China's latest reverse mortgage pilot scheme, which took effect on 1 July in four of the country's biggest cities, is seen as a niche rather than a mass market programme.
The two-year programme is being carried out in Beijing, Guangzhou, Shanghai and Wuhan. Under it, those aged above 60 can mortgage their residential property to an insurance company in exchange for a certain sum every month. The payout depends on the market value of the property and the owner’s life expectancy.
The programme offers customers two options – participating and non-participating. A participating reverse mortgage allows the insurer to share in any gains arising from the property in question, while under the non-participating option, the insurer does not share in any gains.
The reverse mortgage is seen a niche product because many Chinese cling to the traditional belief that property should be bequeathed to their children, Professor Wang Guojun of the Capital University of Economics told the Economic Daily. Analysts say that it could be attractive mainly to those who have no children or who have more than one property.
In addition, the scheme carries longevity risk for insurers whose profit margins would decrease the longer the life span of the mortgagee, said Prof Wang. Thus, it is considered a product which can be sustained by large insurers rather than their smaller rivals which lack financial capacity and data support.
Previous similar programmes in several cities in recent years met with cool response because of the property inheritance tradition and issues such as China's 70-year leasehold system for residential property and the basis for valuing the mortgaged property.
General insurers have proposed to the government to allow them to issue compulsory third-party (CTP) motor cover, with limited liability. For the high-risk commercial vehicle segment, an option for additional liability limit covers is proposed, which will provide a sum over and above the basic motor policy.
Led by the industry body, the General Insurance Council, non-life insurers have sent a proposal to the Road Transport and Highways Ministry to consider TP covers with fixed limits, similar to the pre-determined liability limits for air and train accidents, reported Business Standard.
The implementation of this model will need an amendment to the Motor Vehicles Act which currently does not stipulate any limit on the liability of vehicle owners. Non-life insurers say due to this law, an increase in claim awards by courts is seen every year.
Currently, combined ratios in the motor insurance segment stand at 140-150%, owing to losses in the TP motor segment. According to estimates, payouts by insurance companies to individuals for motor TP-related accidents have risen 15-20%.
In the financial year ended 31 March 2013, general insurance companies incurred total claims of INRR176 billion (US$2.93 billion) in the motor segment, according to data released by the Insurance Information Bureau of India. "The commercial vehicle segment sees the highest losses and the most claims. If this segment's TP liability is limited, it could lead to lower premiums for other categories," said the chief executive of a small private general insurer.
In 2012-13, the total premium collected in the motor business segment stood at INR284.6 billion. Of the total claims, TP claims amounted to INR91.8 billion while 'own-damage' claims stood at INR84.2 billion.
The General Insurance Council, which represents non-life insurers in India, is planning to introduce three to five-year motor insurance policies to tackle the issue of a large number of uninsured vehicles in the country.
The option to buy such policies will save customers the hassle of renewing their motor cover annually, reported the Hindu Business Line citing Mr R Chandrasekaran, Secretary-General of the General Insurance Council, who was speaking at an insurance conference.
The Council is working on the pricing mechanism for such policies. The premium for third-party motor insurance is currently set annually by the Insurance Regulatory and Development Authority (IRDA). According to Mr Chandrasekeran, there is unlikely to be discounts on long-term motor policies because insurers are facing losses on the third party motor insurance portfolio.
One reason for the losses is increases in claims. According to IRDA, the average death claim under third-party motor insurance grew to INR390,000 (US$6,480) in 2012-13 from INR210,000 in 2007-08, a jump of 85% in the last five years. The average loss ratio in third-party motor business is 140%.
Although motor insurance is mandatory for all vehicles plying on roads, a proportion of vehicle owners still do not buy the insurance.
Prospects for the sustained profitability of the bancassurance model, which has been the key driver of growth in the Kazakh insurance sector, will depend on the quality of regulation and further growth in consumer lending, according to Fitch Ratings in a recent report.
The Kazakh bancassurance model generates strong profitability for insurers through a low loss ratio. However, Fitch's analysis indicates that bancassurance profits are increasingly transferred to shareholders rather than being retained within the Kazakh insurance sector.
The profitability of the insurance sector has been strong since at least 2008, with both underwriting profit and investment return contributing to the sector's net profit. The underwriting result is significantly concentrated among a few of the largest players in the sector. In Fitch's view, this reflects a limited level of competition in the Kazakh insurance sector and significant related party operations both in bancassurance and commercial non-life insurance.
In addition, Fitch believes that Kazakh underwriters of employers' liability risks are exposed to significant reserving risk. This risk is not fully captured on the balance sheets of Kazakh insurers and reflects the increased registration of disability, to some extent due to mala fide practice, modest quality of pre-underwriting surveys, and the line's long-tail nature. At present, the government is considering transferring some part of the liabilities to the social security system, which could cut the insurers' average claim size substantially.
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The case of two Italian marines charged with shooting two Indian fishermen is a bilateral matter concerning Italy and India, stated John Ashe, president of the United Nations General Assembly (UNGA), on 21 March. Ashe had just returned from a three-day visit to India, where he met Indian prime minister Manmohan Singh and the external affairs minister Salman Kurshid. The UNGA deals with multilateral matters rather than bilateral issues, Ashe said, apparently ruling out direct UN involvement in the case. The statement appeared to contradict earlier reassurances that Ashe gave to Italian deputy prime minister Angelino Alfano on 17 March. After that meeting, Ashe's office stated that during his visit the UNGA president would "be alert for whatever opportunity presents itself to raise the issue". Kerala chief minister Oommen Chandy has urged India's national government in New Delhi not to release the marines before their trial, even if the UN decides to intervene. Massimiliano Latorre and Salvatore Girone were part of a vessel protection detachment (VPD) aboard tanker Enrica Lexie, when the shooting is said to have occurred on 15 February 2012. The case has created a diplomatic rift between Italy and India and called into question the use of VPDs on merchant ships.
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International Association of Claims Professionals
UK Claims New Entrant Award 2014
The award is open to entry by any new entrant into the claims section of the first or second year of a graduate or similar training programme, or apprentices, with any organisation that is a Regular Member, Run-off Member or Claim-Management Member (as defined in the IACP Bylaws) of the IACP who is based in the UK.
Last year’s winner was Sarah Forshaw of Catlin.
The winning entrant will receive an iPad and a complimentary place at the IACP London Conference 2014.
The award will be judged by the London Conference Committee of the IACP with the announcement and presentation of the award being made by the keynote speaker at the IACP London Conference on Wednesday 30th April 2014 in the Old Library, Lloyd’s, London.
Entrants are invited to submit an essay of not more than 2000 words on one of the following subjects:
1. What is the importance of the claims function in the product which the insurance market sells?
2. How can claims management be enhanced by the use of Management Information and Data?
3. What behaviours and practices does a graduate need to build on academic learning and abilities to progress through to Board level over time?
It is expected that the winning entry will provide innovative and practical conclusions and suggestions for consideration in claims management.
Entries should be submitted to Steve Clarke at firstname.lastname@example.org. The closing date for entries is Friday 28th March 2014.
The decision of the IACP London Conference Committee shall be final.
Gulf News speaks to Dubai Health Authority expert to get the lowdown on the new system.
All emergency cases will be covered by the law. In fact, any emergencyprocedure
will not require pre-authorisation.italbai
We are working with insurance companies to work out attractive family packages with
will not require pre-authorisation.italbai
low premiums to encourage organisations to provide family cover, says Dr Haidar Al
Yousuf, Director of Funding at DHA.
Dubai: The new health insurance law for Dubai, which will be implemented from the beginning of 2014 in phases to be completed by 2016, is a step in the right direction. It will bring every resident of Dubai under its umbrella, offering them basic health coverage as a baseline. However, there are a few concerns about how the new insurance initiative will work and what it means for an individual.
Gulf News spoke to Dr Haidar Al Yousuf, Director of Funding at the Dubai Health Authority (DHA) to shed light on the matter.
How many people in Dubai will the new insurance scheme cover?
The entire population of the emirates of Dubai will come under the purview of the new health insurance law. This includes nationals and expatriates numbering about 3 million. There will be different schemes for visitors as in their case, we are looking at emergency treatments. The particulars of this scheme scheme will be announced in time.
Will this insurance coverage be the only one of its kind to be held by an employee or can he/she also have a government health card?
Yes, this will be the only health coverage for the entire population. There will be no health card. All DHA facilities – clinics and hospitals- will be part of the insurance network.
What happens to the health card?
The health card will be replaced by the insurance card.
What is the minimum premium and basic coverage promised to each person? What is the maximum?
Organisations have to provide a basic health coverage with an annual premium anywhere between Dh500-Dh700 and a maximum insurance cover per persona per annum of Dh150,000.
Which areas of health will be covered by the insurance? What will be included in the basic health coverage and what will be excluded?
The basic coverage includes:
Basic package obviously means all luxury medical expenses will be excluded. Cosmetic, dental and optical medical procedures will be excluded. In the case of dental, only dental emergencies will be included. Patients will not be entitled to private rooms, only general rooms will be provided under the basic cover.
If Dh150,000 is the health cover per person per annum, will the co-insurance and deductibles (amounts paid by the holder of insurance as his contribution towards the treatment costs per episode) get higher? How will DHA ensure that the burden of added cost is not transferred to the common man?
The minimum requirements (premium and annual coverage) will be defined by law and cannot be changed. Every thing that has been mentioned will be allowed. Special investigations will require pre-authorisation but if a patient needs it, it will be done with a pre-authorisation. No insurance company can shift the burden to the common man. Only insurance companies that can provide this basic health benefits with these premiums and the annual health cover can register with us. Only those who fulfill DHA criteria will be allowed.
We will look at companies that have the ability to manage large portfolios, high numbers, acceptable benefits and less profit. There will be other high-end insurance companies catering to other kinds of clients. Even they can apply for additional permit to work out a basic package on our criteria.
Who will decide the bracket of coverage and network?
The government defines the minimum legal requirement and basic benefit package. Whether you are a cleaner or CEO, you are entitled to the basic package. If the organisation chooses to give anything higher than that and better insurance network packages, it will be their prerogative.
(Every insurance policy has a network of hospitals, pharmacies and clinics which are involved in addressing and treating his case. So, a patient needs to be aware of which network his insurance policy is linked to as he can only avail of medical facilities at these the designated points (hospitals, clinics and pharmacies).
Will the company pay only for employee insurance or will there be provision for family health cover? Who will bear the cost of an employee’s spouse and children’s insurance?
We strongly encourage organisations to provide family health cover. However, we cannot force them to do this as small companies will not be able to afford it. They will then begin hiring only single executives and that will alter the social fabric. As a government, we want the emirate to attract families. We are working with insurance companies to work out attractive family insurance packages with low premiums to encourage organisations to provide for family cover. In case the employer does not, then the employee will have to pay for insurance cover for spouse and children.
We are in the process of working out affordable packages that, with a small premium, will help the employee to be completely at ease about the health expenses of his/her family.
Is this health insurance coverage linked to visa renewal like the Emirates ID?
Yes, it will be linked. No insurance, no visa renewal.
What will happen in case of an emergency? Who will pay for the costs?
All emergency cases will also be covered by the insurance. In fact, any emergency procedure will not require a pre-authorisation. If a patient happens to be in an emergency situation and is taken to a hospital that is not covered by his insurance, he will still be taken there and emergency treatment will be carried out. Only after that can a hospital shift him/her to a hospital that is under the insurance coverage once his/her condition stabilises.
What about chronic and pre-existing illnesses? Will the co-insurance amount to be picked up by the individual be higher?
Chronic illnesses will be treated only six months after being in the insurance coverage. But once you have completed the six months, the illness will be considered a pre-existing one and expenses incorporated under the insurance.
What about specific illnessnes like cancer? Will the insurance policy cover the long period of treatment and remission?
We have planned a special fund and a special approach in such cases and will not burden the insurance provider. At the moment we are still working on the plan and cannot disclose it.
In case a person goes into a vegetative state or a coma, will insurance cover it?
Initially, the insurance company will have to bear the cost. Ultimately, the person will have to be sent back to his country of origin. I think all insurances work on the principle of pooling of risk wherein they have a large group of clients. Some make overt use of their services, some use it moderately and some do not have much use. But the premium amount is pooled and that pays for those in most need.
How will DHA enforce the rule that the employer bears the cost and does not pass the burden to the employee?
Legally speaking, no company can shift the burden of the premium on the employee and we will have strict punitive laws in place to take action in case an employee files a complain. In any case, the DHA is going to be the official insurance regulator. Our sophisticated electronic monitoring system called E-claim is already up and running. We monitor all transactions in the health sector to ensure optimum utilisation of the health services in the emirate.
Mr. Girishankar, Director was invited by organizers of Asian offshore energy conference to make a presentation
on oil and gas Insurance in India. You may find the link to the conference.
6India-Country_Review-Giri_Shankar-KM_Dastur.pdf (1.78 mb)