Page 9 - Life Insurance Today January 2018

such frauds. Insurers have blacklisted around 70 locations private insurers. According to the data from IRDAI,
to prevent fraudulent claims. solvency ratio of National Insurance is 1.26% and 1.59%
for Oriental Insurance as on March 2016. But New India
Solvency of Insurance Companies: Assurance has one of the highest solvency ratio of 2.3%
among large general insures in India. It is the board's
A likely era of consolidation begins in the insurance sector
decision, but it is very unlikely that some foreigner will buy
with board approval for merger of Max Financial Services
the stake in the four companies. Yes they can participate
and Max Life with HDFC Life. The second such deal this
in the IPO and can invest, but stake sale is very unlikely.
month, earlier, it was announced that L&T General would
merge into HDFC ERGO General Insurance (a Rs 551 crore
deal). HDFC Ergo bought L&T General Insurance at the
price to book of 1.8 times in June last year. Fairfax Financial
Holding had bought a 9% stake in ICICI Lombard General
Insurance at the price to book of 5.7 times in October
2015. Participants in the market also say this offering
would hit market only in next financial year.

Public Awareness:

The IRDAI makes use of various platforms like newspapers,
television, radio and outdoor publicity to create awareness
about importance of insurance. IRDAI had a budget of Rs
60 crore towards advertisement, but only an estimated Rs
24 crore, or 40 per cent, was spent. Unable to spend even
The Cabinet Committee on Economic Affairs (CCEA)
50 per cent of earmarked funds for insurance awareness
approved listing of five state-owned general insurance
companies, thus paving the way for reducing the last fiscal, the Regulator is looking for innovative methods
to utilise this year's advertisement budget that has been
government's stake in these insurers from 100% to 75%.
raised to Rs 66.5 crore. The government is keen on
It is expected that a price to book multiple of anywhere
increasing insurance penetration in the country, especially
between 1.2 and 1.5 times while offering their shares to
in remote areas.
the public. The government can raise anywhere between
Rs 18,400 and Rs 23,000 crore by offloading its 25% stake
The advertisement for consumer affairs department of
in these five companies.
IRDAI for 2017-18 has been budgeted at Rs 66.50 crore.
This is the base case scenario and the government might While increasing the budget for the current financial year,
be able to raise more money if the market is conducive. the regulator is "planning for more advertisement".
New India Assurance Company, United India Insurance, Towards this purpose, IRDAI has started scouting for
Oriental Insurance Company, National Insurance Company creative agencies for production of TV spots, radio jingles,
and GIC Re will list on stock exchanges. Even solvency and organising exhibitions. It also has plans to empanel
ratios have not been encouraging if compared to other agencies to carry out publicity campaign at the national

“Never be bullied into silence. Never allow yourself to be made a victim. Accept no one’s definition of your life; define yourself.”

Life Insurance Today January 2018 9

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010