“Term life insurance is an intangible product”

Vijay Sinha, senior vice-president & head marketing, Tata AIG Life Insurance talks to Raj Pradhan

ML: What is life insurance for a layman?
VS: It is a combination of protection (risk cover) and thrift (forced savings). People do not like to save. Once you have committed to a life insurance policy, you are forced to save for the sake of your family. If you die, the risk cover will...

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Third party motor insurance claim ratio at 145% for FY’12

The major public and private sector insurance players have been demanding abolition of the third party insurance pool, saying that the arrangement for sharing claims was denting their profits.

Insurance regulator IRDA said motor insurance companies have paid out 45% more than the premium on account of claims under the third party motor pool during the current fiscal.

“... the ultimate loss ratio for motor third party pool for the year 2011-12 as per estimate is 145%,” IRDA said in a circular.

Earlier in December, the Insurance Regulatory and Development Authority (IRDA) had said it will dismantle from 1 April 2012 the four-year-old third party motor insurance pool, which the private insurers said was increasing their losses.

The IRDA had said that the declined pool would be extinguished at the end of every year by transferring the risks at par to members who have not fulfilled their mandatory obligations.

“Declined risk pool shall apply to commercial vehicles for standalone third party liability insurance. No comprehensive/ package motor insurance policy or part thereof shall be ceded to the pool,” IRDA said.

Commercial vehicles denied insurance cover will come under the declined pool, where liabilities will be shared by all general insurance companies. The pool will apply to commercial vehicles for standalone third party liability insurance and not for other insurance claims. The regulator had mandated every insurer to underwrite a minimum percentage of commercial vehicle motor third party insurance. The regulator had earlier said that the existing third party pool would end by 31 March 2012, and experts said it would lead to rise in motor insurance premium.

The pool was formed in early 2007 to ensure availability of third-party cover for commercial vehicles that had been refused third-party insurance.

Third-party insurance cover protects the vehicle owner from any financial liability in case of damage to life or property in an accident to the third person.

The major public and private sector insurance players have been demanding abolition of the third party insurance pool, saying that the arrangement for sharing claims was denting their profits.

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Wealthy Indians spend over 3% of income on charity: Study

Charitable giving among wealthy Indians jumped last year to 3.1% of their total income compared to 2.3% in 2010, with more than half pledging to give even more in 2012: Bain & Company’s 2012 India Philanthropy Report

Wealthy Indians spend 3.1% of their total income on charitable donations in 2011 and more than half pledged to give even more this year, says a study by global business consultancy Bain & Company.

According to Bain & Company’s 2012 India Philanthropy Report, charitable giving among wealthy Indians jumped last year to 3.1% of their total income, compared to 2.3% in 2010, with more than half pledging to give even more in 2012.

Donations by India's affluent as a percentage of their income are however far behind their Western counterparts. In the United States, affluent residents give as much as 9.1% of their income (among the highest in the world) in donations. The survey showed significant charitable momentum building in India among all age groups.

“Two-thirds of all surveyed expect to increase donations in the next five years, with two in five saying they will increase giving by over 20% in that period,” the report said.

The report noted that nearly four out of five of those surveyed said they were “novices” at charitable giving, and have less than three years of philanthropic experience.

Younger wealthy Indians, give a smaller proportion of their income at 2%, compared to 3.9% for their older peers. But almost 60% of the younger group plans to increase donations in 2012.

“India’s young and wealthy have an especially strong commitment to giving back. We are encouraged by the emergence of the next generation of donors, who are even more committed to supporting this charitable culture as their wealth grows,” Bain & partner in Mumbai and the report’s author Arpan Sheth said.

Education remained the most popular cause for giving in India, followed by food and clothing and housing and shelter in the second and third positions respectively.

However, lack of accountability among charitable organisations, are one of the major hindrances that held back philanthropers from increasing their contributions. Other main obstacles include an unsupportive tax system and lack of awareness regarding charitable options.

The global business consultancy's third annual report of charitable giving in India surveyed 400 wealthy individuals with more than USD 0.4 million in assets, excluding primary residence, consumables and collectibles. Overall, more than 60% of the survey group was under 40 years of age, more than one-third were 30 years or younger.

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