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Irdai gives indicative premium growth targets to non-life insurers

Irdai gives indicative premium growth targets to non-life insurers

The Insurance Regulatory and Development Authority of India (Irdai) has prescribed aspirational targets for non-life insurance industry, days after doing the same for life insurance companies. The aim is to increase the general insurance penetration to 2.52 per cent by FY27 from the current 1 per cent as of FY21, people aware of the development said. The regulator wants to increase the general insurance premiums to Rs 11.7 trillion by FY27 from Rs 2.2 trillion as of FY22. In FY22, the non-life insurance industry premiums grew by just 11 per cent over the previous year, data put out by the regulator showed. According to the Irdai’s annual report, as of FY21, non-life insurance penetration in the country is just 1 per cent (see box). Insurance penetration is measured as a percentage of GDP. “The regulator has a vision to see the general insurance market growing from Rs 2 trillion to over Rs 11 trillion, and as a result increase the general insurance penetration. To achieve this, they are looking at making a lot of regulatory changes. The regulator has given individual targets to companies based on their growth and various parameters. The only reason to prescribe targets is to increase penetration. The idea is that coverage should be improved substantially,” said a private sector general executive, who is aware of the development. Email sent to Irdai did not elicit a response till the time of going to press. All non-life insurance companies, including private sector general insurers, public sector general insurers, standalone health insurers, and specialised general PSU insurers, have been growth targets for the next five years. Large traditional non-life insurance companies such as ICICI Lombard, HDFC Ergo, Bajaj Allianz General, have been given premium growth targets of 40 per cent, 38 per cent, and 38 per cent, respectively, for the next five years. Some companies have got growth targets of over 100 per cent. While public sector insurers have been asked to increase their premiums by 25 per cent every year, private sector general insurers have been given a premium growth target of over 40 per cent every year. On the other hand, standalone health insurers have been given premium growth targets of over 48 per cent every year. “The aspirational targets are like a road map for companies as the regulator is seriously looking at increasing the penetration. In five years, the regulator is asking the sector to reach premiums worth Rs 12 trillion from Rs 2.2 trillion. They have also asked companies to own up certain states and districts and work towards increasing penetration in those places,” said another senior insurance executive aware of the development. These are aspirational targets so there will be no repercussions if the companies fail to achieve the target. There will be regular reviews on where the companies have reached, the person quoted above said. Earlier, Irdai had proposed premium growth targets over a five-year period for life insurance companies, in a bid to double insurance penetration in the country. In an e-mailed communication to MDs and CEOs of life insurance companies, the insurance regulator suggested a gross written premium (GWP) growth target for each insurer. For top-tier companies, it proposed a target of 30 per cent compound annual growth rate (CAGR) in GWP over five years and for smaller companies it suggested 50 per cent CAGR growth. In the last few months, Irdai has brought in a number of changes to ease the regulatory environment in which the companies operate. It has introduced “use & file” procedure for almost all non-life insurance products and some life insurance products. It has also reduced the capital that needs to be blocked in respect of certain products so that the freed up capital can be utilized in a better way to increase coverage. Low market penetration

  • 1% Non-life insurance
  • 3.2% life insurance
  • 4.2% Overall insurance

Source: Irdai annual report for FY21

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نوشته‌شده در

Irdai wants life insurance firms to eye 50% premium growth in 5 years

Irdai wants life insurance firms to eye 50% premium growth in 5 years

In a first-of-its-kind advisory, the Insurance Regulatory and Development Authority of India (Irdai) has proposed premium growth targets over a five-year period for life insurance companies, in a bid to double insurance penetration in the country.

In e-mail communications to the MDs and CEOs of life insurance companies, the insurance regulator has suggested a gross written premium (GWP) growth target for each insurer.

“Irdai has given each life insurer indicative targets in terms of total GWP for the next five years,” said Rushabh Gandhi, deputy CEO, IndiaFirst Life Insurance, told Business Standard. “It has also offered to discuss any regulatory support that the insurer may need to meet the target. Overall, this will help increase the insurance penetration in the country substantially.”

While Irdai has proposed a target of 30 per cent compound annual growth rate (CAGR) in GWP over five years for top-tier insurers because of their large base, it has suggested 50 per cent CAGR for smaller companies.

GWP is the sum of new business premium and renewal premium. The regulator has also identified a state for each insurer where it should spearhead the push for increased insurance penetration.

“Irdai has sent separate e-mails to individual companies prescribing growth targets. All life insurance companies have been given targets. The regulator aims to grow insurance penetration in the country over the next five years. The insurance penetration as a percentage of GDP is low and the regulator wants to double it in the next five years. If every insurance company drives growth, the overall insurance penetration will certainly increase,” said the CEO of a life insurance company.

First-of-a-kind advisory

  • Irdai has prescribed targets depending on size and distribution of the company
  • Aim is to increase insurance penetration
  • Large insurers have been given 30% premium growth guidance
  • For smaller companies, it ranges from 40-50%
  • Life insurance penetration is 3.2% while overall insurance penetration stands at 4.20%

Queries over an e-mail sent to Irdai did not elicit a response until the time of going to press.

According to Irdai’s annual report, the life insurance penetration in India is 3.20 per cent and the overall insurance penetration in the country is just 4.20 per cent. Insurance penetration is measured as a percentage of GDP. “Since Irdai has a developmental role, it is perfectly within its realms to prescribe targets to insurance companies,” said an insurance industry veteran.

While the regulator has prescribed targets for individual life insurance companies, there is no clarity on whether insurers will face any action for failing to achieve such targets.

“There is no clarity on what the repercussions would be if companies failed to achieve the target. It’s a five-year plan and it’s not that the regulator will not be asking us to show our progress every two months. As of now, the regulator has not said that part of the remuneration of the MD/CEO shall be linked to such targets,” said the person quoted above.

In the past few months, ever since Debasish Panda took over as chairman of Irdai, the regulator has brought in a slew of changes in regulations, making it easier for insurance companies to create innovative products and bring them to the market.

It has also reduced the compliance burden on insurance companies to an extent.

Irdai extended the “use & file” procedure to most life insurance products, barring individual savings, individual pensions, and annuity products. This essentially means that life insurance companies can launch these products without prior approval from the insurance regulator. It reduced the capital required by insurance companies offering policies under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) by almost 50 per cent.

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wedding insurance: What does wedding insurance cover, how much is the premium, who offers it

wedding insurance: What does wedding insurance cover, how much is the premium, who offers it

For a high expense event like a wedding, it may be a good idea to secure risks by buying an insurance policy.
Q. What does it cover?

Cancellation or postponement: It will cover your booking amount and advance payments made to décor companies, food vendors, hotels, travel agencies, entertainment artists, among others, if the wedding is cancelled, postponed or rescheduled.

Damage to property/ valuables:It covers damage due to fire, explosion, earthquake, etc, to residence, wedding venues or sets and props, as well as loss of valuables due to theft or burglary.

Personal accident: This covers accidental partial or complete disability or death of specified members.

Public liability: It covers any injury or damage to third parties due to accidents during the wedding.
Q. What doesn’t it cover?

Any unnatural cause of injury, loss and injury or death caused by congenital disease, war, terrorism, kidnapping, suicide or pollution are among the standard exclusions in a wedding policy.
Q. How much is the premium?

The premium will depend on the size and type of cover opted for and will typically be 0.2-0.4% of the sum insured. For instance, a Future Generali policy of Rs.40 lakh will cost Rs.10,000-15,000 in premium for the duration of the wedding.
Q. What is the term of insurance?

The wedding cover lasts for the duration of the wedding, usually seven days, typically ending on the next day of the wedding.
Q. Which companies offer wedding insurance?

Not many insurers offer wedding insurance in India. Among those who do are Future Generali, , Bajaj Allianz, Oriental Insurance and National Insurance Company.

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Life insurance: What is the ideal amount of coverage for you? MintGenie explains

Life insurance: What is the ideal amount of coverage for you? MintGenie explains

This is the most important question which arises in the mind of the individual before buying the policy. The answer to the query is very simple, the individual should look out for financial needs and wants, so that the amount thus received after their demise can be used by the family members efficiently. Deciding the correct amount for your financial needs is not actually a tedious task but requires you to keep in mind some factors. But before understanding the factors, let’s glance on the meaning of a term life insurance policy. Term Life Insurance Policy Term Life Insurance as the name suggests is for a fixed tenure where the insured pays premium to the insurer for a fixed number of years and in return the insurer pays the sum assured to the family members or nominee in case of demise of the policyholder. Term Life Insurance doesn’t provide the amount at the maturity of the policy, while providing a huge amount of coverage in comparison to lower premium rates. Factors affecting the right amount of Life Insurance Current Annual Income Annual Income is the first factor to consider while deciding your life insurance coverage. 10 times the annual income is the thumb rule used while deciding the coverage, but considering the inflation rate, increase in standard of living it is ideal to have the coverage which is 20 times your annual income. For example, if an individual has an income of ₹10 lakhs per annum, it would be a rational decision to opt for a cover that offers ₹2 crore. This amount will help the family in their daily expenses and to maintain their standard of living at the demise of their breadwinner. Liabilities Financial liabilities are a crucial part in deciding the sum assured for your Life Insurance plan. In case of sudden death, the coverage can help the family members to pay off these debts and have an undisturbed life. The coverage should always ensure that the existing liabilities of the policyholder are met. Financial Goals The whole point of the life insurance policy is to meet the financial needs of the family after the demise of the policyholder. The coverage should at least cover the most important expenses which includes children’s education and marriage as they some up to be a major expense in our Indian households. Therefore, the life coverage must include these expenses in the case of the deceased, while keeping the inflation in mind. Age Age is an important aspect to be considered while deciding the coverage. Different ages have different responsibilities to adhere to and that is why your coverage should also be according to it. Young individuals who are in the age of 25-35 should have higher coverage as currently they can pay higher premiums considering they don’t have many responsibilities and are currently in their youth. People in the age of 35-45 should have a slightly lower salary as most of the responsibilities get over by now and individuals above 45 should have much lower coverage amounts. An average policyholder aged 25 years can avail a Rs. 2 Crore policy with 30-40 years policy term for an annual premium of Rs. 15,000 to Rs. 20,000 (this will vary from one plan to another). This is an assumed premium figure and may vary from insurer to insurer basis the product offered. The above information is solely based on the current and previous trends and the individual is free to choose the coverage according to their needs and research. If a person needs to buy life insurance, it is important to know what type and how much the individual requires. Not all types of policy can go hand-in-hand with everybody; the most suitable one needs to be chosen with a decent amount of research and by looking for own financial needs and security. With technological advancement a policyholder can use online calculators which help the individuals to select the policy and the right coverage for them. For more such stories, visit MintGenie.

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How does a health insurance policy work

How does a health insurance policy work

There is a lot of uncertainty around the health of a person because of the fragility of the human body. Hospital bills and medical care are expensive and can cost a large amount. This is when health insurances come into play. A health insurance not only prepares one for a rainy day, but also provides health security cover. A Health Insurance is a contract between an insurer (health insurance company) and an individual in which the insurer agrees to cover the cost of any medical expenses that may arise in the future in return for the premiums paid by the benefactor. This is how health insurance mechanism works in India: Choosing a plan- An individual can choose a health insurance plan according to his/her needs based on facilities provided, expenses covered, etc. from an insurance company of one’s choice. In case of pre-existing ailments, different companies have different policies for cover. Thus, it is very important to choose the right plan for oneself keeping in mind all the relevant factors. READ MORE: How to reduce the health insurance premium? Calculation of premium- After selecting an insurance plan, the premium is calculated for the buyer. It is calculated on the basis of age, income, health problems/ diseases if any. A comprehensive full body check-up is administered by the insurance company. Only after this, a premium payable every year is set by the company and the maximum amount that the insurance covers known as “sum assured” is authorised. How does the claim work – In case any medical expenses come up due to hospitalisation, the claim can be sought in two ways. The first alternative is cashless. In this method, if the insured goes to a hospital in the insurance company’s network list, all the expenses will be dealt with directly by the company. The second option is the reimbursement process. In this process, the bills are initially paid by the insured himself and the expenses are later reimbursed by the company to him after submitting the bills and receipts to the company. READ MORE: Looking to buy health insurance? 5 riders that you must be aware of What happens in case no claim is ever made by the insured- In case the need for medical coverage does not ever arise, then the individual, during that year, pays a premium for nothing in return. Some companies, however, provide a “no-claim bonus” under which the company refunds a certain percent of the premium for every year no claim is sought. At the same time, some companies tend to increase the sum assured of an individual as a reward for not making any claim. Health Insurance is quite a beneficial financial product for everyone. Health insurance plans have numerous additional benefits such as tax deduction, free health checkups among many others. One should very carefully choose an insurance cover considering his/her personal needs.   Follow MintGenie for more such stories. 

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