Bharti AXA General Insurance is now part of ICICI Lombard General Insurance.

Bharti AXA General Insurance is now part of ICICI Lombard General Insurance.

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  • Better Safe Than Sorry

    by Ghayas Ansari | Mar 29, 2018

    Better Safe Than Sorry

    Cyber security has always been discussed but never given the importance that it deserves in the boardroom. However the situation seems to be changing post 2017, which saw cyber breaches of global scale and magnitude. Myths — such as only information technology companies are prone to cyber attacks and that fairly advanced nations like the United States and United Kingdom would be the main targets of hackers whereas countries like India would not be victims — were broken. It is time to address cyber security as a business risk, and not just a technology problem.

    The year 2017 saw hackers take down a power grid in Ukraine, ransomware attacks like WannaCry, Petya and NotPetya caused business interruption at ports, hospitals in UK were made to turn down patients since they lost access to their systems and the Equifax breach led to the data of 143 million customers — a number higher than Mexico’s total population — being compromised. Mondelez, the world’s second-largest confectionary company, said its quarterly revenue growth would be reduced by 3 per cent due to a recent global cyber attack.

    India too was put on the global map after becoming the third worst hit country from the WannaCry attack, with more than 40,000 computers being affected. An Indian food startup’s breach was the 6th biggest globally in the first half of 2017, compromising data of 17 million users. The list just keeps growing.

    The thing about cyber risk is that it is evolving at a pace which most companies will find hard to keep up with; attacks are getting more sophisticated — from distributed denial of service attacks to ‘man-in-the-middle’ attacks, the risk just keeps changing. The popularity of cryptocurrencies and their characteristics which prevent them from being traced back will only fuel further ransomware attacks in the future.

    According to a recent report published by McAfee, the total cost of cyber crime globally is $600 billion, or 0.8 per cent of global GDP. With the EU GDPR becoming effective in around two months, several global MNCs will be liable to report breaches within a set timeframe and may be liable to penalties going as high as 4 per cent of their global turnover, the cost of data breach is bound to go up. As I write this, a fresh probe has been requested by the European Commission, asking data protection authorities to investigate Facebook’s data leak to data-profiling firm Cambridge Analytica, which uses psychographic profiling to change behaviour, and may have used the data of 50 million Facebook users to help bolster Donald Trump’s presidential campaign in 2016.

    The increasing frequency of breaches and the costs associated with it demonstrate the need for companies to purchase cyber insurance. Let’s be clear, cyber insurance will not help a company prevent a cyber breach, but it will help it survive one. The amount of loss due to cyber attacks and its spiraling effects cannot be under-estimated. A typical breach would require the company to hire forensic experts to investigate into the breach and recover its lost data, appoint lawyers to communicate the breach to the regulators, customers and other stakeholders as per regulations. Service of a public relations expert may also be required in order to handle the press and other media. All of these expenses can make a huge dent in the company’s bottom-line, especially to the small and medium enterprises, which may not be able to afford such costs. A standard cyber insurance policy would provide cover for all these costs, and further covers such as cover for business interruption, fraudulent fund transfer, PCI-DSS may be purchased depending upon the risk profile and needs of the customer.

    The ever evolving nature of cyber risk poses an even bigger challenge for insurers, as they will have to work towards providing a wholesome risk mitigation product to customers. Such a product would help them not just cover the costs associated with a breach, but also help them improve their cyber security, provide vulnerability assessment and penetration testing services, and most importantly help educate their customer’s employees about threats such as phishing, ransomware and others — since humans are still the weakest link in cyber security.


    *Source: Financial Chronicle

  • Cyber Insurance: A solution against risk of digital warfare

    by Sudhir Joil | Feb 09, 2018

    The layers of security applied to safeguard data needs to evolve with the increasing number of cyber threats which is only growing bigger in magnitude and frequency in the new tech era.

    Technology, as we know, has gradually taken hold in the deepest parts of our residence ranging from high tech home security systems, smart TVs, smart phones, smart watches, CCTV cameras, all of which are connected to the internet. Additionally, with payments moving online, we also store data such as payment details with a number of websites for ease of use. If a restaurant or a store asks us for our birthday, we share the same unthinkingly in hopes of a free meal or a discount. What we do not realize is that our birthday is used as a security question in many applications. Therefore, such data if accessed through deceitful means can be used against us. Hence, it is imperative to consider protecting oneself against such security breach and safeguard from the aftereffects of such a violation. Global consumers will soon face the need to secure their private data to remove the possibility of the data being used as leverage to extract money.

    Recently, cybercriminals with their Ransomware attack ‘Wannacry’ jeopardized over 2 lakh computers in more than 150 countries; it held people & organizations to ransom and caused havoc among many companies. In India, copious amount of demographic data stored in the Aadhaar database was leaked, which attracted widespread criticism against the biometric initiative. The leakage of biometric data provides uninhibited access to one’s personal records, thereby making individuals vulnerable to a variety of cyber threats if it falls in the wrong hands. Therefore, the existential risk posed by cyber attacks and data security vulnerabilities has become one of the prime concerns for boards of directors, management, government agencies and the public.

    This when combined with the power of IoT, puts the end user at critical risk. IoT connects all digital devices which collect and share data. Therefore, high profile security breaches can cause irreparable damage to brands, revenues, stock prices and lead to other significant ramifications.

    In the digital age, cybercrime has evolved into a daily phenomenon. The Indian Computer Emergency Response Team (CERT-In) reported 27,482 cases of cybercrime were between January and June in 2017.In India, a dramatic 300% increase in cybercrime from 1000 attacks a day in 2015, to 4000 attacks a day in 2016 has prompted the need for an extensive contingency plan to prevent considerable damage from cyber-attacks. Further, cyber malwares are expanding to smart phones and other devices. We have already witnessed one of the biggest ever breaches of financial data involving 3.2 million debit cards in India in October 2016. (Source: Data from Indian Computer Emergency Response Team (CERT-In))

    Though cyber risk is a recognized critical threat to the economy, the investments on cyber insurance continue to remain small. The layers of security applied to safeguard data needs to evolve with the increasing number of cyber threats which is only growing bigger in magnitude and frequency in the new tech era. The crucial aspect of this new age risk is that it varies to a great degree from traditional risks, therefore, it lacks a constant pattern, nor can a set of preventive actions be enough to ensure effective data safety. Hence with an evolving cyber security strategies, companies also need to look at insurance to protect them when things go wrong.

    Insurers have been gearing up for the onslaught of such new age risks. They have been focused in their approach, consulting, communication and constituting futuristic solutions to be prepared for such cyber threatened circumstances. Platforms like the World Economic Forum are bringing together the industry leaders to define, draft and recommend solutions on mitigating risks in the cyber enabled era. The experience garnered by insurance firms in treating cybercrime over the years, has equipped them with the knowledge and knowhow of dealing with cyber threats. Hence the support provided by insurance companies during the time of crisis is not only financial, but also expertise and experience in handling of the claim.

    With the rise of cyber threats insurance products have undergone a high degree of modification with time. The principal cyber insurance cover under the policy covers damages and legal costs in connection with a data breach. Insurers are increasingly focusing on corporates to prepare for additional issues such as business interruption losses caused by cyber-attack. Coverage for lost earnings as a result of network breach is also covered under the policy. Further, as comprehensive legislations come into place, insurance offerings are being aligned beforehand to meet the regulatory requirements.

    Cyber attacks will face a sharp incline in the years to come. When it does, corporate and insurance firms have to work cohesively to fight these risks to protect their consumers. For insurers, this is an opportunity to add value to the ecosystem by proactively adopting the risk manager position in the new age innovation economy.


  • ICICI Lombard’s Mr. Gopal Balachandran on the National Health Protection Scheme

    by Ghayas Ansari | Feb 05, 2018

    ICICI Lombard’s Mr. Gopal Balachandran on the National Health Protection Scheme

    The merger of the public insurers and their eventual listing is a positive development. Given the low penetration of non-life insurance at around 0.77 per cent of GDP, there is immense scope for industry players to continue expanding their reach, says Gopal Balachandran, Chief Financial Officer and Chief Risk Officer, ICICI Lombard. Excerpts from a chat with BusinessLine:

    How will the Centre’s flagship National Health Protection Scheme to cover over 10 crore poor families benefit insurers? What will be the contours of the scheme?

    The National Health Protection Scheme should act as a catalyst to increase health insurance penetration in the country. For a nation with a young and aspiring population, ensuring quality healthcare access is extremely important for us to harness our demographic dividend and the government has taken the right steps in this direction.

    Given the scale and reach of the program, it will enable insurers to contribute to the government’s endeavour to provide health insurance cover for around 50 crore Indians. As for the scheme contours, we as an industry are awaiting the details from policymakers.

    How will the merger of three public insurers impact the competitive landscape of the insurance industry?

    The merger of the public insurers and their eventual listing is a positive development. Given the low penetration of non-life insurance at around 0.77 per cent of GDP, there is immense scope for industry players to continue expanding their reach and bring more consumers under the fold of non-life insurance covers.

    Overall, your gross direct premium income (GDPI) has grown by 17 per cent year-on-year (y-o-y) in the nine months ended December 2017. What’s going to be the growth in each segment — health, motor etc. — and the growth drivers, going ahead, in each space?

    Our growth in the nine months of the current fiscal has been in line with expectations. Within health, our focus remains on the more profitable retail health segment, which has grown by 17 per cent in the nine months ended December 2017. We had taken a conscious call to cap our exposure to the mass health segment, which remains a lumpy business.

    We are, however, seeing some uptick in pricing in the corporate health space, particularly in the mid-corporate segment, and we are selectively looking at underwriting risk there. We continue to stay away from the large corporate segment, where business is lumpy and losses can be higher.

    Within motor too, our focus remains on the more profitable two-wheeler and private car segments. We do cater to the commercial vehicles as we are obligated to underwrite some portion of the overall third-party quota. But here too, we have seen an average price increase of 28 per cent in the third-party premiums.

    Still, under price tariff, we are looking to selectively underwrite in certain pockets and geographies, because at a particular loss ratio, third party business is earnings accretive. This is because we receive premiums on day one, and it stays with us as float earning income, until claims occur.

    With regard to crop, we would like to be cautious. In the first half of this fiscal, crop formed 25 per cent of our GDPI, as of December its share is down to 20 per cent. In crop, we want to be sure of the risk we are underwriting.

    Unlike retail health and motor, where the risk size is relatively smaller, in crop the exposures are much larger since you underwrite a cluster covering a large area. In crop, we get to know the outcome of the season in 6-9 months’ time, based on yields determined through crop-cutting experiments.

    In property, we have seen an increase in market share. We do a lot of analytics around risk selection. We also do a lot of exposure-mapping when we underwrite corporate segments (non-health). Some regions have higher exposure to catastrophic events.

    Coming to your key operating metrics loss ratio (ratio of claims incurred to net earned premium) and combined ratio (losses and expenses in relation to the total premiums), while your combined ratio has fallen from 104 per cent levels in FY17 to 100-odd per cent in the nine months ended December 2017, loss ratios in certain segments such as crop and motor third party have gone up.

    Regarding our combined ratio, as we had stated last year at the time of our IPO, our long-term strategy is to bring it down to 100 per cent levels. We stand by those objectives. Within the combined ratio, we do not see much variation in our expense ratios. Where we hope to gain is through improvement in our loss ratios. The first half or nine-month results clearly indicate that we are committed to deliver on this count — our overall loss ratio has trended lower in the past three quarters.

    Specifically, on crop, if you look at the loss ratio for the first half, it stood at 114 per cent, while for the nine months it has come down to 110 per cent. After reporting a much lower loss ratio of 84 per cent in FY17, we saw some sort of an adverse movement this fiscal in claims as far as Tamil Nadu is concerned. Hence, given the uncertainty, we would like to carry higher loss provisions on our books.
    On third party motor, this segment continues to report unlimited claims and hence we would like to be conservative in our reserving practices. We would urge to look at our results more on a year-to-date basis.

    Has the price increase in the third party motor tariff helped? Has it been commensurate with the losses in the segment?

    The price increases are, in effect, a function of the loss experience in the industry. Hence, transparent reporting by all players will help in appropriate determination of the loss experience and price increases.

    One important regulatory move has been the Motor Insurance Service Provider framework that has come into force from November 2017. This framework, among other tweaks, caps distribution fees payable by insurers. In effect, this should lower the cost of acquisition across the board. Hence the focus shifts to quality of service. We believe we have a competitive advantage, given our capabilities in claims settlement, distribution, use of technology, etc.

    Coming back to the price increases, we have, on an average, seen a 12-15 per cent price increase that covers the claims inflation, which is also in the same range for us. The new Motor Vehicle Act, once it comes into force, specifies a time limit of six months for intimation of loss (currently unlimited). This is likely to bring down the float and impact investment income. From our standpoint, given our conservative provisioning (including claim inflation), on balance we could stand to benefit.


    Source: The Hindu BusinessLine

  • ICICI Lombard’s MD & CEO Mr. Bhargav Dasgupta’s take on Union Budget 2018

    by Ghayas Ansari | Feb 02, 2018

    Budget 2018: A significant step forward, says ICICI Lombard's MD & CEO Mr. Bhargav Dasgupta

    The Union Budget 2018 was announced amid the backdrop of path breaking measures like demonetization and introduction of GST last year. The announcements made in the budget indicate that the Government has rightly focused on targeting the key enabling areas of agriculture, education, health, power and women empowerment. Further, it has shown fiscal prudence by limiting the fiscal slippage from the target set earlier. 
    One of the key areas that policy makers have rightly focused on is in terms of providing health cover to our citizens. The launch of the National Health Protection Scheme is a significant step forward from the mass health schemes launched in the past. By providing a health cover of Rs. 5 lakhs per family, it takes account the on-ground reality in terms of rising cost of medical inflation and the need to adequately cover Indians from health-related hazards. For long, there have been discussions on introducing Universal Health Cover and this new scheme does show the Government’s willingness to move forward in this direction. As India’s aspiring population looks forward to a better quality of life, it is imperative that they are adequately covered especially on the health side. While this scheme should provide health cover to around 40% of India’s population, we believe that policy makers will work towards designing the scheme keeping governance and sustainability in mind.

    Source: Business Standard

  • Non-Life Insurance Expectations from Union Budget 2018

    by Ghayas Ansari | Jan 31, 2018

    Union Budget 2018 – Non-Life Insurance Expectations

    The Union budget for 2018 will be presented amid the backdrop of some pathbreaking reforms by the government in the recent past. The demonetization drive in 2016 and more recently GST implementation from July 2017 have been some of the most noteworthy steps taken by the Government in recent times. One will expect policy makers to continue with this reformist focus in the annual budget exercise to take this agenda forward.

    The Non-life insurance industry is passing through a defining phase, as companies get listed on the stock exchanges to start a new chapter in their corporate journey. This is one industry that contributes significantly to the country’s progress. Detailed analyses show that a one standard deviation increase in GI penetration induces a per capita GDP growth of 0.39%. At the same time, the industry is credited with employing over 7 lakh individuals directly or indirectly. Given the low penetration of GI in India at around 0.77% of GDP, there is immense scope for this sector, one that policy makers should help realize through appropriate measures in the budget and through reforms in general.

    Health insurance       
    The Government has been providing tax incentives in health insurance to consumers. Currently, the Income Tax Act allows for deduction of Rs. 25,000 for premium paid towards health insurance by a policyholder for himself, spouse and children. An additional deduction of Rs. 25,000 is allowed for premiums paid for parents (Rs. 30,000 in case parents are senior citizens). In the recent years, the cost of medication has been on a continuous rise across the country. In this scenario, the current slabs necessitate an increase to bring the tax incentives on health insurance premium in line with the rising cost of hospitalization. Policy makers should consider increasing the limit for deduction on health insurance premium to Rs. 75,000 (Rs. 100,000 for senior citizens).

    Home insurance
    The Union Budget should also act as an enabler to promote non-life insurance in other areas that are of critical importance. A lot is being done to protect the interest of home owners by introduction of the RERA act. However, while measures are being taken to empower home buyers, it is equally important to motivate them to protect their homes from any perils. This is critical given the increase in the number of burglaries and natural disasters in various states including large cities in recent times. Introduction of provisions in the Budget towards tax incentives on home insurance premium would be a big boost to the adoption of this underrated insurance product by home owners.

    TDS on motor accident claims
    The issue of the TDS on Motor Accident Claims remains another point of concern. According to the Income Tax Act, TDS is deductible if the interest amount that Motor Accident Claims Tribunal (MACT) awards exceeds Rs. 50,000 in a financial year. MACT awards victims of motor vehicle accidents compensation, as well as interest. For many victims of motor vehicle accidents, tax liability does not arise in the normal course of things. Given this scenario, the system of award, which was brought as a relief measure, should not be used as an instrument of taxation. An amendment should be done to exclude interest component on MACT awards from TDS application. Pending amendment, appropriate instructions could be issued to provide relief to both, claimants of compensation and non-life insurance companies.

  • Augmenting Artificial Intelligence

    by Shriram Ghatwai | Nov 30, 2017

    “Today, it is mandatory for companies to adopt quickly to technology advancements to simply stay relevant in the market place”

    The human race has been gaining intelligence over ages. We are now at a turning point. The intelligence game is shifting from humans to machines. Artificial intelligence or the simulation of human intelligence by machines is the new reality today. Coupled with machine learning, this field of advanced technology is moving ahead at an unprecedented pace. From hearing about industrial robots in newspapers to learning about prototypes not long back, we are already seeing tech tools enabled by AI reaching our door steps - be it smart assistants in gadgets or stand-alone devices. In fact, robots that look and act like any typical human being are already available for purchase in many countries and are helping individuals manage their lives better.

    The AI revolution is influencing every product/ service industry. The banking and financial services (BFSI) segment is one of the key sectors, where AI enabled solutions are making their presence felt widely. Not long ago, banking was about physical branches and human interactions. Today, banks have become the front runners in using technology as algorithms and machines take over most of the tasks. We are not far away from the day when branches will get completely automated, offering customers the most complex of financial products and services without the need for any human intervention.

    Within the BFSI sector, insurance is another segment that is leveraging the advances in Artificial Intelligence. Insurance industry has hitherto focused on manual processes. From underwriting to claims processing, from policy sales to renewals, it has relied mostly on human intervention and paper work. The focus has been on the physical presence of someone reliable, an expert in the field, to guide customers through the product purchase and usage cycle. However, this approach is changing fast. The Associated Chamber of Commerce and Industry of India (ASSOCHAM) recently released a report on the Insurance industry in India. Recent technology trends such as artificial intelligence (AI), machine learning, blockchain and robotic process automation (RPA) have significant potential to streamline insurance operations and enhance customer experience,’ the report noted. It further predicted that ‘the trend of using AI in the insurance industry will accelerate in the near future’.

    We are already seeing multiple insurance brands leveraging on AI to offer innovative customer centric solutions. Many companies have introduced products and services that deploy technologies such as Artificial Intelligence, Blockchai, and others, as the core drivers. At ICICI Lombard, we have been at the forefront of leveraging these technological developments for the benefit of our customers. We have introduced robotic assistance solutions using a chatbot platform called MyRA that allows our customers to get their queries resolved without any human intervention. Further, customers can purchase insurance policies in certain categories e.g. two wheeler insurance right through the chatbot, thereby ensuring convenience of purchase from anywhere and at any time. In another case i.e. fire insurance, the chatbot provides quotes to clients through email conversations. The introduction of MyRA has resulted in reducing the customer turnaround time by 50 percent and generation of quotes is faster than ever.

    We are already seeing multiple insurance brands leveraging on AI to offer innovative customer centric solutions. Many companies have introduced products and services that deploy technologies such as Artificial Intelligence, Blockchai, and others, as the core drivers. At ICICI Lombard, we have been at the forefront of leveraging these technological developments for the benefit of our customers. We have introduced robotic assistance solutions using a chatbot platform called MyRA that allows our customers to get their queries resolved without any human intervention. Further, customers can purchase insurance policies in certain categories e.g. two wheeler insurance right through the chatbot, thereby ensuring convenience of purchase from anywhere and at any time. In another case i.e. fire insurance, the chatbot provides quotes to clients through email conversations. The introduction of MyRA has resulted in reducing the customer turnaround time by 50 percent and generation of quotes is faster than ever.
    *Source - Silicon India Magazine

  • Artificial Intelligence and Healthcare

    by Ghayas Ansari | Sep 25, 2017

    Artificial Intelligence is here. It’s behind the searches you do on the web, it’s in the apps you use to order cabs; it’s in the voice assistant on your smartphone. And there’ll be more of it to help and assist us in our daily lives, with further advancements in technology. But speak to the A.I. trendspotters and you’ll hear them echoing about the great potential A.I. has for healthcare. It has the potential to make people stay healthy without the need for a doctor, or at least not as much, at reduced costs.

    Today, a doctor checks your vital signs, diagnoses, and gives a prescription when you feel ill. With A.I. assistants, doctors can get access to comprehensive data including the patient’s medical history, treatment data etc. Further, they can get real time information on the patient’s health related parameters from wearables and sensors.This can enable doctors to understand the ailment thoroughly, take more informed decisions and prescribe treatment better. Further, access to doctors can become easier. Patients can interact with doctors real-time through digital devices from their homes.

    A.I. along with machine learning can also help add value in the health insurance field. Machine learning can automate much of the claims management and handling process by analyzing massive data in a short period of time. Claims can be fast-tracked reducing the processing time and handling costs thereby enhancing customer experience. This will also allow underwriters to move away from routine work and focus onresolving complex risk related issues and thereby provide better value add to customers. Further, fraudulent claims can be recognized by identifying patterns in the data, thereby speeding up settlement of genuine claims.

    Another area that one needs to look at is Big Datacombined with A.I. By identifying lifestyle and health habits of customers through Big Data applications, insures can offer personalized content as well asrelevant & customized offerings to help their customers understand and manage their health better. By identifying illnesses at an early stage, insurers can use Big Data to reduce severity of ailments and the treatment related complications. They can thus enhance their role beyond merely settling claims once the ailment is detected and treatment sought.

    When it comes to the applications of A.I. today, these use cases may well just be the tip of the iceberg. By making sense of the data available, A.I. and machine learning can help answer a lot of questions in healthcare and best health insurance. While these new technologies are sure to influence the healthcare and health insurance space, how fast do they make an impact and to what extent is something that only time will tell.

  • India Inc must step up on cyber insurance

    by Ghayas Ansari | Jun 09, 2017

    As cybercrime becomes a daily phenomenon, corporate and insurance firms should work together to fight the associated risks

    Cybercrime is back in the news, with the recent ransomware attack WannaCry that struck users and firms across the world. Impacting over 200,000 computers in more than 150 countries, it held people and organisations to ransom and at the mercy of cyber-attackers.

    While this incident might have brought the topic back into the limelight, cybercrime is already a day-to-day phenomenon. More than 4,000 ransomware attacks occurred every day across the globe in 2016 — up from 1,000 attacks a day in 2015. Cybercrime damages cost the world $3 trillion in 2016; this figure will rise to $21 trillion, according to experts. Further, cyber malwares are spreading to smartphones and other devices.

    Indian companies and users are equally at risk. At nearly the same time when the ransomware attack occurred, 17 million user records were stolen from a prominent Indian food portal, despite these being stored in an encrypted format. We have already witnessed one of the biggest ever breaches of financial data involving 3.2 million debit cards in India in October 2016.

    Cyberattacks impact firms irrespective of industry and size. Globally, health care, financial services and retail have been the most impacted by cyber breaches. In case of India, the impact is cross-industry, irrespective of whether the sector is consumer-facing or not. Financial services, pharma, oil and gas, apart from information technology (IT), have been the key targets of cyberattackers. According to recent surveys, while Indian executives acknowledge cybercrime as a serious threat to their organisations, few companies have made it part of their board agenda. Three in four companies do not conduct a detailed cyber risk assessment nor do they have any cyber incident response plan in place. This indicates that India Inc is largely oblivious to the critical damage that cybercrime can inflict on business.

    Having said this, some organisations, especially the larger ones in the banking, financial services and insurance and IT space, are ensuring that they build robust cyber security defences. However, these firms are exposed to another risk — their partners and vendors have inadequate or lax security controls. Cyber hackers exploit this weak link to tunnel into systems and networks of companies. Another cause of concern is data that resides on the cloud. The shared, ondemand nature of cloud computing introduces the possibility of new security breaches. A cloud environment faces threats similar to traditional corporate networks, but due to the vast amount of data stored on cloud servers, providers are potential targets for a cyberattack.

    Though cyber risk is acknowledged as a critical threat to business today, investments in cyber insurance remain small. The global cyber insurance market is estimated at $4 billion and is expected to grow to $20 billion by 2025. The Indian cyber insurance market stands at ~300 million and should expand to ~750 million by 2020. While these forecasts convey a major uptrend, they may not be sufficient given that technology-related risks will only grow in size and frequency in the new tech era. More importantly, this new-age risk is vastly different from traditional risks such as fire or marine losses. It does not remain confined to a pattern nor can it be entirely restricted by a defined set of preventive actions.

    Insurers have been gearing up for this new-age onslaught. They have been enhancing their roles by offering consulting, communicating and constituting futuristic solutions. Further, industry leaders are coming together through platforms such as the World Economic Forum to define and draft recommendations on mitigating risks in the tech and cyber-enabled era. The industry has already demonstrated that it can be a source of guidance in advance of a breach and post breach. For instance, having dealt with incidents of many ransomwares in the past, insurers were in a position to guide their clients during the WannaCry attack to take appropriate action and worked jointly with their legal, communication and security teams to respond effectively.

    On the product front as well, cyber insurance has evolved with time. The first “internet insurance” covers were introduced in the late 1990s to address exposure to online content or software. They were offered as an extension under professional indemnity policies with smaller limits. With the enactment of data privacy law in the US, a stand-alone cyber insurance product was conceived. At present, the principal cover under the policy is for damages and legal costs in connection with a data breach. It also pays for various costs associated with the company, negating an impact on its reputation — that is, costs for notifying customers, hiring reputation management agencies and credit monitoring services for affected customers. In addition, the policy pays for cost of forensics investigation and expenses incurred in recreating any lost data. In case of a cyber extortion situation like WannaCry, the policy will pay the ransom as well as costs of a specialist engaged to handle such a situation. In case of an outage of services (denial of service attacks) due to a cyberattack, loss of profits are also covered.

    As the cyber risk situation evolves, insurers are focusing on addressing business interruption losses caused by cyberattacks. Coverage for lost earnings due to customer attrition as a result of network breach is also being introduced. Further, as comprehensive legislations are put in place, insurance offerings are being aligned beforehand to meet regulatory requirements.

    Cyberattacks are bound to increase in the future. It is up to corporate and insurance firms to join hands to work cohesively to fight these risks. For insurers, this presents yet another opportunity to add value to the ecosystem by taking up the risk manager position in the new-age innovation economy.

    Source: Business Standard
  • BS-IV rule may impact business

    by Sudhir Joil | Apr 10, 2017

    Business in the first quarter could be affected in select vehicle segments

    In an interview, Sanjeev Mantri, Executive Director, ICICI Lombard, the largest private general insurance company, shares his views on recent developments in the insurance industry. He said crop insurance is expected to become the third-largest segment in the industry after motor and health insurance. Excerpts:

    As the financial year draws to a close, how would you evaluate the year for the general insurance industry?

    The general Insurance industry has witnessed robust growth of 31% in the fiscal year 2017 [Apr – Feb data]. This has been driven by the introduction of the Pradhan Mantri Fasal Bima Yojana (PMFBY), the government’s flagship crop insurance program as well as a rise in other segments.

    With PMFBY, crop insurance is expected to beSimilarly, the expectedcome the third largest segment in the industry after motor and health insurance. With a healthy GDP growth and rising per capita income levels, we believe that the industry should continue on its strong growth trajectory in the coming years.

    Do you foresee any challenges in this financial year, with recent developments in the health and motor insurance space?

    In the motor space, we could see some impact of the changeover from BS-III to BS-IV in the form of production constraints, thereby affecting business in the first quarter for select vehicle segments i.e. two wheelers, CVs.

    Similarly, the expected implementation of GST may apply downward pressure on vehicle prices,which will reflect in the car insurance online policies.

    Whether this translates to lower cost of spare parts and hence claims cost is to be seen, even as premiums get influenced by new vehicle prices.

    On the health insurance side, the cap on pricing of implants beyond stents would be beneficial to consumers, especially considering that medical inflation growth has been high (above 12% in 2016 as per industry reports). However, the manifestation of this price capping in terms of overall cost of procedures would be known only in time.

    What kind of premium growth has ICICI Lombard witnessed in the various products?

    The year has been positive for us. As a company, we stayed ahead of the industry growth curve, having registered over 33% growth (9M – FY17) in terms of Gross Direct Premium Income (GDPI). In segments such as motor OD, we registered the second-highest accretion in the industry. On the corporate side as well, we registered robust growth across vertical lines.

    The National Pharmaceutical Pricing Authority recently announced capping of stent prices. How would this impact patients?

    The price capping on life-saving coronary stents has led to a drop in stent prices by about 85%. This will bring a major relief to patients who will now be able to avail treatment at much lesser cost.

    Do you foresee any such breakthrough developments or announcements in the near future?

    We could see more such announcements pertaining to reduction in prices of other implants. The approach would primarily focus on making medical procedures affordable for the common man by reducing the cost of such standardised implant devices.

    Heath insurance has always focused on urban areas. Any expectations from the IRDAI that will help in changing this?

    The regulator has been introducing revisions in health regulations in the recent past and this will definitely lead to increase in health insurance penetration in urban as well as rural areas. The recently announced measures pertaining to allowing insurers to launch pilot products will facilitate product innovation. Insurers can now file group products based on approval by its Product Management Committee.

    This will enable them to customise coverage and better meet customer needs. Further, they can offer premium discounts for healthy habits. These measures are customer centric and would go a long way in increasing health insurance penetration.

    We expect the authority to continue to introduce more such consumer friendly measures that will aid the long-term development of the health insurance industry.

    ICICI Lombard’s recent focus has been wellness; how have you intertwined this theme in your offerings?

    We have been revamping our product portfolio and have introduced innovative and relevant ‘wellness’ focused benefits in our health insurance covers.

    Today, we offer benefits such as gym & yoga reimbursements, nutrition consultation and sports & fitness therapy in our product range.

    Under our ‘Manage and Track Your health’ and ‘Affinity to Wellness’ programmes, there are certain activities which the customer can perform to earn wellness points.

    (Source- The Hindu)

  • Trends in General Insurance

    by Sudhir Joil | Apr 07, 2017

    A lot is happening in the general insurance space and Mr. Sanjeev Mantri shares his views,

    In the Union Budget 2017, the Government has focused on an inclusive agenda with increased allocation towards schemes like PMFBY. What’s your take?

    The Union Budget rightly focuses on pursuing an inclusive and long term development of the economy. It targets the key building blocks i.e. infrastructure, digitisation and rural development among others. While pushing for growth is important, it is equally essential that we maintain a balance through risk mitigation. The introduction of schemes such as Pradhan Mantri Fasal Bima Yojana rightly aligns with this thought process. By increasing the budgetary allocation to ₹13,240 for coverage under this scheme and thereby extending its coverage from 30 per cent to 40 per cent in FY 2018, policy makers are ensuring that growth is well protected by adequate risk management measures in place.

    ‘Wellness’ is a theme that your company has been very vocal about. Could you share details?

    Conventionally, non-life insurance as a sector is perceived to play a role only in case of an untoward incident, with focus on settling claims efficiently. At ICICI Lombard, we believe that we would rather play a more proactive role and adopt the principle of ‘prevention is better than cure’. We have been developing our insurance solutions accordingly and have introduced innovative and relevant ‘Wellness’ benefits in our health insurance covers. Today, we offer benefits such as Gym & Yoga reimbursements, nutrition consultation, sports & fitness therapy to encourage and handhold our customers in their quest to stay healthy.

    Further, we have introduced innovative open access platforms such as ‘Health Advisor’, which empower consumers to benefit from peer opinion pertaining to quality of treatment at hospitals. We also provide detailed information on the infrastructure and cost of treatment at specific healthcare providers through our website

    What technology initiatives are being taken by ICICI Lombard currently?

    We were the first in the industry to introduce the online channel way back in 2005 and have been the pioneers in offering technology enabled insurance solutions since then. We have developed a suite of innovative, tech driven solutions for our customers that can be accessed from anywhere, at anytime. Most recently, we have unveiled a completely new, mobile first website that offers end to end solutions to our customers.

    We have also launched a unique solution for our customers which enable hassle-free renewal of lapsed motor insurance policies. Traditionally, when a motor insurance policy expires, a mandatory inspection is required to be done by a surveyor which is time consuming. With our ‘Mobile Self Inspection’ feature, customers can conduct the vehicle survey themselves by uploading a self-inspected video on ICICI Lombard’s ‘Insure’ app. The video is reviewed by ICICI Lombard’s underwriting team. Once approved (within a few hours), the customer can pay online and the policy is renewed.

    Another unique feature that we introduced sometime back is to allow customers to receive a renewal quote by simply sending a picture of their existing policy (from any insurer) through ICICI Lombard’s ‘Insure’ app. On receipt, a quote is sent within a few minutes with details of the insured and vehicle pre-populated. The customer can accept the quote or modify the proposal as required and then pay through the app for instant policy issuance.

    How is long-term two wheeler insurance faring?

    The two wheeler segment has for long grappled with the problem of uninsured vehicles on roads. As per estimates, around 70 per cent of vehicles plying on roads do not have an insurance cover. The Long Term Two Wheeler policy is one of the many innovative steps that we have taken to plug this insurance gap.

    In terms of the response to the product launched in April 2015, we crossed the 5 lakh policy mark and garnered over ₹100 crore premium in the first year itself. Today, the product has already crossed the ₹200 crore mark. This proves that a simple yet innovative product can go a long way in reinvigorating a category. To understand the customer response in detail, we conducted a comprehensive research with nearly 1000 customers who had purchased the product. We registered 90 per cent acceptance levels and more than 94 per cent advocacy from customers.

    On a different note; you are an avid marathon runner. How do you manage to pursue your passion for running?

    Certainly I am very passionate about staying active through some form of physical activity that keeps my adrenaline high. Fortunately, my current role also necessitates that we play an active role in our customer’s life to keep them fit and healthy. That being said, I truly enjoy the process or the build-up that goes in running a marathon, more than running one. I believe that each one of us should have an activity that we pursue as a hobby, one that goes beyond our day to day work life and can go a long way in keeping us mentally and physically fit.

    (Source-Outlook Money)

  • Goods and Service Tax (GST)

    by Sudhir Joil | Mar 08, 2017


    Goods and Service Tax (GST) is a destination based tax on consumption of goods and services. It consists of Central GST ("CGST") and State GST ("SGST") for intra state supply & Integrated GST ("IGST") in respect of interstate supply. State wise registration is required for all places of business in the State. Central GST & Integrated GST rate would be uniform across the States whereas State GST rate may vary to the extent of 2%. Invoice with unique consecutive serial number, name, address, GSTIN of insured needs to be issued towards collection of premium. Except IGST, CGST & SGST liability can only be adjusted against CGST, IGST & SGST, IGST respectively.


    GST registration in each State of operation would also require following to ensure compliance:

    • • State wise GSTIN of the insured other than non -business customers would be required to be captured in policy booking system;
    • • The GSTIN of the insured, State of branch issuing policy along with other basic details needs to be mandatorily reflected in the policy copy;
    • • Monthly returns capturing GSTIN of the insured other than non-business customers along with Premium & GST amount would be required to be uploaded on GSTIN website
    • • Input Tax Credit would be available to the insured of GST paid on premium to the extent reflecting against their GSTIN.

    GST liability will arise in the state of branch office booking the policy as under:

    • • If the state of branch office & address of the insured is same, CGST & SGST will be applicable simultaneously being intra state supply;
    • • If the state of branch office & address of the insured is different, IGST will be applicable being interstate supply.

    Input Tax Credit ("ITC") on expenses including claim & commission would also arise at State level as under:

    • • ITC on other than common expenses would be available in the Consumption State of branch office;
    • • ITC on Common expenses would be required to be distributed to the States on the basis of month wise State Gross Written Premium ("GWP") ratio;
    • • State level ITC mapping may result in accumulation of unutilized tax credit & high cash flows in States with lower/higher GWP;
    • • ITC would be available only to the extent of reflecting in the Electronic Ledger upon payment by vendors/Garage/Surveyors/ Hospitals etc. against GSTIN of the Company on the basis of monthly return filed by them.

    Positive Impact

    • • There is no distinction between Goods and Services hence the VAT credit would also be additionally available for setoff against the GST liability on Insurance Services.

    Negative Impact

    • • Every State has an option to increase the GST rate declared by GST Council to the extent of 1 to 2%. As a result, there may be a differential GST rate from State to State. Hence the premium pricing of the product would vary from State to State on account of differential tax rate.
    • • The insured may require State wise policy in case of multiple risk location to avail the State wise input credit & for adjusting the same against the corresponding GST liability in the State. As a result there will be increase in count of policies, stationery cost etc.
  • Our MD & CEO Mr. Bhargav Dasgupta's view on the Union Budget 2017

    by Sudhir Joil | Feb 06, 2017

    The Union Budget was a much awaited event post the demonetisation drive, a momentous step by any standard. While many were expecting the budget to provide sops to balance the short term impact of the drive, I think the Government has done well to present a prudent balance sheet that focuses on the long term growth prospects of the nation and gives a boost to those areas that form the backbone of the Indian economy. To my mind, the focus on agriculture growth, digitisation, infrastructure development and enabling cashless transactions will give the necessary fillip to India's long term growth engine.

    While there are many aspects of the budget that have been dissected by several experts, I would like to focus on one area that hasn't received adequate attention. For long, we as a nation, have been pursuing only the growth agenda without adequately emphasising on the importance of risk alleviation, even though natural catastrophes and man-made disasters now occur at an alarming frequency. The government has taken cognizance of this in recent times and has taken some steps towards risk mitigation for different segments of our population. Here, I would like to point towards a specific measure announced in the budget for a very critical sector - agriculture. Even though the contribution of agriculture to India's GDP is only 16%, it provides employment to over 50% of the working population. Further, the sector is highly volatile and vulnerable to both pricing as well as production risks due to droughts, inclement weather, floods etc.

    While we have had several crop insurance schemes in the past, most of them have not been too successful given the complex structures and limited cover. The Pradhan Mantri Fasal Bima Yojana (PMFBY) announced in January 2016, however seems to be turning the tide. Within a year of its launch, the coverage of crop insurance has increased to 29% from 23% earlier. Today, crop insurance already accounts for the third largest segment for the non-life insurance sector as a result of PMFBY cover. By further increasing the budgetary allocation towards this scheme by ₹13,240 crore for FY18, the Government is looking to increase the coverage from the current 30% to 40% in FY18 and 50% in FY19. This will facilitate more farmers, especially the non-loanee ones to come under the ambit of crop insurance, thereby securing their harvest against the vicissitudes of erratic monsoons.

    The Government has set the target to double farmer incomes in the next 5 years. By promoting risk mitigation measures through schemes such as PMFBY, we can look forward to a robust agricultural sector and ensure an inclusively growing India in the coming years.
  • Insurance e-commerce norms will push insurers to innovate

    by Sudhir Joil | Aug 19, 2016

    E-commerce as an industry took birth way back in 1979 but became mainstream with the launch of in 1995. Starting with simple sale of standardised products, the segment has evolved to empower consumers to design and customise products online to suit their individual preferences. In a span of two decades, the sector has grown to a $1.67-trillion industry. India, which is touted as the world’s fastest growing major economy, is also among the fastest growing e-commerce markets. For a country that registered $3.8 billion in sales in this sector in 2009, the industry is expected to grow 10 times to $38 billion by the end of 2016.

    The Indian insurance industry is expected to actively participate in the online revolution. It is estimated to clock online sales of ` 20,000 crore by 2020, a rise of 20 times in just 5 years. We have already experienced success stories in online insurance. Life insurance products such as term insurance got a new lease of life with the surge in online policies that were priced lower than traditional term plans. General insurers, too, haven’t stayed behind. They now offer non-life insurance products on both online and mobile platforms. In fact, today, products such as travel insurance dominate the online platform, with two in every three travel insurance policies being purchased online. Motor insurance renewal is already witnessing a shift to the online platform, and more recently to mobile apps.

    In a major milestone, the insurance regulator recently released an exposure draft on guidelines pertaining to distribution, sale and servicing of insurance products through the online platform. This came with a short period of the government announcing e-commerce regulations.

    The new guidelines are a much needed step for the industry to ensure a clear roadmap for multiple entities that want to establish or enhance their online platforms.

    Even as the guidelines provide clarity in terms of the responsibilities of insurance companies and intermediaries, they will ensure a better experience for consumers as well. For one, consumers should benefit from a seamless experience while buying insurance. At their end, insurers need to quickly align their online platforms with those of their channel partners or work with the intermediaries to develop integrated systems that cut across the manufacturer-distributor relationship. The guidelines also provide a clear roadmap for the distribution chain encompassing the insurer and the intermediaries. They map the responsibilities for the intermediary, including the role of the insurer in case a policy is sold online by the intermediary. This is important as consumers buying online will not have the traditional support of their family agent or preferred dealer but will have to seek support of neutral platforms.

    Further, insurers will be allowed to sell products through the online platform which are currently available through offline channels with differentiated pricing. This will enable insurers to offer their entire suite of products and combine their product development expertise with the service capabilities that the online platform offers. For consumers, this means access to quality and tested products at differentiated prices while wanting to avail the convenience and speed of the online platform.

    Some may argue that products like insurance need an offline intervention given the nature of the product wherein the benefits are not immediately evident or are derived after a long gap post-product purchase.

    Also, one needs to understand multiple aspects of the product, including policy exclusions. These fears seem to be farfetched as life insurers have already successfully sold term plans through the Web medium for many years, including the high-value single-premium option. Similarly, general insurance companies are gaining traction online in products such as travel and motor insurance.

    Many industries have been able to improve product penetration by moving online and the insurance sector too can witness the same impact.

    We expect the guidelines to provide clarity on the distribution front in terms of their implication for the diverse set of distribution partners. As specified, Insurance Self Network Platforms would need to be set up by interested companies to sell insurance online without any offline intervention. It would help if the regulations provide complete clarity on key processes such as filling of forms and their acceptance, pricing of insurance covers, compliance to know-your-customer (KYC) requirements, issuance of policies, settlement of claims and other policy related aspects. Having said this, the measures announced on e-signatures and eKYC as well the mandatory requirement to set up e-insurance accounts to store policy documents are a big move forward in that regard.

    So what lies ahead? It is now in the hands of industry participants and other stakeholders to work together and introduce comprehensive Web enabled and mobility solutions for the benefit of consumers, especially the millennial generation, which is oriented to the online experience. One can learn from the online retail industry which, driven by entrepreneurship and innovation, has dismantled many traditional approaches to product sale and customer service. Simple yet innovative product offerings and customised solutions are possible in the online era. The stage has been set; it is now for the industry to make the leap into the online age.

  • Have you declared the correct IDV for your vehicle?

    by User Not Found | Feb 12, 2016
    It is a testing time for Indian consumers. Amid sluggish economic growth and persistently high interest rates, the need to manage monthly budgets without compromising on essential amenities remains a daunting task. Even as one continues to face the challenge of rising cost of food items, another area that witnessed a price increase recently was motor insurance third party premium. As per the new guidelines, third party motor insurance premium, which forms an important component of your vehicle's comprehensive insurance policy, has undergone an increase of 20% for private cars, 10% for two wheelers and 10% for commercial vehicles.

    Comprehensive insurance policy comprises two covers – Own Damage (OD) and Third Party. OD covers loss or damage to vehicle against accidental damage, natural calamities and manmade calamities, whereas third party cover protects the insured against liability due to accidental damages resulting in the permanent injury or death of a person, and damage caused to the surrounding property. For premium computation, Insured Declared Value (IDV) is considered for calculating OD premium, whereas third party premium is tariffed as per the vehicle category and has no relation to the IDV of the vehicle.

    Even though premium rates have increased, there are ways to reduce your motor insurance premium i.e. on the OD component. One can avail NCB benefit, buy anti-theft devices , opt for voluntary deductible, etc. to avail premium discount. However, at times, some customers tend to adopt not so favourable means to reduce the insurance premium. This includes declaring or unknowingly accepting a lower Insured Declared Value (IDV) of the vehicle. IDV is central to deciding the insurance premium of your vehicle, be it a sedan, two wheeler or SUV. A lower IDV may help reduce your motor insurance premium but can lead to significant loss in case of intimation of the insurance claim.

    Let's understand the concept of IDV in detail. IDV is considered to be the sum insured and is fixed at the commencement of each policy period for each insured vehicle. IDV is arrived on the basis of manufacturer's listed selling price of the brand and model, as the vehicle proposed for insurance at the time of commencement of insurance / renewal and then is adjusted with the standard deprecating rates as per Indian Motor Tariff. IDV is the maximum amount that insurance company will pay in case of a claim i.e. in the event of total loss (the vehicle is no longer capable of running on the road), constructive total loss (aggregate cost of retrieval and/or repair of the vehicle is greater than 75% of IDV) or your vehicle being stolen.

    For example, if your vehicle value or IDV is fixed for `4 lakhs at the commencement of the policy, the maximum amount the insurance company will compensate you in case of total damage to vehicle or theft will be `4 lakhs. It is important to note that compensation is given only in case of total loss, constructive total loss or in an event of theft of the vehicle within the policy period.

    The rate of depreciation keeps increasing with the age of the car. A new car will fetch the maximum IDV but as the vehicle turns old, the rate of depreciation keeps increasing. To cite another example, a car not exceeding 6 months might be charged 5% depreciation rate whereas a car aged between 4 years will push the depreciation to 40%. The rate of depreciation is arrived based on a standard metric (on the basis of age of the vehicle). If the car is more than 5 years old or is an obsolete model (i.e. model which the manufacturer has discontinued to manufacture) is determined on the basis of an understanding between the insurer and the insured.

    It is to be noted that at the time of first purchase as well policy renewal, current selling price of the brand and model is considered for computation of IDV and not the price at the time of purchase of the vehicle. For example if a customer purchased a particular brand and model vehicle in April '12 at `10 lakhs and the current (April '14) selling price of the same brand and model is `11 lakhs; the insurance company would consider the current listed selling price i.e. `11 lakhs for computation of IDV.

    If one declares a lower IDV than the reasonable market value and were to make a claim for total loss, one would receive a lower claim amount since the IDV declared was lower. A little saving on the premium by declaring a lower IDV can thus result in much higher loss in an unfortunate event of a large claim or theft of the vehicle.

    At the same time, some customers tend to declare a high IDV assuming that the claim amount will accordingly increase or it can help them if they were to sell the vehicle in the market. However, it must be noted that IDV is the maximum possible claim amount that the insurer will provide depending on the type of loss. At the time of claim processing, the insurer will consider the age of the vehicle and hence its depreciation before finalizing the claim. As such, one may end up receiving a lower claim amount despite having taken a higher IDV and hence paid a higher premium.

    So, the next time you renew your vehicle insurance, make sure that the IDV declared is in sync with the vehicle age and model.
  • Significance of Motor Insurance

    by User Not Found | Feb 12, 2016
    It is imperative for a driver to own a motor insurance. Motor insurance is legally required in almost all the countries in the world. Owning a quality motor insurance protects the driver, the passengers and their vehicle.

    The amount of insurance that one may require may vary depending on the country they are in. If drivers are caught driving without car insurance they have a high risk of their vehicles being impounded on the spot. The driver could also be charged with heavy fines and fees by the courts if caught driving without insurance policy. In addition to all these issues, the driver may also get his license suspended or revoked for a certain amount of time.

    Insurance offers protection
    The most important reason to own insurance is the financial, medical and personal protection. Motor insurance cover body injuries, damage to the vehicle, theft, payment of medical bills. A quality motor insurance may also temporarily replace income for an insured person who may be unable to work as a result of an injury from a fatal accident. If a person is uninsured and they are involved in a dangerous accident, they may find themselves in a financially compromising situation. Keeping in mind these financial and physical stresses it is important to purchase motor insurance.

    Also, if the driver is hit by someone who does not possess a motor insurance policy and even if he does not have one, chances are the driver will have to pay for his own medical treatment. In such a time it is important to own quality insurance policy.

    Another important reason for owning a motor insurance policy has to do with the cost of repairs of the other vehicle if the driver hits someone. Vehicle repairs can be very expensive. If the driver is at fault in an accident he may be required to pay for the repairs or the replacement of the vehicle that has been hit.

    Drivers should bear in mind that there a number of details that should be taken into consideration when applying for a motor insurance.

    Unfortunately most drivers ignore reading or understand the policy or the related jargon associated with it. Most people do not read the policy documents thoroughly and ignore the "disclosure" clause until they are frantically trying to make a claim after an accident. If a second hand car is purchased the new owner needs to ensure that the cover of the previous owner is null and void. This is applicable even if a legal ownership transfer has not yet materialized.
    The driver holds a huge responsibility once he is behind the wheel and on the road. It is up to him to ensure absolute safety for his passengers and pedestrians from any harm. One of the ways to ensure safety from themselves and others is to own a quality motor insurance.
  • What is Consequential Loss

    by User Not Found | Feb 12, 2016
    Monsoon is here and incidents of water logging leading to vehicle breakdown, traffic jams are making news headlines again. Even as the administration and we as citizens make efforts towards a trouble free monsoon, invariably there will be days when we come across such situations in the coming weeks.
    As vehicle owners, we can prepare better by ensuring that our vehicle is serviced and has undergone pre-monsoon check up. Apart from this, it is extremely important for us to depict the right behaviour when it comes to situations of water logging on roads.

    Today, more and more cars as well as motor bikes are installed with high technology equipments to ensure a safe and comfortable drive. However, the same technology also brings its own disadvantages when it comes to the monsoon, especially in situations of driving through water logged areas. You may have driven or seen other motorists driving through water and the car engine suddenly stalling. This is a phenomenon known as hydrostatic loss and can impact any vehicle including those with high technology and equally high price tags. It is important to understand the reason behind this phenomenon and how to avoid your car from getting stalled in a water-logged area.

    As you would be aware, vehicle engines work on the principle of combustion. This involves continuous intake of air supply to compress and ignite the fuel in the engine cylinder to create the necessary force to drive the engine. In high end cars, this suction capacity is multiplied several times given the need for high power. While driving through a water logged area, water can find its way into the engine through the air intake valve. Since water cannot be compressed, it leads to a situation where the engine cylinder rod bends or breaks leading to engine seizure. The problem gets aggravated when the driver tries to forcibly turn on the vehicle or crank the engine resulting in heavy damage to the engine.

    It is important to note that engine damage due to hydrostatic loss is classified as a consequential loss as per motor insurance regulations and is not covered under a regular motor insurance policy. This is because the damage is a consequence of a certain action resulting from having cranked the engine and not an outcome of an uncertain event. The cost of engine repair in this case would be minimum `1 lakhs for a small car and around `3 lakhs for a mid-size car. For SUVs and premium vehicles, it can be upwards of `10 lakhs.

    So how do we avoid such incidents? As they say, prevention is better than cure. It is best to avoid driving your vehicle through water logged areas. If you were compelled to do so and the vehicle was to stall, avoid cranking the engine under any circumstances. Instead, call your insurance company or a towing service provider to get the vehicle towed away safely to a garage or service station. The critical point is to avoid trying to move your vehicle by trying to restart the engine.

    In addition to the preventive approach, one can also consider purchasing an add-on cover that insurers now offer to cover such losses. With this cover, you can avoid paying for the damages that occur to the vehicle engine if the same stalls while driving through a water-logged area. Priced at only around 10% of your motor insurance cover, it can save you from incurring heavy expenses towards engine repair from hydro-static loss. It is important that you avail this cover at the time of purchasing or renewing your motor insurance policy.

    Monsoons bring relief from the heat but also bring their set of problems, especially when on the road. It is best to show precaution and be equipped with the right cover to financially secure ourselves from high losses arising out of vehicle stalling in water logged situations.

    So if you were holding any of the above misperceptions, rest assured, go ahead and purchase a comprehensive student travel insurance right here before you leave for your dream destination.
  • Motor insurance outlook for 2015

    by User Not Found | Feb 12, 2016

    2014 was a mixed bag for the automobile industry. Passenger cars as a segment witnessed muted consumer demand. Commercial vehicles that have been registering de-growth since 2011-12 continued to decline at -7% (Apr-Nov ‘14). While a decisive electoral mandate at the Centre revived sentiments, the impact of the mood change is yet to translate into actual purchase. The exception was the Scooter segment that grew at 28% in the first 8 months of the current fiscal. Industry stakeholders are hoping for a better 2015 aided by policy reforms, lower petroleum prices and expected reversal in interest rates.

    The motor insurance segment was impacted by the automobile sector trends, and the sector grew at a slower rate of 9.8% in the 8 months of the current fiscal. While any signs of uptick in vehicle numbers will be closely watched, there are several interesting trends that the industry and motor insurance customers can look forward to in the New Year ahead.

    One of the key facilitators in 2015 would be the proposed introduction of the Road Transport and Safety Bill. Scheduled to replace the erstwhile Motor Vehicles Act, 1998, the bill aims to arrest the rate of incidence of deaths and injuries caused by motor accidents. It focuses on improving safety standards of vehicles, enforcing compliance to rules by motorists and levying heavy penalties in the form of monetary and legal action on the violators. This should help reduce the country's road accident fatality rate, which is one of the highest in the world.

    The bill also plans to introduce a National Unified Information system which will centralize details on vehicle registration, driving licenses, insurance, permits, penalties and accidents. This can address one of the most contentious issues raised by motor insurance companies for long. As is widely known, India has a high percentage of uninsured vehicles, with some reports placing this population at 30 - 40%. The availability of a central database will foster efforts towards increasing insurance penetration and allow identification of fraud arising out of forged documentation of insurance policies, vehicle registration etc. The bill also recommends the implementation of DAIR (Detailed Accident Investigation Report) framework which will reduce reporting time for insurers and the waiting time for claimants thereby improving customer experience when it comes to third party motor insurance claims.

    The central database could also allow insurers to apply risk based pricing wherein the risks applicable to the driver and vehicle in question are factored in while arriving at the premium instead of the current limited approach of asset based pricing. This will directly benefit those customers who follow safe driving habits and practice timely renewal of mandatory documents i.e. insurance policy, driving license etc. in the form of lower motor insurance premiums.

    On the product front, 2015 should see the continuance of customer centric solutions from insurers. Insurance companies are gradually evolving from being mere risk financiers to performing the role of risk managers. Within the motor insurance space, companies are introducing innovative offerings. Benefits such as six-month warranty on quality of repair are now being offered by some insurers. Similarly, assistance services in the form of towing facility, emergency accommodation are becoming mainstream. In the coming year, motor insurance customers can look forward to newer benefits such as insurer provided extended warranty on motor parts, interest on delayed claim payments etc. Customers can also look forward to longer term policies that will reduce the hassle of yearly renewals.

    Technology is pervading our lives like never before. Even as insurance companies promote online insurance purchase, the coming year will see a greater emphasis towards providing value add services and convenience to customers through the digital medium. Mobile as a platform will take the centre stage as insurers experiment with innovative solutions through mobile apps to drive engagement and build customer loyalty.

    Another area that should see increased activity is the analytics space. Having access to reams of customer details and claims data, insurers will work towards building capabilities to better understand their customers. The focus would be on predicting potential fraud using analytics and investigating those cases in time. This will help hasten the settlement process of genuine claims thereby providing a better claim settlement experience to the larger base of customers.

    The New Year holds a lot of promise for Indian consumers. For Motor insurance customers, this should translate into better products, convenient services and an overall enhanced experience from their vehicle insurance policy.

  • Natural or Manmade disaster - Get your vehicle engine covered

    by User Not Found | Feb 12, 2016

    A vehicle is one of the most prized possessions that we purchase during our lifetime. We take utmost care in protecting it from wear & tear and external damages. Though an insurance policy does cover repairs when the vehicle is damaged during an accident, it becomes redundant when the vehicle is submerged in a flood. In this scenario, water can enter the vehicle engine causing it to cease, bringing the vehicle to a standstill. The recent natural catastrophes in the states of Jammu and Kashmir and Andhra Pradesh led to severe flooding across the region.

    Such incessant rains without any warnings created havoc and caused damages not only to human life but also to property and vehicles. The general mindset and behaviour of vehicle owners purchasing a motor insurance policy is that the insurance cover would guard their vehicle from all sorts of damages including engine damage. However, damage caused to the engine through water ingression due to cranking or repeated starting, referred to as "Hydrostatic Lock" is not covered under a comprehensive motor insurance policy. This is because the damage is a consequence of cranking the engine and hence not a probability event.

    The engine is the most crucial mechanical component in a vehicle. Any damage caused to the engine stalls the vehicle. engine repair charges can be exorbitant, given that the engine may need to be replaced in case of severe damage. To avoid a scenario of paying an exorbitant amount, one can opt for purchase an engine Protect cover to take care of Hydrostatic Lock. The cover also takes care of consequential losses to engine, gear box and differentials which is caused due to leakage of lubricants as a result of an accident. Such a cover is an add-on cover to a normal motor insurance policy. The cover is available at a marginal cost of about one tenth to the overall motor insurance policy but goes a long way in preserving your savings in case of damage to the vehicle's engine. The most susceptible to engine damage are diesel variant car models which come with high compression engines that are more prone to damages in case of the car getting submerged or driving through accumulated water. At the other end, luxury cars too are not immune and come under the sphere of engine damages due to water ingression.

    Engine Protect covers assures you that your vehicle is safeguarded from all the external as well as internal damages caused by an event which is beyond human control. Disasters do not come with a warning but preparedness to shield oneself against them is definitely a smart move.

  • International Travel Insurance - A lot more than just the flight journey

    by User Not Found | Feb 12, 2016
    Travelling abroad on a holiday is something each one of us aspires for. Visiting exotic locations, experiencing the local culture and heritage, relishing local cuisines are things that we look forward to when on an international leisure trip. Not to forget the moments of fun and frolic with family or friends.

    Even as we plan for the trip, unexpected events during the tour can potentially disrupt the fun filled moments or worst lead to an abrupt end to the itinerary. Availing of a travel insurance policy can help you mitigate the impact of several incidents that can disturb your holiday. While most of us are aware about the availability of travel insurance policies, surprisingly many of us mistake this product to be offering cover only for flight delays, cancellations and lost baggage. In reality, a travel insurance policy offers a much wider spectrum of coverage.

    These include:

    • Cover for Medical emergencies: In case of emergency medical treatment, your travel insurance policy can reimburse the expenses incurred on the treatment. You can also avail of cashless facility at network hospitals. A noteworthy point here is that pre-existing diseases are also covered in case of emergency and life threatening situations. In addition, one is not required to undergo medical check up till the age of 85 years.

    • Emergency Medical Assistance: This part of the travel insurance policy can assist you in getting immediate medical help for transfer to a hospital in case of an accident when abroad.

    • Cover for Trip cancellation, curtailment or interruption: Your policy can also compensate for any financial loss resulting out of cancellation or cutting short a trip abroad.
    • Personal Accident cover: This feature provides insurance to the policy holder's family, in case of his/ her unfortunate demise or a permanent total or partial disability such as loss of a limb or loss of eyesight.

    In addition to the above covers, a travel insurance policy offers many other benefits that not only you but your wife, old parents or any other family member back home can avail of Insurance firms nowadays offer value added services like medical concierge, automotive assistance, lifestyle services e.g. gifts or flower delivery assistance, home movers assistance, plumbing or electrical assistance etc.

    While choosing the right travel insurance policy based on your needs is important, it is equally critical that you keep a few things handy so as not to face inconvenience at the time of claiming the cover after an unforeseen event. While travelling abroad, you should ensure that you have the customer service numbers of the Third Party Administrator (TPA) or the Assistance Company handy, so that you can intimate the TPA regarding the cashless or reimbursement claim ensuring hassle free claim processing. The assistance Company can also help the insured at the time of crisis be it in the form of contacting the embassy, locating the nearest cashless clinic, hospital admissions etc. It is important that you read the fine print to make the best out of the insurance policy and are informed of the coverage provided. While requesting for a claim, it is important that you complete the documents properly. For instance, in case of claims pertaining to flight cancellation, trip delays you should obtain a written proof from the airline authorities stating the period of delay. Other documents like copy of passport, visa with entry and exit stamps, copies of boarding pass, ticket and baggage tags should also be retained and submitted while filing a claim. Similarly, for claims pertaining to medical emergency the duly completed claim form signed by the treating doctor, original documents of doctor's medical report, admission and discharge cards, original bills, vouchers, payment receipts stating the details treatment and prescriptions, copy of X-ray, pathological and investigative reports will be required. Also all the documents must be sent within 30 days of your return to India or expiry of policy, whichever is earlier.

    So the next time you travel on an international holiday, be sure to subscribe to a comprehensive travel insurance policy and ensure an enjoyable trip abroad.
  • Insure your car against thefts!

    by User Not Found | Feb 12, 2016
    Who would have thought that 3 SUV's would be stolen in a span of five minutes in broad day light in a city like Mumbai! This incident left surprised not only the owners of the vehicles but also the local police personnel who are investigating the incident. This is not the first time that such incidents have taken place in our country. As each day passes, there are reports across police stations, where FIR reports are being filed about car/bikes being stolen from public places.

    In fact, as per a 2012 report by National Crime Record Bureau, India has the world highest vehicle theft cases i.e. every four minutes one car is stolen. To curb such incidents, the police are doing their duty by arresting suspected anti-social elements but it also critical and imperative for car/bike owners to take precautionary measures to avoid such an event with our vehicle insurance.

    Let's take a hypothetical example wherein Shyam who has recently purchased a car, goes out with his spouse to watch the last show of a movie at a local theatre in Mumbai. To avoid the cost of parking his vehicle in the mall where the theatre is situated, Shyam goes ahead and parks it in a secluded and unmanned ground close to the mall. Once the movie is over, Shyam and his wife return to the unmanned area and are shocked to find that their car is missing from the location.

    Fearing for the worst, Shyam has no option but to approach the local police station to file a report on his car being stolen. Such incidents usually require time for the Police to investigate. However, it is the vehicle owner who has to undergo the mental stress of having lost his priced vehicle even while cooperating with the authorities investing the matter. To avoid or minimize the damage of a similar incident if it were to happen to you, let's look at some preventive measures which car/bike owners should proactively undertake:

    • Paid Parking: Though it's a hurdle for car/bike owners in metro cities to find paid parking places, it would be wise to search or plan your social/professional activity wherein you can park your vehicle at a municipality authorized parking area. Do not forget to take the parking tag/valet note, which ensures that the vehicle is under the custody of the authorized parking entity. By doing so, it becomes easy for the police to investigate the incident, since the vehicle was parked under an authority whom they can question.
    • Installation of Anti-theft devices: With anti-social elements always on the hunt, it's a wise decision to install anti-theft devices in your vehicle. Insurance companies too vouch for installing anti-theft devices, which can be a crucial aid during times when your vehicle is stolen. As an added incentive, installation of such devices in your car can help you avail a discount on the insurance premium. Some car manufacturers are already providing prefixed anti-theft devices in new vehicles or one can buy them from the local market.
    • Check your insurance cover before filing a claim with the insurance company: Vehicle owners especially two wheeler customers show a tendency to opt for the mandatory Third-Party insurance cover instead of the Comprehensive insurance cover. While this may save them with a few rupees, the cover is futile if a claim of stolen vehicle is intimated to the insurance company. This is because Third-Party cover guards the insured from physical losses levied by Third-Party entities in case of an accident. However, by opting for a Comprehensive Insurance cover, you are provided reimbursement of the vehicle's Insured Declared Value (IDV) by your insurance company in instances where the police might not be able to track the vehicle within the stipulated timeline. Comprehensive insurance cover will also cover the damages to your vehicle if it is recovered damaged. It may happen that the thief damages the vehicle interior or parts and abandons it. In such a scenario, the repairs will be covered with comprehensive coverage minus your deductible, subject to the extra features you have added on to your policy. If you are unsure of what your policy covers, make sure to find out by reviewing your policy with your agent or reading up on the subject. Knowing how your policy works before a claim situation arises will relieve you of a lot of stress.
    • Documentation: Often car/bike owners store original car purchase papers and insurance copies inside the vehicle. When encountered with an incident of theft, it is a tedious and time consuming activity to get duplicate copies from the car dealer as well as retrieve information from the insurance company, when you do not posses any information on car purchase and insurance policies. To avoid last minute hassles for lapse committed by you, it is be recommended to photo-copy the original documents and store the same in the vehicle. This will ensure that you have all the official papers handy when filing a loss report with the police as well as intimating a claim with the insurance company.

    Owning a vehicle is a prized possession for all of us. Seeing it being stolen would be a nightmare for any vehicle owner. Being proactive and complying with the above tips would minimize or lessen the physical and mental burden during such an incident.

    Happy Driving!

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