Companies & Sectors
Airbus arm to make copters in India with Mahindra

The joint venture will bid for reconnaissance and surveillance helicopters and the naval utility and multirole helicopters procurement progarmmes

 

Subsidiaries of global aerospace major Airbus and leading auto maker Mahindra will jointly produce helicopters in India to meet the country's growing military needs.
 
"A joint venture will be set up soon to become the first private manufacturer of military helicopters under the 'Make in India' initiative," Mahindra Defence said in a statement here on Friday.
 
Both the arms have formed a partnership to jointly bid for copters' order through tenders.
 
"We will produce next-generation helicopters that will meet our country's defence needs and tap export potential," Mahindra's aerospace and defence sector president S.P. Shukla said in the statement.
 
"The tie-up is to develop an indigenous industrial ecosystem dedicated to helicopters of reliability, quality and safety required for combat operations," Airbus Helicopter chief executive Guillaume Faury said.
 
The joint venture will bid for reconnaissance and surveillance helicopters and the naval utility and multirole helicopters procurement progarmmes.
 
With the Indian government opening up the defence sector and increasing foreign equity participation to 49 percent from 26 percent, private firms will compete with the state-run Hindustan Aeronautics Ltd (HAL), which produces a range of copters for the military and civil sectors.
 
"As we have expertise in engineering, automotive and fixed-wing sectors, we have substantially invested in aero components manufacturing," Shukla said.
 
The $16.9 billion Mahindra group, which had set up its aerospace and defence business division to support policy initiatives in both domains has an aerostructures plant at Narsapura, 40km from here.
 
As a division of the $7.2-billion French Airbus group, the chopper subsidiary sells civil and military helicopters in 152 countries the world over. About 12,000 copters are in service fleet, operated by about 3,000 state-run and private customers.

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Indian arrested in biggest Malaysian drug bust
Police seized 19 tonnes of white powder, believed to be ketamine, from a house in Rawang
 
 A 36-year-old Indian man was arrested in a drug bust in Malaysia's capital Kuala Lumpur, media reported on Friday.
 
Police seized 19 tonnes of white powder, believed to be ketamine, from a house in Rawang.
 
Assistant Commisioner R. Munusamy said the house was used as a storage facility for the substance, estimated to be worth at least 290 million Malaysian ringgits ($7.6 million).
 
"When we arrested the suspect (on Thursday), we found two packets, each containing five kg of white powder," The Star Online quoted Munusamy as saying.
 
The arrested Indian man was not identified.
 
"Following the arrest, the suspect led us to a house along Jalan Aman Sierra, Rawang," he said, adding that when they searched the house they found 762 gunny sacks, each containing 25 kg of the same white powder that they found at the time of arrest.
 
He said police also arrested a 42-year-old businessman at the house.
 
"We have sent the substance for analysis to verify that it is ketamine. Both men were remanded to help with investigation," he said, adding that the drugs were believed to have been brought in from India.
 
Munusamy said they were investigating how the syndicate smuggled the drugs to the country.
 
 

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Will life insurers now bleed with fraudulent claims?
Amendment to Section 45 of Insurance Act means that all claims will have to be paid after three years. This will help genuine policyholders but will it give a fillip to fraudsters? What can be the impact on you?
 
Life insurance companies find themselves in a tough situation with the Amendment to Section 45 of the Insurance Act. It can be difficult time ahead for insurers and easier time for genuine policyholders. According to Section 45 of the Insurance Act, 1938, “No life insurance policy can be called into question on grounds of mis-statement or wrong disclosure after two years of the policy coming into force. However, if the insurer is able to prove that the claim was fraudulent, it need not be passed.” This used to give insurers a leeway for making investigation after the death claim was received. The investigation was usually done for early claims within two or three years of the policy purchase. If there was misrepresentation, mis-statement or non-disclosure while buying the policy, then the claim was rejected. Needless to say, if there was fraud detected by the insurer then the claim was rejected too.  
 
Section 45 of the new insurance Bill, states a policy cannot be called in question after three years of it being issued. Insurers will find it almost impossible to repudiate claims after three policy years due to the amendment. It puts the onus on the insurer to do proper checks at the time of underwriting. There will be need for robust underwriting process so that all issues are flagged before the policy inception. The insurer will have three years to raise any objections regarding the insured declarations. The amendment should be a welcome change for the genuine policyholders. It will not allow insurers to reject claim after three years under the garb of any misrepresentation, mis-statement or non-disclosure while buying the policy.
 
However, what about fraudsters who are out there to defraud life insurers? According to a senior insurance official, there are specific locations in India where insurance fraud is prevalent. “We are wary about underwriting policies from these locations. They work in an organised way with full set of forged documents to cover up the fraud. There can be cases of insurance taken in name of dead person with death certificate forged to put a future date after fraudulently buying the policy,” he said.
 
A retired senior insurance official, says, “Insurance companies will bleed if they are forced to pay all claims after three years of buying. The amendment should have considered disallowing claims if there is a proven fraud.”
 
What may be expected in the near future?
 
Stringent verification process – Insurers will have a higher scrutiny of customers at the buying process. It should be a welcome step for genuine customers who should not be looking for speed in buying, but proper underwriting by insurers. Today, medical tests are not required for insurance up to specific amount and based on age. This can be changed to bring more buyers under the ambit and even for even lower sum assured. Medical tests should not be avoided by the customer.  
 
Premium increase – If there are insurer losses and overall loss by the industry due to claim payment to fraud cases, then the overall premium can increase for all the customers. It means bad news for the customers, but it is the price to be paid for ensuring genuine claims is paid. The premium for life insurance is locked for the policy term and hence it makes sense to buy term plan today rather than waiting for tomorrow.
 
Claims settlement will improve – The amendment will put pressure on insurers to settle claims when the policy is over three years without doing investigation. It will mean lower death claim rejections. Life Insurance Corporation of India (LIC) has lowest rejection ratio (1.10%) in 2013-14 followed by private insurers like HDFC Life (4.70% rejection ratio) and ICICI Pru (4.98%). But, even 1.10% rejection ratio of LIC equates to 8,387 claims rejected for amount of Rs181.30 crore. With amended section 45, fewer claims will be rejected and hence higher cost to the insurer.
 
The amendment forces the insurers to do the underwriting at the underwriting stage rather than at the death claim stage. The lax insurers have got a wake-up call. Genuine policyholders have less to worry as the family can be assured of claims payment especially if the death is after three years of policy purchase. Hopefully, the insurers are able to keep the fraudsters at bay with usage of technology and other fraud detection means. The amendment is a boost to make the insured trust the insurer and should help to increase life insurance penetration too. It can be a game changer for helping the underinsured Indians to buy life insurance with faith in claims process.
 
Will the life insurers and Life Insurance Council be able to reverse the impact of Sec 45 amendment in future is a million dollar question.
 
 

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COMMENTS

krishnan

1 year ago

This is downright silly .The govt is desperate to show they are doing something! instead of checking if genuine claims are getting rejected ,they are asking the insurers to pay all claims!

Ralph Rau

1 year ago

Medical Fraud in the USA resulted in the near collapse of a company called Tenet Health Care the 2nd largest US hospital operator.

The fraud was perpetrated by Tenet Health. The fraud was on the Medicare and Medicaid support from the government.

In addition to performing un-necessary procedures billing was done for procedures that were never actually performed.

The absolute worst crime of course was the performance of un-necessary heart surgeries and angioplasties on patients who did not need it.

Human Greed is Universal !

Ralph Rau

1 year ago

Please do not assume that Insurance fraud is an India only phenomenon

As one example of western fraud - it is a fact that migrants from poor countries attempt insurance fraud in Canada as a desperate measure to get hard cash compensation.

In Canada this means deliberately subjecting oneself to severe injury, loosing fingers, toes even lower limbs.

Jagdish Motwani

1 year ago

A very Good Move, but 2008 Bill's period of 5 Years instead of current 3 Years would have been better. Also was expecting similar provision for Health & Personal Accident Insurance Policies.
Jagdish Motwani

nginx

1 year ago

I believe this is how it works in the US too. Good to see that India has taken this important step in safeguarding the interest of the Insureds. No doubt this will encourage more people to take insurance.

India will never be free of frauds, that's for sure given the mentality of people in this country. Hence Insurers always needed to be on their toes anyway. This amendment changes nothing except that the Insurance Companies now must do the background verification of customer before actually issuing the policy instead of harassing the beneficiary after death of the insurer. This is how it should have been from the beginning.

Deepak R Khemani

1 year ago

As long as Insurers underwrite policies properly and effectively on health and financial grounds frauds can be reduced to a minimum. We can NEVER be a fraud free country

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