Insurance
PSU insurers asked not to charge low premium on fire insurance

The Finance Ministry also said that while the insurance companies are providing huge discounts to big customers while 'snatching business' from other PSU insurers, premiums have been hiked up continuously for individual retail policies

 
New Delhi: Concerned over increasing losses in fire insurance business, the Finance Ministry has asked four state-run general insurers to desist from charging 'ridiculously' low premium from corporates and undercutting one another, reports PTI.
 
In a letter to the heads of four state-owned or public sector (PSU) general insurance companies, the ministry said that the insurers are focusing on increasing business even at the cost of incurring losses.
 
"The PSUs are advised to be more cautious and prudent in underwriting fire business by devising a proper underwriting / marketing strategy to maintain its age-old status of a profitable segment of non-life insurance business," the letter said.
 
The ministry issued this directive to United India Insurance, Oriental Insurance, New India Assurance and National Insurance -- after it came to its notice that the insurers are "offering a ridiculous level of 100% discount on the standard fire policies by not charging premium at all for the basic policy but only for add-on covers".
 
"Such kind of extremely negative business procuring tendency, especially by continuously underwriting of premium by PSUs pricing cannot be allowed to continue, and, therefore, all the four insurance companies shall ensure that the companies desist from snatching renewals of business of other PSU companies," it said.
 
Fire insurance account of over 50% of a general insurers' portfolio.
 
The ministry also said that while the insurance companies are providing huge discounts to big customers while 'snatching business' from other PSU insurers, premiums have been hiked up continuously for individual retail policies.
 
"As a result of which there is a huge price distortion where individuals and retail policyholders who are otherwise not in a position to bargain are made to pay disproportionately higher level of premium per policy, compared to what it should be vis-?-vis such corporate account holders who have the bargaining power and are able to get such windfall discounts," the letter said.
 
It said that since the detariffing of fire insurance premium rates since 2007, there have been unhealthy competition among the PSU insurance companies.
 
It also asked the insurance companies to keep the claim to premium ratio at less than 100% by a more "realistic" pricing of the fire insurance cover.
 

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Reliance Life Insurance targets small cities to hire salary-based agents

Reliance Life Insurance is aiming to hire over 5,000 insurance agents from small towns and rural areas and give them jobs as their career option

 
New Delhi: Private sector insurer Reliance Life Insurance will target small cities and rural areas to hire over 5,000 advisers on fixed-salary basis by the end of current fiscal, reports PTI.
 
"We are aiming to hire over 5,000 insurance agents from small towns and rural areas and give them jobs as their career option with a sense of security. The recruitment drive is targeted at Tier II and III cities," Reliance Life Insurance President and Executive Director Malay Ghosh told PTI.
 
"We believe that the fixed salary-cum-variable income will be a game-changer in the domestic insurance sector," he added.
 
In India, insurance agents work on commission basis and have uncertain income level. Hence, the industry is facing a very high attrition rate.
 
The Anil Ambani-led Reliance group company has identified some potential non-metro cities, small towns and rural areas across the country to hire sales agents on its pay-roll.
 
The company is betting on the fixed salary-based agents in order to check increasing attrition and provide committed customer service.
 
In the beginning, Reliance Life Insurance will be recruiting these career agents across 200 out of over 1,200 branches across India.
 
"We have already hired over 500 career agents and deputed them in about 100 branches across the country. Now, our aim is to hire around another 5,000 career agents by March 2013," Ghosh added.
 
The company is hiring 5,500 insurance advisors this fiscal under a new distribution channel, Career Agent, with a view to providing young people with career paths where successful agent could become supervisors in three years.
 
"The objective is to give a fixed stipend to insurance agents in the first six months during their training tenure and help them pass the licensing examination. This will help them take their jobs with greater commitment," Ghosh said.
 
When asked, whether this new distribution format will hit the exiting advisor workforce working on commission basis, Ghosh pointed out that the two distribution channels are positioned differently in terms of composition and execution.
 
"Rather both will complement each other and improve customer service."
 
With the passage of time, Reliance Life Insurance plans to take the salary-based advisor system to the next level with bigger numbers and proliferation.
 

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SEBI chairman asks people to invest in capital market

According to UK Sinha, investment in mutual funds and equity market is important for the people in their long-term interest


Patna: UK Sinha, chairman of the Securities and Exchange Board of India (SEBI) has asked the people of Bihar to consider investment in the capital market in equity and mutual funds for better long-term returns, reports PTI.
 
Investment in mutual funds and equity market was important for the people in their long-term interest as the centre has launched a number of pension schemes where the investors can put in their money for safe and handsome returns over about 20 years after retirement, he told a seminar.
 
The mutual fund sector has only 0.42% share of Bihar's investment at Rs1,509 crores and only 24 offices, while the number of d-mat account holders in the state is quite low.
 
There was only one registered share broker, 1,000 terminals of share market in the entire state and only two companies located in it listed on the bourses, the SEBI Chairman said.
 
He said SEBI had framed rules for popularizing investments in mutual funds in the small towns and was giving an opportunity to the non-income tax payers in the equity market.
 
SEBI has also proposed steps for propagation of financial literacy among the people to motivate them to invest in equity and venture capital.

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COMMENTS

Sweena Jain

4 years ago

Small investors be cautious and dare not to enter capital market as there are more CHEATS than GENUIGN and regulator or Exchanges will never ever come for your help.Therefore be CAREFUL.

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