Active TopicsActive Topics  Display List of Forum MembersMemberlist  CalendarCalendar  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin

Sector talk
 The Equity Desk Forum :Investment Ideas - Creating winning portfolios! :Sector talk
Message Icon Topic: How to play the insurance boom in India? Post Reply Post New Topic
<< Prev Page  of 38 Next >>
Author Message
CHINKI
Senior Member
Senior Member
Avatar

Joined: 07/Feb/2007
Location: India
Online Status: Offline
Posts: 2827
Quote CHINKI Replybullet Posted: 11/Jul/2007 at 7:01am
Gen insurance may get 70% cheaper by Sept

NEW DELHI: The price war in general insurance products is far from over. Come September, and the premiums on fire, engineering and motor policies may fall by as much as 70%, say industry insiders. With the Insurance Regulatory and Development Authority (Irda) expected to make pricing more liberal by then, companies are preparing to unleash a fresh round of price war.

However, before you pop the champagne, be warned that the cheaper cover may come at a higher risk. Customers run the risk of foregoing important risk covers, say industry insiders. “This is the time where customers need to be careful because in the rush to save premium, they may be foregoing certain risk covers that they have enjoyed in the past and they may not fully understand the long-term implications of their choices,” Prudent Insurance Brokers vice-president, international business, Pavanjit Singh Dhingra said.

“What is expected going forward is, the same products will be priced much lower. Indiscriminate discounting without proper risk management measures is dangerous for the industry,” he added.

Interestingly, both public and private insurers are accusing each other of initiating the price war. Free pricing kicked off in January 2007, with the regulator giving controlled freedom to insurers to slash prices within prescribed bands.

After detariffing, Irda had restricted discounts to 20% for fire and engineering, and 10% for motor rates for the first month till filed rates were approved. The bands prescribed further allowed an additional 25% discount on new rates. The present Irda guidelines stipulate that maximum discount for individually rated risks is 51.25%.

And there are many voices in the industry that support free pricing and even a price war. “As long as solvency margin requirements are met, insurers should be allowed to price as per the strength of their balance-sheets. If a risk can be underwritten at a 70% discount, then so be it, as long as it is quoted on the face of the policy,” an official at a public sector general insurer said.

“It is expected that September would test new lows in terms of pricing and discounts with the market stabilising after a few months,” an analyst said. Already, pricing rather than underwriting, is raking in volumes under the free-pricing regime.

The breaches are both in terms of higher discounts, and discounts being offered without the necessary risk parameters being in place. “The IRDA does not have adequate policing mechanisms to take action against this,” a CEO of a insurance company said.

Further, IRDA is also in favour of advancing the date when insurers can make changes to existing products to January 2008, from April 2008. By advancing the date to January, insurers will be able to introduce gradual changes to products well in advance so that they are comfortable when policies are renewed in April.

Already, the general insurance council is working on the standardisation of formats and interpretation of clauses. The industry is expected to have 2-3 standard formats by January 2008. The IRDA has said that it will examine the recommendations made by the council and consider advancing the date from April 2008.

However, insurers are not in favour of tweaking policies too much, because it might affect the rates at which their reinsurance treaties are negotiated in April next year. “Reinsurers might not like too much unpredictability in the policies,” an industry source said.

Source : http://economictimes.indiatimes.com/Gen_insurance_may_get_70_cheaper_by_Sept/articleshow/2196242.cms
TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO
IP IP Logged
CHINKI
Senior Member
Senior Member
Avatar

Joined: 07/Feb/2007
Location: India
Online Status: Offline
Posts: 2827
Quote CHINKI Replybullet Posted: 15/Jul/2007 at 10:22am
Secret of Bajaj Allianz success

MUMBAI: The secret behind early profits of Bajaj Allianz Life Insurance is out. The company has managed to avoid losses on new unit-linked policies through a product that allows it to front-end charges and show higher first-year allocations at the same time.

While nearly all new insurance companies continue to be in the red, Bajaj Allianz Life Insurance has reported a net profit of Rs 63 crore last year, which was followed by a Rs 30-crore profit in Q1 of 2007-08. The company has managed the profit despite a growth in annualised premium of 86%. The profit has surprised the industry since companies typically lose money in the first year of a new policy. As long as premium from new policies outstrip renewal premium, it is difficult for a life insurance company to break even.

Bajaj Allianz’s Capital Unit Gain has placed IRDA in a dilemma as insurers feel that it violates the spirit of regulations, which require insurers to provide for the first year expenses upfront

A similar product is also being sold by Aviva India. IRDA has received proposals to launch similar products. Sources said IRDA may set up a team of actuaries from the life insurance industry to look at the product.

Capital Unit Gain was introduced by Bajaj Allianz last year. The difference between this and other unit-linked products is that in Capital Unit Gain, the first year premium is used to allocate capital units and the regular premium payable thereafter will be used to allocate accumulation units. In other words, while units are allocated to policyholders in the first year, only a part of the investment happens in the first year, the rest of the units are credited to the policyholders account, but are not available to them. In the long run (after six-seven years), this may not make any difference to them, but this feature reduces the surrender value. Speaking to ET, Sam Ghosh, MD, Bajaj Allianz Life, said: “IRDA does not allow any unit-linked policy with less than a three-year tenure, so the surrender value in the first three years are not of relevance to the policyholder.” He added that for those who hold the policy until maturity, the returns are in line with other unit-linked policies. While unit-linked insurance plans by themselves are complex products, the capital unit gain takes the complexity even higher. It requires different software to calculate separately the net asset value of capital and accumulation units. The product details disclose this feature.

According to the product brochure, if the regular premium is not paid in three years and the policy has lapsed, the surrender value would be 100% of the capital units. Immediately upon completing the third year, the insured would lose a big chunk of the premium because of the product structure. However, as years move on, the surrender value would converge with
the regular unit-linked policies.

Source : http://economictimes.indiatimes.com/Secret_of_Bajaj_Allianz_success/articleshow/2205931.cms
TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO
IP IP Logged
bub100
Senior Member
Senior Member
Avatar

Joined: 08/Sep/2006
Online Status: Offline
Posts: 110
Quote bub100 Replybullet Posted: 23/Jul/2007 at 3:03am
any news on Sundram finance going up with heavy vol.
gs
IP IP Logged
CHINKI
Senior Member
Senior Member
Avatar

Joined: 07/Feb/2007
Location: India
Online Status: Offline
Posts: 2827
Quote CHINKI Replybullet Posted: 24/Jul/2007 at 12:36pm
‘INSURANCE INDUSTRY WILL BE HOT BED FOR M&A DEALS’

Hyderabad, July 23 In a development that can impact the consolidation aspects of Indian life insurance industry, the valuation of industry players is increasing rapidly and will impact the capital requirement of stake holders in the existing joint venture arrangements, according to Mr Jean Francois Izac, Director (Mergers & Acquisitions), Aviva Plc.

“Going by the current trends, Indian insurance industry will be hot bed for M&A deals once the upper ceasing on foreign direct investment is relaxed or removed,” Mr Izac told Business Line in Prague recently.

MORE DETAILS ARE HERE : THE HINDU BUSINESS LINE
TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO
IP IP Logged
basant
Admin Group
Admin Group
Avatar

Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
Quote basant Replybullet Posted: 01/Sep/2007 at 5:20pm
Can anyone find out which of the insurance companies in india have not issued warrants to their foreign partners. Insurance will become big or rather huge now the strategy is to ride on a pure play or a player whose market cap wil be influenced more by the insurance venture. That cancels out ICICI and to a large extent HDFC, we need conservative managment also so they don't write out each and every policy because this is about managing risk, the best that comes to mind is MAX but where is it placed in terms of premium and business any idea where we can get such information?
 
Future capital could become big because generali is 17th in the world but the problem is about call options. Rahul Bajaj messed up everything by writing calls to Allianz.
 
The only company worth buying is Reliance Capital because it owns 100% so no prblems about calls there but its market cap at Rs 28,000 crores is a bit too high for a pure insurance play otherwise it is into the right set of businesses.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
IP IP Logged
nav_1996
Senior Member
Senior Member


Joined: 08/Sep/2006
Online Status: Offline
Posts: 803
Quote nav_1996 Replybullet Posted: 01/Sep/2007 at 11:01pm
I am yet to get any information that Reliance Capital holds 100% of insurance. If it holds through subsidaries then obvious question is why? Are they 100% subsidaries?
IP IP Logged
deveshkayal
Senior Member
Senior Member
Avatar

Joined: 04/Sep/2006
Online Status: Offline
Posts: 3903
Quote deveshkayal Replybullet Posted: 01/Sep/2007 at 11:07pm

From Merill Lynch,Sharekhan and Prabhudas reports, Rel Cap holds 100% in its insurance business and they are valuing as if it is a 100% subsidiary. I am sure Ambani wont give the "cream" to any foreign partner. He wants to have the cake and eat it too !!!

"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
IP IP Logged
kulman
Senior Member
Senior Member
Avatar

Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
Quote kulman Replybullet Posted: 01/Sep/2007 at 11:22pm
Click here for interview of P Nandagopal, CEO, Reliance Life Insurance on Dna Money
 
Some excerpts:
 
Reliance Life Insurance, one of the newer private life insurance companies, has registered an almost five-fold increase in premium income to Rs 930.46 crore during 2006-07
 
We believe that we would achieve high growth in the current year as well. We are clearly focused on need-based selling and our Ulips would continue to be preferred by the market. 
 
Capital infusion is dependant on the growth and the product mix. We have adequate resources to fully fund our expansion plans that might need over Rs 1,000-1,200 crore of capital in the next few years.
 
We do not have tie-ups with large banks due to the current high-cost structure of bancassurance
 
 
Life can only be understood backwards—but it must be lived forwards
IP IP Logged
<< Prev Page  of 38 Next >>
Post Reply Post New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum



This page was generated in 0.125 seconds.
Bookmark this Page

Join Theequitydesk.com Today!

It’s easy to Join and it’s free.

Here's why members would love to be a part of theequitydesk.com

  • Equity Desk focuses on why to buy shares and invest in share rather than what to buy.
  • Live discussion forum wherein members can discuss the current Indian share Market trend, BSE Sensex or the Nifty Index.
  • Have huge cache of information on Indian and World Share Market.
  • Analysis of Indian stock market, Global events, Investing insights, portfolio management strategies and thoughts,
  • Meet investors from round the globe check their investing strategies share experiences and learn for their experiences on stocks and shares, evaluate opinions on investing in India.

Register now while it’s free!

Already a member? Close this window and log in.

Join Us           Close