IRDA has not disclosed details of repudiation of claims for 2009-10 for reasons best known to it. Private life insurers have come out pretty badly vis-à-vis LIC in this regard
Claims experience has to be one of the most important factors to consider before finalising life insurers, because every insurer will love to collect premiums, but few insurers will feel the same about claim payments.
Unfortunately, this crucial data is not available for 2009-10. LIC comes out better than private insurers in this regard. It too does not disclose its repudiation number for 2009-10, but hinted that it was slightly higher than 1.33% which was the figure in 2008-09. Looking at the atrocious claims repudiations percentage of private insurers, they may be the ones having something to hide. Can the Insurance Regulatory and Development Authority (IRDA) publish the numbers soon?
Based on 2008-09 data, the most incredible statistic is that of Aegon Religare with no claims settled, 71.43% claims repudiated and 28.57% claims pending. Please see: www.docstoc.com/docs/58633842/IRDA-claims-settlement-08-09.
It could be that for 2008-09 there were lesser claims being generated because of new business, and unfortunately, the claims that came in had to be genuinely repudiated. We have to give the benefit of the doubt if that is the reason. When a life insurance company gets a claim within three years of policy start there is always investigation and possibility of claim repudiation.
Bharti Axa Life has recently unveiled its new brand positioning - "Jeevan Suraksha Ka Naya Nazariya." It has a service guarantee of "Release of Fund Value within 48 hours" of receiving claim intimation. It is even advertised on TV. In 2008-09, Bharti AXA Life had 53.20% claims settled, 44.83% claims repudiated and 1.97% pending. Low claims pending shows that Bharti Axa certainly is making quick decisions on claims, but high claims repudiation means that one out of two claimants will never get claims paid, forget about the 48-hour claims settlement. We will again give the benefit of the doubt to this insurer if the 2008-09 data is indeed skewed due to new business.
The reason for repudiation can be due to incorrect/hidden details in policy forms filled by a policyholder with or without abetment from an agent. It is imperative that the policyholder fills up the policy form completely and in good faith without the agent filling any policyholder personal data. An ethical agent who is properly trained by the insurer will not mislead the potential customer just for getting commission. The policyholder will be at a loss because the policy form will be scrutinised only at the time of claim.
The other reason can be policyholders themselves indulging in fraud. As far as fraudulent claims are concerned, the insurer has every right to repudiate the claim.
According to Vipin Anand, chief-corporate communications, LIC, "Repudiation of claims also has investigation cost and possibly litigation cost in cases of a policyholder filing a grievance. In some cases, these costs can be greater than the claims cost. LIC can repudiate claims on technicalities and policy wording, but it does not do so unless there is a fraudulent claim. Moreover, LIC is in a strong financial position and does not worry about the bottom-line when genuine claims have to be paid. We pay on (an) average 77,000 claims in a day. "
Private insurers are struggling to break even and will surely be scrutinising claims to a greater extent. It will be hard for them to keep up with the giant called LIC. When will private players measure up to the insurance behemoth?
New Delhi: Oil and Natural Gas Corporation (ONGC), the country's biggest energy explorer, today reported a 6% rise in net profit to Rs5,388.77 crore in the quarter ended 30 September 2010, its highest quarterly profit in two years on rising demand that boosted prices. ONGC posted a net profit of Rs5,089.64 crore in July-September 2009, the company said in a statement to the Bombay Stock Exchange.
Sales rose to Rs18,238.98 crore in the second quarter from Rs15,134.04 crore in the period a year ago. The company said it paid Rs3,019 crore towards fuel subsidy in the period under review, compared to Rs2,630 crore in the previous corresponding period, PTI reports.
The company sold crude at $62.75 a barrel after giving refiners IOC, BPCL and HPCL a discount to make up for one-third of their loss on sale of fuel below cost. That's a 11% increase from $56.41 a barrel in the period last year. Gross realisation (pre-subsidy discount) was $79.21 per barrel compared to $70.50 a barrel in the quarter a year ago.
ONGC shares gained 0.4% to Rs1,303.85 on the Bombay Stock Exchange today, before the results were announced. The stock has gained 11% this year compared with a 14% increase in the Sensex.
On 1st June, the government allowed ONGC to more than double gas prices, loosening controls as it prepares to sell a stake in the state-owned producer. This is likely to ease the company's subsidy burden. Diesel, kerosene and cooking gas prices were also raised. The government may raise about $3 billion from the sale of a 5% stake in ONGC, before March 2011.
The company plans to get the equivalent of 60 million tonnes of oil from overseas fields by 2025, or more than double its output in India. It is also looking at oil opportunities in Brazil, Venezuela and Syria after losing out to China in at least $12.5 billion of contracts in the year ended June.
The high degree of volatility associated with the futures and options (F&O) contract expiry, coupled with institutional selling, resulted in the indices closing below their crucial levels.
The Indian market opened on a firm note this morning taking cues from its Asian counterparts, which were trading with marginal gains in early deals. Nervousness on the expiry day of the October futures and options (F&O) contract led the market into the negative terrain for a short while after which the indices bounced back into the green on news that food inflation for the week ended 16th October had eased.
The market stayed in a narrow range near the neutral line but got a boost in the noon session as the European markets opened higher. A sudden bout of selling in the last half-hour saw the indices tumbling into the red once again touching the day's lows. However, a marginal reversal resulted in the market settling off the day's low, but in the red for the third day in a row.
The Sensex ended 64.33 points (0.32%) down at 19,941 after touching an intraday high of 20,185 and a low of 19,869. The Nifty stood at 5,987, a decline of 24.95 points (0.41%) over its previous close.
The losers outnumbered the gainers in terms of market breadth today. The Sensex ended with 22 stocks in the red against eight gainers. The Nifty had 32 declining stocks and 18 in the advancing list at the end of trade. The broader indices underperformed the key benchmarks today. The BSE Mid-cap index tanked 0.64% while the BSE Small-cap index shrank 0.53%.
The top Sensex gainers were Bharti Airtel (up 2.62%), Hero Honda (up 2.20%), HDFC (up 1.88%), HDFC Bank (up 0.74%) and Tata Power (up 0.65%). Today's losers included Jaiprakash Associates (down 2.24%), DLF (down 2.22%), NTPC (down 1.79%), Tata Steel (down 1.57%) and Sterlite Industries (down 1.50%).
BSE Auto was the lone gainer in the sectoral space, up 0.25%. The sectoral losers were led by BSE Realty (down 1.72%), BSE Consumer Durables (CD) (down 1.51%), BSE Power (down 1.08%), BSE Metal (down 0.85%) and BSE PSU (down 0.75%).
Food inflation fell sharply to 13.75% - down 1.78 percentage points - for the week ended 16th October, on improved supplies but economists said the Reserve Bank of India (RBI) will still raise short-term rates.
Food inflation was 15.53% in the previous week, and 12.15% in a year ago period. This is the second straight week of decline in food inflation.
Finance minister Pranab Mukherjee recently attributed the rise in overall inflation to high food price. The overall inflation for September stood at 8.6%, much higher than the RBI's comfort level of 5%-6%.
The Asian pack ended mixed on concerns about the pace of the global economic recovery. Meanwhile, Bank of Japan brought forward its 15th-16th November policy meeting to next week in a bid to launch its five trillion yen asset-buying initiative to boost the country's economy. Investors expect volatility to continue till next week until a clearer picture emerges.
The Hang Seng was up 0.20%, Jakarta Composite gained 0.40%, KLSE Composite added 0.02%, Straits Times was up 0.16% and Taiwan Weighted surged 0.76%. On the other hand, Shanghai Composite fell 0.15%, Nikkei 225 lost 0.22% and Seoul Composite shed 0.09%.
Wall Street closed lower on Wednesday as investors preferred to stay on the sidelines, awaiting the outcome of the two-day Federal Reserve meeting next week. On the economic front, sales of new US single-family homes rose more than expected last month while demand for durable goods, excluding aircraft, unexpectedly fell in the same month.
The Dow fell 43.18 points (0.39%) to 11,126. The S&P 500 fell 3.19 points (0.27%) to 1,182. On the other hand, the Nasdaq rose 5.97 points (0.24%) to 2,503.26.
Institutional selling was seen in both segments yesterday. While foreign institutional investors were net sellers of stocks worth Rs9 crore, domestic institutional investors net sold equities worth Rs518 crore.
Amid reports of suicides by small loan borrowers and talk of a regulator to monitor the microfinance industry, market leader SKS Microfinance (down 1.48%) on Wednesday announced that it had "voluntarily" slashed interest rates. The company said it has reduced interest rate from 26.69% to 24.55% (depreciating) or a flat 12.55% per annum.
The move is seen as a damage control exercise by the Hyderabad-based company given the negative publicity starting from the sacking of SKS Microfinance CEO S Gurumani and a spate of suicides by borrowers, although SKS has maintained they were unrelated.
Wind turbine major Suzlon Energy (down 0.70%) has said it is looking to enter new regions, mainly Latin America and the African continent in the coming years. The company, which has added over 5,000MW of wind power capacity for around 1,500 customers in India, has operations across Asia, Australia and Europe.
Suzlon is the third largest player in the global market with 10% share worldwide, and more than 50% share in the Indian market.
IT services firm Religare Technova (down 5%) has completed the de-merger of its global Banking, Financial Services and Insurance (BFSI) led products business from its healthcare IT businesses.
The company also announced a recast of its global management team and its board, with Ralph Horne now being appointed as Global CEO and managing director, Religare Technova said in a statement.