The Philippines is seriously considering proposals like sponsoring catastrophe bonds that could be
included in other insurance packages the government is now exploring with Lloyd’s of London and the
World Bank to cover state assets, the Department of Finance (DOF) said in a statement.
On the sidelines of the annual meetings of the World Bank and the International Monetary Fund (IMF) in
Bali last week, the DOF said that it was exploring a plan to sponsor a Cat bond to cover disaster-related
risks in the Philippines, reports Business Mirror.
Finance Secretary Carlos G. Dominguez III, with executives of Citi Group (Citi), discussed these proposals,
along with a plan to come up with bonds or securities linked to attaining the United Nations’ Sustainable
Citi Vice Chairman for Corporate and Investment Banking Jay Collins explained that the Philippine
government will serve as sponsor of a Cat bond, with the World Bank issuing the bond to qualified
Depending on the insurance coverage and its trigger, the Philippines as sponsor of the Cat bond will get
paid the principal contributed by investors if a catastrophe occurs. But if there is no trigger, then
investors would make a positive return on their investment in the bonds.
Citi helped draw up the $1bn catastrophe bond covering four nations of the Pacific Alliance in Latin
America, namely: Chile, Colombia, Peru and Mexico. It was successfully launched earlier this year. It is the
largest single issuance of Cat bonds ever facilitated by the World Bank.
The finance chief said the government can have multiple mechanisms to help cover the disaster-related
risks both for the national government and local government units (LGUs).
“Right now, we have a local autonomy law and quite a number of the LGUs are liquid that they can buy
the insurance. What we want to do is structure a system where everybody can participate. But everybody
pays their own share. The national government does. LGUs can participate if they wish but they have to
pay their own share,” Mr. Dominguez said.
On a broader scale, he said the Cat bond coverage could later be expanded to include other countries
within the ASEAN so that funds could be pooled to push down insurance premiums for each countryparticipant.
Last month the DOF met officials of Lloyd’s of London to discuss possible insurance structures that could
be applied to cover the Philippines’s expanding roster of government assets and properties. Read More
A committee set up by the Insurance Regulatory and Development Authority of India (IRDAI), the
insurance regulator, to standardise exclusions in health insurance policies, is likely to submit its report in
the next two months, recommending that health policies should also be available to people with longstanding,
non-curable but manageable diseases.
Sources close to the development said that persons with diseases, including hemophilia, certain autoimmune
diseases, cardiac problems and diabetes, may now find it easier to get health cover.
“The general idea is that even if a person is suffering from such diseases but is receiving treatment and
has declared it, he or she should be able to get health cover if not fully for that particular disease, but then
for any other health problem that may arise later,” said the source.
The committee will take another two to three months to finalise its recommendations, he added. Another
issue under discussion is how and in what form cancer survivors could get health insurance. “At present,
it is very difficult for persons who have successfully recovered from cancer to get health cover even if
they declare it,” and this issue will also be looked at by the committee.
Sources said the committee is also likely to provide clarity on the definition of mental illnesses, which
now have to be mandatorily covered under health insurance. However, the premium and pricing of
medical insurance policies are also likely to be impacted with the changes.
The IRDAI had, in July this year, set up a working group to rationalise the exclusions in health insurance
policies to enhance the scope of health insurance coverage.
Significantly, the committee led by Suresh Mathur, Executive Director (Health), IRDAI, has also been
asked to rationalise the exclusions that disallow coverage with respect to new modalities of treatments
and technologically-advanced medical treatments.
“With the increase in the number of companies providing health insurance, there is an increase in the
number of products offered. It is desired that the industry adopts a uniform approach,” the IRDAI had
noted. Read More
Insurance watchdog Irdai is likely to come up with its much-awaited draft on new reinsurance norms by
next month for global reinsurers.
Among the set of new norms, the Insurance Regulatory and Development Authority of India (Irdai) is
expected to highlight the norms of ‘right of first refusal’ — the norm that will favour the ongoing
businesses of state-run reinsurer GIC Re. Irdai approved the Reinsurance Act in its last board meeting in
Hyderabad on September 28.
When asked about the development, Irdai chairman Subhash Chandra Khuntia said the reinsurance
guidelines have been pending for long time with the regulator and it would come out soon. “We are still
working on the reinsurance norms and it will take some more time. We are hopeful that we will be ready
with the draft by next month,” Khuntia told Financial Chronicle without divulging any details.
Generally, the ‘right of first refusal’ is granted to General Insurance Corporation of India (GIC), under
which the reinsurer has the first right to accept or refuse any reinsurance treaty in the country, and it
was supposed to come under the review of insurance regulator.
A senior official of Irdai, however, said, “We are almost ready with the draft which will be coming out
with a detailed report on reinsurance regulation within a month’s time. There will be set of norms for
global reinsurers to carry out their businesses in India. Out of which, GIC Re will probably continue to
enjoy its right of first refusal. The new global reinsurers with full-fledged branches in India have been
raising their demands to snatch away the right of first refusal from GIC Re so as to make a level-playing
field, but it couldn’t happen at the regulator’s end.”
In India, there are seven reinsurers that have set shops. When the guidelines to acquire licence for
opening branches were introduced, several foreign reinsurers had expressed interest in setting up an
Indian bra-nch. But they are still unable to make any headway due to first right of refusal. Several global
reinsurers, including Swiss Re AG, Munich Reinsurance Co and Hannover Re SE, were worried about the
right to first refusal proposal, saying that it gave more rights to GIC Re.
As per insurance business norms, right of first refusal (ROFR or RFR) is a contractual right that gives its
holder the option to enter a business transaction with the owner of something, according to specified
terms, before the owner is entitled to enter into that transaction with a third party.
However, a source said, “Indian reinsurers to get more rights is the sole decision as directed by the
government. Despite sending several representations to Irdai in this regard, this provision was retained,
and it was stated that this would be reviewed at a right point in time.”
Currently, global reinsurers with a branch licence include Swiss Re, Munich Re, Hannover Re, SCOR Re,
Reinsurance Group of America (RGA), XL Catlin and Gen Re, apart from specialist insurance market
Apart from GIC Re, there is another domestic reinsurance company, ITI Reinsurance, which had been
granted final licence in December 2016. The aim of the insurance regulator is to have maximum business
reinsured within the Indian territory with domestic capacity, and only the rest being passed on to foreign
Though the foreign reinsurers were already writing Indian business, they are now in closer proximity to
the clients, thus giving the-m the advantage to assess and price the risks better.
The Insurance Regulatory and Development Authority of India (IRDAI) have formed a panel to examine
the feasibility of payment of general and health insurance claims in instalments. “Some general and
health insurance companies have proposed payment of claims in instalments in respect of personal
accident policies and benefit-based health policies as against lump sum payments,” IRDAI said in circular.
The concept of settlement of claim benefits in instalments will enable the beneficiaries/claimants receive
payments in a series of pre-determined instalments, it said.
In order to examine the proposal, the regulator has constituted a working group with Suresh Mathur, ED
(Health), IRDAI, as its chairman.
The panel will look into the need for allowing settlement of personal accident and benefit-based health
insurance claims in instalments by general and health insurance companies.
Private insurers led the growth in the industry in September as new business weighted retail premium
(WRP) grew 16.8 per cent, industry data showed. Life Insurance Corp, which has been hit by competition,
has lost retail market share as this year’s loss rose to 600 basis points.
Private players’ new business WRP growth came even as the industry reported a slower growth of 5.3
per cent. Large insurers, including Tata AIA, Birla Sunlife and Max Life led the WRP growth.
State-run Life Insurance Corp reported a decline of 6.6 per cent year on-year in its new business WRP,
adversely affected by a 40 per cent YoY decline in group WRP. LIC’s market share, thus, shrank 823 basis
points month-on-month to 43.4 per cent.
For April-September, the growth for industry now stands at 7 per cent led primarily by growth of 13 per
cent for private players and 1 per cent for LIC.
The market share of the top five private players – SBI Life, ICICI Prudential Life, HDFC Life, Max Life and
Kotak Life – stands stable at ~66 per cent. However, other players like Tata AIA and, more recently, Birla
Sun Life are gaining healthy traction and are only slightly behind Bajaj Allianz Life – the sixth largest
insurer. “We estimate private players to report WRP growth of 16 per cent in FY19, which implies growth
of 18 per cent for the residual months,” said Motilal Oswal in a report. “Private players’ market share,
thus, will likely improve to 53.7 per cent from 51 per cent in FY18.”
In the first half, listed companies HDFC Life reported 20 per cent growth, SBI Life 10 per cent while ICICI
Prudential Life reported a decline in growth to 7 per cent.
Life insurance industry saw its annualised premium equivalent (APE) at 7% year-on-year for the first six
months of the current financial year. While private players witnessed higher growth at 13%, Life
Insurance Corporation of India (LIC) saw a growth at just 3% (year-on-year) at Rs 16,296 crore in the
period April-September, suggests the data from Kotak Institutional Equities.
Participants in the insurance industry say LIC is facing challenges in the group insurance segments in the
current financial year. The data from Insurance Regulatory and Development Authority of India (Irdai)
shows that, in the current financial year till September, LIC received first year premiums of Rs 63,480.68
crore as against `68,224.29 crore in previous financial year a negative growth of around 7%. The decline
in premium is higher in the group insurance business for LIC.
Even in the month of September, LIC
saw its APE at 5% largely due to the
fall in group insurance business. On
the other hand, insurance industry
witnessed APE at 7% and private
players at 18% for the month of
September. APE is the sum of
annualised first year premiums on
regular premium policies, and 10%
of single premiums, written by
insurance companies during any
period from both retail and group
“Private sector individual APE continued to rise upwards, increasing 18% y-o-y in September 2018.
While HDFC Life recovered to 20% y-o-y post a few months of sluggish performance, ICICI Life was flat yo-y.
SBI Life picked up as well with 23% y-o-y growth while Max remained strong at 30% y-o-y. With
shifting focus to protection and other high-margin policies, VNB growth of large players will remain
strong and in that sense APE growth trends are less relevant,” says the report by Kotak Institutional
Players like Birla Sun Life Insurance, Bharti AXA, Future Generali and India First continued to see its APE
growth in positive in the current financial year. “Birla SL reported 70% growth in individual APE in
September 2018, increasing market share to 2.3% from 1.5% in September 2017. This is likely driven by
making strong inroads in HDFC Bank. 59% y-o-y rise in ticket size in the individual non-single segment
during September 2018 (up 19% in 1HFY19) suggests that a large part of the growth may be from
higher-ticket ULIPs,” says the report by Kotak Institutional Equities.
The data from Irdai also shows that first year premiums in the current fiscal of life insurance companies
surged by 1.1% at Rs 93,079.03 crore as against Rs 92,065.36 crore in the corresponding period last
fiscal. Officials in the industry say that, in the past few months, growth has been coming from individual
non-single premiums and with volatile equity markets and people will stay away from single premiums
Before heading out to your favourite destination this holiday season, remember to pack in travel
insurance too. But ensure you go through the terms and conditions of your policy thoroughly. Very often
one tends to take a close look only at the premium and coverage part of the policy without understanding
the fine print.
Last week, the District Consumer Disputes Redressal Forum dismissed a complaint lodged by Mumbaibased
petitioner Nagin Parekh against his insurer for denying his claim for treatment of injuries incurred
during a hot air balloon crash in 2015, calling the ride a “hazardous activity”.
Insurance companies can deny claims in certain situations and an accident during adventure activities is
one such instance. That’s why it becomes important to read the fine print as different companies may
have different policies on exclusions. We tell the circumstances under which an insurance company can
If you go for Adventure activities
Planning to go bungee jumping at the Western Cape in South Africa? Or a fancy skydiving experience in
New Zealand? Adventure seekers may want to get their heart pumping, but your insurer will not be
amused. “Most insurers do not cover adventures activities including bungee jumping, paragliding,
mountain climbing, racing, etc. Some other insurers cover it as an add-on cover for international travel,”
said Tarun Mathur, chief business officer-general insurance, Policybazaar.com.
If you are still looking for options, then you would have to pick a policy that mainly caters to adventure
travel. Only a few companies, including Go Digit General Insurance Ltd cover adventure activities as a
part of their basic policy but at a relatively higher premium. Most insurers don’t cover adventure travel if
your itinerary includes high-risk activities which could put your life in danger.
Baggage loss within 24 hours
Among the many reasons why people purchase travel insurance, the fear of misplacing or losing one’s
baggage tops the list, especially if you are travelling abroad. As a norm, most policies cover loss of
baggage but there is a catch.
Though it depends on the cover you have and its features, most policies don’t process the claims unless
your baggage is missing for more than 24 hours.
If you don’t get a direct flight and the next flight is scheduled on the same day, you may panic and file a
claim within 24 hours but insurers give that much time to the airlines to trace the missing baggage. Your
insurer will step in only if nothing is done by the airline in the first 24 hours.
If your tour operator denies service
If you have booked your holiday through a travel agency and if the operator cancels the trip at the last
moment, you cannot file a claim for the cancelled trip. The most trusted insurance companies within
India or even outside the country would not cover this loss.
Always remember to get a confirmation from the tour operator in the form of an email receipt or a
hardcopy so you can hold them accountable for the cancellation. Having email evidence will still not make
your insurer dispense the money but you will at least be able to take legal action against the tour
If you initiate a loss
Travel insurance policies in India and abroad, even if they are from the most trusted companies, will not
pay for the losses for which you can be held accountable. “Baggage loss and passport loss is built-in, but
losses like theft or robbery are provided only as add-on covers,” said Mathur. If you do file a claim for
such a loss, the company will first evaluate if you were under the influence of alcohol or any drugs when
the loss of baggage occurred. Also, if you are travelling by a flight and end up damaging the airline’s
property, you cannot expect the insurer to process your claim.
Regular travel insurance policies will mostly not cover you for certain medical conditions such as
diabetes, AIDS and high blood pressure. However, on searching widely, you may be able to find a suitable
insurance by paying more to cover for these conditions. Insurance companies don’t accept separation
cited as reason for cancelling a trip. Travel insurance policies will cover you only for unexpected logistical
eventualities or death but not for emotional reasons such as divorce or break-ups. Remember to read the
fine print that comes with your insurance policy and take necessary steps before you plan that trip. It’s
better to be safe than sorry.
The government is planning to set up a ‘talent pool’ to deal with the succession planning in the PSU
general insurance sector. Finance Ministry officials had recently told insurers that the government will
create a ‘talent pool’ of officials who will be eligible for the fast-track promotions to hold the top positions
of the public sector general insurance companies. The Bank Board Bureau (BBB) had recently selected
CEOs for ten PSU banks from Executive Directors of PSU banks and Deputy Managing Directors of SBI.
The PSU general insurance industry will see a large scale retirement of senior officials in the next twothree
years and there are not many who will be eligible for the top positions of these companies. The post
of the chairman and managing director (CMD) at United India Insurance hasn’t been filled as yet as the
appointee — Girish Radhakrishnan, chief executive officer, NIA’s London operation — is yet to get
regulatory clearance to get relieved from his present assignment. New India Assurance is also operating
without a CEO.
Though the merger of three companies United India, National Insurance and Oriental Insurance have
been announced, the issue was not part of the agenda at the last month’s convention, indicating that the
merger issue has been put in the back burner and MoF’s current focus is to strengthen these companies.
The two-day conclave had a brain storming session on the six-point agenda: product & risk management,
HR practices, talent, distribution, technology & digital, customer experience & operation and inclusive
Growth. The summit also identified 36 micro issues for which action plans will be developed.
The six groups that were deliberating the six broad issues will be meeting in every two-three weeks to
devise suitable action plans, said sources who had attended the two-day conclave. Union finance minister
Arun Jaitley also heard sympathetically the demand about one more option on pension for the employees
— those who were working before 2004 — of the PSU general insurers. The government has also shown
favourable response to the long standing demand for providing one more option on pension to the older
employees of the sector. “Providing one more option on pension to the employees, who had not opted for
it, will not put any extra burden on the government,’’ the insurers had impressed upon Jaitley.
The state’s free health insurance scheme for the poor got a windfall when, after a three-month tussle with
a national insurance company, it got a refund of Rs 80 crore on Wednesday. The money was supposed to
be used for information, communication and education (IEC) to popularize the Mahatma Jyotiba Phule
Jan ArogyaYojana (MJPJAY) among the 2.23 crore family beneficiaries.
About 2% of the premium was to be used for IEC purposes, said Dr .Sudhakar Shinde, who heads the
MJPJAY scheme and oversees the implementation of the Centre’s Ayushman Bharat scheme in
After using Rs 26 crore in the first couple of years, the insurance company failed to carry out any IEC
exercises. As per the MoU between the state and the National Insurance Company, the latter is supposed
to carry out IEC work after consulting the MJPJAY society. But this wasn’t done, said Dr .Shinde.
The society worked out that Rs 64 crore meant for IEC over six years hadn’t been used. “I wrote to the
company and met its board seeking a refund, but was told that the money had lapsed,” he added.
In July first week, the MJPJAY society, instead of giving a premium of Rs 384 crore, sent a cheque with Rs
64 crore as “adjustment” towards IEC payment. This started a long battle between the two entities, with
the company finally agreeing to a refund of Rs 64 crore and another Rs 15 crore adjustment in the next
“But there was a moment when the company said it would stop accepting preapprovals for surgeries. It
was tough,” he added. Efforts to contact officials of the National Insurance Company were in vain. TOI has
a copy of the letter sent by the company to MJPJAY on October 15, showing the “refund of unspent IEC—
schedule of payment”.
The refund can be used to finance operations not covered under MJPJAY. The state is among the few that
offer local as well as central schemes. While MJPJAY covers operations of up to Rs 1.5 lakh, the central
Ayushman Bharat offers a Rs 5 lakh cover. While the Centre pays 60% of the costs, the state puts in the
remaining 40%. The insurance refund could be used for this purpose.
To make its flagship crop insurance scheme more attractive, the government is considering a proposal by
the NITI Aayog to return 75% of the premium paid by the farmers enrolled under the Pradhan Mantri
Fasal Bima Yojana (PMFBY) if they don’t file claims for crop damages for four-six consecutive seasons.
Officials reckon that such a move would attract more farmers into the insurance fold. Only 29% of the 12
crore farmers/cultivators in the country have crop insurance cover at present. However, the proposed
change in the scheme may not find favour among insurers. The officials are of the view that insurers are
estimated to have made a surplus of nearly Rs 10,000 crore (including operational costs) in the past two
In kharif 2016, insurance companies collected Rs 16,276 crore premium under PMFBY while the claims
paid were Rs 10,425 crore, resulting an estimated surplus of `5,851 crore. In kharif 2017, the difference
between premium collected and paid was Rs 4,077 crore. Since the burden on farmers is only 2% of the
sum insured, no claim bonus is needed, an insurance company executive said. The premium for kharif is
12% of the sum insured with 5% each borne by the Centre and the state concerned.
However, government officials said the amount to be reimbursed as per the NITI proposal is not small as
it can meet the fertilizer requirements of small farmers in a season. For example, if the premium paid by a
farmer for a season is Rs 1,000 (of total Rs 5,000) for the sum insured Rs 50,000/hectare, she may be
entitled for a bonus of Rs 3,000 at the end of fourth season. According to agriculture ministry data, the
input cost of fertilizer is between Rs 3,000-4,000/hectare for paddy in major states.
“This incentive is needed to ensure that farmers’ interest in the scheme is not lost,” an official said. One
complaint about the scheme is that a farmer is not able to receive compensation if the entire
village’s/panchayat’s crop is not damaged. So the incentive could encourage more farmers to seek the
The coverage of farmers under PMFBY came down from 4.02 crore in kharif 2016 to 3.46 crore in kharif
2017, partly due to disinterest among a section of farmers but also for farm loan waivers implemented by
six states in FY18. Loanee farmers are covered under PMFBY.
The proposed cash-back on premium (80%) paid by the Centre and state governments for these farmers
could be ploughed back for launching innovative farm insurance products, etc.
“Insurers have also not brought any new product for farmers based on their region and requirement,” the
official said. Now products are at the panchayat level, they need to bring individual farmer or village –
level products, he added. Given the vagaries of nature that hit farming in India, the Centre recently
changed norms to allow states to appoint insurers for a period of three years instead of one year, to
ensure that insurers don’t pick only good years for providing cover and leave out bad crop years.