opportunity, the insurance
Legalities concerned) nil expenditure company is to dispose of the
There are now 12 offices of insurance representation of the insured. Only
ombudsmen functioning in metropolitan in respect of
then does the Insurance Ombudsman
and large cities covering all the states Ombudsman cases. look at the case based on merits as well
and union territories of our country. The as the documents on which the
jurisdictions of insurance ombudsmen company’s decision was based apart
are decided on the basis of the addresses from the oral submissions of the
of the policy-issuing offices of the The Insurance Ombudsman at first
tries to mediate and recommend a parties.
insurance companies. All the insurance
settlement of the complaint (Rule 15). The time limit for the Insurance
ombudsmen have been appointed from
But if that is not possible, then he passes Ombudsman to decide on the complaint
among senior retired insurance
an Award which should not exceed Rs. is one month if by recommendation,
executives (both life & non-life), the
20 lakhs including cost and expenses and three months if by way of Award.
judiciary and the civil services.
(Rule 16).
An insurance ombudsman may be The number of cases before
In case this Award is not acceptable insurance ombudsmen is increasing. In
appointed for two terms totalling three
to the complainant, he or she can lodge a this calendar year, the number may
years or till the age of 65 years, whichever
complaint afresh before the Consumer cross 10,000.
is earlier. Every Insurance Ombudsman
Court under Section 12 of the Consumer
is supported by executives deputed from
Protection Act, 1986, or file a suit before The primary reason is the very fast
public sector insurance companies.
the appropriate court of law governed final redressal and, (as far as
The Life Insurance Corporation of under the Civil Procedure Code subject respondents are concerned) nil
India (LIC) provides the necessary to the period of limitation as enumerated expenditure in respect of Ombudsman
infrastructure including immediate day- in the Consumer Protection Act cases. In contrast, it takes five years on
to-day expenses (which will be actually as well as in the Limitations Act, an average, with allied expenses, if the

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cases are before a consumer court and before the introduction of the above Depending on the gravity of case, the
there are chances of further delay due Regulation. officials from the higher offices, the
to appeals/ revisions. Substantial doctor, investigator or surveyor
Many a time, policy issuing offices
expense is necessary if cases are to be concerned may accompany him/her at
perceive the Office of the Insurance
filed before civil courts due to stamp fee the time of oral deposition so that they
Ombudsman as an outside entity and
and advocate’s fee with an average time can supplement in their areas of
do not submit the required papers as
period of five years and chances of expertise.
per the notices and within the required
further delay and cost due to appeals Challenges ahead
time. They also remain indifferent at the
and so on. Even in case of arbitration,
time of hearing, apart from writing very All of us are aware of the names of
there are expenses towards sharing of
casual, generalised letters to the Office globally acclaimed insurance companies
arbitrator’s fees.
of the Insurance Ombudsman. which went into liquidation in the recent
In addition to fast settlement with past. The present day competitive
The policy issuing offices of the
no expenses of cases in front of the environment, regulator-controlled
insurance company should take cases
ombudsman, the credibility of the cause business climate and disinvestment, all
before the Ombudsman seriously. As
of action is clear. This is due to the fact have their inter-linked effects on dealing
soon as any Notice (P IV) from the
that the system’s support services with consumers who are more conscious
Insurance Ombudsman is received, a
providers are from the insurance about their rights.
self-contained note (i.e., written
industry, and have good number of
statement), giving information in The mitigating aspect of insurance
years’ exposure in technical areas in
chronological order with para-wise litigation is also to be seen from the
different offices and in different cadres.
comments on the complaint along with above larger perspective. Global studies
Hence, they understand the subject in
of insurance companies reveal that
its proper perspective. In many offices
disputes with insureds cause losses.
of insurance ombudsmen, there is
Before the introduction of the
further value addition as there is a Many policy issuing Ombudsman in insurance sector, the
techno-legal executive deputed from the offices perceive the Office question of how customer disputes can
insurance Industry.
of the Insurance be settled quickly through an impartial,
Subtleties Ombudsman as an outside credible mechanism with the requisite
In today’s buyers’ market, insurance domain knowledge had been debated
entity and do not submit and seriously discussed before the
product purchasers are demanding and
savvy. Retired officials of insurance the required papers as per regulator.
companies are also contributing to the the notices and within the A system like that of the Insurance
increased in the knowledge of the required time. They also Ombudsman is a long desired grievance
buyers. The desire to be apprised about remain indifferent at the redressal mechanism which is outside
the price mechanism of a particular time of hearing. any insurance company but which is
insurance product as well as the logical very much within the insurance
interpretation of the meaning of industry and the successful execution
different policy wordings are of the system will lie with all the
predominant demands from the buyers’ the copies of vital documents like policy- insurance companies operating in India.
side. schedule, policy conditions, survey
report, medical opinion, claim form and The introduction of the Insurance
The opening up of the insurance Ombudsman system may have caused
the other documents on which the
an increase in the financial liabilities of
sector and the consequent creation of a decision has been based and consent
insurers which they avoided till now by
competitive environment has enhanced letter are to be submitted.
their casual approach. But as this lax
the opportunities in this respect. The
At the time of oral deposition, attitude has tarnished companies’
obvious end result is the increase in original documents should be brought images and no company can afford to
disputes between the insureds and and the dealing officer of the respondent allow this in the present market
insurance companies. Today, interest policy-issuing office should normally be environment, the sincerity with which
on delayed insurance claims payments present. The dealing officer is involved they respond to cases in front of the
is a matter of right of the insureds in all the decision-making processes in ombudsmen will only benefit them.
according to Regulation 9 of The IRDA respect of underwriting/ claim-
(Protection of Policyholders’ Interests) settlement of the aggrieved insured.
Regulations, 2002, effective from April The author is Assistant Secretary (Legal),
Hence, no other officer is in a better
30, 2002. Incidentally, the LIC started Office of the Insurance Ombudsman,
position to present the company’s case
paying interest on delayed claims much Mumbai.
before the Insurance Ombudsman.

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Ageing Society: Whose Baby?

R. C. Sharma
L ord Buddha services, has resulted in longer life spans. giving old age pensions to senior citizens
said that one But longer life is coupled with more old of their states.
should always age diseases which need more physical
In India, the Union and state
r e m e m b e r care and money to meet medical
governments provide retirement benefits
sickness, old age expenses.
to their employees in the form of
and death. He
Sociological changes have changed pensions/ gratuity/ medical benefits
must have had a
the colour of the society. Earlier, children / housing schemes etc. But actually this
s p i r i t u a l
used to take care of their elders and the is a small fraction of the total working
connotation in
joint family system used to be the vehicle force, estimated at about 11 per cent of
mind while
to share these burdens as a whole, the working population in India.
preaching these
cushioning families against hardships.
words, but the The unorganised sector, which is a
advice is quite appropriate in the With the growing individualistic major chunk of the workforce is
temporal world as well. In fact it could pattern of society, elders are being left completely left out of these benefit
be quite spine-chilling to think of the to their own fate financially and schemes.
effects of old age on oneself. And death emotionally. Not all older people may
of course is inescapable. With the objective of providing the
have enough financial resources to take
workers of the unorganised sector with
care of themselves in their old age. First
Each of these has its own tortuous the means to save for their future, the
because they have stopped earning and,
effects on one’s life in terms of physical PPF scheme was introduced in 1968-69.
second, because their medical care costs
agony, economic strains and social/
family stress. But they are the hard facts Because of the premature
of life. Everybody has to pass through withdrawal facilities and the tax
this route with varying degrees of pain. Any civilised society can benefits allowed, the scheme has not
The point is how to mitigate these produced the desired results of serving
ill afford to neglect this as an effective old age pension scheme.
inevitable miseries. The financial
strength of the individual can go a long important and respectable The Government also introduced a
way in making it more bearable. segment of the society. monthly income scheme through the
Department of Posts. But with ever
With increasing life expectancy, the decreasing interest rates on deposits,
phenomenon of the ageing society is these kind of schemes also are proving
getting more attention the world over. less than able to meet the needs of an
Whereas developed nations can take care have gone up. old age pension. Mutual fund schemes
of this segment of the society are also not robust enough to provide
The prudent savings made by some
comfortably, developing countries are sufficient yields.
of them may also not yield sufficient
still groping to find viable ways and
income due to the increasingly lower The fact remains that any civilised
means to meet this mounting problem.
returns on their savings. society can ill afford to neglect this
A problem that is likely to escalate in the
future faster than the measures important and respectable segment of
Under the circumstances, they are
contemplated to control it if not tackled the society.
hopelessly left to themselves or, in some
in time. cases, at the mercy of the State. There Governments of the day cannot go
may be some philanthropists or non- beyond a particular point due to
What are the demographic changes,
governmental organisations (NGOs) also financial and administrative
especially in India, that have changed the
on the scene, but these are far from constraints. Most of the affected people
sufficient to meet the enormity of the are not used to even the monthly regular
Life expectancy has almost doubled challenge. income concept as they never belonged
from 32 years at the time of to a working force which received regular
Governments all over the world are
independence to 62 years in 1995. incomes and this is one of the basic
seized of the matter and are taking
Females have a higher life expectancy reasons for their not participating in any
appropriate steps to mitigate the
though it is the males who are mostly post-retirement beneficiary schemes.
problems faced by them in different
the primary breadwinners.
ways. In India also, the Union In the absence of an adequate social
A decline in the mortality rates, in Government and state governments security network, people have to think
infant mortality rates and, most have taken some steps in this direction. about their own future and old age
markedly, an improvement in health Some of the state governments are requirements. In fact, there is no

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genuine awareness about the dire need providing assured monthly income and monthly income to meet his basic daily
of such a system among people at large. healthcare benefits in the form of riders. requirements. Any scheme in the
Future planning or retirement planning shape of a monthly pension is the
is as important and significant as But they are yet to come out with
actual answer to his problem.
today’s living. need-based solutions. Their approach
has been a bit conservative. Perhaps The UK and a few Western
Also, they lack the professional the greater interest of self sustenance countries have such schemes for their
knowledge to calculate the quantum has been overriding for them. In the senior citizens. In spite of the fact that
and method of savings required to cater scheme of annuities, the concern of the most of the countries are turning out
to their future needs. To complicate insurance company is not that the to be welfare states, this kind of
matters, future needs have also insured will die early but that he will gesture cannot be easily afforded by
undergone tremendous changes costing live too long and receive the annuity many of them. Many countries provide
more in terms of money. for a longer period than expected. annuities based on contributory
Savings, hitherto, have been almost funding both by the employee and the
This is an opportunity to innovate
entirely from the angle of tax avoidance. employer and in the case of self-
in terms of products to meet the
There have been no serious efforts from employment, the schemes self-
compelling requirements of a market
any quarter to create any awareness to financed.
segment. Again this is not as easily
enthuse people to plan their savings for done as said. Life sector policies are There may be cases where
old age needs. very difficult to devise as they have to individuals have outlived their assets
Insurance companies should take sustain over a very long period, and died paupers, or other cases where
the lead in creating such an atmosphere sometimes even for a longer period they have lived very miserly lives and
where even a common man is able to than the person had actually served in died asset rich. Actually a great
comprehend his future requirements an organisation. amount of intrusive calculation and
and look for solutions in terms of assessment is required.
This involves a deep actuarial study
insurance policies and other products. The actual answer is a viable
to develop a product keeping in view
Members of this segment in synergic the quantum and tenure of investment pension/ annuity scheme modelled on
association with some agencies/ required for a particular yield. The various available schemes. Concerted
corporates can help themselves by investments are not free from risks and efforts on the part of all involved is
carving out a few schemes which can uncertainties. But again, this is required to ensure some regular
yield long-term regular monthly income. achievable and sustainable. The income to the growing numbers of
apprehensions are genuine but how ageing members of the society.
Hitherto, life insurance companies
long will the stalemate continue?
have floated some schemes giving
multiple benefits combined with life Again this is not the real need of The author is Assistant Director, IRDA.
insurance. These schemes could help in an old person. He has to have a regular The views expressed here are his own.

AND BAD We welcome consumer experiences.
Tell us about the good and the bad you have gone through and your suggestions. Your insights are valuable to the industry.
Help us see where we are going.

Send your articles to: Editor, IRDA Journal, Insurance Regulatory and Development Authority,
Parisrama Bhavanam, III Floor, 5-9-58/B, Basheer Bagh, Hyderabad 500 004 or e-mail us at

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Train the Trainers First!

Vijay Vora
The class room training should to be attended, at least once, by a
Training is a continuous process. consist of : responsible officer of the IRDA.
Need-based training is most
advantageous to customers and Q Code of conduct and legal liabilities At the same time every effort should
Attitude be made to have exhaustive feedback
producers/ providers. This will give Q

Q Product knowledge, with stress on from trainees without any fear or favour
added advantages and comfort to
product designing and this should be thoroughly monitored
customers and profits/ surplus to the to improve trainers’ training. In course
Q Investment pattern under the IRDA
producer/ provider. Insurance is a very of time we will have visionary trainers
technical subject. It involves a Q Solvency margin and share capital for the industry as a whole.
knowledge of medical and health Market and outcome of market
sciences, law, statistics, technicalities
As we know the LIC has the largest
research vis-a-vis rules for number of agents among the insurers of
of all industries, actuarial science, advertising and publicity the world. The fact remains that in spite
financial markets and so on. When Value-added service before and after
of this Malhotra committee’s report on
thinking of training it is normal to think the sale the opening up of insurance sector
of growth in sales and in turn profits. Q Information technology observed that the Indian life insurance
At the IRDA the consumer is now the market is untapped.
The practical training, at first instance,
focus of training.
should include: As such, trainers’ training should be
Training examines the very nature of such a high quality that they deliver
Q The office - its outlook and purpose
of consumers and their growing and the expected results. Today training has
Q Process of working, including basic
changing needs in the light of a become just a formality because it is
of underwriting of risk
changing world. In insurance we think Q Office discipline and expectations mandatory.
of risks involved in day-to-day life, from an intermediary At present, training is given at a
business, production, travel, health, and Q Paperwork and use of information place near residence/ office of the trainee.
so on. These require a very close look at technology Many good orators have started the
new and growing risks, the type of losses Q The role of an intermediary and that institutes without any subject knowledge
people face and their cost in terms of of the office (underwriter, marketing, of insurance. This results in trainees not
premium and claims. product designing and so on) attending the training course diligently.
They are involved in their day-to-day
The present state of affairs is such All these together, if provided by
activity and work. It may be a good idea
that the IRDA has prescribed a training good, experienced, innovative and
if the training is imparted as a
course for intermediaries like individual friendly trainers, will go a long way in
residential programme of three to six
agents, brokers, for bancassurance and achieving the goal. days
so on. They attend the course conducted
by recognised institutions and pass the
B ut the very big and burning This could also include sports, indoor
question of trainers’ training is to be and outdoor, opportunities to show off
test to get licences. resolved on a priority basis. one’s talent in other areas and to
The first renewals of agency licences We, at present, do not have trainers exchange ideas and opinions on various
become due in July 2003. But no course with a clear vision of what the industry subjects and so on. This will make
is designed, no books published and no requires. They are not clear about training attractive as it includes, to some
arrangements made in terms of various aspects of the future needs of extent, subjects and preferred activities
infrastructure required. consumers vis-a-vis the needs of apart from usual course, and is result-
providers. As such a very comprehensive oriented. A close look at the number of
The same was the case when the trainees will make it easy to have more
IRDA started issuing licences to new programme of trainers’ training has to
be conducted at every level. personalised training.
agents. The productivity of newly
recruited agents, even after 100 hours This may be devised under the able What is our expectation of training?
of training and passing of the prescribed guidance of the IRDA and conducted by Usually it is an increase in sales and, in
test, has been very discouraging. The insurers, very keenly watched and turn, of profits. But it is expected also
retention ratio is also likely to go down supervised by the IRDA. that the trainee be very familiar with
products, legal liabilities, attitude,
drastically. In a nutshell, the ball has
A body should be established to future growth prospects and his
started rolling for training first.
conduct the exams which should be participation vis-a-vis his income, the
The training course should include licensed after confirming the faculty, support he will be getting from his
both classroom and practical infrastructure and integrity of the principal, his role in making the
components. institution. Each and every session has customer the king and, above all, faith

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and trust in his principal as to solvency have a visionary, and thriving the industry in the global market, then
and capital requirements. insurance sector on a global level as we I am sure the future is India’s.
All industries are building up their have in the software industry. The author has been with the Life Insurance
dream teams to become global players,
I end with the hope that, as the Corporation of India (LIC) as Development
and insurance is one of them. We have
IRDA is at its initial stage in life if it Officer for 20 years and studied actuarial
capabilities to market insurance
thinks of and visualises the future of science at the Post-graduate level.
globally, and from these trainees we will


50 hours training the agent trainee can
be exposed to them and also refer to them
KNI and its Academy of Insurance
and Finance has developed a prototype of
Rohit Grover and Ashita K. issues and basic calculations are such a library, which has books, articles,
understood, agents/ their companies research findings, Acts, Regulations,
The article by Mr. V. Krishnan (Vantage can well concentrate on some lines journals e.g FORTE Insurance Journal,
Point, IRDA Journal, February 2003, Page only. links to other useful sites etc. This is
6) is excellently written and raises some hosted on
This is, however, only for the purpose
important issues regarding training in the In short, while issues and problems
of examination for 100/ 50 hours. Is not
context of attracting and building good do arise, if the aim remains that of
training a continuous activity in insurance
distribution in non-life insurance. Besides creating a well-informed/ trained agency
business? Training need not begin and end
analysing diverse channels of distribution, force, answers can be found to such
with the 100 hours training.
two points are brought out. problems/ issues.
Agent trainees (especially if they are
Q Need for limited training for ‘monoline We need to recall that about five lakh
from other specialised service areas) need agents who, ipso facto, got licences under
producers’ like travel agents
to be exposed to the whole field, and made the IRDA Agents Regulations, 2000,
Q Availability of training institutes
aware of sources of information and would be coming up for renewal of their
‘agreeable to bypass’ the 100 hours of
knowledge so that they can continuously licence before July 2003. How can training
update themselves with or without formal institutes cope with the load of retraining,
He suggests modules of 30 hours each (or regulator mandated) training 25 hours of which is required? Should a
which are intensive in one line of business requirements. specific 25 hours curriculum be devised,
like travel, auto, home and so on. or left to individual companies?
Some companies like Max New York
Mr. Krishnan has also outlined agent Life which conduct training in-house, Should they be divided up into
trainees’ burden by listing 20 different Acts require agents (after their 100 hours specialised 25 hours modules somewhat
and 32 different policies. training) to attend at least one day per on the lines of what Mr. Krishnan’s article
week in training. suggests?
Knowledge Network India (KNI), as an
accredited training institute (ATI) of the Another issue, which requires focus, Can such a great training load (and
IRDA, and having had the experience of is that the post-2000 agent is different genuine requirement) be catered to in the
from 20th century agent in that s/he is offline mode. How would we accommodate
training a few thousand agents online and
training requirements in languages other
offline for over a dozen insurance companies becoming a full-fledged financial services
than English?
in the public, and private sector, we can agent by virtue of having product lines of
share our experience by saying that: mutual funds, units, agency for mobile Should not the diversified channel
phones, etc along with an insurance line. members from banks, microfinance
1. The 20 Acts and 32 policies can be briefly institutions and NGOs become
Does such a person not require a thorough
commented upon and bare Acts and knowledgeable in insurance, pension
understanding of customer needs, their
detailed policies can be placed as a products, and financial services over and
analyses, an understanding of various
library item, online or offline. above the scope of the 100 hours training?
insurance products and other financial
2. If some ATIs are ‘agreeable to bypass’ the
services (FS) and thus become an Mr. Krishnan’s thoughtful article has
training regimen, there must be the
integrated FS agent? encouraged us to put these thoughts
other side of coin, insurance companies forward. Hopefully it would encourage
willing to accept this bypass. Why should If so, we find that the online mode is
others to join the debate on various
insurance companies or their regional/ far superior, where lots of information, aspects of training.
branch offices accept a bypass? statistics, product lines of various
3. Pass marks in exams are 50 per cent and insurance companies and other FS The authors are members of the faculty of
if basics of rating, underwriting, the role producers can be maintained as a digital Knowledge Network India – Academy of
of the agent, consumer protection learning sources library. During the 100/ Insurance and Finance.

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Data Management and Detariffing

Anup K. Mathur
The world has intelligent analytical system that can
drive the business.
Unstructured and static data is of
little use to insurers and reinsurers.
one exabyte of
Profitability in the insurance industry
data online It is in this context that data
requires the ability to judge risks with
today - in warehousing and data mining
a high degree of precision. This in turn
databases, file technologies assume significance
creates a dependency on aggregate
systems and especially with reference to the
statistical analysis.
p e r s o n a l insurance sector in India.
computers…This A major data integration effort is
Business Scenario
one exabyte needed at the enterprise level to create
(1000 patabytes The insurance industry, particularly a risk-model based on statistical
or 1,000,000 general insurance, is grappling with the analysis.
terabytes) is question of detariffing. It has been a Increasing competition requires an
equivalent in size to telephone books debatable and contestable issue for insurance enterprise to rapidly re-orient
stacked to the moon and back again. quite some time now. its strategy from a policy and product
These masses of databases ranging Should we detariff? What to detariff? approach to a customer-centred model.
in size into the terabytes - more than When? How? And how much? These are This is particularly so now when the
1,000,000,000,000 bytes of data - some of the questions that evoke strong property and casualty insurance
contain hidden information of strategic responses. This issue has gained industry is undergoing its worst crisis
importance. in the past couple of years.

Data, by itself, does not have any Recession, market conditions and the
meaning. It needs to be structured for Unstructured and static tragic events of 9/11 have contributed to
analytical purposes leading to analysis data is of little use to the dismal industry-wide results. Weak
in some form to reveal the hidden underwriting, product pricing, sky-
insurers and reinsurers. rocketing reinsurance costs, reduced
patterns. This analysis then becomes
information. It is this information that
Profitability in the capacities, nose-diving interest rates,
is to be unlocked for driving the insurance industry spiralling claims and reserving decisions
business of an enterprise, particularly requires the ability to have put pressure on the balance sheet
of major players.
insurance. judge risks with a high
When information is internalised, degree of precision. This The legacy of these decisions will
it becomes knowledge and knowledge in turn creates a continue to plague the industry and
when applied becomes wisdom. This is impede its financial recovery for years
dependency on aggregate to come. Insurance companies need to
the classic hierarchy as we move along
with data and convert it to help us
statistical analysis. initiate and implement fundamental
make meaningful decisions. changes to analyse operational data in
the decision-making process if
Rightly then ‘information’ is seen as profitability has to improve significantly.
significance due to the deregulation and
a strategic asset. Access to and usage
increasing competition in the insurance Leveraging technology and
of this information at the right time is
industry in India. analytical systems will enable insurers
becoming a key to compete efficiently.
Usage of information to identify The common refrain, both for and to profile their business, precisely,
profitable customers, business trends, against detariffing is centred on the lack assess actual levels of risk, accurately
high yield products and the most of sufficient information as a result of: and price those risks appropriately.
productive distribution channels will New analytical systems will assist in
enable an insurance enterprise to Q Absence of data informed decision-making, which in
compete effectively. Q Inadequacy of data turn will lead to improved future
Q Absence of statistical information profitability.
While the insurance industry in the Q Absence of scientific practice,
industrialised world has moved ahead and so on Policies generate revenue and
with technology (in relative terms-it is claims generate expenses. Large
still laggard when compared to other The inference is that the general amounts of data are collected from
industries like banking and securities), insurance industry, with its current set underwriting risks and paying claims.
insurance companies in India have of data, is not in a position to harness Operational offices of the public sector
either not been able to capture all the the full potential of the Indian market unit (PSU) general insurance companies
data or have not been able to devise an to its advantage. have underwritten a large number of

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risks each year and paid claims of that helps business users make informed determined from known results. Then
diverse nature. It is here that the PSU decisions through the analysis of that model has to be tested.
companies enjoy a tremendous patterns, trends and events that affect
advantage over their young competitors the business. The subject areas could be Simply put, data mining is used to
since they can leverage the data that is any factor of business like customer, discover relationships between various
available in various operational offices product, activity, policy, claim, account facts and dimensions in order to help
across the country. or reinsurance. the management make better business
decisions. Data mining unearths
However, this data is in its most It is a process by which subject-based relationships that exist within data
rudimentary, unstructured form. data from many different sources and in that exists within an organisation.
Collation and compilation of data many different forms is extracted,
scattered across operational offices of cleansed, loaded, transformed and Statistical and actuarial
the PSU companies spanning the length converted into a consistent, uniform professions have shown great interest
and breadth of this country is a format. The user can extract the relevant in data mining techniques like
challenging task and requires information from the data warehouse. It Classification and Regression Trees
is so organised that it can support the (CART). This technique aids in
Herculean efforts. But this is necessary
decision-making process of an enterprise. resolving a business problem that
for survival of an insurance enterprise
requires risk modelling in insurance.
itself. Especially when operating
A data mining technique sifts The nonlinear and nonparametric
margins and profits are under constant
through massive amounts of data using approach on which CART methodology
threat due to dwindling investment
a variety of data analysis tools. Combined is based, provides good insights into
income, increasing business acquisition
with modelled it uncovers hidden the hidden patterns in large data sets
cost and escalating underwriting losses.
patterns and relationships in the data, with, maybe, a few million cases and
The challenge for the PSUs is to leading to valuable information that may several hundreds of possible variables.
harness the vast amounts of dormant Such data sets are common in many
data available in its operational offices, areas of insurance, healthcare,
and develop a robust technology-driven Data mining unearths telecommunications, credit risk,
analytical system that would augment banking and so on.
relationships that exist
the ability to use the information at an
enterprise level to improve on the within data that exists Modelling is the process of
mathematically combining data about
business performance. within an organisation. past performance to make predictions
Relevance of a data warehouse about future events. It aids in making
and of data mining better business decisions, identifying
important trends in the data and in
A data warehouse can be defined as be utilised for making a probabilistic
determining which customers or the
‘a subject-oriented, integrated, time- estimation. This information can help in
industry processes in a particular
variant, non-volatile collection of data developing a risk and a pricing model.
geography are the best risks or who
in support of the management’s decision
making process’. It is a repository of The first step in data mining is to are the best candidates for a
consistent historical data that can be describe the data and to identify the marketing campaign. Data mining
easily accessed and manipulated for statistical attributes (such as means enables searches through large
decision support. and standard deviations) of the data. collections of data and helps in
This is followed by a visual review, detecting hard-to- find relationships
A data warehouse holds, maintains using charts and graphs, and the that can be exploited for driving the
and integrates subject-specific data determination of potentially business in a profitable manner.
from operational and support systems meaningful links among variables
like underwriting applications, claims (such as values that can be clubbed A simple example of such a model
systems, sales and distribution systems, together). Exploration, collection, and is the batting average of a cricket
accounting and other systems player.
selection of the right data are critical
throughout the enterprise in a central
activities during the data mining Data about past performance
process. But these activities alone (number of innings and number of
Simply, a data warehouse is an cannot provide relevant business runs scored) is combined into a
orderly and accessible repository of information. A predictive model must mathematical formula (runs divided
historical facts based on related data be built on the basis of patterns by number of innings) to estimate the

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probability of runs that a player may though manifold, is centred on detail by combining a number of
score the next time he goes out to bat. achieving the following objectives: dimensions such as demographic,
geographic, socio-psychographic etc.
This batting average tells you what Q To understand the needs of
The micro view will help it in
you can expect from a player ‘on an customers and offer them superior
recognising and exploiting information
average’ for his innings. It also allows products and service at affordable
you to determine which of two players that is revealed by uncovering hidden
has a better chance of scoring more runs patterns, which can be utilised to create
the next time they are going to bat. Q To develop, augment and new products, services or processes.
implement superior risk
An insurance pricing model works A data warehouse combined with
the same way. Data about past data mining techniques provides
performance such as number of claims, Q To increase profitability and intelligent business inputs and plays a
mean claim size, premium, number of investment strategies to offer vital role in all the areas of insurance
insured in that particular category of stable returns to stakeholders, operations like Corporate Strategy &
risk and other factors are combined in policy holders and employees Management, Finance & Asset
a formula to determine the expected Management, Sales & Marketing,
Q To service customers quickly,
loss ratio of a policy. Such a loss ratio Customer Management, Risk
efficiently and conveniently and
allows you to determine which of two Modelling and Business Intelligence &
risks is the better one. Q To plan ambitiously for profitable Strategic Decision Making.
growth in a cost-effective manner
Underwriting models have been (A discussion on how data
built for a long time. Underwriters Insurance companies in India, warehousing and data mining impact
take information about past especially the nationalised insurers, key business areas like actuarial work,
performance and make assessments can leverage data warehousing and anderwriting, risk and policy
as to what is likely to happen during data mining techniques to not only management and its relevance to the
the period of the policy. This process create new business opportunities, but debate of detariffing, particularly with
becomes analytical when statistical also conduct the business profitably reference to the general insurance
theory, mathematical formulae and and efficiently. market, follows in the next part of this
computers are used to process massive article, to be carried in the next issue.)
An insurance enterprise can
amounts of data to come up with
leverage on data warehousing and
predictions or scores. Typically models
data mining techniques to discover The author is Functional Consultant,
can be built to predict loss ratios,
new perspectives at both the macro Finance and Banking vertical, Wipro
claims frequency, severity, propensity InfoTech. The observations made in this
to renew and so on. and micro levels. The macro view
would allow an enterprise to article are in his personal capacity and
The aims for building up a data understand the general market do not in any manner reflect the
warehouse in an insurance company, company’s understanding of the subject.
environment or geography in rich


In the last few pages you have seen reader reactions to various Issue Focus stories we have published in past issues.
You too can write in with your views on various topics.

Send them to:

The Editor, IRDA Journal, Insurance Regulatory and Development Authority, 5-9-58/B, Basheer Bagh, Hyderabad - 500 034.

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Introducing the Actuary

K. Subrahmanyam
People know about astrologers who agony he has to undergo to become an disadvantage of the public in order to
actuary in order to do such things. secure gains to someone.
predict happenings in the future. Some
people are familiar with statisticians The mother of all institutions Francis Bacon’s quotation: “I hold
who use statistical techniques to make producing actuaries is the Institute of every man a debtor to his profession,
guesses about certain things - for Actuaries, London, which is over 150 from which as men of course do seek to
instance the quality of drugs, quality of years old. In those days, the actuary’s receive countenance and profit, so ought
cosmetics, population in future. Very talents were used in life insurance. To they of duty to endeavour themselves
few people know about the poor actuary! determine how much premium one has by way of amends to be a help and
to pay to secure a cover for a given ornament thereunto,” is of relevance,
In fact, I had difficulties (and so did
amount for a given period for the risk even today.
my family) in explaining the word
of death, and how much money is
‘actuary’. Who is this fellow? And what The actuarial profession is for the
required to pay for a given amount of
does he do? Some people thought he is good of the insurance industry and for
annuity per month from a fixed age to
not necessary for their jobs because the welfare of the people. A professional
the time of death. All these ideas were
(having not understood what he speaks is always useful to the society. In an
to protect individuals.
or writes), they do not understand the insurance company, the actuary sits
usefulness of an actuary. All of us know perils will visits us behind the driver of the car and gives
and can destroy us at any time during directions to reach the destination
Especially my general insurance
the course of life, but many did not know safely even though the road is rough and
colleagues think that he is not required
how to fight these perils by means of an tough.
at all for any job in their sector!
insurance protection. The peril for an
To end with a serious joke: An
He makes many assumptions in the individual could be such that he would
actuary was travelling by train and a
determination of premium rates and cease to earn, or that his earnings would
co-passenger showed him a beautiful
also in the determination of the amount get reduced and could even become zero.
ship off the coast through the window
of policy liabilities in the balance sheet. The known perils were accidents and
of the train and said the ship was black.
The problem for users is to understand death. This concept was extended to
The actuary replied that only 50 per
‘assumptions’ first and, later, whether income producing assets such as cattle,
cent of it was black. The actuary was
such assumptions are fair and commercial properties, factories, sea-
careful with his words for he could see
reasonable. going vessels, etc.
only half the ship!
I strongly feel that the actuary is not The actuary could, having studied
Even if this is in lighter vein, isn’t it
understood, particularly his capabilities past experiences, make better/ best
comforting to have such a cautious
and techniques which are used to make estimates for the future, and his tools
person backing insurance products?
decisions, and also his analyses of could be made use of in product design
various insurance matters, for instance and pricing, and in the assessment of
cause-wise analysis of deaths. They policy monies. In any profession, the The author is Executive Director,
don’t understand what training and tools could be misused to the (Actuary), IRDA.

Ageing-the new challenge for actuaries of the world, can only be described as a
revolution. But a revolution is exactly what
it is, and unfortunately most people,
Rising longevity is changing traditional dimly aware of, but the implications of it whether the general public, in business or
family structures and is already are not well understood or prepared for. in government, are only just waking up to
dramatically affecting inheritance patterns. Actuaries in general, and the Institute this reality. The importance of the
We now see inheritance skipping a specifically, are pivotal in understanding actuarial profession in making the facts
generation to grandchildren or great and explaining the implications. more widely known is crucial.
grandchildren, as children themselves may
For a profession rightly proud of its
be in their 60s or 70s by the time they inherit. Baroness Sally Greengross, Executive
conservative and cautious image, it may
The role of actuaries in all this is obviously be hard to accept that the impact of the Chair, International Longevity Centre, UK
important because of the fundamental age demographic shift across the life course and Honorary Fellow of the Institute of
shift our society is undergoing; the fact we face in the United Kingdom, across the Actuaries, London, in a Guest Editorial
that this is happening, most people are European Union and in most other parts in the British Actuarial Journal.

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The Actuary in India

K.P. Sarma
– The Past and The Future
The actuarial profession in India business of foreign insurers to
determine the ‘excess assets’ to be
product development practices of new
companies has been crucial. The role of
can be said to be more than 100 years
repatriated and fixing an equitable the Appointed Actuary has also received
old as Mr. Duncan McLanchlan Slater,
formula for relative bonuses of a very considerable attention in various
a fellow of the Institute of Actuaries,
large number of companies varying discussion forums.
London, came to India in 1866 to
widely in the pattern of working and in
represent some insurers. He was also The Future
financial strength.
the Founder Manager and Actuary of
The future for the actuarial
the Oriental Government Security Life India was in its early stages of
profession in India is likely to throw up
Assurance Company Ltd. founded in ‘development’ and the economic and
many challenges and opportunities.
1874. In the early years of the profession, financial conditions were different from
These can have different ramifications
Mr. H. G. W. Meikle was for some years those in developed countries. In matters
with the actuary’s participation in
Actuary of Oriental and thereafter such as underwriting and investment,
Actuary to the Government of India. the actuary had to take into account the (1) issues internal of individual
local environment and constraints and companies
Indians began appearing for the
find practical solutions consistent with (2) issues relevant to reasonable
examinations conducted by the Institute
actuarial principles. expectations of policyholders and
of Actuaries, London, from the early
customers and
years of the last century and Mr. L. S.
(3) maintenance and development of
Vaidyanathan was the first Indian to
qualify as a Fellow in 1926. Thereafter Actuaries should have technical standards for regulations.
till 1942, the profession was in its the skills to work with Many of these involve technical
infancy with only a handful of Fellows. other professionals and to skills connected with business planning,
pricing, valuation and bonus
Insurance companies began seeking convince them of the declarations arising out of the education
the advice of actuaries on a wide range
of matters not limited to statutory
reasonableness and and training of actuaries. Of equal
valuations and premium rates. They acceptability of actuarial importance could be competencies and
skills relating to personal qualities
were also appointing actuaries and solutions. required for working in an environment
actuarial students on their staff. During
where persons belonging to other
the period from 1945 till 1956, the
professions such as Chartered
actuarial profession in India came into
The Present Accountants, investment analysts and
its own with 83 students qualifying as
business managers demand attention
Fellows. A number of actuaries became Opening up of insurance business to and need to be convinced of the
chief executives of life offices and many
the private sector in the year 2000 was reasonableness and acceptability of
more rose to senior management
preceded by a few years of hectic solutions provided by actuaries.
preparatory work at the Government Some of the areas which might
With the nationalisation of the life level and in the nationalised insurance receive attention and demand solutions
insurance business in 1956, the industry. Participation of actuaries in include the following:
prospects for new entrants in the many formal and informal consultative
profession was limited and there was a meetings was an important part of such v Search for appropriate actuarial
sharp fall in the number of Indians preparatory work. Even the new basis and continued refinement
taking up the examinations. entrants to the industry depended particularly of expense rates,
morbidity rates and persistency
The actuaries absorbed by the heavily on work done by a few selected
nationalised Life Insurance Corporation actuaries and actuarial students. The
profession was also galvanised into the v Participation in introduction and
of India (LIC) held a large number of implementation of suitable
managerial and executive positions and discussion of many actuarial issues with,
or led by, the regulator at its periodical insurance software and in particular,
discharged their responsibilities systems which facilitate both
successfully utilising their training and conferences, in which actuaries from
internal valuations and statutory
technical background. different countries participated.
Two important examples of During the last two years, the role v Coping with continued pressures of
acceptable solutions to difficult of actuaries not only in facilitating an strict implementation of
problems are those relating to laying appropriate framework of regulations, philosophies, procedures and
down the basis for valuation of Indian but also in setting up the pricing and methods of a foreign joint venture

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partner on the one hand and v Developing abilities to not just live far reaching implications not just on
increasing awareness and choices of with varied and sometimes new business but also on existing
policyholders and customers on the conflicting interests of shareholders portfolios and expectations of
other hand in introduction and but to foresee potential and possible policyholders.
pricing of new products. changes in shareholding patterns. The future for the profession is
v Sticking to actuarial principles and Issues especially relevant here would indeed promising and challenging. It
professional standards which are be both choice of methods and fixing would be also of interest to speculate on
drawn from developed markets actuarial bases connected with how not only individual actuaries
perhaps ignoring the realities and working out embedded values and handle the problems but how the
problems of a heavily distorted appraisal values of the business. profession as a whole and the
element of competition in the market professional body representing the
v Alertness in understanding and
with a few small and growing profession goes through the process of
implementing regulators’ preferences
companies set against a nationalised evolution to promptly and correctly
and intricacies of statutory reporting
company/ companies with a giant size identify issues and bring out common
connected with pricing, valuation, approaches and solutions in the best
of the market share. An alternative
expense limitation, segregation of ‘public interest’.
to this could be to not only accept
differing yardsticks for the playing funds, vigil on investment decisions
by companies etc. The author has been in the actuarial
field but also translate such
yardsticks into technical standards v Last, but not the least, helping profession for over 25 years and was
acceptable for regulators, legislators managements cope with changes in Appointed Actuary, Max New York Life
and the public in general. tax regimes and regulations having Insurance Company Limited.


Actuaries Make Financial Sense of the Future Actuaries Balance the Interests of All
Actuaries are experts in assessing the financial impact of Actuaries balance their role in business management with
tomorrow’s uncertain events. They enable financial responsibility for safeguarding the financial interests of the
decisions to be made with more confidence by: public. The duty of Actuaries to consider the public interest
Q Analysing the past is illustrated by their legal responsibility for protecting the
Q Modelling the future benefits promised by insurance companies and pension
Q Assessing the risks involved, and schemes. The profession’s code of conduct demands the
Q Communicating what the results mean in financial terms. highest standards of personal integrity from its members.

Actuaries Enable More Informed Decisions

Actuaries add value by enabling businesses and individuals and corporate planning. Actuaries are invariably involved
to make better-informed decisions, with a clearer view of in the overall management of insurance companies and
the likely range of financial outcomes from different future pension, gratuity and other employee benefit funds
events. schemes; they have statutory roles in insurance and
employee benefit valuations and, to some extent in social
The actuary’s skills in analysis and modelling of problems
insurance schemes sponsored by government.
in finance, risk management and product design are used
extensively in the areas of insurance, pensions, investment Actuarial skills are valuable for any business managing
and, more recently, in wider fields such as project long-term financial projects both in the public and private
management, banking and healthcare. Within these sectors.
industries, actuaries perform a wide variety of roles such Actuaries apply professional rigour combined with a
as design and pricing of products and financial management commercial approach to the decision-making process.

From, the official website of the Actuarial Society of India

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Life Breath
S.P. Subhedar – The Role of the Appointed Actuary in Life Insurance
The Appointed be satisfied at all times that, if a full
actuarial valuation was carried out, the
include a certification by the Appointed
Actuary which confirms:
Actuary has a
financial position of the life office would
special role in Q that the data used was adequate for
be satisfactory.
the life the valuation of the life office’s
insurance The Appointed Actuary system liabilities
business in envisages shift of responsibility for Q that the actuarial value placed on
India. The role monitoring financial viability from the the liabilities under the life office’s
of this category regulatory authority to the Appointed policies is adequate
of professionals Actuary.
Q the available solvency margins and
c o n t a i n s
This is because the annual actuarial the required solvency margins
elements of a
investigation report is to be submitted the adequacy of premium rates on
system of self-regulation with the local Q

professional body, the Actuarial Society to the regulatory authority within the which new business is transacted,
of India (ASI), functioning as a self- specified period, six months in India, and
regulatory organisation. from the close of the year and it may
Q that the relevant guidance notes
take a few weeks for the regulatory
issued by the ASI have been
The IRDA regulations require that authority to analyse the report. On the
complied with
“A life insurer shall not carry on other hand, the Appointed Actuary is
business of insurance without an considered to be in such a position This process of valuation, reporting
appointed actuary” and, inter alia, within the life office that he/ she should and certification by the Appointed
prescribes the duties and obligations of have a good idea of the financial position Actuary enables the regulatory
the Appointed Actuary. The procedure at any particular moment, and not just authority to monitor the life office’s
for appointment of Appointed Actuary at the year ending. financial position without going in for
requires that, in the case of an insurer its own detailed investigations.
carrying on life insurance business, the In order to be satisfied on this, the
Appointed Actuary has to monitor all This wider role of the Appointed
Appointed Actuary shall be an employee
aspects which could influence the Actuary, as it has developed, has come
of the insurer.
financial position, and in particular: to be regarded by the regulatory
Supervision of Life Insurers authorities as one of the central features
Q product design of the prudential supervision of life
Section 13 - Actuarial report and method of marketing
offices. The Appointed Actuary is
abstract - of the Insurance Act, 1938, volume of business
Q supported by the regulatory authority
requires that “Every insurer carrying on premium rates
Q and the actuarial professional body by
life insurance business shall, in respect
Q options and guarantees allowing consultation and providing
of the insurer ………in respect of all life
Q surrender and paid up values advice when required by him or her.
insurance business transacted by him,
Q investments held and changes in
every year, cause an investigation to be Professional Conduct
investment policy
made by an actuary into the financial
current and likely future levels of The ASI requires all its members to
condition of the life insurance business Q

expenses conform to the guidance provided

carried on by him, including valuation
current and likely future tax Bases through Guidance Notes and advice on
of his liabilities in respect thereto and Q

reinsurance arrangements professional conduct standards, which

shall cause an abstract of the report of Q

claims handling policy, and are backed by disciplinary procedures.

such actuary to be made in accordance Q

any contingent liability The IRDA (Appointed Actuary)

with the regulations…………..”. Q
Regulations have laid down the
The IRDA (Assets, Liabilities and The Appointed Actuary is required procedure for appointment of an
Solvency Margin of Insurers) to report the findings of the actuarial Appointed Actuary. The regulations,
Regulations lay down in detail the investigations to the Board of Directors inter alia, require that an actuary
procedure to be followed for valuation of the life office and also advise the seeking appointment as an Appointed
of assets and determining the liabilities Board on any points of potential concern Actuary must be a Fellow of the ASI
and determination of solvency margins that may arise. He/ she is also required (FASI) and must possess a Certificate
of life insurers. However, the Appointed to submit a report and abstract of Practice (CoP) issued by it. CoPs are
Actuary is not just required to carry out prepared in the prescribed format to the issued to applicants subject to their
specific tasks such as the annual regulatory authority. The report will fulfilling certain experience
valuation of the liabilities and the give particulars of the valuation requirements and the conditions laid
determination of the surplus, but must methods and assumptions used and will down with regard to Continuing

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Professional Development (CPD). These (ii) any other meeting of members of the While the Appointed Actuary, as
CoPs are renewable annually. The insurer at which the insurer’s such, has no executive powers, it is his/
renewal is dependent, in particular, on annual accounts or financial her duty to advise the Board of Directors.
the Appointed Actuary keeping abreast statements are to be considered or
of relevant developments through It is possible that a situation could
at which any matter in connection
participation in the CPD programs arise where the business considerations
with the Appointed Actuary’s duties
organised by the ASI. is discussed’. of the management and the Board
require the recommendations of the
The ASI has, with the concurrence The presence of the Appointed Appointed Actuary to be modified with
of the regulatory authority, issued a Actuary at the meetings of the Board of his approval. It is also possible that the
guidance note specifically related to the Directors enables him/ her to give Board and the Appointed Actuary are
work of Appointed Actuaries. Two more his/ her advice directly to the Board as unable to reach an agreement on some
guidance notes, one on the Financial also to respond to any questions that material issue. In such a situation the
Condition Report and the other on may arise. regulatory authority could be
Additional Guidance to the Appointed approached for assistance in resolving
Actuaries are on the anvil. The IRDA It is also necessary that the
Appointed Actuary be consulted and the issue. The IRDA regulations do
regulations on the actuarial report
given the opportunity to comment on specify that ‘Any provision of letter of
require that a certificate signed by the
any significant proposals at the initial appointment of the appointed actuary,
Appointed Actuary shall be appended
stage so that advice can be given to the which restricts or prevents his duties,
to the Abstract and Statement
obligations and privileges under these
certifying, inter alia, that ‘he has
regulations, shall be of no effect’.
complied with guidance notes issued by
the ASI with the concurrence of the The Appointed Actuary Financial Management
Authority’. is clearly expected to act
The Appointed Actuary is clearly
Guiding the Board as a front line controller expected to act as a front line controller
of prudential financial of prudential financial management of
The Board of Directors of the life
office are essentially the employers of management of the life the life office, lessening the need for close
the Appointed Actuary, the Appointed office, lessening the need regulatory attention, which could never,
Actuary of a life office essentially being for close regulatory in practice, give the same degree of
required to be an employee of the continuous monitoring as is required of
attention. the Appointed Actuary. The link to the
company. Even though the Appointed
Actuary is an employee, the normal regulatory authority is effected through
professional relationship of the professional duty to ‘blow the whistle’
confidentiality and independence of Board about the influence of the if the board or the management of the
advice applies here. proposed action on the financial life office persists in following a strategy
development of the life office. which the Appointed Actuary considers
The Appointed Actuary system
The IRDA (Appointed Actuary) might have a serious adverse financial
envisages that the Appointed Actuary
Regulations do include in the duties and impact on the life office.
has access to the Board to present
his/ her advice directly. Many life offices obligations of the Appointed Actuary In order to undertake the work of
follow a working arrangement under the duty of ‘rendering actuarial advice determining the value to be placed on
which the Appointed Actuary receives to the management of the insurer, in the life office’s liabilities for the purpose
all Board papers and is invited to attend particular in the area of product design of comparison with its assets, the
all Board meetings where the life office’s and pricing, insurance contract Appointed Actuary will need particulars
insurance activities are under wording, investment and reinsurance’. of the life office’s portfolio of business,
discussion. This could be regarded as The regulations also require the information regarding its recent history
best practice if the Appointed Actuary Appointed Actuary to draw ‘the and details of assets.
is not a Director. attention of the management of the
insurer, to any matter on which he/ she The Appointed Actuary would like
The IRDA (Appointed Actuary) to be satisfied that the need for
thinks that action is required to be
Regulations, inter alia, require that the information required for actuarial
taken by the insurer to avoid –
Appointed Actuary shall be entitled ‘to investigation into the financial condition
attend – (i) any contravention of the Act or
of the life insurance business of the life
(i) any meeting of the shareholders or (ii) prejudice to the interests of office is fully understood by the life
the policyholders of the insurer; or policyholders office’s management and the Board and

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that appropriate arrangements are put These are: The Appointed Actuary has
in place to ensure that the information responsibilities to:
Q the treatment of with-profit
is provided.
policyholders through bonus Q the life office’s Board of Directors
The IRDA regulations do specify declarations Q the life office’s policyholders
that ‘An appointed actuary shall have Q the basis on which unit prices are Q the regulatory authority for
access to all information or documents determined for unit-linked business, monitoring and reporting on the life
in possession, or under control, of the and office’s financial position, and
insurer if such access is necessary for Q the exercise of any discretion the life Q the actuarial professional body that
the proper and effective performance of office may have to alter the terms its guidance is followed
the functions and duties of the and conditions applicable to existing
The Appointed Actuary assists the
appointed actuary’. policies, especially in the area of
life office to operate on a sound financial
charges under unit-linked policies
footing and to meet the reasonable
One of the duties of the Appointed expectation of its policyholders.
The Appointed Actuary has to Actuary is to advise the life office
The development of statutory, quasi-
ensure that the policyholders’ interests management and the Board in these
regulatory roles, such as that of the
are protected. The regulatory authority areas. The Appointed Actuary has to
Appointed Actuary of a life office, has
expects that the life offices fulfil their advise the life office of his/ her
served well the interests of both life
“policyholders’ reasonable interpretation of its policyholders’
offices and the regulatory authorities,
expectations”. The IRDA regulations reasonable expectations, having due
and has led to a high level of protection
require that the Appointed Actuary regard to the broad nature of the life
office’s business and its treatment of for policyholders. It is in this context
shall ‘ensure that the policyholders’ that the IRDA has adopted the
reasonable expectations have been policyholders, both individually and
collectively vis-à-vis shareholders. Appointed Actuary system for life
considered in the matter of valuation of insurance business in India.
liabilities and distribution of surplus to It is also incumbent on the
the participating policyholders who are Appointed Actuary to ensure that References:
entitled for a share of surplus.’ prospective policyholders are not misled 1. The IRDA Regulations.
as to their expectations; the life office 2. The Role of the Appointed Actuary
The expression “policyholders’ being required to consult its Appointed in the United Kingdom. An Institute
reasonable expectations” is not formally Actuary about the various aspects of the of Actuaries and Faculty of
defined. However, over time, the information to be disclosed in respect Actuaries, UK, publication.
actuarial profession has developed a of new policies, including the level of 3. The Regulatory Role of the Actuary,
working understanding of how the expenses and other charges to be a paper presented by C.D. Daykin
concept should be interpreted. allowed for when giving projections of to the Institute of Actuaries on
possible policy benefits. February 22, 1999.
There are three main areas where
the policyholders’ reasonable The Appointed Actuary system is The author, an actuary, is Senior Advisor,
expectations are relevant in the day-to- central to the financial viability of life Prudential International Corporation.
day operations of a typical life office. offices.


Mr. Yvo R. Metzelaar has been appointed as Managing Director and CEO of
ING Vysya Life Insurance Company Pvt. Ltd. He has been Deputy MD and President
of the company since 2001.
Mr. Tony van der Star, who held the post of MD and CEO is to move to Greater
China in a senior role.
Mr. Metzelaar was the Chief Representative of ING Insurance International BV
since 1997, developing the entry strategy for the life insurance business in India,
together with Mr. Naren Joshi who is the current Chief Representative of ING
Insurance International BV.

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Long Way– TheToRoleGoof the Appointed Actuary in General Insurance

Arpan N. Thanawala
T he
Appointed its continuing ability to fulfil the
contractual obligations (certification
The first and foremost is the
availability of good quality data in the
A c t u a r y
of reserves) format that can be used by an actuary
controlling the type of products sold for the purposes of his investigations.
framed by the Q

and the pricing of such products In assessing premium rates and

(filing of products with IRDA along technical reserves, an actuary needs
Regulatory &
with actuarial certification for fair access to past data pertaining to each
pricing) class of business separately. Based on
Authority (IRDA)
establishing contingency this data, the actuary, using various
have created the Q

arrangements to ensure that tools, assumptions and methodology,

role of an
obligations under the contracts arrives at suitable premium rates and
underwritten are met even if the derives adequate technical reserves.
Actuary of a general insurance company
insurer runs into financial Therefore, accurate determination of
in India. As per these regulations, the
difficulties (maintaining and premium rates and reserving depends
Appointed Actuary of a general
monitoring a solvency margin at all critically on credible data.
insurance company can be an employee
of the insurance company or a times) In India, prior to the opening up of
consulting actuary. the insurance sector in the year 2000,
there was very little involvement of
This article examines the role an Another area where the actuarial expertise in the operations of
Appointed Actuary will be expected to Appointed Actuary can the General Insurance Corporation of
play in India, the challenges faced by
him and the possible way forward. play a very significant role, India (GIC) and its four subsidiaries in
determination of premium rates and
although this is not in the reserving. Consequently, not much
The role of Appointed Actuary of a
general insurance company, as regulations, is in the emphasis was put on collecting the
prescribed in the IRDA regulations, is planning and relevant past claims data for each line
of business and relating it to each period
no different from the role set out for an implementation of an
Appointed Actuary of a life insurance of exposure.
company. In particular, the Appointed
appropriate information
Furthermore, the new private
Actuary will be responsible for looking technology system. insurance companies have only just
after the interests of the policyholders started their operations and would
and to serve as a watchdog of the therefore, not have sufficient past data
regulator. Besides this, the Appointed Actuary of their own nor much industry-wide
The regulations stipulate that the is also expected to assist the published data on which they can rely.
Appointed Actuary of a general management in achieving its financial For an insurer to achieve his long-
insurance company should: objectives. term profit goals, ascertainment of
Q render actuarial advice to the Another area where the Appointed sound rates for each class of business is
management of the insurer and in Actuary can play a very significant role, imperative. Sound rates are based on
particular, in the area of product although this has not been specifically sound insurance principles and have
highlighted in the regulations, is in the regard to the portfolio written and the
design, pricing, insurance contract
planning and implementation of an changing social, economic, legislative
wording, investment and
appropriate information technology and technological environment. This, in
system. An actuary is in a unique turn, requires proper selection of rating
Q ensure the solvency of the insurer
position to appreciate the potentialities factors for the insured population to be
at all times
of any system and would, therefore, be sub-divided into reasonably
Q certify the premium rates in case of
able to add significant value in homogeneous groups for purposes of fair
non-tariff business, and pricing.
Q certify reserves to be calculated on development of a system.
sound actuarial principles This, however, is currently not
happening in India. To illustrate, rating
The bulk of the responsibility of an of motor car premiums by state-owned
There are numerous challenges that
Appointed Actuary is centred around companies is simply carried out on the
an Appointed Actuary of a general
the protection of the policyholder by: insurance company is likely to face in basis of the size of the engine, although
Q establishing the liabilities of the India and some of the important ones there are a large number of other equally
insurer to ensure its solvency and are mentioned below: relevant rating factors which influence

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the exposure to risk from motor car put a system and process in place so that functions of general insurance
claims. The main rating factors used by in times to come the Appointed Actuary operations, the regulator should make
insurers in the UK for motor car of a general insurer will be well placed it mandatory for the Appointed Actuary
insurance include, besides the size of the to effectively discharge his duties and to spend a certain stipulated amount of
engine, the type of cover, vehicle use, play a meaningful role in the prosperity time in various departments of a general
area and age of the vehicle as well as of of the insurer in particular and in the insurance company till he acquires
the policyholder and so on. development of the industry in general. adequate expertise in order to
In addition to these, insurers also In particular, emphasis should be appreciate the intricacies of various
use other minor rating factors such as placed on the following: lines of business.
occupation of the policyholder, whether
1. Actuaries should be involved at the Furthermore, much work has to be
the car is garaged at night, driving
outset in specifying the amount and carried out by the professional actuarial
convictions and maintenance of the
the type of data which need to be
vehicle. Pricing premiums on various body to pro-actively produce various
collected and stored, to be able to use
rating factors will need a careful guidance notes and to conduct
the same for rating and reserving
planning of the proposal form in order numerous Continued Professional
to capture the relevant information and Development (CPD) programmes in the
also to develop techniques to use all 2. Proposal forms should be designed areas in which the actuary is expected
these rating factors in arriving at sound to play a role in general insurance
rates. business. These steps will assist the
Increasingly the world over, Not many actuaries in Appointed Actuary in obtaining the
actuaries in the general insurance area practical orientation of the general
have been adding value to the
India are specifically
insurance business which he may be
management of the insurance company trained in the complex currently lacking.
by preparing various kinds of financial general insurance By very nature, insurance business
analyses which include financial
projections for profitability and solvency
business. This will make it deals with uncertainties. Actuaries are
purposes, development of budgeting difficult for actuaries in trained in assessing the financial impact
techniques, analysis of cashflows and the short term to play a of such uncertainties by using statistical
expenses and their allocation between and other modelling tools. Therefore,
classes of business. Actuaries have, in full role as envisaged in actuaries can play a very vital role in the
the past, not been involved in the regulations survival and general prosperity of the
performing such financial analyses and general insurance company in a highly
providing valuable management volatile and competitive market.
information systems to the
management of the insurer from time The IRDA has placed a large
suitably to capture all rating factors
to time. responsibility on the shoulders of the
for each risk involved and actuaries
actuary by requiring each insurance
For reasons explained before, not should rate risks more scientifically
company to appoint an Appointed
many actuaries in India are specifically by breaking them down in
homogeneous sub-groups to arrive Actuary. The role of the Appointed
trained in the area of general insurance. Actuary is not only to act as a watchdog
Although actuaries may have the at sound rates.
of the policyholder but also to provide
theoretical knowledge acquired through 3. By providing useful and timely vital inputs to the sound management
the course curriculum, very few management information reports, of the business.
actuaries in India have the relevant actuaries should demonstrate to the
experience of working in a general management the utility of carrying It is now for the actuaries concerned,
insurance company. This, coupled with out financial analysis from time to the professional body and the industry
the fact that the general insurance time and of consulting the actuary to work together and meet the
business is complex and very varied in before taking crucial financial challenges for the Appointed Actuary
nature and each class of business has decisions which may have a long system to work most effectively as we
unique features, will make it difficult term impact on the solvency or move forward.
for actuaries in the short-term to play a profitability of insurance operations.
full role as envisaged in the regulations.
In view of the fact that not many The author is a consulting actuary and
The Way Forward actuaries in India have had an a partner in Thanawala Consultancy
The way forward is to address each opportunity to obtain first hand Service, Mumbai. The views expressed
of the challenges highlighted above and experience in dealing with various in this article are his own.

irda Journal, April 2003

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irda Journal, April 2003

IRDA_April_PAP.pmd 32 1/04/2003, 2:39 PM


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½þÉäMÉÉ VÉ¤É ¤ÉÖ®úÒ º´ÉɺlÉªÉ {ÉÊ®úκlÉÊiÉ ½þÉä =ºÉ ´ªÉÊHò Eäò ÊVÉxÉEòÒ ¤ÉÒ¨ÉÉÆEòEò iÉEòxÉÒEòÉå Eäò +ÉvÉÉ®ú {É®ú MÉhÉxÉÉ ªÉ½þ <ºÉʱÉB ºÉÆ¦É´É ½þÉä ºÉEòÉ EòÒ =ºÉ ºÉ¨ÉªÉ ¶Éè¶É´É
ʱÉB VÉÉä ¤ÉÒ¨ÉÉ SÉɽþiÉÉ ½èþ. EòÒ VÉÉiÉÒ ½èþ. ÊVɺɨÉå ªÉ½þ näùJÉÉ VÉÉiÉÉ ½èþ ÊEò ʴɶÉä¹É °ü{É ¨Éå ¤ÉÒ¨ÉÉÆEòEò iÉEòÊxÉEòÉå EòÉä {ɽþ±ÉÒ ¤ÉÉ®ú °ü{É ÊnùªÉÉ

irda Journal, April 2003

IRDA_April_PAP.pmd 34 1/04/2003, 2:39 PM


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Many Roads to Health Insurance!

G.V.Rao A Contrarian View
Why has the Mediclaim insurance The Mediclaim policy does not need
much of a selling effort. The buyers are
cover become so dispute-ridden between
aware that medical costs are high and
the contracting parties, hindering its
that in their own self interest they need
fast growth and spread?
to have insurance. They have the
While the cover is intended to serve financial capacity to buy cover for
a larger socio-economic group, it is at themselves and their family members.
present grounded in conflicting basic They also want to be treated at the best
interpretations of conditions and hospitals. The rub comes when the
intentions, leading to mutual distrust question arises of whether insurance
between contracting parties. It is in the should pay at all for existing illnesses
national interest to widen the safety net not disclosed at the time the cover is
by providing health insurance to bought.
increasing numbers of people to reduce To pay for such expenses, amounts
the burden on the Government and its to social welfare payments in the realm
medical institutions. of the Government but is certainly not
What else should be attempted to the responsibility of insurers. Insurance
achieve a rapid spread and deeper basically covers events that may or may
penetration of this cover that has a vital not occur but certainly is not expected
public. They have relied so far on the
significance to a growing number of contractual language used by them to
middle-class families? bail out. But the legal forums mostly
Life insurance companies possess All are keen that health favour the claimants on grounds of
special aptitude and expertise to deal insufficient education of the insuring
insurance should gain a public. The IRDA has now licensed
with individuals for their insurance
needs. Should they be encouraged to faster and deeper Third Party Administrators-Health
take up sale of health insurance as well? penetration. Allowing life Services (TPAs) whose responsibility is
now to settle such claims, taking the
Is health insurance not a part of insurance companies to whole claim process out of the hands of
individual need, akin to life insurance?
sell health insurance will the insurers and their officials.
Should non-life companies, serve the cause more While this step may address the
currently writing annual Personal
aggressively. issues of claims’ settlement, the basic
Accident covers, be allowed to write
issue of the exact scope of the cover and
death due to natural causes also as an under what circumstances the claims
extension? Why not? lodged will become payable remains.
The Mediclaim policy was first to cover events that are bound to occur. Since it is usually the responsibility
introduced in 1987 by the general Insurance, insurers argue, is not meant of the sellers to define the cover
insurance industry in India. Its sales for illnesses that are already known to boundaries, it is for the insurers to also
pitch since then has left both the exist but is only for illnesses that may educate the insuring public of
insurers and the insuring public quite be contracted at an uncertain future eventualities when the cover will not
disappointed. This was because date. The question of dispute between operate. There has to be a reverse
insurers intended to cover individuals the contracting parties is one of moral disclosure of material circumstances
who were healthy to start with but who hazard, each suspecting the other of when the cover will not operate and
later acquired illnesses due to a variety material non-disclosure. insurers must ensure that the insuring
of factors, but the insuring public was No insurance cover has given rise to public knows about them without
under the impression that even existing so many disputes at an individual level ambiguity. Such a defensive action is
ailments or symptoms could be insured than Mediclaim. Consumers’ forums imperative in the self-interest of
and claims realised. The most notorious and the ombudsmen are flooded with insurers. Insurers will have to come
exclusion of ‘pre-existing illnesses’ and disputed claims, mostly relating to down from their pedestals to reach out
its interpretation has led to a mutual liability issues. Insurers have done little to the misguided insuring public to
distrust between the parties. to help themselves by devising recover their own lost public image.
This distrust continues unabated underwriting mechanisms to check Will such a restrictive selling, in
till this day. malpractices committed by the insuring which negatives are highlighted with

irda Journal, April 2003

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greater intensity, serve the insurers’ Banks are going in heavily for sell and service such business. It is
interests better? There does not appear personal loan offerings for a variety of suggested that non-life companies be
to be much choice given the alternative personal needs. The number of allowed to enter this specific segment
of losing cases with greater regularity borrowers is ever increasing. In the of the market so that they may sell such
and earning a bad name for themselves. event of the death of the borrower prior covers to the borrowers of all financial
The other question insurers would have to the full repayment of the loan, the institutions.
to address is if their current pricing of banks are exposed to the risk of Another popular cover, with a large
Mediclaim cover gives them any recovering the balance loan amount. section of the employers in the Middle
meaningful profits. If it does not, then Since personal loans are usually clean East, is a life cover for a term of one year
where is the tradeoff? facilities, loans without collateral, the – renewable every year – for all their
The Government, the IRDA and the default risk is higher for the lender in salaried employees against death either
insuring public are all keen that health such cases. by accident or natural causes. The sums
insurance should gain a faster and insured are fixed in multiples of the
In Western countries, and also in the basic salaries of the employees and
deeper penetration so that more and Middle East, banks invariably insure
more people are covered under the underwritten based on their respective
the lives of all borrowers for the age groups. Medical expenses insurance
safety net of insurance reducing the outstanding loan amounts and pay
social burden otherwise placed on the is given as an add-on rider at extra
premiums every month at an agreed premium.
Government machinery. rate. The death of any borrower, either
as a result of an accident or due to Such a life cover is provided as a
Allowing life insurance companies to
perquisite for employee retention by the
sell health insurance will serve the cause
company. Life insurers in India do not
more aggressively. They are at present
seem to be pushing sales of such a cover,
transacting personal accident cover that
forms a part of non-life business. The
Since insurance contracts as they are keen on targetting
backing personal loans individuals and not companies as their
dividing lines are thin. Health insurance
main prospects. Non-life insurers are
can certainly be an additional product in are on an annual basis certainly better placed to use their
their sales armoury. Since life cover is
given after verification of the medical
non-life companies can existing customer relationships with
write the business without companies to sell such group life covers.
record, they have more underwriting
They could be permitted to sell such
information with them to decide on actuarial calculations, like annual covers.
acceptance of the business. Life
companies have a wider reach in the
any other personal As spread of insurance awareness
medical fraternity to consult with for accident cover. and deeper penetration of the market
acceptances, even where non-medical life for these two socially relevant schemes
insurance is given. They also have a is a worthwhile goal, it is necessary that
wider distribution network and closer natural causes, enables the bank to get the expertise lying with the two sectors,
contacts with the insuring public. In paid the full outstanding loan amount life and non-life, should be brought to
every way they are better placed than on the date of death, including any the fore. These proposals may look odd
non-life companies to enhance the spread overdue interest payments. and threatening to each others’ interests
and penetration of health covers. but are certainly worth examining
Since the insurance contracts are on further to widen the availability of
It is for the IRDA to consult the non- an annual basis even non-life covers to large sections of the insuring
life companies on the possible companies do write the business public.
competitive impact and then decide that without actuarial calculations like any
life companies could enter the fray to other personal accident cover though Now that a new enactment to
enhance the spread and penetration to death due to natural causes is an add- combine all the existing laws on
a wider public. Life companies have on provision. insurance into one is on the anvil, any
sufficient means to advertise the cover legal impediments, to such a
Since these covers are essentially of competition between the two wings of
heavily for creating better public
interest to banks, financial institutions insurance can be ironed out keeping in
awareness of the product in addition to
and hire purchase companies, non-life view the larger interests of the insuring
the agency network that can push its
companies that are in the core business community.
of selling insurance covers to
What should non-life companies get corporations and companies and have The author is retired CMD, The Oriental
in return? the close contacts are better placed to Insurance Company Limited.

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Report Card: GENERAL

Analysis of the non-life business figures for
the eleven months ended February, 2003. BUSINESS DONE IN THE FIRST
The 12 non-life insurance companies
reported a gross premium of ELEVEN MONTHS OF 2002-2003
Rs.12,54,548.83 lakhs for the first 11 (Rs. in lakhs)
months of the current financial year
S. No. Insurer Premium No. of Policies
2002-03. Of these four were public sector
companies: National Insurance, New
India Assurance, United India Insurance 1 Royal Sundaram
and Oriental Insurance. In the private Fire 3,564.69 15,708
sector the eight companies which Marine-Cargo 1,175.44 2,788
underwrote business were Royal Engg 1,297.59 496
Sundaram, Tata AIG, Reliance, IFFCO- Motor 7,311.68 1,82,950
Tokio, ICICI Lombard, Bajaj Allianz, Health 849.15 17,347
Cholamandalam and HDFC Chubb. The Liability 120.09 228
Personal Acc 1,785.73 41,971
last two entrants in this segment
Others 493.09 3,825
commenced operations in October 2002.
TOTAL 16,597.46 2,65,313
Analysis of the information furnished
by the insurers reveals that the four public 2 Tata AIG
sector companies have captured 90.51 per Fire 3,020.40 3,730
cent of the total premium underwritten Marine-Cargo 2,123.90 2,269
Engg 2,763.59 585
in the 11 month period. New India leads
Motor 6,894.66 72,050
with 27.82 per cent of the total business
Health 3,001.28 84,444
underwritten in the non-life segment, Liability 2,148.28 259
followed by United India at 21.67 per cent, Others 79.12 2,813
National at 20.67 per cent and Oriental
at 20.35 per cent. TOTAL 20,031.23 1,66,150

The private sector accounted for 9.49 3 Reliance

per cent of the total premium Fire 5,275.94 3,893
underwritten during the period. Of the Marine Cargo 644.28 2,711
private insurers, Bajaj Allianz leads with Marine Hull 56.44 2
2.07 per cent of the total non-life business. Engg 1,444.69 729
The latest entrants viz., Cholamandalam Motor 662.87 12,142
Health 495.34 726
and HDFC Chubb, have underwritten on
Aviation 423.46 43
a n
Liability 1,297.19 727
average .06 per cent and the other non-
Marine Energy 5,289.19 4
life private insurers have underwritten Others 1,471.46 4,248
premiums in the range of 1.32 per cent to
1.60 per cent of the total business. TOTAL 17,060.86 25,225

Further, analysis of the performance 4 IFFCO-Tokio

of the private players reveals that Fire Fire 9,378.37 9,563
business accounted for the maximum Marine Cargo 1,222.40 7,397
business underwritten at Rs. 37,543.18 Marine Hull 450.91 18
lakhs, followed by Motor business at Engg 2,106.89 1,253
Rs.33,231.97 lakhs. The Engineering Motor 2,195.32 91,067
business accounted for Rs.11,209.46 lakhs, Health 885.28 11,515
with Health and Marine (Cargo and Hull) Liability 341.22 671
PA 1,034.27 2,349
segments following at Rs.7,448.78 lakhs
Others 1,291.77 7,370
and Rs.7,144.71 lakhs respectively. These
five segments cumulatively accounted for TOTAL 18,906.43 1,31,203
81.12 per cent of the business
5 New India* 34,9026.00 N/A
underwritten by the private players.
On account of non-availability of break However, a study of the business figures followed by Fire at Rs.49,542.34 lakhs. The
up of the premium underwritten by the furnished by Oriental reveals that Aviation and Health segments accounted for
public sector players, similar segment wise maximum business was underwritten in the Rs.23,236.10 lakhs and Rs.17,867.85 lakhs
analysis is not possible for the public sector. Motor segment at Rs.94,278.07 lakhs of the premium underwritten respectively.

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(Rs. in lakhs)
S. No. Insurer Premium No. of Policies

6 Oriental
Underwritten Issued
Fake TPAs
Fire 49,542.34 6,28,314
Marine Cargo 12,376.62 1,55,705 The IRDA has expressed concern over cases
Marine Hull 8,993.54 5,755 where some institutions which have not
Engg 14,130.90 48,254
Motor 94,278.07 44,79,719
registered themselves as Third Party
Health 17,867.85 3,59,692 Administrators - Health Services (TPAs) under
Aviation 23,236.10 1064 the regulations are reported to be offering
Others 34,847.31 1,5,06,190
assistance in the development of medical
TOTAL 2,55,272.73 71,84,693
insurance schemes.
7 National* 2,59,327.00 N/A
8 United India* 2,71,871.00 N/A
What is more worrisome is the fact that some
of these organisations seem to have the
9 ICICI Lombard
Fire 11,598.18 27,213
support of insurance companies.
Marine Cargo 518.92 1,241 The IRDA has issued a warning that the
Marine Hull 287.53 9
Engg 1,852.66 613 insurers, by aligning themselves with these
Motor 195.54 2,278 unlicensed organisations, would be
Health 1,258.83 190 compromising their interest. Moreover, it has
Aviation 114.99 15
Liability 89.08 84
pointed out that any agreement with an
Special Contingency 10.22 13 unlicensed organisation to act as a TPA in
Others 3,206.03 47,898 those areas of work which have been allotted
TOTAL 19,131.98 79,554 to be done by the TPA would be outside the
10 Bajaj Allianz scope of the provisions of the Act and the
Fire 4,245.91 14,784
IAR 862.13 457
regulations and that the insurers as well as
Cargo 653.36 7,959 such unlicensed ‘service providers’ would
Hull 0.14 1 attract penalty from the Authority.
Motor 15,224.33 6,03,726
Engg 1,659.15 1,787 The IRDA has also reminded insurers of their
Health 893.41 13,537 obligation of filing with the Authority the
Aviation 57.17 10
Travel 829.17 61,131
agreements they have concluded with licensed
Special Contingency 392.33 632 TPAs under the IRDA (Third Party
Others 1,094.93 28,846 Administrators-Health Services) Regulations.
TOTAL 25,912.03 7,32,870 Some insurers have not yet done so and in
11 Cholamandalam other cases the Authority feels that the
Fire 459.69 405
Cargo 11.39 144
documents require clarity and that the
Engg 84.89 36 coverage in the agreement is not to the extent
Motor 149.57 11,428 it has to be.
Health 65.49 827
Liability 14.13 20 The purpose of this requirement was for the
Crop Insurance 0.57 1 Authority to know the exact scope of work
Others 23.90 577
which an insurer has entrusted to the TPA or
TOTAL 809.63 13,438
the jurisdiction in which the TPAs act on behalf
12 HDFC Chubb
Motor 598.00 10,783
of the insurers.
Personal Acc. 1.79 4 Hence the insurers and the TPAs are now
Others 2.69 7
required to see to it that the agreements
TOTAL 602.48 10,794
entered into bring out clearly the scope of the
GRAND TOTAL 12,54,548.83 #86,09,240
work the TPA is to carry out in various areas
N/A : Not available and be aware of their obligations under the
*Break-up not available
# Does not include No. of policies for New India, National, United India regulations.
Companies at serial Nos. 11 and 12 began their operations in October 2002.

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Budget & the Single Premium Policy

R. Anand
annuity plan referred to in clause
The Finance Bill (xiiia)], on the life of persons
actually assured, which is to be or
may be received under the policy by
2003-04 has specified in sub-section (4); any person.
g i v e n
considerable As the section stands, there is no The memorandum explaining the
importance and quantum limit prescribed in respect of provisions on this subject states:
thrust to the the premium paid in relation to the
overall sum assured. Under the existing provisions
subject of
contained in Clause (10D) of Section 10,
insurance. Apart The Finance Bill 2003-04 targets the any sum received under a life insurance
from a novel SPP and has proposed that wherever policy, including the sum allocated by
social security premium on any insurance policy other way of bonus on such policy, (other than
scheme, the Varishta Bima Pension than a contract for deferred annuity any sum received under a policy for the
Yojana, articulated by the Finance exceeds 20 per cent of the actual capital medical treatment, training and
Minister in his speech, it has also sum assured, the qualifying amount for rehabilitation of a handicapped
addressed the issue of taxing the Single tax rebate will be limited to 20 per cent dependant under Section 80DDA or any
Premium Policy (SPP) which has
sum received under a Keyman
become a popular scheme in the market
insurance policy), is exempt.
place now.
While there may be some Under the existing provisions of
Basically premium paid in respect rationale in restricting the Section 88, a deduction from the
of life insurance is entitled to tax rebate
under Section 88 of the Income Tax Act
tax rebate to 20 per cent income-tax payable is allowed to an
individual or a Hindu undivided
(the Act). This rebate is available for of the capital sum family (HUF), in respect of any sum
individuals & Hindu undivided families assured, it is harsh to tax paid or deposited in schemes such as
(HUFs) at an amount equal to 20 per
cent, from the income-tax payable
the entire proceeds on PPF, GPF and NSC, and as insurance
premia. The deduction is allowed at
subject to certain conditions specified in maturity as taxable in the specified percentage of such sums.
the section. hands of the policy holder.
Insurance policies with high
One of the items dealing with tax premium and minimum risk cover are
rebate is the subject of insurance and similar to deposits or bonds. With a view
the provision allows a tax rebate in of such capital sum assured. It has also to ensure that such insurance policies
respect of any sums paid or deposited made it clear that in calculating any are treated at par with other investment
in the previous year by the assessee. such capital sum, no account shall be schemes, it is proposed to rationalise the
(i) to effect or to keep in force an taken. tax concessions available to such
insurance on the life of persons (i) of the value of any premium agreed policies. It is therefore, proposed to
specified in sub-section (4); to be returned, or substitute the Clause (10D) of Section
10, so as to provide that the exemption
(ii) to effect or to keep in force a contract (ii) of any benefit by way of bonus or available under the said clause shall not
for a deferred annuity, [not being an otherwise over and above the sum be allowed on any sum received under


Age Group 18 to 59 years 60 years and above
Period 5 year plan 10 year plan 5 year plan 10 year plan
Sum Assured 30000 30000 30000 30000
Single Premium-at inception -29505 -27663 -29482 -27650
Maturity Benefit 40147 53725 40147 53725
Returns %
If investor is not subject to tax 6.35 6.86 6.37 6.87
If there is no tax on maturity proceeds 16.36 13.54 16.40 13.51
Assuming a 31.5 per cent tax 9.28 10.02 9.30 10.03
The above working is for Bima Nivesh with benefits worked out on the basis of
Guaranteed Additions at Rs. 60 per thousand only as Maturity Benefit and not as a Death benefit.

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an insurance policy in respect of which the While there may be some rationale in January 2003, the private players in the
premium paid in any of the years during restricting the tax rebate to 20 per cent of insurance business have put through
the term of the policy, exceeds twenty per the capital sum assured, it is harsh to 40,881 policies, garnering a premium of
cent of the actual capital sum assured. tax the entire proceeds on maturity as Rs.234.26 crores and sum assured of
However, any sum received under such taxable in the hands of the policyholder. Rs.353.65 crores. As against this, LIC
policy on the death of a person shall (See table for a sample case). underwrote 2,53,625 policies at a
continue to be exempt. It is also proposed premium of Rs. 227.29 crores and sum
to clarify that the value of any premium As the wordings in the proposed Bill
assured of Rs. 284.45 crores.
agreed to be returned or of any benefit by stand, even premiums paid on which no
way of bonus or otherwise, over and above tax rebate is allowed will be subject to Insurance is a contract between the
the sum actually assured, which is to be tax on maturity which cannot be the insurer and the insured. The insured
or may be received under the policy by any intention of the proposal. At best only the avails of the product taking into account
person, shall not be taken into account for portion relatable to the excess of the the position of taxation at the time of
the purpose of calculating the actual proceeds over the sum assured should be concluding the deal and the pattern of
capital sum assured under this clause. subject to tax on maturity. tax savings he will be getting over a
The new provision also provides that the period of time. Any abrupt change in
amounts received under sub-section (3) of the taxation pattern will completely
Section 80DD, shall not be exempt under Insurance is a contract upset the economics of the decision
this clause. making process.
between the insurer and
It is also proposed to insert a new sub- the insured who takes into The proposal in the Finance Bill to
section (2A) in Section 88 which seeks to restrict the quantum of rebate under
provide that the deduction in respect of account the tax at the Section 88 and also to tax the proceeds
the sums paid or deposited as premium time of concluding the on maturity in respect of SPP products
under an insurance policy shall be deal. Any abrupt change can be construed as a breach of
available only on so much of the premium promissory estoppel.
or other payment made on an insurance in the taxation pattern
policy, other than a contract for a deferred will upset the economics It is earnestly felt that the proposed
annuity, as is not in excess of twenty per amendment with suitable modifications
cent of the actual sum assured.
of the decision. as mentioned above should be made
applicable only in respect of policies
It is also proposed to clarify that the taken on or after April 1, 2003. This
value of any premiums agreed to be will protect the benefits of the insured
returned or of any benefit by way of bonus Reports indicate that the
Government is reconsidering the issue who have availed SPP products in the
or otherwise, over and above the sum
of taxing the maturity proceeds in current year.
actually assured, which is to be or may
be received under the policy by any entirety and hopefully some
person, shall not be taken into account amendments will be moved during the
for the purpose of calculating the actual debate in the Parliament. The author is General Manager,
capital sum assured under this clause. SPP as a business product has made Corporate Affairs, Sundaram Finance
considerable progress in the last couple Limited. The views expressed here are
At present, Section 10/(10D) of the
of years. During the period upto his own.
Act exempts any sum received under a
life insurance policy including the sum
allocated by way of bonus on such policy
from income tax. In 1996 it was made
clear that any sum received under
Keyman insurance policy will not be
entitled to the exemption. Finance Bill
2003-04 provides that the exemption
under Section 10/10D will not apply in
respect of, among other things:
any sum received under an insurance
policy in respect of the premium paid in on the web!
any of the years during the term of the
policy exceeds twenty per cent of the
actual capital sum assured.

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TP liability even if Megacities hazard index

driver’s licence fake Munich Re, one of the largest reinsurance companies in the world, has come out
The Supreme Court has ruled that with a natural hazard index for megacities which lists the 50 largest metropolitan
an insurance company which has areas and quantifies their risk potential for all natural hazards including the
issued a Third Party (TP) liability vulnerabilities (to terrorist risk) and concentrations of values (of insurance cover).
policy has to pay compensation to the Topping it is Tokyo-Yokohama followed by San Francisco and Los Angeles all with
victims of a road accident even if the index figures of over 100 while Mumbai comes in with about 5 and Delhi with 1.6.
driver of the vehicle which meets with
an accident had a fake driving licence. The index is significant because, according to the United Nations, the urbanisation
The ruling was given by a bench of the earth is progressing at a rapid pace. In 1950 just under 30 per cent of the
comprising Justice S. N. Variava and world’s population lived in urban areas, today it is over 50 per cent. Moreover,
Justice B. N. Agrawal, while imposing megacities have enormous dimensions nowadays (Tokyo-Yokohama has about 35
a cost of Rs 20,000 on United India million inhabitants, New York about 22 million, São Paulo about 20 million,
Insurance Company Ltd. for filing Shanghai about 14 million). Cities are continually spreading into highly exposed
‘unnecessary appeals’ to deprive the areas, such as zones threatened by floods or forest fires.
claimants of compensation. The megacities index reflects the hazard and vulnerability of the world’s main
The insurance company had taken agglomerations and, for the first time, provides a basis for realistic comparison
the stand that it was not liable to since insurance penetration is known in these areas and an estimate can be made
pay compensation to the third party of probable insured losses in these areas.
accident victims on the ground that
the driver of the vehicle had a fake Megacity Population Total Risk index components
(Millions) Risk Index Hazard Vulnerability Exposed Values
The bench categorically stated that
insurance companies could not Tokyo-
disown liability in such cases as that Yokohama 34.9 710 10.0 7.1 10.0
would negate the very purpose of Los Angeles 16.8 100 2.7 8.2 4.5
mandatory TP insurance which is a New York 21.6 42 0.9 5.5 8.3
social security measure meant to
London 12.1 30 0.9 7.1 4.8
help innocent victims of road
accidents. Paris 11.0 25 0.8 6.6 4.5
Mumbai 18.2 5.1 0.8 8.6 0.7
General insurers have been losing
heavily on account TP insurance Bangalore 8.0 4.5 0.3 8.4 1.6
which has no cap on liability and Calcutta 15.9 4.2 3.2 9.5 0.1
where claims and court awards have Singapore 4.0 3.5 0.3 7.1 1.9
been unfavourably high. Delhi 17.2 1.6 1.2 7.8 0.2

Early renewals: IRDA says no, corporates want it

Corporates have opposed the IRDA companies were planning to advance the are being conducted or have just been
directive of March 11 warning insurers renewal ahead of April 1 to avoid the concluded for renewals.
against allowing renewal of cover before higher, eight per cent, service tax on
The companies have taken the stand
the due date and have requested IRDA insurance premiums proposed in the
that the insurance regulator does not
to withdraw the circular saying that this Budget for 2003-04.
have the power to prevent them from
matter was beyond the authority of the
Most fire policy renewals, which renewing covers before time unless
insurance regulator.
account for the bulk of the premium amendments are made to the fire tariff.
The IRDA had directed insurance expenses of corporates, are scheduled The tariff allows for premature renewal
companies not to allow companies to for April 1, the start of the financial of policies provided the insured makes
renew their insurance policies before the year, for operational convenience. And out a case of it, typically relating to a
due date following reports that many this is the time when final negotiations change in accounts closing date.

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LIC looking at insurance for

Response to VRS HIV-infected women
The Voluntary Retirement Scheme (VRS) the company. Also in future, marketing Life Insurance Corporation of India (LIC),
that just concluded in the four public remuneration would move from being just which launched a new policy exclusively for
sector general insurance companies has revenue-based to profitability of the women, ‘Jeevan Bharati’, is looking at
extending insurance cover to HIV-infected
seen about 12 per cent of the 11,500 strong portfolio in order to encourage better
women under this policy. Jeevan Bharati is
Development Officer force opting to leave quality business being written, it is a money back policy for women, with critical
their companies with an exit package understood. illness benefits.
while another 20 per cent has preferred The Development Officers who have opted The company will need national level data
to move over to the administrative side of for VRS can become agents of any of the on AIDS/HIV infection and relevant
marketing. four general insurance companies in the statistical information to take any decision
public sector and their representative on extending insurance cover to women
The maximum number opting for moving affected by this disease.
bodies are learnt to be pressing for a waiver
to administration was from eastern India.
of the 100 hours training requirement for
The cut-off date for applications for VRS, agency licence on the basis that they have NEW INSURANCE COMPANIES
which would automatically be accepted, long years of experience in the industry. The IRDA has granted in-principle
was originally March 3. This scheme also frees company resources approval to the Agricultural Crop
to start utilising the services of brokers Insurance Corporation (ACIC).
The date from which those opting for the
and corporate agents and to bring the ACIC with a capital of Rs. 200 crore, has
VRS would be relieved is not final and the
management expenses ratio to within 19.4 GIC as the principal shareholder with a
mode of settling VRS dues will be decided
per cent of the premium income as 35 per cent stake. The four public sector
by individual companies.
required by Section 40 C of the Insurance general insurers together hold a 35 per
The idea behind the VRS was to prune the Act, 1938. cent stake and the balance is held by the
overhead commitments of the companies National Bank for Agriculture and Rural
The General Insurance Public Sector
Development (NABARD).
in maintaining this in-house marketing Association (GIPSA), which co-ordinated
force and to retain the option of having The IRDA has also granted in-principle
the VRS scheme for the four companies is
permission to the Sahara Group to enter
some of them work as agents or brokers working on a proposal for a VRS for Class
the life insurance business, subject to the
so that the business could be retained by IV and Class I as well. latter fulfilling some regulatory

Compliance Certificate
The IRDA, in an effort to get a true and fair
picture of the investments of insurance SBI Life covers
companies has asked that they file a
certificate on a quarterly basis stating the
nature and extent of encumbrances, if any,
on their investment portfolios.
personal loan borrowers
This Compliance Certificate, under Sections
28(2A) and 28(2B)/ 28B(3) of the Insurance SBI Life Insurance Company has tied up with GE Countrywide and Maruti
Act, 1938, is to be filed along with other Countrywide to provide life insurance cover against personal loans, two-
investment returns. The certificate has to be wheeler loans and auto loans.
from the Custodian who is holding such
securities on behalf of the insurer and has R. Krishnamurthy, MD and CEO, SBI Life, said that creditor protection
to state that they are free of encumbrance, policies are the best way of ensuring the financial protection of family
charge, hypothecation or lien at the end of members as they take away the burden of repayment of outstanding loan
the quarter. amounts in case of death or total permanent disability of the primary loan
The insurer has to forward this certificate to holder.
the IRDA at the end of the financial year
along with a certificate from the Custodian SBI Life already has creditor protection schemes in place for outstanding
mentioning the amount as certified by the payments against credit cards (for SBI card holders) and housing loans
insurer is free of encumbrance, charge, (SBI housing loans and Sundaram Home Finance customers).
hypothecation or lien.

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$ 13.5 billion disaster bill in 2002

Natural catastrophes and man-made made losses totalled $ 2.1 billion. This comprehensive flood cover is a major
disasters cost non-life insurers $ 13.5 marks the return of natural challenge. A carefully balanced private-
billion in 2002. catastrophes outweighing man-made public partnership could be in the best
Property losses were below the long- disasters, a trend which was only interests of the public and private
term average, according to Swiss Re broken in 2001, due to the September sector.
sigma statistics which started in 1970. 11 terrorist attack. The terrorism threat still exists,
Flood losses, however, cost insurers a Floods caused record losses in 2002, nevertheless potential insured losses
record $ 4.1 billion. Floods are posing a costing insurers worldwide $ 4.1 billion. are considerably reduced.
growing challenge to the insurance $ 3.2 billion of this amount was due to
industry and the state. For property insurers, threat scenarios
the two flood events in Europe during still include terrorism, and September
According to Swiss Re’s latest sigma the summer. The previous records for
study, Natural catastrophes and man- 11 gave the public a clear reminder of
flood losses also stem from the recent its ominous dimensions. In 2002, the
made disasters in 2002, cost insurers past: $ 2.9 billion in 2000 and $ 2.7
$ 13.5 billion worldwide $ 1.5 billion attacks on Bali and Djerba further
billion in 1993. The economic losses proved that international terrorism is a
more than the provisional sigma caused by the floods are significantly
estimate of December 2002. The lurking threat. However, potential
higher than the insured losses: sigma insured losses have been reduced
increase was mainly due to higher storm
estimates that the two European floods considerably for private direct insurers
losses, which totalled $ 6.7 billion.
However, the annual loss burden on alone triggered an economic loss of and reinsurers. Terrorism cover has been
insurers was substantially down from $ 15 billion. restricted, and some markets have
$ 35 billion in 2001. While natural These figures show that some countries introduced new types of cover, eg the US,
catastrophes in 2002 caused the are underinsured against flood losses. Germany and France, in which the state
majority of losses, $ 11.4 billion, man- Developing and introducing carries a substantial share of any loss.

The five most costly insured losses in 2002 The five worst catastrophes in terms of victims in 2002
Insured Total Date Event Country Victims Date Event Country
Loss Loss (start) (dead and (start)
(in $ bn) missing)
3.2 15.0 31.07.2002 Flood (2 events) Europe 2000 27.02.2002 Social unrest India
1.7 - 27.04.2002 Spring storm, US after arson on train
tornadoes 2000 25.03.2002 Earthquake Afghanistan,
0.8 - 26.10.2002 Storm Jeanett Europe (6.0 Richter scale) Pakistan
1863 26.09.2002 Ferry Le Joola capsizes Gambia
0.7 2.0 21.09.2002 Hurricane Lili Caribbean, US
1500 01.12.2002 Cold wave India et al
0.5 - 14.09.2002 Tropical storm
Isidore Caribbean, et al 1460 27.01.2002 Explosion in munitions Nigeria

Malaysia’s mandatory national health insurance because of increasing healthcare costs,

consumer expectations and the current
imbalance of facilities and services
Malaysia is introducing a national capacity of those who can afford it and
between the public and private
health insurance scheme and citizens where the needs of the disabled, poor,
healthcare system in that country.
will soon have to make mandatory elderly, government servants and
monthly contributions to it. retirees would be taken care of by the A National Health Financing Authority
government. (NHFA), wholly-owned by the
The contribution amount has not yet
Government and run by the Health
been decided but there is likely to be a Under the scheme – which is still
Ministry, would manage the scheme
ceiling for high-earning contributors awaiting approval from relevant
and the Government would introduce
and those earning below a certain authorities – the members would be
the basic packages which could include
income would not have to contribute. able to seek treatment at any medical
secondary care, out-patient treatment
facility, private or public. 
The scheme is being positioned as one and preventive care such as
that takes into account the paying The need for the scheme was felt immunisation and oral health.  

irda Journal, April 2003

IRDA_April_PAP.pmd 44 1/04/2003, 2:39 PM


US employees may have to Life Insurance Sales Up

Across the Board in 2002
pay more for health cover Limra International’s quarterly survey has
revealed that individual life insurance sales
Large and small businesses in the US deductibles and co-pays next year increased across the board in the US market in
may have to pass more of the costs for and for the next five years. 2002, with gains in annualised premium (3 per
health insurance coverage along to their Nevertheless, companies expect to cent), face amount (12 per cent) and number of
employees considering the way bear the bulk of the anticipated cost policies (1 per cent.)
premiums are rising. increase, passing on just one-fourth
In a press release from Limra, its Vice President
According to a report based on a of the cost increases to employees.
and Head of Product Research, Ms. Elaine
national survey of 600 large and small Q To cope with the rising costs, 45 per Tumicki has said that while this is “not dramatic,
businesses, while American businesses cent of employers say they will this is the first indication of a turnaround in
remain committed to providing reduce employee health benefits over individual life insurance policies sold in 19 years.”
employer-sponsored health insurance, the next five years. Industry-wide results that will be available in
92 per cent say they are likely to mid-year are expected to confirm the positive
Q Just four per cent of businesses say
increase the amount that their sales trend for 2002. Annual sales of policies have
they are likely to drop employee
employees pay for health insurance been in decline since 1984.
healthcare coverage entirely next
premiums next year.
year. But if faced with rising costs Fixed products continue to drive sales growth with
The business survey shows that for the next five years, businesses are universal life (UL), which is a unit-linked product,
companies of all sizes expect health increasingly likely to drop coverage, leading the way. After slowing down in the third
insurance costs to jump an additional especially if it is a small business quarter, UL annualised premium jumped back up
18 per cent over the next year. This that has fewer than 50 employees. in the fourth quarter with a growth rate of 46 per
comes on the heels of an increase of
Research shows that being uninsured cent compared with the same quarter of 2001. UL
approximately 14 per cent in 2002. And
takes a serious toll on men, women and represents 28 per cent of premium for 2002, the
businesses do not foresee relief any time
soon. According to the survey, children. Uninsured men are nearly highest share for UL since 1986.
businesses predict a 17 per cent average twice as likely to be diagnosed with Annualised term premium for the year is up 13
increase per year in their healthcare colon cancer at a later, more dangerous per cent, exceeding industry expectations. Whole
costs for the next five years. stage than are men with insurance. life ended the year with a 13 per cent increase
Uninsured women with breast cancer over 2001, the first time since 1990 that whole
The survey also shows that:
are twice as likely to die as insured life has recorded double-digit growth for the year.
Q More than 70 per cent of employers women with the same disease.
say the number of uninsured will Uninsured children are 70 per cent Variable life (VL) and variable universal life (VUL)
grow in the next decade. more likely than insured children not – which are equity-linked annuities - declined
Q Nearly all businesses say employees to receive medical care for common compared to the same quarter prior year for the
will be expected to pay more for their childhood illnesses such as ear seventh consecutive quarter. Annualised premiums
health insurance premiums, infections. in 2002 for variable life products were 24 per cent
lower than in 2001. The variable product share of
life sales has tracked closely with trends in the stock

UK regulator eyes non-life insurance market over the last several years.
Survivorship life annualised premium was down
five per cent for the quarter (compared to fourth
Britain’s financial super-regulator, the Financial Services Authority, in another step
towards taking over the regulation of mortgages and general insurance products asked quarter 2001) and 12 per cent for the year. The
lenders and insurers for their opinions on a set of draft rules. fourth quarter declines were driven by variable
The FSA will take over supervision of firms that lend, sell and advise on mortgages products. Both UL and whole life increased
on October 31 next year. From January 14, 2005, the FSA will also assume control of compared to fourth quarter 2001.
insurance products like car and health cover.
“The Treasury has brought general insurance into the scope of FSA regulation in Limra International which used to be called Life
order to implement the Insurance Mediation Directive (IMD), which sets common Insurance Marketing and Research Association,
minimum standards across EU countries for....the sale and administration of is a worldwide association providing research,
insurance,” the FSA said in a statement. consulting and other services to nearly 850
“It (the Treasury) had previously announced that mortgage lenders, administrators insurance and financial services companies in
and intermediaries would be regulated by the FSA.” The FSA has put together a set
of proposals covering how mortgage and general insurance firms should operate and
more than 60 countries. Limra was established
how much cash they should hold to ensure solvency. Companies have until June 13 to in 1916 to help its member companies maximize
comment. their marketing effectiveness.

irda Journal, April 2003

IRDA_April_PAP.pmd 45 1/04/2003, 2:39 PM


Testing Vehicle Safety

The Insurance Regulatory and Development Authority (IRDA), in association with Concert,
the Chennai-based Centre for Consumer Education, Research, Training and Testing, is planning
to put up a vehicle safety testing centre. The facility, modelled along the lines of the Consumer
Association Research and Testing Centre (CARTC), in the UK and Consumer Union of the US,
will work in the areas of consumer testing of vehicles, safety education and training.
As a first step to this a workshop on vehicle safety and testing was conducted by the IRDA
and Concert at Chennai on March 21-22. It was attended by about 60 delegates from various
vehicle manufacturers and insurers and had presentations by Mr. Mike Monk, Director, CARTC,
of the US, Mr. Aloke Prasad, and Mr. Chris Evans formerly of the Consumer Association of
the UK. Mr. B. Bhanot, Director, Automobile Research Association of India (ARAI), Pune,
spoke about vehicle testing for safety.
Workshop participants discussed various aspects of vehicle safety design, consumer
Mr. Venu Srinivasan, Chairman, awareness and education and also issues relating to insurance costs and submitted their views.
Sundaram Clayton Limited, delivers the
Mr. Chris Evans, who has been associated with the Consumer Association, the UK and with
inaugural address at the two-day
Workshop on Vehicle Safety and Testing editing the association’s magazine, Which? for over 25 years, has been retained as consultant
conducted by the IRDA and Concert at and would advise the IRDA and Concert on the shape and scope of such an institute.
Chennai on March 21 and 22.
Speaking at the workshop, Mr. S. Ramakrishnan, Secretary, Department of Consumer Affairs, Government of Tamil Nadu,
said that the State Government would provide support in the form of the necessary lands for the project. Chennai, it is thought,
would be the ideal location for such a facility given the large automobile and accessory industry located in and around the city.
Mr. Venu Srinivasan, Chairman, Sundaram Clayton Limited, who delivered the inaugural address said that vehicle safety
design are much neglected areas in India though we have a very large vehicle population here. With the fourth highest accident
rate in the world in 1997 we still topped the list of nations in the number of fatalities which stood at 75,000. In 1999 the number
of road accident fatalities in India stood at over 88,000.
Homologation and Certification systems, though well developed in India, still do not cover adequate crash testing facilities
and, as far as fitness inspections are concerned even elementary things like testing for braking and other safety systems were
poorly developed in India. Things would only get worse, he said, when high-speed corridors like the Golden Quadrilateral were
commissioned, and vehicle safety design standards should catch up with world standards soon.
Sundaram Clayton, he said, had the country’s only
testing track for anti-locking brake systems (ABS), on
which Rs. 20 crores had been spent and an additional equal
amount would be spent. This track would be made available
to Concert to test vehicle safety.
Speaking on the occasion Mr. R. Desikan, Trustee,
Concert, said that product recalls of vehicles with defective
parts was unheard of in India while recall directories ran
into something like 200 pages in a technologically advanced
market like the US.
“Does this mean that there are no defective vehicles or
parts in India?” he asked, underlining the lack of awareness
and enforcement of safety standards in the country.
A CD to spread awareness of the necessity of wearing
ISI-certified helmets by two-wheeler riders to reduce
accident impact and fatalities, produced by Concert, was
released on the occasion.

Mr. S. Ramakrishnan, Secretary, Department of Consumer Affairs, Government
of Tamil Nadu, releases the CD on Helmet Wearing for Two Wheeler Safety and
Mr. Venu Srinivasan, Chairman, Sundaram Clayton Limited, receives the first
copy during the vehicle safety workshop. Mr. N. Rangachary, Chairman, IRDA,
Send us a write-up! is also seen in the picture.

IRDA_April_PAP.pmd 46 1/04/2003, 2:40 PM


Yogakshema, the corporate house journal of the Life Insurance
Corporation of India (LIC), won the best house magazine award from
the Public Relations Society of India (PRSI), Hyderabad Chapter.
The competition for house journals received 40 entries from all over
India from public and private sector organisations. LIC, South Central
Zone, Hyderabad’s house magazine, ‘Sagar’ also won a
certificate of merit.

Mrs. Swarna Prabha Sukumar, Regional Manager (PR & Publicity) of LIC, Hyderabad
Zone receives the award on behalf of Yogakshema from Mr. Tammineni Sitaram, Minister
for Excise and Prohibition, Government of Andhra Pradesh. Also in the picture is
Mr. N. L. Narasimha Rao, Chairman, PRSI, Hyderabad Chapter.

Fill this form and send it to us.
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Phone : _______________________________
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Our Address : Editor
IRDA Journal
Insurance Regulatory and Development Authority,
Parisrama Bhavanam,
5-9-58/B, III Floor, Basheer Bagh, Hyderabad - 500 004
or e-mail us at :

IRDA_April_PAP.pmd 47 1/04/2003, 2:40 PM


Dear Editor
I received information about the IRDA from my insurance agent and found that We thank you for including our address
it is the only and correct place where I can get my query cleared. in your mailing list. I find the journal
to be very interesting and useful.
I have gone through many insurance plans available in the market from LIC It is suggested that you may allot one
and from private companies who have just come in. page in the Journal every month
What is the security of my funds? Will these private companies exist till the time exclusively to publish any modifications
to the regulations made by IRDA. A
I receive my maturity money? In case the company I am buying any insurance
point in question is as follows :
plan from quits the insurance business, what happens to my money paid as
As per the Regulations made by IRDA
premiums till that date?
for licensing insurance agents, it is
I am sure you will help me with answers to my questions. mandatory for anyone who desires to
take up insurance selling to undergo
As such what I have found is agents are just behind their business and don’t 100 hours training and pass an
actually care about what the customer wants. They don’t even try to tell me examination to be conducted by the
which plan is suitable for me. Insurance Institute of India (III),
I would not only be thankful, but it also will be my pleasure to have a reply from
But the regulations also provide
your side.
exemption to certain categories of
Shashank Harshe qualified persons from the 100 hours
Wadi, Baroda-390 017. training and prescribe only 50 hours
training for them. The list of such
All insurance companies are registered and their registration renewed annually by the qualified persons includes Chartered
IRDA after they fulfil stringent capital and other financial requirements. Accountants, Cost Accountants,
Company Secretaries, Fellows of the III
Insurers can invest policyholders’ funds only according to strictly laid down norms which and F.I.As and F.A.S.Is.
are geared towards the security of funds. They also have to maintain solvency standards We understand that the IRDA has
according to IRDA regulations. These aspects of financial stability are monitored by the recently added two more qualifications
IRDA on an ongoing basis including through onsite inspections. to the above list viz. (1) Engineering
Graduates (B.E. or B.Tech.) and
As such the IRDA’s responsibility is to ensure the protection of policyholders’ interests by
monitoring and ensuring the financial strength of all registered insurers. The IRDA achieves (2) C.A.I.I.B. prescribing only 50 hours
training to persons holding any of these
this end through various mechanisms and actions that will act as early warning systems to
two qualifications also. When we looked
potential failure.
into the relevant regulation on your
In the event of a company heading towards failure, a scheme of merger would be devised website, no such addition was found to
by the regulator so that one of the other insurance companies would take over and the list of qualifications.
discharge the liabilities of the ailing company. In the event of a failure, policyholders’ Will you please confirm whether such a
funds will be distributed in an equitable manner as per the law, and their claim will take modification has been made to the
precedence over that of shareholders’. regulation by the IRDA.
M. Viswanatha Rao
I have received two issues of IRDA Journal. The contents and printing are Associate Director
informative and beautiful.  Subodha Institute of Insurance
It would be good if the IRDA initiates the introduction of a health insurance Education & Training,
policy whereby health cover is provided for a longer period of time like a life Hyderabad
insurance policy instead of one which is being renewed year after year where We do publish changes in regulations as and
the insurer also has option to discontinue at his will. when they take place. We also keep readers
abreast of changes in rules.
Health insurance should be available as a long-term contract. It is more so because
once a person starts needing it, he may be refused cover by an insurance As for your specific query on the waiver of 50
company.  of the 100 hours training and the additions of
new categories eligible for waiver, the answer
YK Gupta is no. There have been no such additions to
1-Kha-19, Jawahar Nagar the list. The regulations on the website are kept
Jaipur-302 004. always updated so you can go by that.

irda Journal, April 2003

IRDA_April_PAP.pmd 48 1/04/2003, 2:40 PM

“ ”
We are formulating detailed guidelines
for quick settlement of claims by the
state-run general insurers… It is
necessary to settle claims if the industry
is to create faith and confidence in the
minds of the public.

Minister of State for Finance, Mr. Anandrao Adsul,

speaking about pending motor claims.

I have never come across an industry as

paper-bound as the London insurance
market, and I have to say that it even
surpasses the Civil Service in its volume of
paper. It’s odd to think that the Four years ago we took contrarian
fundamentals of the insurance industry positions in four major areas: to stay focused
Editorial Board: have changed so little since the days of on
N. Rangachary Edward Lloyd’s coffee shop. life insurance when others were venturing into
R.C. Sharma
other financial services; to maintain our career
S.V. Mony Lord Peter Levene, Chairman, agency system when some claimed it was too
K.N. Bhandari Lloyd’s of London, on technology. expensive; to remain a mutual when others
A.P. Kurian were going public; and to go global when
Nick Taket others feared the risk. All four of these
Ashvin Parekh decisions are paying off. In a year of sales
Nimish Parekh and earnings duress in our industry, New York
Hasmukh Shah Life set records for both operating earnings
A.K. Venkat Subramaniam and life sales.
Prof. R. Vaidyanathan
Sy Sternberg, Chairman and CEO,
With the landmark announcement New York Life
K. Nitya Kalyani (of the Universal Health Insurance scheme
in the Budget 2003-04), we expect as many
Hindi Correspondent:
Sanjeev Kumar Jain as 40-45 per cent of the population to avail
a health cover in the medium term itself,
Design concept & Production:
with the figures going up subsequently.
Imageads Services Private Limited
Art Director : Shailesh Ijmulwar While this move is significant on the health
Production : Anand and Usha insurance front, we believe that mandatory
health insurance is the complete solution
Printed by P. Narendra and and the nation
published by N. Rangachary on behalf of No doubt competition is one factor
must opt for it at the earliest. which is driving us these days.
Insurance Regulatory and Development Authority.
Editor: K. Nitya Kalyani We cannot be complacent now...
Dr. Prathap C. Reddy, Chairman, Competition is not the only factor. During
Printed at Pragati Offset Pvt. Ltd. Apollo Hospitals this period, stock markets were in bad
17, Red Hills, Hyderabad 500 004
and published from shape and interest rates were falling....
Parisrama Bhavanam, III Floor there was no other suitable and safe
5-9-58/B, Basheer Bagh investment avenue.
Hyderabad 500 004 We don’t provide (board members) with
Phone: 5582 0964, 5578 9768 officers’ and directors’ liability insurance. Mr. S. B. Mathur, Chairman, LIC
Fax: 91-040-5582 3334 Basically, we want the behavior of our
directors to be driven by the effect their
decisions will have on their
family’s net worth.
© 2003 Insurance Regulatory and Development Authority.
Please reproduce with due permission. Mr. Warren Buffet, CEO, Berkshire Hathaway Inc., which itself is
an insurer for other companies’ D & O risks.

IRDA_April_Cv_PAP.pmd 2 1/04/2003, 1:28 PM

Volume I, No. 5

APRIL 2003
April 6 – 8, 2003
Venue: Baltimore, Maryland
The Annuity Conference
This annual spring conference is by LOMA, LIMRA International May 7 – 8, 2003
and the Society of Actuaries. Over 400 financial Venue: Taiwan
services professionals meet to discuss important issues related to Conference on Catastrophe Insurance in Asia by Asia Insurance Review
income annuities, qualified plans, product design, product Seeking Real Solutions to CAT Exposures in Asia
management, conservation and about everyday issues that affect
the annuity professional. May 5 – 9, 2003
Bonus – Registered attendees of The Annuity Conference can Venue: Beirut
also attend sessions at The Pension Conference at no additional Financial Stability Forum’s Special Seminar with the World Bank
charge. Topic: Anti-Money Laundering

April 6 – 8, 2003 May 7 – 9, 2003

Venue: Baltimore, Maryland Venue: New Mumbai
The Pension Conference Actuarial Society of India (ASI) in collaboration with
LIMRA is joining forces with LOMA and the Society of Actuaries to English Matthews Brockman (EMB), General Insurance
organise this comprehensive conference dealing with the Actuaries and Consultants, the UK, is organising a General
marketing, sales, operations and development of pension plans. Insurance Actuarial Training programme.
The Pension Conference provides the latest information and ideas Appointed Actuaries in general insurance companies, senior
that can be implemented right away. and middle level staff of general insurance companies
Bonus – Registered attendees of The Pension Conference can also dealing in reserving, reinsurance, MIS etc, IRDA, TAC
attend sessions at The Annuity Conference at no additional charge. officials and Actuarial students interested in general
insurance are prospective participants.
April 6 – 10, 2003
For further details and registration form please contact
Venue: Chicago
Ms Anitha Ravi at
41st Risk and Insurance Management Society (RIMS)

The Actuary in India

Annual Conference. May 19 – 23, 2003
Theme: “Specialist solutions in the face of shifting risk.” Venue: Vienna
Financial Stability Forum: Selected IAIS Insurance Core Principles
April 7 – 11, 2003 K.P. Sarma
Venue: Kathmandu May 26 – 30, 2003

Getting the Price Right

Financial Stability Forum’s Regional workshop with SEANZA. Venue: Vienna
Topic: Risk Management: Consolidated Supervision Financial Stability Forum: Core Supervisory Issues

April 15 – 16, 2003 May 26 – 30, 2003 Venkatesh S. Mysore

Venue: Mumbai Venue: Beatenberg

Data Mining & Detariffing

4th Conference on Bancassurance, Wealth Management & Financial Stability Forum’s Focused Seminar. Topic: Risk Management
Alternative Distribution Channels by Asia Insurance Review
Leveraging on Distribution As a Key Driver To Get Ahead May 27 – 28, 2003
Venue: Singapore Anup K. Mathur
5th Conference on Alternative Risk Transfers by Asia Insurance Review
ART As an Effective Risk Management Tool Today
Many Roads to Health Insurance

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IRDA_April_Cv_PAP.pmd 1 1/04/2003, 1:28 PM