While Korea ranks second in Asia for insurance penetration, there are still plenty of unmet needs for life
insurance coverage which the industry has to address to remain sustainable into the future. Speaking at a
panel discussion during the Insurance Summit on Industrial Revolution 4.0 held in Seoul this week, CEO
of LINA Life Insurance Company Ben Hong said that both societal and technological trends mean that
insurers in Korea would have to find ways to adapt their business model.
“There is a convergence of changing consumer needs and digitalisation, for instance self-driving cars
should happen soon in Korea and when that happens, premiums will be mileage-based and as a result
motor premium volumes will drop.
“Also, people are living longer and so are more focused on living benefits,” he said. Meanwhile, ABL Life
Insurance’s chief digital officer Chang Wonkyun said that access to new data points provides an
opportunity for insurers to innovate. .
“If we could measure people’s activities in real time, rather than just use current metrics like age and
gender, then we can develop new products depending on the time and risk. Although there may be some
regulatory obstacles for such a product to go to market right now, I do see that regulations are moving in
a positive direction,” he said.
Given the fact that insurance has a long historic past, it is important for the industry to openly engage
with new ideas from outside the sector. We have our own culture and processes and sometimes we need
someone from the outside to come in and help us, but unless we have an open mind then it will be
difficult to set the right environment for it to work,” said Mr Michael Shin, CEO of RGA Korea.
Mr. Chang added that the people side is very important in the transformation agenda and hence
organizations need to have open communication when embarking on digital transformation. Meanwhile,
Mr. Hong pointed out the need to keep the focus on customers and respond effectively to their needs.
“So far much of our investments have been focused on the back office function for operational efficiency
but we need to ask how do we create genuine customer value and how do we apply technology to achieve
that,” he said.
Panel moderator Ms Kim Mijung, CEO of YONG Consulting, rounded up the discussion by stating her
belief that the industry can successfully assimilate new technology and people – rather than having to
choose one over the other.
The insurance sector’s returns on investments, including securities and fixed assets such as land and
buildings, have been minimal. Thirty-two life insurance companies invested BDT139.49bn in government
securities, from which the return was 2.62%, or BDT3.65bn, in the first quarter of this year, according to
a report in The Daily Star citing the Insurance Development and Regulatory Authority (IDRA).
In the first quarter of the year, life insurance companies invested BDT24.7bn ($294m), or 8.48% of their
total funds in fixed assets. The return was only BDT100m, which is 0.40% of the investment. Life
insurance companies had a total BDT291.18bn invested in a range of different sectors. The highest
portion of the insurance funds— about 48%—was invested in government securities as insurers are
mandated to invest at least 30% of their funds in such instruments, said Mr. MohammodiKhanam, CEO of
Life insurers had also placed BDT90.28bn in fixed deposits, which was 31% of their total funds as of
March this year. The return from the investment was almost 2% in the January-March quarter. The life
insurers had invested BDT24.2bn in the stock market, from which the return was BDT130m, or 0.54%, in
the first quarter. These returns have left the regulator concerned and it has asked insurance companies
to invest policyholders’ money wisely and boost the return on investment.
The Insurance Council of Australia (ICA) has said it supports the removal of stamp duties on agricultural
insurance products nationwide as a key measure to improve the uptake of farm income and crop
insurance for primary producers.
ICA CEO Rob Whelan said the insurance industry was examining ways to expand insurance coverage for
primary producers. He said access to better data, removing unfair taxes and introducing incentives would
play a significant role in improving outcomes during droughts or following extreme weather such as
floods or cyclones.
“Government support should be directed at encouraging the take-up of crop and farm income insurance,”
“The abolition of stamp duties for agricultural insurance products is one of five measures that insurers
believe would help primary producers in times of drought and protect an important sector of the
economy.” Several states have already implemented stamp duty concessions for primary producers.
The other proposals raised by the ICA are:
Running a census on every primary producer to collect and publish critical data. More
information is required on the agricultural sector to support underwriting of existing covered
crops and expansion into livestock and non-cereal crops.
Introducing tax reductions or offsets for farm income and crop insurance products. This incentive
would help encourage greater take-up of these products and ultimately reduce dependence on
Starting a government-guarantee facility for insurers offering farm income and crop insurance for
25% of losses at the declared 1:60 to 1:100 year drought. This would assist insurers to maintain
reinsurance cover in the global market.
Changing government lending criteria through the Regional Investment Corp. It should be
dependent on the primary producer holding adequate farm income or crop cover, in the same
way that a private market lender will not lend unless the asset is protected by insurance.
Mr Whelan said state taxes and levies on insurance were unfair and highly inequitable, and contributed
to the low uptake of farm income and crop insurance products. He said any stamp duty concessions on
insurance introduced for the agricultural sector should quickly be applied to the whole community.
Data show that this year has so far been among the hottest and driest years on record for parts of
Australia. The months from January to October were some of the driest on record for New South Wales,
Victoria and the Murray Darling basin regions, despite the recent rainfall.
The Actuaries Institute yesterday launched a climate index, an objective measure of extreme weather
conditions and changes to sea levels, to help policymakers and Australia’s businesses assess how the
frequency of weather extremes is changing over time.
The Australian Actuaries Climate Index, which includes a number of sub-indices, tracks changes in the
frequency of extreme high and low temperatures, heavy precipitation, dry days, strong wind and changes
in sea level, mainly concentrating on the 99th percentile of observations. The components of the index
were chosen due to their link to risk, an area of expertise for actuaries, and because extremes have the
greatest potential impact on people and, often, the largest cost to the economy.
The index is the culmination of an extensive research and implementation process. It is the result of
consultation with Australia’s Bureau of Meteorology, Commonwealth Scientific and Industrial Research
Organisation (CSIRO), leading insurance and natural hazard scientists and regulators. “The index is
designed to help us understand how extreme weather, and hence risk levels, may be shifting as a result of
climate change,” said Mr. Tim Andrews, a principal at Finity Consulting.
Mr. Andrews, who has 30 years of actuarial experience, collated the index, using data from the Bureau of
Meteorology’s extensive network of weather stations and tide gauge facilities. The data was collected
nationally and grouped into 12 climatically similar regions.
Actuaries Institute president Mr. Barry Rafe said, “Actuaries are skilled at summarising and presenting
complex data, and the assessment and management of the financial consequences of risks.” “This project
aims to help big and small corporations better understand the changes in weather extremes across
Australia. It is one way to bring science and business together.”
Actuaries Institute chief executive Elayne Grace said: “This work will assist businesses to assess and
report risks from climate change, and Australians more generally will be able to look at the data and see
what’s going on.” Australian financial institutions can reference the index to help them meet their
commitments to adopt international risk reporting measures, Ms Grace said. The Financial Stability
Board’s Taskforce on Climate-Related Financial Disclosures in 2017 wrote recommendations for a single
international cross-industry standard for disclosing those risks.
The Australian Prudential Regulation Authority (APRA), which last year warned that the risks of climate
change were “foreseeable, material and actionable now”, has welcomed the new index. APRA executive
board member Geoff Summerhayes said, “APRA has a longstanding working relationship with the
Actuaries Institute, collaborating on financial risk metrics and standards. We believe this initiative is a
positive step towards helping regulated entities to understand and manage the potential impact of
climate risk on their businesses.”
CEO of the Investor Group on Climate Change (IGCC), Emma Herd, said: “The effects of climate change are
here and now, and getting worse.” “Australian investors are looking for the tools they need to better
assess and mitigate physical risks for their investments. The Australian Actuaries Climate Index is a
welcome new tool for managing climate risk.”
The IGCC represents Australian and New Zealand institutional investors with around A$2trn ($1.46trn)
in funds under management, and others in the investment community concerned about the impact of
climate change on investments.
First index report out on 12 Nov
The very first Australian Actuaries Climate Index report, to be issued on 12 November, and which covers
the period 1981 to 2018, shows the frequency of extreme conditions in autumn 2018 was higher than the
historical extremes for autumns in the baseline period from 1981-2010. In fact, the frequency in the
baseline period has been exceeded in every season but one since 2010.
The results are compared to a 30-year reference period, mostly focusing on the 99th percentile of
observations. The index will be updated each quarter. The Actuaries Institute plans to develop more
explicit measures of risk and the climate index represents the first phase of that work.
“This is a first step,” Ms Grace said. “We hope to build on this index by attaching risk data, such as damage
to property and health statistics, in order to understand the relationship between weather extremes and
risk, enabling more explicit risk indices to be developed.”
The District Consumer Disputes Redressal Forum has penalised a movers and packers firm and an
insurance company for overcharging insurance premium. While the premium was just Rs 116, Allied
Movers and Packers India Limited, Zirakpur, charged Rs 3,000 and Future Generally Insurance,
Chandigarh, also did not provide a solution to the consumer.
The complainant, Dr Rajesh Kumar, a resident of Chandigarh, now living in Kasauli, stated that on his
transfer from the city to the Himachal Pradesh town in December 2016, he hired the services of the
movers and packers firm for transporting his household goods. He stated that he was charged Rs 12,650,
along with Rs 1,897, for transport and packing and Rs 3,000 towards insurance premium.
However, on receipt of the invoice-cum-premium receipt, he came to know that the insurance premium
was only Rs 116 and thus requested the opposite parties to refund the excess amount taken, but to no
avail. The complainant also exchanged a protracted correspondence with both the parties but in vain. He
thus approached the consumer forum.
The insurance firm admitted that the premium was Rs 116 under the “Specific Marine Insurance Policy”
that was issued in connection with the case. Documents showed that the insurance firm had charged only
Rs 116 but the movers and packers firm charged Rs 3,000 from the complainant. However, no one
appeared for the said firm and it was allowed to be proceeded against ex parte.
A perusal of various email communications of the complainant with the insurance firm revealed that the
complainant gave various reminders to it regarding illegally charging of the insurance premium by the
movers and packers firm. However, there was no concrete solution provided by the insurance firm.
Hence, Future Generally Insurance was also liable “by giving shelter to the movers and packers firm and
not highlighting its fault before the appropriate authorities”, observed the forum.
Both the firms were thus directed to refund Rs 2,884 to the complainant along with Rs 10,000 as
compensation on account of deficiency in service and causing mental and physical harassment. The two
firms were also told to pay Rs 5,000 as cost of litigation.
The Madras High Court Friday held that insurance companies cannot be made liable to pay compensation
to accident victims who travel in goods carriers. Justices K Sasidharan and R Subramanian said that in the
light of the categorical pronouncements of the Supreme Court in various accidents, Motor Accidents
Claims Tribunals are not right in directing insurance companies to pay the compensation and recover the
same from the vehicle owner.
The bench gave the ruling while passing orders on a batch of appeals from Bharati AXA General
Insurance Company Limited in Bengaluru, challenging a September 23, 2014 order of the Motor
Accidents Claims Tribunal in Dharmapuri, on October 24. On September 1 2011, a 16-member marriage
party from Kottapatty village had engaged a goods carrier to go to Soolakurichi to attend the event. On
the way back, the van turned turtle, killing some people and injuring others.
They moved the tribunal, which in September 2014 awarded various amounts. The tribunal directed the
insurance firm to pay the amount and recover it later from the vehicle owner. Aggrieved, the insurance
company moved the court.
The court said it was no doubt true that in many cases, the claimants may not be able to realise the award
amount from the owners of the vehicles involved in the accident. “But the said factual situation alone
cannot impel us to do something against the provisions of the statute and the decisions of the larger
benches of the Supreme Court,” the bench added.
Holding United India Insurance deficient in services, a consumer disputes Redressal forum here has
directed the insurance company to compensate a policy holder by paying over Rs20,000 for “wrongly
repudiating” a claim.
Stating that the insurance company’s contention that the policy holder’s claim was under the “exclusion
claim”, the consumer panel said, “This forum is of the opinion that the ailment or disease of the
complainant is not covered under [relevant] clause of the policy and the opposite party has wrongly
denied claim. Thus, holding guilty of deficiency in services, we direct [insurance company] to pay Rs
20,000 as compensation for harassment and mental agony.”
Complainant Kaushlender Ojha had alleged that despite having a mediclaim policy, the insurance
company had refused to pay the claim of over Rs 31,000 raised by him.
“The complainant alleged that on account of… severe pain in the stomach, he approached Jaipur Golden
Hospital through emergency and remained in the hospital and took treatment for [the] ailment,” read the
complaint in the order.
Further it was alleged that despite sanctioning the amount, the insurance company “unlawfully declined
the payment of the claim” later.
The insurance company had however contended that resolving appendicitis “did not warrant
hospitalisation” and hence, the complainant was not entitled to a refund of the claim.
Dismissing the insurance company’s contentions, the consumer panel has directed the company to
compensate the policy holder by November 26, failing which an interest of 10% per annum will be levied.
Most people give a lot of thought to purchasing a vehicle but not so much to buying auto insurance. This
lack of interest could be due to the perception that insurance is complex, lack of information, paucity of
time, or a negative experience associated with claims.
The auto insurance industry has taken cognizance of these challenges and has revamped its offerings by
going digital for a hassle-free experience. Digitisation empowers policyholders to make an informed
choice, choose the best-suited policy, and also save money in the process.
Digital is convenient, cheaper: With insurers going digital, auto insurance has become simple and
convenient. You can purchase or renew auto insurance from either an insurer’s website or from a web
aggregator. The process is similar to shopping for an item on your favourite e-commerce platform. Online
policies are priced lower without compromising on the scope of the cover. Some insurers also offer
exclusive offers. Companies are able to sell their policies cheaper online as these are direct sales that do
not involve a middleman, and they also save on operational costs. Insurers transfer a part of their savings
to customers, making the online product cheaper for them.
Review your existing coverage: First-time car and bike owners generally purchase the insurance policy
that the vehicle dealer suggests. At times, a dealer may offer discounts on the vehicle or free accessories
on the condition that the buyer purchases his insurance policy at the showroom. In most cases, the cover
purchased from the dealer is expensive and may also lack certain essential features. You may have been
offered unnecessary add-ons while essential add-on could be completely missing.
When your policy comes up for renewal, review its coverage. There is no need to go for riders that are
not going to be beneficial to you. For instance, if you mostly travel alone, insurance covering a copassenger
is inconsequential. Such add-ons further increase the cost of insurance. Opt only for add-ons
that are useful. A zero-depreciation cover, for example, can save you money in case of claims.
Don’t forget the no-claim bonus: Vehicle owners are rewarded with a no-claim bonus (NCB) by
insurers for not raising a claim during the policy period. NCB is offered as a discount on auto insurance
premium while renewing the policy. This NCB is incremental in nature and can go as high as 50 per cent,
provided you do not raise a claim for five consecutive years. Even when changing your insurer, the new
company will consider the entire NCB and offer a discount on the premium.
Opt for renewal in advance: If you are changing the insurer, the new one might want to inspect the
vehicle before issuing the policy. Don’t start searching for insurance close to the expiry date. Do it in
advance so that you have enough time to finish the formalities. If the insurance cover is renewed after
expiry, in certain cases you could even need to shell out a higher premium. If you do not renew your
policy within 90 days after its expiry, you will lose out on the accumulated NCB as well.
Install an anti-theft device: Installing an anti-theft device on your car can not only act as a
precautionary measure against theft but can also reduce your auto insurance premium. Insurance
companies usually provide a discount on premium if you have installed such a device. Make sure that the
installed device is certified by the Automotive Research Association of India. Only then will you be able to
avail of the discount.
Automobile Association membership: Some insurance companies offer a discount on car insurance
premium to members of the Automobile Association of India. The membership comes with several
benefits such as breakdown assistance, car battery installation with doorstep service, and several others.
Check out on the internet all the benefits of becoming a member and then decide whether you want to
purchase the membership.
Voluntary deductible: Two types of deductibles are associated with auto insurance – compulsory and
voluntary. Compulsory deductible is the amount you contribute in case of a claim. Voluntary deductible is
the amount over and above the compulsory deductible. If you opt for it, you convey to the insurance
company that you are willing to contribute a certain, pre-decided amount in case of a claim.
As a result, the insurance company reduces the insurance premium space. Choosing a voluntary
deductible means that you will receive a lower claim amount. As the entire point of insurance is to
minimise losses, keep in mind the financial implication of the voluntary deductible on you before making
this choice. Note that this process varies from insurer to insurer.
A few more handy tips: The tips mentioned above may or may not be communicated upfront by
insurers on their websites. You can, however, get in touch with a company executive to know more about
discounts. Insurers, for example, do not advertise that they provide discounts for installing anti-theft
devices. But they might provide a discount if you request them for it by calling them or sending them an
Make an informed choice when renewing your insurance. Clarify all your doubts with the insurer.
Understand the inclusions, exclusions and the extent of coverage. Driving a vehicle without a valid
insurance policy is a punishable offence. An expired auto insurance policy is considered invalid. Renew
your policy ahead of the deadline. But above all, compare what’s available before you write a cheque.
Add-on covers that work
Zero depreciation: Provides full claim on the value of the parts that have to be replaced
after an accident.
Engine protect: Covers damage to the engine. Handy in areas that are prone to flooding.
Also called as hydrostatic lock cover or engine and gearbox protector.
Roadside assistance: Useful for those who frequently travel long distances. You get
assistance in case of mechanical breakdown, including on-site battery jumpstart, tyre
replacement, refilling of fuel and towing service.