Page 7 - Life Insurance Today May 2016
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3. SBI Life Insurance- 12273. has imposed a heavy fine for its mis- selling House
4. HDFC Life insurance company- 31957 Mortgage policies.
5. Max Life insurance- 16546
6. Bajaj Allianz life insurance- 19946. The penalty for Rebating by the agents has been hiked to
Insurance penetration measured as a percentage of Rs 10 lacs and fine for any other misdemeanour by the
premium to the country's GDP fell to 3.3 % in 2015, intermediaries also increased manifold in order to act as
compared to 3.9% during 2014. a deterrent.
Actually this is the lowest since 2005-06 when it was
3.14%. On the passing of the New Insurance Act 2015, IRDAI has
The average Global penetration is 6.2%. powers to define expense limit on the cost of the
The highest is South Africa- 15.4%, South Korea- 11.9%, insurance products and also declare a limit on the rate of
& UK- 11.5%. commission to distributors.
While the Global premium grew by 4.3% for life insurance,
India grew only by 1%. More Initiatives needed in the interest of
Customers
The new Role of the IRDAI
Why there should be a condition of a minimum 3
IRDAI has given up its role in the training of the years' premium payment before the policy attains the
intermediaries by ceding the function of recruitment and Paid-up value or the Special Surrender value? This is
training of agents to the insurance companies from April very harsh as the customer loses all the hard-earned
1 2015. Thus the whole licensing system has gone. money paid, if for any unavoidable financial or other
reason, stops paying the premium before the end of
Only for the mandatory test, the company has to approach 3 years. Especially if it is a large policy, the premium
the IRDAI. will be considerable. It should be a case of simple
refund of all premiums paid, deducting the expenses
IRDAI has mandated that 25% of the ULIP Funds should be like the commission paid to the agent, incentives given
invested in the Government Securities. to the Development Officer, medical fees paid to the
Doctor, policy preparation charges including the stamp
The Holdings of Equity in an Indian Promoter company duty and the premium charged for the risk coverage.
held by the FIIs, other than the foreign Promoters of the
company, will not be a part of the FDI. The Guaranteed Surrender value under a policy is
presently 30% of all premiums paid, excluding the first
IRDAI has issued a circular mandating certain conditions year's. This is very harsh- it should be at least 80% of
for the advertisements being floated by the insurance all premiums paid by the policyholder.
companies- The caveat Conditions Apply should have at
least 50% font size of the copy of the advertisement- The new Insurance Act 2015 has mandated that all the
because normally this caveat needs a lens to read it! death claims arising after 3 years of taking the policy
should not be repudiated but paid. This rule should be
Foreign Partners will not have any final say in the followed in letter and spirit. Even when death takes
appointment of the CEO & Directors of the company, place within a period of 3 years of taking the policy,
decisions on Strategy and Products. although the insurer has the right to do all vigilance
check, investigation etc, they should be done without
IRDAI can impose stiff penalty on the erring insurance harassing the hapless claimant. No doubt, there is
companies. Already on SBI Life insurance company, IRDAI always a chance of a Planned Fraud by certain
unscrupulous policyholders, in collusion with the
agents/ staff/ Development Officers/ medical
examiners etc by claiming the sum assured at the end
"If you judge people, you have no time to love them."
Life Insurance Today May 2016 7
