Data from the consumer affairs ministry shows that one in almost every five cases in consumer forums is related to the insurance sector. This is followed by complaints relating to the housing and banking sectors. Presently, about 4.15 lakh cases are pending before different consumer forums, nearly three-fourth of them at the district level. Experts say that consumer forums receive more insurance related cases for two broad reasons: one, that consumers prefer approaching these forums as opposed to civil courts where one is required to pay court fee, the second is that consumers largely buy insurance products in good faith without showing due diligence and analysing the contract conditions properly, later insurance companies confront them with tricky conditions, denying compensation.
Source: The Times of India, January 29, 2017
In an attempt to improve the confidence of policyholders, Insurance Regulatory and Development Authority of India (IRDAI) released draft norms for insurers to bring in greater transparency in the mechanism of investments managed by them. Called the ‘Stewardship Code for Insurers in India’, these list out seven principles to be adopted by insurers as institutional investors. Stewardship activities include monitoring and engaging with companies on matters such as strategy, performance, risk, capital structure, and corporate governance, including culture and remuneration. IRDAI has said that the growth in the insurance industry in recent years has resulted in a significant increase in the funds of insurance companies. They are also significant investors in the securities markets and act as investors on behalf of the policyholders.
Source: Press Trust of India, January 19, 2017
Listing of general insurers on the bourses is expected to impact the pricing of general insurance products, according to industry experts, after a Cabinet Committee on Economic Affairs (CCEA) gave its nod for listing of five general insurance companies. This decision comes at a time when there is lot of pressure on the 28 general insurers in the market. The direct premium income of non-life insurers registered growth of 13.81 per cent during 2015-16 at Rs 96,379 crore. Since the introduction of de-tariffication in 2007, which allowed insurers to fix their own premium rates for most products, they witnessed a decline in the larger volume group business. Experts are of the opinion that listing of insurance companies in the near future will force the industry to bring in discipline and also ensure that companies make money from their core businesses.
Source: The Hindu Business Line, January 20, 2017
The government has approved a plan under which the country’s five public sector general insurers, namely General Insurance, New India Assurance, National lnsurance, Oriental lnsurance and United India Insurance, will raise much needed growth capital by issue of fresh equity to the public. Alongside, the government will also reduce its stake in these firms over a period of time, an exercise that would boost its capital receipts and the ability to pump-prime the economy. Finance Minister Arun Jaitley has said that the shareholding of these public sector general insurance companies will be divested from 100 per cent to 75 per cent in one or more tranches over a period of time. This could be done either via fresh equity or offer for sale.
Source: The Financial Express, January 19, 2017