Sector Update: Insurance

Sector Update: Insurance

Government of India is trying the best to pass the insurance reform bill in Rajya Sabha but the govt have no majority in Rajya Sabha and important bills in this session has stuck.

Impact on insurance industry of new insurance bill:

In new insurance bill, IRDA has to decide on the commission of insurance agents. Health Insurance entry capital for new player will remain same at Rs 100 crore. According to this bill, IRDA will free to formulate acts and rules and allowed to fix penalties.

One more important and lesser known provision in this new insurance bill which can increase the no. of rejected claim. Under the current rule, an insurance policy cannot be called into question after 2 years of policy issued. Under the new amendment in this bill this period would be 3 years now. The discrepancy in the new bill is that it holds insured responsible for any fraud conduct by the insurance agent whereas according to insurance regulation, which deems agent to be representative of the company.

Life insurance council has recommended for reduction in service tax to the government. At present at the time of getting policy mature proceed service tax levied on PAN card holder is 2% and non PAN card holder is 20% of the maturity amount whereas other financial products like mutual funds and fixed deposit do not attract service tax on maturity.

Now onwards, group health insurance cover will become more expensive for companies where hospitalization claims from employees exceed the premium paid. The IRDA will penalize such insurance companies as due to these losses individual policy holder pay more premium. The regulator has also asked insurance companies to come up with saving-linked insurance plan so that individual buyers do not need to pay more as the age grows.

More group health insurance policies are now offering OPD (outpatient department) expenses. With the growing competition, most of insurance companies have begun to cover day-care procedures in hospitals instead of the mandatory overnight stays.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

How to choose best insurer?

How to choose right Insurer..?

Now a days, people are realizing the importance of insurance. In India, the penetration of insurance is still low when compare with the rest of the world. However, now more and more people are to cover themselves. The financial adviser and regulator also play very vital role to spreading the insurance cover across the country. Now the big question is how to select the good insurer. There are many private companies in insurance sector and it has become difficult to choose the best one. We are going to discuss here some parameter about the insurance companies which we should consider before purchase any insurance product.

Financial strength of Insurance company:

It is very vital parameter which you should consider before purchase any insurance product. For all insurers, IRDA has set the working Solvency Margin Ratio which should be minimum more than 1.5 times. Solvency Margin Ratio is a ratio of actual solvency margin to the required solvency margin. In simple world, Required Solvency Margin is the amount of company’s capital exceeds its projected liabilities. It tells the financial health of the insurance company. It means the more higher ratio the more safer company.

Past Performance:

If you go with traditional plans then you should know about past declared bonuses by the company. If company controls the expenses and policy lapse rate successfully on a consistent basis then there is possibility to get good return. In reality the companies are not beating inflation so real return almost nothing or negative from insurance product. It is better go with pure term insurance plan as insurance is not good for investment product according to me.

Claim Repudiation Ratio:

It shows the number of claims settled against the number of claims processed with consideration of amount of claim. The company with the lowest Claim Repudiation Ratio is considered a good life insurance company.

Credit Ratings:

In India, credit rating agencies like CRISIL, ICRA and CARE gives the rating to insurance companies after evaluating the financial health, claim ratio, expenses and many other factors. It is an opinion of the credit rating agencies after assessment of the company. Many companies are still not rated by any agencies in India.

Expenses in insurance product:

Many of policyholder don’t know the charges of the policy which they are here going to purchase. In ULIP product the charges are clearly mentioned in the policy document which comes after purchase the policy. You can cancel the purchase if you are not satisfied with the charges within 15 days after issuing the policy. You must read your policy document carefully to know the exact term and condition.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com