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INSIDE THE ISSUE

22nd – 28th January 2016

Front-end commissions mean hit and run insurance agents – Mint – 28th January 2016

Almost a year back, the insurance regulator was allowed to redraw distributor incentives. Till the Insurance Laws (Amendment) Act, 2015 shifted power to the regulator, commission caps were described in the Insurance Act of 1938. On 13 January, the Insurance Regulatory and Development Authority of India (Irdai) finally came out with a draft exposure on commissions and remunerations of insurance distributors, which, in the case of life insurance, is nothing short of disappointing.

To begin with, it doesn’t sit well with the big picture of reducing incentive arbitrage in financial products and moving to trail model of commissions (commissions spread over the lifetime of the product, instead of bunched up in the beginning). The draft has retained the front-loaded commission structure that pays a fat commission in the first year itself and subsequently moves to a lower amount over the course of the policy. So, bundled products (read unit-linked insurance plans and traditional investment plans), will have a cap of 35% of the premium in the first year, coming down to 7.5% till the fifth year, and 5% thereafter. If the premium payment term of the policy is lower than 12 years, the cap is 30% in the first year.

In fact, distributors are entitled to more. The draft adds another layer in the form of rewards—amounts paid directly or indirectly as an incentive, whatever name it may be called—by an insurer to the insurance agent or the intermediary. That’s over and above the commission. For individual agents, it’s 20% of the first-year commission; for institutional distributors, it’s 40%. This payout, too, comes from your pocket, which means that effectively you may end up paying up to 42-49% in the first year on bundled products.

The draft takes a blinkered approach, which still sees merit in putting more money in distributors hands, and that too in the first year itself. Bunching incentives helps if the idea is to sell it and forget it. But if it’s about selling for the long term and servicing the policy over its course, trail commissions should be more effective. Life insurance is a long-term product and for an insurer to unlock real profits—not profits had from lapses—keeping a healthy in-force book is important. This means customers should stay with their policies and pay their premiums regularly.

But this hasn’t happened yet as the industry continues to see high lapses and consequently, low persistency of policies. According to financial year 2013-14 figures published by Irdai in its annual report, on an average less than 60% of the policies got renewed after a year of buying the policy. In fact, at the end of the fifth year, the industry on an average was unable to retain even a third of its customers. Globally, the first-year persistency is around 90%. I looked at the latest persistency number for a few insurers and the numbers haven’t changed drastically. Product regulations have not had the desired impact in encouraging persistency for two reasons: one, there are still loopholes in traditional plans, and two, the industry has shifted to selling them owing to high margins and distributor incentives.

A front-loaded incentive structure encourages a hit and run attitude among distributors and makes renewal incentives meaningless. The instant gratification of pocketing 35% on a sale clouds the delayed gratification of trail commissions and the draft has thrown its weight behind instant gratification. In doing this, the draft has

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Regulation 5

Life 7

Health 8

General 10

Reinsurance 12

Insurance Industry

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also not considered the recommendations of the Sumit Bose committee, which has proposed trail commissions and asked for same commission structure for the same function of products.

To push pure protection plans—term plans—the draft proposes a higher commission of 50% of the premium in the first year for premium payment term of 12 years or more and 10% in the subsequent years. But will this mean a sudden uptick of term plans among the distributors? Unlikely because the commission is calculated as a percentage of the premium and in the case of term plans, the premium compared to that of bundled plans will be much lower.

To encourage more protection products, the regulations should simply link commissions to the sum assured or the insurance cover. In fact, remunerations should be such that it increases the average sum assured sold by agents and other intermediaries. And customers buy pure term plans contrary to what the industry believes that insurance is not bought, but sold. Online term plans is a brilliant example. Even as the total business from term plans remains small, nearly 80% of term insurance was sold online last year. The term insurance market has grown by 30% since 2014 and is expected to grow further. The average sum assured of term plans sold online is around Rs.70 lakh-1 crore compared to the average sum assured of around Rs.2 lakh sold by the industry, which primarily involves distributor led sale.

Distributors are not selling insurance and the draft doesn’t address that problem, neither does it make products long term from a sales point of view. The draft continues to do what the regulations have done so far: focus on chasing top line.

Policy churn and complicated products have resulted in high lapsation rates for the industry. Product regulations alone will not help unless the distributors of life insurance are incentivised to sell for the long term and sell more insurance. Distributors should also be penalised for high lapsation as it erodes value for insurers and customers alike. In its current form, the draft doesn’t seem to hold the distributor responsible for high lapsation in the industry and this is worrying.

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Insurers set to turn over new leaf with new products, tech - Financial Chronicle – 24th January 2016

After a hike in the foreign direct investment (FDI) limit in the insurance sector to 49 per cent, the sector has reportedly received more than $341.43 million during March-September 2015.The fresh infusion of funds and the greater participation by foreign partners will see a flurry of activities going ahead. This could include introduction of internationally successful products, new concepts of distribution leading to deeper penetration of insurance, technology to improve efficiencies and new ways to increase acceptability of products.

“Health insurance companies have seen their foreign partners increasing their stake in Indian entities. Foreign partners are taking the insurance business in India seriously. Experts say that greater incomes and savings, coupled with changing lifestyles, are expected to drive rising insurance penetration in the country,” said Sandeep Patel, MD and CEO, Cigna TTK Health Insurance. Inflows of additional funds, better technology and expertise will encourage innovation in the sector and edge the companies closer to the goal of making quality healthcare accessible and affordable for all, said Ashish Mehrotra, CEO and MD, Max Bupa Health Insurance.

“It will also infuse greater confidence amongst the global investors and gradually help improve the penetration of health insurance in the country. Max Bupa became one of the first companies in India to benefit from the proposed increased limit for foreign direct investment (FDI) in insurance,: he said, adding that Max Bupa will stand to benefit from Bupa’s expertise in areas such as under-writing health risks and product innovation.

Many insurance companies have already lined up several new products. Some are being customised for the Indian market, a few others are awaiting regulatory changes. SBI General Insurance’s foreign partner Insurance Australia Group (IAG) has several products that have been successful in the international market. SBI General is in the process of introducing some of them.

Extended warranty for automobile and consumer durable products is one such product. At present, automobile and consumer durable manufacturers provide warranty for their products and for additional cost some of them also provide extended warranty, which starts after the normal warranty period ends. Insurance companies offer this extended warranty as an add-on to the comprehensive cover.

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SBI General is also looking at introducing a gap insurance product. This one gives protection against losses that can arise when the amount of compensation received from a total loss of the automobile does not fully cover the outstanding amount of the auto loan. This situation arises when the balance owed on a car loan is greater than the book value of the vehicle, which depreciates every passing year.

In the home insurance space, the insurer is planning to launch a product that is meant for high net worth individuals. This will cover art pieces and jewellery owned by them. The existing home insurance policies provide a cover based on the declared value of the items.

However, art and gold are subject to price fluctuations. The price of an artwork can fall if the artist loses his stature or if the upkeep of the piece is not proper. The policy will cover all such eventualities. Another new product in the automobile insurance segment is driver a focused-policy.

At present, in India the pricing of insurance is focused on the vehicle. Driver-focused policies are popular in the international market. Once the regulator makes necessary statutory changes, SBI will be able to bring in policies wherein the pricing will be determined by the way the vehicle is driven and the distance it covers. On-board devices to gauge the acceleration, speed, area and usage will have to be fixed in cars to understand the driving pattern.

Health segment could see several new innovations. Consumers are already demanding more ‘personalised’ products and there is a demand for products with higher cover, disease-specific covers and family covers. There is a need for extending the purview of insurance products beyond ‘in-patient’ care. Cigna TTK Health Insurance looks forward to taking its operations to the next level as the foreign partner will help its Indian entity increase its operational efficiency and geographical reach with the help of technology while expanding the market with globally successful products like health savings plan and community health products.

“Health insurance has been recognised as a separate category. Irdai is also working towards opening up the segment for innovative and long-term products. This will help us bring in products like health savings plan and community-based health plans in the Indian market,” said Patel.

In a health savings plan, a part of the premium paid is used to meet the current expenses due to health-related eventualities. This will cater to the medical needs when the person already employed and is paying the premiums. A part of it also goes towards a savings plan and the accumulated amount will take care of the post-retirement premiums and medical spends which are not covered under the policy. This will ensure that the person will remain insured throughout his life, even if he/she does not pay premiums after retirement.

Cigna TTK also wants to bring in community-based products. The group policies mainly cater to the employees of different companies. The community-based products will take care of the needs of the members of a locality. The insurance company will also identify doctors, hospitals and specialty centres close to the locality for the members. The pooled premiums of such community policies will be lesser compared to the individual policies.

The distribution channels will get opened up with increased investments. “Increase in capital inflow will open multiple opportunities for insurance sector like enhanced underwriting skills, robust IT infrastructure and some of the best practices from the developed market will be introduced in the country. With the capital inflow, more channels for distribution are expected to open such as the citizen service centres or other government delivery centres such as public delivery systems. This will improve the reach in rural areas.

Customers will have more points of sale to buy policies from. The insurance companies will be able to create more jobs to meet their targets of venturing into under insured markets through improved infrastructure, better operations and more manpower,” said Pushan Mahapatra, MD and CEO, SBI General Insurance.

Citizen services centres will offer contact points for access to various insurance policies at community level. It might include simple health insurance policies and other group insurance policies. This will enhance insurance penetration towards a more financially inclusive society.

Technology is an area, which will see lot changes. “Foreign investments will bring in their expertise in terms of better resources, better implementation of practices, product trainings and technology in terms of strengthening distribution. Digitalisation of distribution channels/networks is a positive trend to be looked out for in the insurance space,” said Patel.

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Many of the insurance providers have already started using mobile devices and applications to connect with the sales force and customers. Instant data transfer helps quicker issuance of policies and claim settlement processes.

“Digitisation would translate into our ability to reach significant non-insured populations in the country. Further, the policyholder’s experience of using the product can be enhanced using digital and mobile. Instant claims approval and preventive healthcare through internet and mobile apps is already happening. It is a safe assumption that most industry players would make their services and processes accessible, digitally. The benefit of being able to enhance user experience digitally, would provide the necessary positive referrals for the category,” said Mehrotra.

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FDI of insurance companies with pension plan under CCEA lens - The Economic Times – 22nd January 2016

Proposal of insurance companies which also have pension ventures is under scrutiny due to lack of clarity on how foreign investment limit in the pension sector should be calculated.

The Foreign Investment Promotion Board had in a meeting in December 2015 recommended a Rs 1,705 crore foreign investment proposal for the consideration of the Cabinet Committee on Economic Affairs. FIPB did so even as the proposal is for investment below the prescribed Rs 3,000 crore threshold for such permission.

According to the proposal, Standard Life (Mauritius Holdings) 2006 Ltd wants to increase stake in the insurance venture HDFC Standard Life from 26 per cent to 35 per cent. At present, Housing Development Finance Corporation Ltd holds 70 per cent stake in the insurer. HDFC is majority foreign owned.

A senior government official said the proposal was sent to CCEA as a policy issue was involved.

HDFC Standard Life has a wholly-owned subsidiary HDFC Pension Management Company Ltd, a licensed pension fund manager.

"We need to get clarity on whether downstream investments in companies which are engaged in selling pension products are also covered under the Insurance Act, which provides such leeway," said a senior government official, requesting not to be identified.

The government has allowed 49 per cent FDI in both insurance and pension sectors. However, it has also provided specific exemption to insurance from the prescribed method of calculating direct and indirect foreign investment. Under this method prescribed in the FDI policy, all investment by a majority foreign owned or foreign controlled company in another company is counted as foreign investment.

However, there is a carve-out for such downstream investments in case of insurance sector, which is governed by its sectoral methods that do not count foreign portfolio investment in parent as FDI.

This carve-out has allowed many private banks that are majority foreign owned to hold on to their insurance ventures even when the FDI limit in the sector was 26 per cent, which has since been raised to 49 per cent. Under the rule applied to other companies, the entire holding of such banks would have been counted as foreign investment in violation of the policy.

Accordingly, the government had approved Kotak Mahindra Bank's proposal to raise its foreign institutional investment cap in the bank from 49 per cent to 55 per cent, thus allaying fears that this may have implications for the bank's insurance venture.

The carve-out is not available for the pensions sector, leading to confusion over how foreign investment in downstream pension sectors will be calculated. "There is no clarity on pension ventures, whether that rule applies to them as well," the official cited earlier said. A similar issue is expected in other cases as well, he said. Another government official said that now the CCEA will take a call on this. "We want to remove any ambiguities and if the CCEA approves of it we will come out with a clarification as we did on the insurance sector," he said.

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PFRDA and IRDA cross swords on insurers’ pension offerings - The Economic Times – 27th January 2016

The pension and insurance sector regulators may be about to engage in a turf war over pension plans offered by insurers. The Pension Fund Regulatory and Development Authority (PFRDA) has written to the government seeking clarity on the issue.

"As pension regulator, we have the mandate to regulate all pension products. We have written to the finance ministry regarding this concern," said a senior PFRDA official, who didn't want to be named. Most insurers and some asset management companies offer pension-linked products.

"The PFRDA Act 2013 confers on us the power to register and regulate pension funds, frame their investment guidelines and levy monetary penalties for violations under the Act," the PFRDA official said. The insurance regulator isn't convinced by the argument.

An Insurance Regulatory and Developmental Authority of India (IRDA) official said the PFRDA Act allowed the pension regulator to oversee the National Pension System (NPS) and schemes not covered under any Act.

"All insurance products which have pension features are already under our supervision and covered under the ambit of the Insurance Act, so there is no case," he said. In 2012, the regulator had issued stringent guidelines on pension plans in order to ensure more transparency.

In 2010, a similar turf issue emerged between the Securities and Exchange Board of India ( SEBI) and IRDA after the market regulator banned 14 insurance companies from raising funds through unit-linked insurance policies (ULIPs) on grounds that the products in question had investment features.

The matter was resolved after the finance ministry's intervention and an ordinance was issued that ULIPs were to be regulated by the insurance regulator.

The government had then set up the Financial Stability and Development Council (FSDC) in December of that year, with the finance minister as chairman and representation from all regulators to facilitate coordination among them.

A finance ministry official said that a dispute resolution mechanism is available under FSDC. "It is being looked into. Our major concern is that any financial product that is being offered should fall under a regulatory jurisdiction. If there are any turf issues, they can be resolved," he said. Both regulators should work in tandem to ensure greater access to both the insurance and pension sectors, he said.

ET View

India needs a unified regulator.

The Financial Stability and Development Council must resolve the dispute over the regulation of hybrid financial products before it gets messy. India should now move towards a unified regulator for the financial sector, spanning banking, insurance, pensions, capital and commodity markets, and a single appellate tribunal. This would call for unbundling of the functions of the RBI, and this must be done even if the transition is unsettling. Given the extensive overlap among insurance, debt, equity.

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Focus on products, tech, customer grievances: Irdai - The Financial Express – 23rd January 2016 The Insurance Regulatory & Development Authority of India (Irdai) on Friday asked the insurance industry to focus on products, technology and customer grievances. However, TS Vijayan, chairman of Irdai, praised the industry for handling of claims after the recent floods in Tamil Nadu.

Speaking at the 17th annual insurance conference, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), Vijayan said, “Despite claims being high, the industry has settled the claims very well. We are still monitoring the situation, and few days ago we had some meeting with stakeholders from Chennai markets on the issues.”

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According to senior officials, the insurance industry received 50,000 claims amounting to Rs 4,800 crore for Tamil Nadu floods, with a large number of claims coming from the property, automobiles and small and medium enterprises (SME) sectors. Irdai is also in process to come out with new guidelines on re-insurance and Indian reinsurance companies will get first preference in treaties.

“We have received six applications for reinsurance branch licence and that they will be able to give first stage of licensing by their next board meeting to some of them, Vijayan said. On the sidelines of the event, he also said three to four draft norms on new regulations would come in and the process would be completed by March.

Vijayan highlighted the changes sweeping in the insurance sector in India. Important among these is the change in the Insurance Act. These changes made it imperative for the regulator to respond in an appropriate manner.

“Despite this, the industry is very buoyant. In 2014-15, real premium growth was 1.4% and this highlights the potential for growth at least to catch up with the global standard. The secret is not on fighting the old but on building the new. Past experience may not be the right guidelines for future,” said Vijayan.

The insurance regulator is also in the process to develop I-Track for E-KYC. Amitabh Chaudhry, managing director and chief executive officer, HDFC Standard Life Insurance Co, said with the passage of the new insurance law, regulators are trying to create the right platform for growth. He cited ‘short termism’ as the bane of the industry. He pointed out that the industry needs to groom leaders and talent.

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Irda May Cut Cost of More Insurance Products - The Economic Times (Delhi) – 23rd January 2016

After bringing most life insurance products under cost control, the insurance regulator will now shift focus to traditional investment-cumsavings products, or profit products of life insurance companies. Speaking at the sidelines of Ficci insurance event on Friday, TS Vijayan, chairman of Insurance Regulatory and Development of India (Irda), said the regulator would now look to bring down cost of profit products of insurance companies.

Participating products are traditional investment-cum-savings products where benefits include bonus declared by the participating fund.

IRDAI, in the past, had introduced regulations for various kinds of insurance products, including unit-linked insurance schemes, non-participating pro ducts, universal life insurance products and pension products.The regulator had imposed various caps, including caps on expenses on these products.

Earlier in an exposure draft, the regulator had said that it would take action for managements' non-compliance for expense rules by companies in the sector, which could result in restriction of performance incentive for whole-time directors and key management personnel and on the approval for opening new places of business. It reserves the power to levy graded penal action and re move key management personnel if the companies fail to comply with the rules.

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Insurers seek more time from IRDAI on management control issue - The Economic Times – 22nd January 2016

Several insurers with foreign partners have sought more time from the regulator to report on the issue of management control, a top IRDAI official has said.

Earlier, IRDAI (Insurance Regulatory and Development Authority of India) had asked insurers to report whether their companies -- having foreign joint venture partner either with 26 per cent or 49 per cent -- are being managed by the Indian promoters or not.

"Some companies have already submitted their report on ownership and management control. There was a deadline of January 18 but we are waiting for more clarity to come from them," IRDAI chairman T S Vijayan told reporters on the sidelines of a Ficci insurance summit today.

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"The JV agreements are already there between foreign partners and domestic partner, but they have to give certain clarification on the issue," he said. On the issue of finalising the reinsurance regulations, Vijayan said the final norms on reinsurers were likely to come within next two-three weeks.

"The regulations on Llyods and reinsurers are in making process and it has to be approved by authority and then it will be notified in the gazette." "Exposure draft on Llyods is already there and needs to be finalised," he added.

On the latest move by IRDAI to cap agency commissions, Vijayan said commission should not be destructive in the market and it should be within the expense management ratio. "Not that every insurer can pay a higher commission and hence we have suggested a cap. The whole idea is to reduce discrepancy in commission payout and create a level playing field," he said.

On the claim settlement of recent Chennai floods, Vijayan said that the regulator is monitoring the issue. "Even though the claims are high, the insurers are doing it very well, we are monitoring the situation. Few days ago we had some meeting with stakeholders from Chennai markets and discussed the issues at length," he said.

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Life insurers first year premium collection rises 9.5 pc in December - The Economic Times – 25th January 2016

The first year premium collection of life insurance companies rose by 9.5 per cent to Rs 11,026.82 crore in December 2015 compared to the last year.

The first year premium collection of life insurers stood at Rs 10,071.80 crore in December 2014.

The new business premium grew by 16 per cent to Rs 85,587.73 crore during April-December 2015 over the year-ago period, the data released by insurance regulator IRDAI showed.

The first year insurance premium of private insurance companies declined year-on-year basis in December, while that of LIC rose significantly.

The first year business premium of LIC rose by 25 per cent year-on-year to Rs 7,323.67 crore as of December 2015, while that of private sector companies fell by 12.1 per cent to Rs 3,703.15 crore in the month.

For April-December, LIC's new premium collection expanded 15.4 per cent to Rs 59,615.41 crore.

Private insurance companies saw 17.5 per cent growth in new business premium at Rs 25,972.31 crore during April-December 2015, the monthly data of 23 private life insurance companies and state-run LIC showed.

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Life policy returns set to go up as regulator tells insurers to cut spends - The Hindu Business Line – 21st January 2016

Policyholders are likely to get better returns on their life insurance policies from April as the regulator has asked insurers to bring down their overall expenses.

In its exposure draft, the Insurance Regulatory and Development Authority of India (IRDAI) has asked insurers to bring down their overall expenses limit for various categories of life insurance products.

But, according to insurers, if implemented, the proposal will severely hit their marketing budget.

“The overall expense allowances of life insurers have been reduced significantly. Our estimate is that expenses will come down by 15-20 per cent for insurers which could result in better returns to customers as insurers cannot spend as much as they used to earlier,” said Srinivasan Parthasarathy, Chief Actuary & Appointed Actuary, HDFC Life.

“Expenses include all administrative and marketing spends, including commission. So, in order to bring them down, companies can either cut commissions to agents or other general expenses as the overall cost involved in selling a product needs to be brought down,” Parthasarathy added.

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Industry experts said several life insurers have asked the Life Insurance Council to take up the matter with the regulator. However, a senior industry official said that the draft is expected to be implemented, as this was the third draft put out by the regulator after consultations with the industry. The new rules will be applicable to all life insurers from April. The insurance regulator has also said that if companies breach the expense limits then the excess expenses will have to be paid from the shareholders’ fund.

V Manickam, Secretary General, Life Insurance Council, said that a majority of the companies have said that they will be affected and the Council has submitted a representation from the life insurers to the regulator.

A senior official from a life insurance industry said: “Insurers’ marketing budgets, branch expansion plans and commission payouts to intermediaries like agents will take a hit.”

Following passage of the Insurance Amendment Bill, IRDAI now has powers to define the expenses limit and commission payouts to intermediaries. Recently, IRDAI also came out with a draft circular defining the maximum commission payouts to distributors and giving insurance companies flexibility in paying out commissions to insurers within their overall expense limits.

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Health insurance market maintained double digit growth last fiscal year - The Hindu – 27th January 2016

The health insurance segment in the country continues to witness steady growth on the back of growing healthcare costs and increasing penetration levels with total premium collection growing 15 per cent in 2014-15 year-on-year. During 2014-15, the gross health insurance premium collected by non-life insurance companies was Rs.20,096 crore compared with Rs.17,495 crore in 2013-14, recording an increase of 14.87 per cent, according to the latest annual report of IRDAI (Insurance Regulatory & Development Authority of India).

The four public sector general insurance companies – New India, United India, Oriental and National – accounted for a major share of health insurance premium at 64 per cent of total health segment. Stand-alone health insurers contributed 14 per cent. While there is a marginal increase in the share of public sector and stand-alone health insurers, there is a drop in the share of private non-life insurers whose market share has come down from 26 per cent in 2013-14 to 22 per cent in 2014-15.

Over the past five years, there is a marked increase in the share of individual health insurance premium in total health insurance premium collected- increasing from 35 per cent in 2010-11 to 44 per cent in 2014-15.

The share of group health insurance business (other than government business) in total health insurance premium has remained static at around 45 per cent. . About 24 per cent of India’s total population has been covered under one of the health insurance policies in 2014-15.

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Govt sets out to widen health insurance scheme to 50 crore people - The Indian Express – 27th January 2016

The Ministry of Health is preparing to roll out an expanded version of the Rashtriya Swasthya Bima Yojana, the government’s flagship health insurance scheme, covering more than 10 crore families or about 50 crore people.

The plans come a year after the health ministry got the administrative responsibility for RSBY from the Ministry of Labour, which launched it in 2008. The expanded scheme will be the first step towards universal health insurance, though the final modalities and the name of the scheme are still a work in progress.

Beneficiaries will be listed not just on the basis of income — as is the criteria for BPL families — but also based on “deprivations” as listed in the socio-economic caste census, so that a little more than the total BPL families are covered. The actual rollout will be done by states which will, therefore, have a say in the final basket of services to be covered and also the ceiling for a particular procedure covered under the scheme.

The health ministry is also looking at developing an IT platform where health-related schemes not just of this ministry but also those of other ministries that have a bearing on health — for example, the Janani Shishu

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Suraksha Yojana of the Women and Child Development Ministry — can be managed from the same platform and a common registration system, ensuring there is neither duplication nor wastage of resources.

When it was transferred to Health from Labour, RSBY came with about 3.72 crore active smart cards, which would entail coverage for about 15 crore people from BPL families. It was transferred as the NDA government felt universal insurance is key to the concept of health assurance as visualised in lieu of what was earlier known as universal health coverage.

Instead of starting from scratch it was decided that RSBY, which is an internationally feted insurance-based health scheme, should be restructured and expanded. Launched in 2008, RSBY provides health cover to BPL households with beneficiaries entitled to hospitalisation cover of Rs 30,000 for a range of diseases. Pre-existing conditions too are covered.

“We are looking at an IT-supported implementation platform for this insurance scheme — whether it will continue to be called RSBY or may be renamed is not clear yet — but this platform will be one where schemes of all ministries including ours can be mounted for effective implementation. We are still in the process of working out what schemes will be covered and what would be the ceiling for individual procedures. States can add to both by paying for the additional coverage. There will also be a very important element of screening for diabetes, hypertension and some common cancers to begin with,” said a senior official in the ministry of health.

Sources in the health ministry say the restructured RSBY, possibly under a new name, is likely to be rolled out by the financial year 2017-18. Initially the idea was to shift to a trust-based model but after health experts and some states red-flagged that idea, the ministry is now looking at a more open-ended scheme with states having the power to decide whether it should be through a trust or in partnership with insurance companies.

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Labour ministry moves to ease compliance norms for start-ups – Mint – 25th January 2016

The labour and employment ministry on Sunday took steps to relax labour-related compliance measures for start-ups, a week after Prime Minister Narendra Modi unveiled the Start-up India initiative.

The ministry has decided to exempt start-ups from inspections related to key labour laws—including the Industrial Disputes Act, the Contract Labour Act, the Employees State Insurance Act, the Trade Union Act and the Employees Provident Fund and Miscellaneous Provisions Act—in a bid to dispel fear and encourage young entrepreneurs to start and grow businesses in India.

In a letter to all autonomous institutions such as the Employees’ Provident Fund Organisation (EPFO), Employee’s State Insurance Corp. and the Labour Commission, the ministry has asked them to desist from any unwanted interference related to labour law compliance in the functioning of start-ups.

“Promoting start-ups... would need special handholding and nurturing. Thus such start-ups, as defined by DIPP (department of industrial policy and promotion), may be allowed to self-certify compliance with the labour laws,” labour secretary Shankar Aggarwal said in the letter.

Both Modi and finance minister Arun Jaitley last week assured start-ups that the government will help enable their growth.

As per the labour ministry, start-ups will not be inspected in the first year of their establishment, and in the next two years, they will not be inspected until the central analysis and intelligence unit of the labour ministry verifies a written complaint and advocates any inspection.

Till that time, the start-ups will have to self-certify their compliance of labour laws and each of the concerned bodies of the ministry will accept it. Following the labour ministry move, EPFO also wrote to all its field offices to take note of the development at the regional office level.

“Start-Ups are allowed to submit self-certified returns under EPF and Miscellaneous Provisions Act 1952. From the second year onwards, up to three years from the setting up of the unit, such start-ups may be taken up for inspections only when very credible and verifiable complaints of violations is filed in writing and the approval has been obtained from central analysis and intelligence unit,” EPFO said in its internal circular.

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“It is therefore advised to regulate inspections in the Start-Ups, as suggested above, wherever, applicable,” said the circular, a copy of which has been reviewed by Mint.

A labour ministry official said that from the prime minister on, all in the government believe that job creation is a key agenda and it has to live up to the expectations of young Indians.

Nearly 60% of India’s 1.2 billion population is below the age of 35. The official said the ministry’s move will benefit all small and big start-ups in the country. “We have made a beginning for successful implementation of the Start-Up India initiative and going forward more relaxed norms may be unveiled for these companies so that they create more jobs,” the official said, requesting anonymity.

Last week, Modi has said that “start-up doesn’t mean billion dollar company where thousands of people work. It is about employing even five people and developing India”. “We have to bring a psychological change in the mindset of young Indians—from job seekers to job creators,” Modi said during the launch of the Start-up India initiative.

Himanshu Aggarwal, chief executive of Aspiring Minds, a job and skill mapping company, said start-ups are likely to create more than 100,000 jobs in 2016 and 225,000 jobs in 2018. “Start-ups will be the mainstay of job growth for the next five years. The Start-Up India initiative has the potential to propel this further,” Aggarwal said.

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While IRDAI's proposals are largely consumer-friendly, they have also raised a few concerns - The Economic Times (Kolkata) – 25th January 2016

The Insurance Regulatory and Development Authority of India (IRDAI) have recently released draft health insurance guidelines that will supersede the regulations framed in 2013.

While most policyholder-friendly provisions, part of existing guidelines, have been retained, consumer activists have raised concerns over the absence of a key clause that prevented insurers from rejecting claims arbitrarily. At present, insurers are required to provide a medical reason while rejecting a claim. “This is a very important clause as it entitles a consumer to a medical reason for denial of claim. It is missing in the exposure draft. It should be reintroduced at the time of finalizing the guidelines,“ said Gaurang Damani, a consumer activist, whose petition in the Bombay High Court had led to the formulation of regulations that are in force at present.

The regulator has also proposed allowing insurers to design closed-ended pilot products with tenure of less than five years. After the tenure ends, insurers will have the option of either converting them into regular products or withdrawing them. These products could cover “risks that are otherwise generally declined or excluded“ by the existing products.

The draft guidelines also permit insurers to reward policyholders for desirable behaviour. This, among other things, will include buying a policy at a young age, continued renewals, favourable claims experience, and following preventive and wellness programmes. The insurer will be required to specify the details of the incentives on offer in the policy document.

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Govt to buy drone technology to assess crop damage - The Hindu Business Line – 28th January 2016

In a bid to settle crop insurance claims as quickly as possible, the government has decided to purchase unmanned aircraft technology ‘drone’ for assessing crop damage faster and more accurately. The move follows a direction from Prime Minister Narendra Modi for using modern farm technologies to implement effectively the new crop insurance scheme, Pradhan Mantri Fasal Bima Yojana from June this year.

“We have already given an in-principle approval to Mahalanobis National Crop Forecast Centre (MNCFC) for purchase of a drone technology. An e-tender will be issued next month,” a senior Agriculture Ministry official told PTI.

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Initially, the government will purchase one drone technology and would order for more after checking the feasibility, the official said. The Ministry’s plan is to purchase one drone for each State and at least 20 drones in the next five years.

The cost of one drone and its maintenance is estimated to be around ₹70 lakh, which the government has already allocated in the 2015-16 Budget, the official added. Last year, the government had hired a drone for pilot test in Rajasthan, Madhya Pradesh and Maharashtra.

At present, there is a huge delay in settlement of crop insurance claims because of manual assessment of crop loss. In the existing crop insurance schemes, some farmers have not got claims for crop loss witnessed two years ago. The government has addressed these concerns in the new crop insurance scheme which will be rolled out from 2016 kharif (summer) season starting June.

Farmers will pay less premium and get early settlement of their claim under the new scheme. Back

Cost of cover against natural disasters may rise by 10-15% - The Economic Times (Mumbai) – 25th January 2016

Premium rates on natural catastrophes are likely to rise by 10-15% after three years of consecutive claims from such calamities. The general insurance industry had faced claims of more than Rs 4,700 crore from the recent Chennai floods, and in the past two years, the industry paid huge claims from J&K floods as well as the devastating effects of Cyclone Hudhud which struck in 2014.

Although the reinsurance market was soft during the December renewal, the industry is expecting rates to harden on April 1, when most corporates will renew their property and liability insurance. Reinsurance is the insurance taken by insurance companies to help lower their share of the risk. “We expect Natcat rates to harden by 10-15% in the coming renewals,“ said G Srinivasan, chairman and managing director New India Assurance.

“The industry has paid huge claims over the past three years due to natural catastrophes. Now, rates will reflect the past claims.“

The claims arising out of Chennai floods have crossed the numbers of Jammu & Kashmir and Uttarakhand floods, when there was a hit of Rs 2,000 crore to the industry for each event.

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New crop scheme to boost agri insurance biz, say insurers - The Financial Express – 24th January 2016

With the government launching a new crop insurance scheme from April, the industry hopes that the move is likely to more than double the agriculture insurance business within very first year of implementation of the scheme. “All the 11 general insurance companies, which offer agri insurance business, have business of around Rs 5,000 crore and it is likely to cross Rs 13,000 crore by the end of the next fiscal year as I expect many new players entering the fray in an aggressive manner,” Agriculture Insurance Company (AIC) chairman and managing director P J Joseph told PTI.

“We are fully geared up to implement the scheme as we know the business very well,” he added. Already the largest non-life insurer New India Assurance, which is a fringe player in the crop insurance front, has decided to grow the book aggressively.

“We are not much into crop insurance as of now. We have already written to the government requesting it to allow us to become an aggressive player in this area,” New India Assurance chairman and managing director G Srinivasan said. “The scheme gives flexibility to rate the segment appropriately. Farmer needs to pay a lesser premium due to the large government subsidy,” he added.

Following the drought conditions in many parts of the country and the instances of farmer suicides, Prime Minister Narendra Modi on January 13 announced a new crop insurance, Pradhan Mantri Fasal Bima Yojna (PMFBY), for the harried farmers with a low premium of just 2 per cent of the covered amount.

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The scheme will be rolled out from the coming kharif season beginning June and the Centre and the states together will involve an annual outgo of Rs 8,800 crore in terms of subsidy which will be equally shared. The Centre would incur an expenditure of more than Rs 8,800 crore annually at this rate of subsidy if 50 per cent of the total crop area of 194 million hectare is insured.

Under the new scheme farmers will pay only 2 per cent of the premium fixed by insurance company for kharif grain/ oilseeds crops and 1.5 per cent for rabi foodgrain/oilseeds crops. The remaining sum of premium would be borne by the Centre and states equally and aimed at covering 50 per cent of the crop area of 194.40 million hectare annually.

Last year, only 27 per cent of the crop area was insured which cost Rs 3,150 crore to the national exchequer.Tata AIG General Insurance believes the new scheme will help increase the crop insurance penetration up to 50 per cent, from present low 23 per cent penetration, Tata AIG president M Ravichandran said.

SBI General Insurance said the merging of the existing National Agricultural Insurance Scheme (NAIS) into the PMFBY will offer it a further opportunity to offer crop insurance to a larger number of people. “This will be possible as the area earlier covered under NAIS will be available to all insurance companies,” its newly-appointed managing director and chief executive Pushan Mahapatra said.

Insurers feel that features like use of modern crop insurance technology under the new scheme will make the entire process more transparent. “Use of drones and smartphones and remote sensing techniques will reduce time for crop cutting experiment and will bring more transparency in loss assessment, Bajaj Allianz General Insurance agri business head Ashish Agarwal said.

Sanjay Datta, head of underwritings and claims at ICICI Lombard, said it is a positive scheme as it talks about risk-based insurance product for crop insurance rather than claim-based subsidy product. He cited the capping of the farmer’s premium at a meager 2 per cent as the biggest game-changer for the industry as earlier, the premium used to go up, while sum assured came down. “But that will not be the case now on,” he said.

Talking about turnaround time in claim settlement in the new scheme, he said, “it normally takes one or two years in the existing system but it will not be more than a quarter under the new scheme.”

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GIC Re wants to be among top 10 reinsurers globally: Vaidyan - Business Standard – 25th January 2016

GIC Re, country's sole reinsurer, today said that it is fully geared to meet the emerging competition in the domestic reinsurance sector.

The company also said that it wants to be among the top ten reinsurers of the world, from its currently global positioning at 14th, over the next couple of years.

After assuming charge as the chairman and managing director of GIC Re, Alice Vaidyan said, "GIC Re is confident of increasing its market share even after the arrival of global reinsurers in the country. We have almost 50 per cent market share at present."

"But, given the market condition and given the fact that we have supported the market in good and bad times and our rapport with all our customers (insurers) in the market," she said.

Slowly, GIC Re is expanding its international reach, she said.

"We are aiming for focussed growth in countries like Latin America, China and CIS countries. These three are main target countries for us as of now," Vaidyan said adding, "GIC Re has diversified across the globe now doing business in 160 countries and has branches in countries like the UK, Dubai and Malaysia,"

Talking about the future plans of GIC Re, Vaidyan said, "We are planning to open a new branch in Brazil this year."

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"GIC Re intends to be among top 10 reinsurers in the world within next couple of years, while still maintaining its pre-eminent role as national reinsurer in the domestic market," she said. Even as the final regulations for reinsurers are likely to come from IRDA anytime from now, GIC Re's role is very important one.

"It is very crucial for the Indian insurance industry as the global reinsurers are opening up and hence GIC Re's role will be to facilitate and collaborate with them,"' she explained. The company has been in the market for more than 40 years and has a great talent pool.

"We have the backing from the government for our financial strength," she said. GIC Re has to ensure that the nuclear pool should take off, she added. "In our bid to help government increase insurance penetration in the country, where insurance reaches the last mile, my dream is to achieve the goal of insurance for every Indian," she said.

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Six foreign reinsurers apply to IRDAI to open branch offices - The Hindu Business Line – 22nd January 2016

The Insurance Regulatory and Development Authority of India (IRDAI) has received applications from six foreign reinsurance companies for opening branches in India. This development comes even as the insurance regulator recently did an about-turn in its reinsurance regulations and said that Indian reinsurer(s) will be given first preference in reinsurance treaties compared with the branches of foreign reinsurers.

Incidentally, foreign reinsurers had written to the Centre seeking relaxation on the proposal to give Indian reinsurers first preference in premium ceding. Among the foreign reinsurers that have applied to the regulator to set up base in India are Swiss Re, Scor, Munich Re and Catlin.

Speaking on the sidelines of the FICCI Insurance Summit, TS Vijayan, Chairman, IRDAI, said, “The predominant thought process is that if there is a reinsurance company established and fully capitalised in India and it should get a better opportunity at reinsurance treaties than a branch of a foreign reinsurer opening operations here. We want to distinguish between Indian reinsurer and branches of the reinsurer.”

What this means is that government-owned General Insurance Corporation of India (GIC Re), which is the sole domestic reinsurer, will now enjoy preference in reinsurance treaty agreements. Vijayan said that the R1 application (first stage application) for some reinsurers is expected to go through in the next board meeting.

The IRDAI chief said that some insurers have sought clarifications on the ‘Indian ownership and control clause’ in the regulations governing insurance joint venture agreements after passage of the Insurance Regulation Bill. IRDAI had asked insurers to rework their joint venture agreements to incorporate Indian ownership and control clause to which many insurers have sought additional time to comply with.

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Millennial vehicle owners yet to realise importance of insurance: Report – Mint – 25th January 2016 The Indian millennial’s choice of transport is driven by ease of conveyance, says ICICI Lombard survey Habits & Attitude Research – Road Safety & Motor Insurance 2016. The study looks at understanding the Millennial’s driving habits and attitude towards road safety and motor insurance. According to the survey—conducted among 1,073 car and bike owners in the 25-35 years age group, from Mumbai, Delhi, Pune, Bangalore, Ahmedabad and Kolkata—awareness of own damage and third party insurance policies is the highest.

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Insurers should have long-term digitisation roadmap: BCG-FICCI report – 22nd January 2016

Insurance companies should have a long-term digitization roadmap, said ‘the Changing Face of Indian Insurance: In Pursuit of Profitable’ report jointly published by Boston Consulting Group (BCG) and Federation of Indian Chambers of Commerce and Industry (FICCI).

The report said that insurers around the world are increasingly digitising front end sales processes as well as back end processes in an effort to achieve higher productivity, operational efficiency and cost benefits.

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“As most Indian insurers are just embarking on the digitisation journey, it is important to prioritise processes, build supporting capabilities and define strategies for implementing and driving adoption,” it added.

The report showed that digitisation benefits all key stakeholders: on the ground sales force, managers, back end teams as well as customers. According to it, with the progress of technology, almost every insurance process can be digitised, but Indian insurers need to individually evaluate their starting position and prioritise processes and initiatives that can deliver maximum value.

“At BCG, we have identified major trends such as digitisation, changing consumer needs and ageing changes that are expected to impact the sector in its next phase. However, the challenge lies in sustaining profitable growth” said Alpesh Shah, Senior Partner & Director at BCG, India and Head – Insurance Practice in Asia.

The report also said that insurers need to look beyond just the actuarial valuations and focus on how to create a truly valuable company that can provide sustainable returns to shareholders and also continue to create value. Also with respect to listing, it said that while regulator has allowed insurers to get publically listed, it said that an IPO only makes sense as an integrated part of a strategic plan.

“Insurers should first set a valuation target, define an appropriate strategy and make decisions accordingly,” it explained.

It has been 15 years since the privatisation of the Indian insurance industry. The objective of privatisation was to create awareness and increase insurance penetration in the country.

The report said that the industry has, during this period witnessed several dramatic shifts, including emergence of bancassurance, de-tariffing, regulatory activism, explosion of health insurance as well as the emergence of large government insurance schemes.

Some of the key trends that are expected to impact the sector in its next phase as per the report include the digital imperative, changing consumer needs and behaviour, apart from factors like regulatory activism. It also added that digital is likely the most important trend amongst all of the above. As industries are disrupted by bold digital business models from non-traditional attackers, the report pointed that more and more traditional companies are at risk of extinction.

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Australia: Premiums rise for retailers; flat for other businesses – Asia Insurance Review

Australia's retail sector saw the price for commercial cover soar by 10% last year, despite premiums remaining flat across other industries, according to the latest findings of commercial insurance comparison website BizCover.

While small and medium-sized businesses (SMEs) were still reaping the benefits of cheap cover thanks to an over-supply of capacity in the market, the retail trade sector, which includes restaurants, cafes and stores, was the exception due to the complexity of their businesses and lack of competition for retail policies, reported the Sydney Morning Herald citing Bizcover.

"Insurance for the retail sector is more complex to price due to the vast number of variables that impact the risk of a business," BizCover managing director, Michael Gottlieb, said. "There are relatively few insurers in Australia that have sufficient data to technically price risks based on geographical location, type of business and the physical structure of the building."

Claims in the retail sector often involve physical property. This requires access to "a large number of professionals around the country who can assist in assessing the claim and helping the business get back to the position they were prior to the claim", Mr Gottlieb said. An average SME which runs a retail business may pay around A$1,700 (US$1,200) for a policy, compared with a non-retail company owner who pays A$1,000 for their insurance.

BizCover's latest Small Business Insurance Index climbed five points during the three months to December, signalling that prices may rise further this year. It is the first increase charted by the index in 10 quarters, based on data collected from nine insurers, including giants such as Allianz, AIG and QBE Insurance Group. The

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major driver behind the price hike is a hardening of rates in the non-professional sector, with public liability and business packs (predominantly covering perils and theft) increasing, the research found.

"Insurers are caught in a corner as the increase in rates is necessary due to the increasing claims loss ratios," Mr Gottlieb said. "However, the need for the increase comes at a time of unprecedented capacity in the marketplace and therefore it is unlikely insurers will be able to continue to further push premium rates up."

"Commercial insurance for most businesses will continue to remain relatively flat with good levels of competition thus allowing astute buyers to continue to benefit from the soft market," he said.

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China: CIRC to expand reverse mortgage trial – Asia Insurance Review

China's insurance regulator has said that it would extend a pilot scheme for reverse mortgages for the elderly in other parts of the country this year, following what it hails as the programme's success in four major cities.

The statement was made at a recent forum on reverse mortgages by Mr Huang Hong, a Vice Chairman of the China Insurance Regulatory Commission (CIRC), reported the People news website.

The regulator will select cities which have good economic conditions, and where the real estate market is orderly, for the extended trial.

In July 2014, the city governments in Beijing, Shanghai, Guangzhou and Wuhan had been slated to start a two-year reverse mortgage experiment. However, the trial only eventually took off in March 2015 when Singfor Life Insurance received approval to launch a reverse mortgage product.

At the moment, the authorities are taking things a step at a time given the experimental nature of the scheme. Although the situation is stable, there are also challenges such as insurers needing to cope with the ups and downs of the property market as well as longevity and interest-rate risks, said Mr Huang.

According to data from the CIRC, 62 senior citizens from 45 households had signed a memorandum of understanding with Singfor Life Insurance to undertake reverse mortgages by the end of 2015. Among them, 38 senior citizens had signed contracts with the insurer of whom 29 had started to receive their monthly pensions from the scheme. The average age of the clients was 70.5 years.

The reverse mortgage programme is a bid by the Chinese government to widen channels to generate retirement income. However, some experts doubt that the scheme would be popular because the lease granted by the government on private property is capped at 70 years. Traditionally, property is also passed on to the next generation as inheritance.

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China: Insurers' total premiums rose by 20% to US$365 bln in 2015 – Asia Insurance Review

Premium revenue received by China's insurance firms reached CNY2.4 trillion (US$365 billion) last year, the industry regulator said yesterday.

This represented an increase in total insurance premiums of 20% last year from 2014, Chen Yingdong, a spokesman for the China Insurance Regulatory Commission, said.

Industry profits totalled CNY282.36 billion last year, an increase of 38% over 2014. Back

Hong Kong: New rules to retard life insurers' growth – Asia Insurance Review

The introduction of more stringent rules governing how life insurers in Hong Kong underwrite and sell non-linked policies are likely to moderate their growth dynamics in the next one to two years, according to Fitch Ratings. The new rules might also lead to changes in some insurers' operating processes. Solid capital buffers and sound operating margins, however, will continue to underpin the credit strength of Hong Kong insurance sector.

In a report, entitled "2016 Outlook: Hong Kong Insurance", Fitch says that it expects uncertainty in the movement of Chinese yuan against the US dollar to reduce the attractiveness of yuan-denominated life

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insurance policies. New life policies issued in yuan, in terms of annualised premium equivalent (APE), declined by about 16% on a year-on-year basis in 3Q15.

Visitors from Mainland China, though, will remain the key source of growth for new life insurance business. New life insurance policies as measured by APE sold to tourists from Mainland China increased by 43.2% in 3Q15 on year-on-year basis. Unless the number of visitors contracts substantially, the demand from Chinese buyers is likely to remain robust in the short term.

In non-life insurance, Fitch expects keen competition as a result of abundant underwriting capacity to constrain general insurers' capacity to improve their operating margin. Pricing for the employee compensation (EC) line is likely to remain soft while the underwriting deficit from motor third-party liability insurance could persist.

The overall underwriting margin of non-life insurance sector in Hong Kong is likely to remain healthy, however, due to the continued earnings contribution from other non-statutory business such as property damage insurance. The sector's combined ratio amounted to 91.3% for 3Q15 (2014: 89.6%).

The stable sector outlooks primarily reflect Fitch's expectation that both the life and non-life sectors will maintain sound operating profitability despite high volatility in the stock market.

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Australia: Gen insurance brokers exempt from new qualifications - Asia Insurance Review

General insurance brokers have been completely exempt from requirements designed to lift standards of education and ethics for financial advisers, detailed in draft legislation put forward by Assistant Treasurer Kelly O'Dwyer late last year, says the National Insurance Brokers Association (NIBA).

The concession won for insurance brokers comes off the back to two years’ worth of lobbying by NIBA, which argued that general insurance brokers were not responsible for the recent losses suffered due to poor financial advice.

The draft legislation will require all new financial planners from 2017 to hold a degree, pass an exam and spend a year developing their professional skills. Existing advisers will have to undergo training if they are to continue advising. Both existing and new advisers must also be part to a code of professional ethics, which will come into force from the middle of 2019.

NIBA CEO Mr Dallas Booth said: “There has been no evidence at all of any systemic poor advice by general insurance brokers at any of the reviews or inquiries that have been held over the past two years.”

“NIBA will take a strong interest in the new requirements on behalf of members who give advice on life risk products,” he added.

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Nepal: 40% of claims related to 2015 quakes paid to date - Asia Insurance Review

On an average, 42.3% of the claims lodged in respect of last year's devastating earthquake in Nepal has so far been paid, according to the Insurance Board (IB). Against claims totalling NPR18.28 billion (US$169 million) received by non-life insurers, payouts amounting to NPR7.73 billion have been made. The insurers in turn have received NPR3.91 billion from reinsurance companies.

“We had expected more than 80% settlements by now, but it has been slow,” reported the Kathmandu Post, citing IB Director Raju Raman Poudel. He said that insurers were making payments for smaller claims, but were delaying the settlements of bigger claims. He said that claims related to high-rise and hydropower projects remained unresolved.

However, in relation to the total economic damage, the claims lodged are very low, representing 3.53% of the damage caused by the earthquakes on 25 April and 12 May last year.

This is corroborated by a report published by Munich Re which said that 4.3% of the property devastated by the earthquake was insured. The global reinsurer said that the April quake caused total damage of US$4.8 billion. “But only $210 million of the damaged properties have been insured,” it said.

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Cyber risk adds to the challenge of marine insurance - Asia Insurance Review

Aside from subdued rates, the risk landscape in marine insurance is rapidly changing with the industry an attractive target for cyber attacks. Where insurance is concerned, traditional insurance models may not be an ideal fit for the dynamic cyber environment being faced with insurers still assessing the scope of the risk exposure.

Should an attack or breach happen, there are both financial and operational risks involved that need to be considered, given that 90% of world trade is carried by the international shipping industry. These include lost revenues from operation downtime, costs in terms of third-party claims and liabilities, legal and defence costs, reputational damage and even potential lawsuits from shareholders.

From a legal standpoint, various jurisdictions will still determine the applicability of cyber law principles, and in cases where a breach happens when a ship sails to multiple destinations, there will be contention as to whose law would apply.

These are just some of the key issues that are being faced in the maritime industry. They will be discussed at the 1st Asia Pacific Maritime Insurance Conference (APMIC) organised in conjunction with the Asia Pacific Maritime 2016 in Singapore – taking place from 16-18 March 2016.

Marine insurers face rising frequency and severity of claims with vessels getting bigger, while competition is keeping premiums down. Yet marine is one of the most fundamental segments of the insurance industry that supports globalisation and world growth and development.

Hence, there is an urgent need for international attention to review the marine insurance scene and find new and lasting solutions for the challenges faced by marine insurers who ensure that a ship can sail. Marine insurers need to find that niche to grow and prosper despite the odds.

This two-day conference includes active panel discussions and expert presentations to discuss pressing issues relating to market development, legislation and regulations, underwriting, claims, risk management as well as practical solutions for the maritime trade.

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China: Insurers expected to post record gains for 2015 - Asia Insurance Review

The Chinese insurance industry is expected to report record net profits for last year, with an average increase of nearly 73% over 2014, according to Mr Zhou Yanli, Vice Chairman of the China Insurance Regulatory Commission (CIRC).

The full-year performance is not unexpected because from January to September last year, industry profits were estimated to have reached CNY244.02 billion (US$37 billion), representing an increase of 95% over the corresponding nine months in 2014, as CIRC data indicate.

In line with the trend in the industry, several insurers, which have reported their unaudited financial results for 2015, showed stellar performances.

For example, Taikang Life posted net profits of CNY8.8 billion for last year, representing an increase of 44.4% over 2014; Huaxia Insurance CNY1.24 billion (45.8% increase); and Qianhai Life CNY3.1 billion (an increase of 22.3 times). Tian An Property, though, turned in a net profit of CNY380 million, representing a more modest 4.3% increase, reported the Securities Times.

Investment gains contributed a large part to net profits. For instance, Taikang Life reported investment profits of CNY46.9 billion representing an increase of 121%; Huaxia Insurance CNY14.95 billion (204% increase); Qianhai Life CNY11.3 billion (168% increase) and Tian An Property CNY8.29 billion (442% increase).

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China: CIRC to ban high-yield insurance plans of up to 3 years - Asia Insurance Review

China's insurance regulator is planning to ban the sale of new high-returns insurance products that have a term of less than three years. In addition, all sales of such short-term products, already being sold, are to be halted after 1 October this year.

A report from the Caixin financial publication says that the China Insurance Regulatory Commission (CIRC) held a discussion with seven large insurers, including China Life Insurance, on the proposed restriction. The new regulation is expected to be implemented next week.

It is understood that the move is related to concerns about risks faced by insurers which have been aggressively snapping up stocks to offer high returns to customers.

Last month, CIRC warned that aggressive stock buying by insurers and sales of high-return products could damage the country’s financial system. The insurance regulator issued at least seven statements on risk management between November and December, including a demand for better disclosure and limits on high-return products.

Analysts say Beijing is most concerned about the smaller companies, which are pitching investment products with promised annual returns as high as 8%.

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