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General Insurance

Insurance cover to pro- Reliance General Insurance IPO gets SEBI nod
Reliance General Insurance Company, said it has received markets regulator
tect your teeth Sebi's go ahead to float an initial public offering. The
Soon, all dental expenses may be
IPO comprises fresh issue of little over 1.67 crore
covered under an
shares by Reliance General Insurance besides an of-
insurance policy
fer for sale of 5.03 crore shares by Reliance Capital.
for the first time
in India. Ocare The company plans to utilise the proceeds from the
founded by Neeraj fresh issue towards augmenting the solvency margin and consequently increas-
Sheth, a dentist ing the solvency ratio. Besides, the money will be used to meet future capital
from Mumbai, has requirements, which are expected to arise out of growth.
applied for a license to float a den- The Securities and Exchange Board of India has issued its final "observations" to
tal insurance company. There are the draft papers filed by Reliance General Insurance in October, the company
five standalone health insurance said in a statement. The regulator's "observations" are very important for any
companies in India but none provide company to launch any public offers. At the end of March this year, Reliance
complete dental cover. This com- General Insurance's book value stood at Rs 1,250 crore.
pany may offer cosmetic dental sur-
geries apart from teeth extraction NIC & ICICI Lombard face Rs. 300-crore payout on Fire
procedures and others.
at Haldiram`s
"We are looking to start as a dental
National Insurance Company Limited and ICICI Lombard may take a combined
insurance company and expand into
hit of Rs 300 crore from the fire that gutted the
other healthcare insurance," said
manufacturing unit of Haldiram's, the biggest sweets
Neeraj Sheth founder Ocare. "Today,
and snacks maker in the country. The fire, which had
only those procedures are covered,
raged for 15 hours from September 6 and had taken
which requires domiciliary medical
more than 100 fire tenders and more than 200 fire-
care." The dental service market is
fighters to douse, destroyed a new manufacturing
around Rs 12,000 crore. There is no
unit with modern machines in Noida's Sector 68.
insurance company offering dental
insurance to individuals. Today, root National Insurance Company has paid the first cheque of Rs 50 crore on account
canal costs Rs 1,500-8,000, teeth ex- of loss due to fire. "The claim has come due to fire in one of the units which had
traction up to Rs 800. Cosmetic den- modern equipment and were manufacturing automated potato chips and other
tal surgery costs upwards of Rs snacks," said National Insurance Company chairman K Sanath Kumar. "Our claim
25,000 and is not covered under any payout may be around Rs 300 crore including losses due to fire and business
group insurance policy. interruption," he said.
Health insurance is the fastest grow- Kumar said that Haldiram's is reconstructing the unit quickly so there may not
ing segment in the general insur- be huge claims due to business interruption. According to an executive aware
ance segment. It contributes 30% to of the matter, the property damage is estimated at Rs 250 crore and business
the sector. interruption loss, about Rs 430 crore.

The Insurance Times, January 2018 5

Higher crop insurance National Insurance may alter IPO strategy
With two of the biggest initial public offering of public sector general insurance
coverage to inflate crop firms getting tepid response from retail investors,
insurance subsidy bill National Insurance, which is planning to come out
The 2017-18 subsidy bill for the with its IPO in March-April 2018, is expected to
states and tweak its IPO strategy.
the Centre "Insurance is a very complex sector and not many
due to the retail investors understand it. However, having
Pradhan said that, we would definitely incorporate the learnings from the IPOs of New
M a n t r i India Assurance and General Insurance Corporation in our offering. We will sit
Fasal Bima with their analysts and discuss the strategies," said K Sanath Kumar chairman,
Yojna (PMFBY) is set to increase 10- National Insurance Company. According to sources, National Insurance had been
15 per cent as the scheme enters looking to raise about Rs 4,000-5,000 crore.
the second year. The farmers' cover-
Notably, analysts have pointed out that the large issue size and high price of
age is expected to increase by 10-15
public sector general insurance firms have been key reasons for poor response
per cent. In several states, insurers
from retail investors. Due to high prices, retail investors did not foresee any
have raised premium quotations by
listing gains on the issues, according to analysts.
five-seven per cent.
Also, combined ratio, a key measure of financial health of insurance firms, cal-
Reliance Capital arm, YES culated by diving the sum of claim-related losses and general business costs by
the earned premiums over a period, has been higher for public sector firms.
Bank in bancassurance
"A lot of IPOs got bunched up in the last few weeks, which could have impacted
agreement the outcome. Also the issue size was quite big and for over subscription, one
Reliance General Insurance, has needs to have substantially high amount of subscription. On the other hand, for
signed a smaller issue sizes, the pent-up demand is higher.
comprehen- Since the prices were high, retail investors did not see any listing gains. On the
sive banc-as- other hand, institutional investors, who typically don't go for listing gains, have
surance-cor- seen obvious long term returns in the issues," said Karthik Srinivasan, Senior Vice
p o r a t e President, ICRA.
a g e n c y
"The valuation for both GIC and New India Assurance was on a higher side, while
agreement with YES Bank.
the operational parameters are that as strong as private sector peers. Globally,
YES Bank with its network of 1,040 the combined ratio for general insurance sector is around 103-104 per cent,
branches across all 29 States and whereas for public sector general insurers in India it is around 115 per cent on
seven Union Territories will enable an average. Also, the issue size itself was so big that retail investors did not see
Reliance General Insurance to reach any gains,' said Jaikishan J Parmar, Research Analyst, Angel Broking.
a large base of retail and MSME cli-
ents. Crop Insurance cover third largest segment
This is the first partnership signed by Crop insurance has emerged as the third-largest line of business for the insur-
YES Bank since the open-architec- ance industry, after motor and health, contrib-
ture norms under the corporate uting 16 per cent of its total general insurance
agency regulations were introduced premium of Rs.1,28,000 crore in FY17.
by the IRDAI in April 2016. The share of crop insurance may increase fur-
Rana Kapoor, Managing Director, ther, as the Centre has increased the insurable
YES Bank, said in a statement: "With crop coverage from 30 per cent to 40 per cent
this alliance, we remain committed this year and is scheduled to increase it to 50 per cent in the next Budget.
to leveraging our pan-India branch However, while an increase in crop coverage and a subsequent rise in premium
network to capitalise on the im- is music to the industry's ears, assessing and settling claims is a highly complex
mense opportunities in the Indian and risky exercise. In the days of climate change, scattered rainfall and pest
bancassurance market." attacks, such risks are wider than in, say, motor insurance.
6 The Insurance Times, January 2018
Insurers can now appoint IRDAI committee for waiver of compulsory cession for
professional promoters certain classes
Two former CEOs of insurance compa- The Reinsurance Expert Committee The REC has proposed that reinsurers
nies - Rajesh appointed by IRDAI has proposed that should be classified into two categories
Relan (ex- the stipulation of order of preference for offer of participation in the follow-
CEO of PNB for reinsurance cessions - or compul- ing order of preference: GIC Re and
MetLife) and sory cession of business to GIC RE - then (simultaneously to other) Indian
P Nandgopal could be waived for cer- reinsurers, cross-border
(ex-CEO of tain classes of business. reinsurers (CBRs), if any,
both IndiaFirst) - are turning into The Committee, chaired whose terms for a mini-
health insurance entrepreneurs. by M Ramaprasad, said mum line size (say 5 per
IRDAI's decision to permit private in its report that "there cent for treaty and 10
equity (PE) funding, as against stra- is merit in the represen- per cent for facultative
tation of life reinsurers risks) established the
tegic investors, in insurance sector
seeking waiver from or- best terms, foreign rein-
has paved the way for professional
der of preference stipulations, given surance branches (FRBs), Lloyd's India
the consultative and long-term risk and Indian insurers.
IRDAI is expected to notify the final
management relationship between The second category will be reinsurers
guidelines on PE in insurance soon.
the Life insurer and a reinsurer." The in Special Economic Zones (SEZs), joint
PE investors will be allowed to set up
committee said aviation, life insur- venture partners of Indian insurers,
companies through a special purpose
ance, marine hull, large infrastructure reinsurers and other CBRs satisfying
vehicle. However, there will be a 5
projects petrochemical and refinery the eligibility criteria above (including
year lock-in before they can sell their plants, large power plants, oil and en- overseas reinsurance entities of FRBs'
shares. ergy, specialised/ emerging / volatile parent group).
While most of the insurance compa- risks with high loss potential as well as In another measure aimed at curbing
nies have corporates as promoters retrocession's, rely on international alternative risk transfer (ART), the
with strategic partners, in recent reinsurance market for design of the committee had recommended that
months there have been a few pri- covers, wordings, conditions, capacity, "only structured reinsurance proposals
vate companies with professionals as and support. satisfying risk transfer tests that may
promoters. The recently licensed Insurers and reinsurers require the flex- be prescribed by the IRDAI can be per-
Digit General Insurance is led by ibility to obtain best terms and reinsur- mitted at this juncture".
Kamesh Goyal, former CEO of Bajaj ance support from reinsurers with high The IRDAI "may not allow/ consider
Allianz, in India with Fairfax Group security ratings, it said. "Stipulations of alternative risk transfer instruments
(former stakeholder in ICICI order of preference for reinsurance ces- involving capital markets. Such propos-
Lombard) as partner. Acko General sions can be waived for these classes of als would need discussions and
Insurance is promoted by Varun Dua, business and for such other classes of co-ordination with other capital mar-
who earlier led online insurance bro- business as may be permitted by the ket regulators like RBI and Sebi," it
kerage firm Coverfox. IRDAI from time to time," it said. said.
The Insurance Times, January 2018 7
IRDAI to set rules for pricing of policies via fitness devices IRDAI caps insurers' pay-
IRDAI will soon come out with regulations for life and health insurance compa-
nies that use fitness trackers and wearable's for pric-
ment to Motor Insurance
ing policies. The issues involved include privacy of in- Service Providers
dividual data and applying the principles of insurance. IRDA has issued a new regulation,
Insurance Regulatory and Development Authority of bringing to
India in a statement said that insurers now look at an end the
ensuring 'wellness' of the customer and this is factored old practice
into their pricing and product design. For example, of general in-
some insurers reward policyholders for maintaining a fitness regime or under- surance com-
going regular diagnostics. panies paying
The insurance regulator has set up a panel to look into innovations in insurance extra commission to automobile dis-
involving wearable/portable devices. As per IRDAI, "Use of wearables and por- tributors for selling their policies.
table devices in insurance are a subject that frequently comes up in the context Insurance Regulatory & Develop-
of financial technology. In the context of both health and life insurance, wear- ment Authority has capped pay-
able devices could be used to measure personal fitness and incorporate a healthy ments by insurers to agents and deal-
lifestyle." ers at 19.5% for cars and 22.5% for
The terms of reference for the panel include examining technological advance- two-wheelers and brought them
ments in portable devices and seeing how they can be used for improving as- under its purview as motor insurance
sessments and reducing risks. The panel will also look at global developments in service providers (MISPs) starting this
the area and suggest a policy framework, keeping in mind the interests of the month, a move that is expected to
customers. bring down claims ratio.
"The implementation is on way and
IRDAI panel to review norms for investment in Govern- we have to see the impact of that
entire dealership comes under the
ment Bonds regulatory supervision," said an in-
Insurance Regulatory and Development Authority has constituted a committee surance company executive who re-
for reviewing norms that require 50% of the
quested not to be named. "There
funds mobilised from traditional life policies
were payouts happening in other
to be invested in government bonds. Accord-
forms, to dealers and to brokers,
ing to the committee's report, the restriction
which has come down now to one
on investments does not permit life compa-
commission to dealers." These deal-
nies to generate a return of even 8% in tra-
ers were outside Irda's regulation
ditional policies given the drop in yields on
for so long.
government bonds.
With Irda's regulations, they have
"The expectation of generating a return of at least 8% per annum is a tall order
been now structured and brought
given that at least 50% of assets of the insurer are mandatorily to be backed by
under the regulator's ambit. They can
G-Secs (government securities), which currently yield 6.7-7.2% per annum. Fur-
choose to work with brokers or with
ther, given the downward pressure on interest rates, the actual yields on fu-
insurance companies, but under the
ture premiums are only expected to be lower," said the report. In reality, al-
regulator's supervision. Insurers said
most 80% of the proceeds of traditional policies are invested in government bonds
the development will help the indus-
since other investments do not qualify.
try in better claims management and
According to the report, there is a need to lower the mandatory proportion of reducing expenses, which were paid
'G-Secs' in the life fund and the pension & general annuity funds and allow for earlier as outsourcing expenses.
more exposure in alternative higher yielding assets (for example, equity or prop-
erty) or high-rated corporate bonds. The panel has also suggested that the regu- "We feel that this will help us in
lator allow insurance companies to adopt a modular product approach for de- bringing down the claims ratio," he
signing insurance products. Currently, the regulator has approved a policy which had said after announcing second
is a bundle of various benefits payable at the occurrence of different events. quarter results of the company.

8 The Insurance Times, January 2018

LIC of India
LIC books Rs. 13,500 cr trading profit in Apr-Sep LIC to be less aggressive
Life Insurance Corporation of India, has booked a trading profit of at least Rs
13,500 crore from the sale of equity holdings
in investing in equities
Life Insurance Corporation of India,
in the first half of the current financial year, as
t h e
stocks scaled record highs. The figure marked
a 23.8% increase over the Rs 10,900 crore in
trading profit that LIC earned in April-Septem-
ber 2016 through investment redemptions, two
equity in-
people with direct knowledge of the insurer's investment earnings said.
v e s t o r,
has said that it has decided to bring
Finance Ministry confirms LIC's Rs. 1.5L-crore railway down its aggressive investment in
funding equities. LIC had invested in Indian
Life Insurance Corporation of India can now go ahead with its proposed Rs 1.5 stocks worth Rs.39,224 crore be-
lakh crore funding of the Indian Railways, tween April and September this year,
with a finance ministry clarification effec- more than twice that in the past
tively nullifying the Irda's concerns and de- year. The insurer made about Rs.
mand for sovereign guarantee for the in- 12,374 crore on sales of equities dur-
vestment. ing this period.

LIC had signed a memorandum of under- VK Sharma, Chairman, LIC of India,

standing two years ago to invest in the rail- was quoted as saying: "We are
ways through bonds issued by the Indian contrarian (when it comes to invest-
ment). Market (equity) is at peak.
Railway Finance Corporation (IRFC). But since this would take LIC's exposure to
We will be selling whenever we have
more than 25% of IRFC's net worth - it has to keep the investment within that
an opportunity…We will keep on do-
limit in any company involved in infrastructure, debt and equity included -the
ing routine sale and purchase, but
insurance regulator demanded explicit government guarantee for the bonds and
we will not be aggressive in buying
a gazette notification classifying these as special securities, like oil bonds.
equities." LIC will keep booking prof-
The finance ministry has now issued an order, clarifying that the IRFC bonds can its on its Rs.5.71 lakh crore equity
be treated as approved security for investment above the exposure limits. It holdings, Sharma added.
didn't offer any government guarantee on the bonds, but said the bonds were Compared to a decade ago when LIC
covered by Section 2(3) of the Insurance Act under which the repayment is dwarfed every other domestic insti-
charged on the revenue of the railway ministry. The railway ministry's revenue, tution, today the Indian market is
in turn, is backed by budgetary allocation. mature with counter-balances to LIC
The charge on the central government revenue is more than a government in the form of mutual funds, EPFO,
guarantee, as it amounts to express intention of the government to pay out NPS and insurance companies. Do-
the obligation, whereas payment against guarantee will happen only when the mestic MFs manage over Rs.7 lakh
guarantee is invoked, the finance ministry said. crore of equity money.

The Insurance Times, January 2018 9

LIC premium income increases 12% at Rs 1.48 trillion LIC to to stop sale of
Total premium income at Life Insurance Corporation rose around 12% in the six
months ended September to Rs.1.48 trillion. Total Jeevan Akshay
net income during the period rose 12.6% to Rs2.50 Life Insurance Corporation of India
trillion. LIC, India's largest institutional investor, will stop
booked Rs.12,374 crore profit from the sale of selling
equities during the period, up 16.3% from a year the popu-
before, as the market scaled record highs. lar annu-
ity prod-
u c t
LIC told to pay premium with interest after policy Jeevan
holder declared dead by court Akshay from next month, as falling
Taking serious note of a complaint wherein the complainant had asked the Life interest rates has made it impossible
Insurance Corporation (LIC) to release the claim amount to sustain returns at the current
against a policy but her application was rejected, the Con- level. It may, however, reintroduce
sumer Forum has now directed LIC to pay the premium the plan by offering a lower rate, a
along with 9 per cent interest from the date the letter senior executive said.
was rejected by the corporation. Jeevan Akshay had been best selling
Promila Kumari, in her complaint to the Forum had stated plan of LIC, generating close to a
that her husband, Narinder Kumar, had taken a life insur- fourth of its new business income.
ance policy of Rs 1 lakh from LIC for 20 years on March The single-premium plan contrib-
28,1999. The premium of Rs 584 per month, payable by uted Rs 10,000 crore to LIC's
the 28th of every month was deducted from the policy holder's salary. The last revenue so far this financial year and
premium was paid on April 2001 and the policy was to get matured on March Rs 22,000 crore for the past two
31, 2019. years.
Meanwhile, Kumar went missing on March 19,2001 and a FIR was lodged by The scheme that offers a regular in-
Promila on March 22, 2001. Kumar was later declared dead by the court on come is currently paying a yield of 7.5
November 5, 2011. The complainant then served a legal notice on February 25, per cent. LIC has seen massive in-
2016, to release the amount against the policy, but LIC rejected it on the ground flows into this product, which offers
that the policy was lying in a lapsed condition nothing is payable. She then moved returns that are half a percentage
the Consumer Forum and filed a formal complaint. points more than the 10-year gov-
ernment securities.
In reply, LIC stated that the premium was deducted from the salary of the policy
holder upto April 2001 and the policy remained in a lapsed condition for non- "We have decided to discontinue
payment of the premium at the time of death, i.e till January 2014 and, there- with the high interest rate of 7.5 per
fore, nothing is payable as per the terms and conditions of the Insurance Policy. cent from December 1," said the
The Forum then directed LIC to pay the premium of the policy along with 9 per senior LIC executive. The executive
cent interest from the date of the rejection letter, ie. November 23, 2011 till said it would file for a revised plan
its realisation. having a lower interest rate of 6-6.5
per cent with the Insurance Regula-
LIC launches Jeevan Shiromani plan for HNIs tor and Development Authority of
Life Insurance Corporation (LIC) launched 'LIC's Jeevan Shiromani', a non-linked,
with profit, limited premium payment money back life Single-premium guaranteed prod-
insurance plan especially designed for the high net-worth ucts help insurers boost revenue. But
individuals segment. According to LIC statement, mini- with the yield on the 10-year govern-
mum basic sum assured under the plan is Rs 1 crore with ment bond at around 7.05 per cent,
no upper limit. The plan is available for ages from 18 to offering a high return has become
55 years. It provides for financial support for the family not only in case of death difficult since the insurer also incurs
of life assured during the policy term but also provides for payment of a lump costs such as on policy administra-
sum amount on diagnosis of any of the specified critical illnesses. tion and acquisition.

10 The Insurance Times, January 2018

Health Insurance
More funds to fight Apollo Munich Health Insurance launches Health
lifestyle diseases Wallet
The health ministry is planning to Apollo Munich Health Insurance, launched a health insurance plan, Health
spend more Wallet, which caters not only to the custom-
funds, over and ers' hospitalisation and OPD expenses, but
above the cur- also ensures affordability of continuing the
rent sanction of policy in their golden years. On offer along
Rs.955 crore with the Health Wallet plan is a 'Reserve'
(2017-18) for benefit that continues to grow and earn for
tackling lifestyle the customers and helps them secure their retirement, said Antony Jacob, CEO,
diseases such as cardiovascular dis- Apollo Munich Health Insurance.
ease (CVD), hypertension, obesity
and diabetes. Interestingly, in 2017- "Reserve benefit has been designed to ensure that your money does not get
18 non-communicable diseases wasted. The most interesting part is that it lets your money earn for you," said
(NCDs) received the highest increase Jacob. Every year, the unused reserve amount gets carried forward, and earns
in allocation from Rs555 crore in a 6 per cent bonus. The accumulated reserve kitty can, in turn, be used to pay
2016-17 to Rs955 crore in 2017-18. up to 50 per cent of the renewal premium, post five continuous renewals.
"NCDs are Union Health Ministry's
major concern and we are running
Mangma OneHealth to give IVF, bariatric cover
special screening programs for the Magma HDI, announced the launch of 'OneHealth' health policy. "There is an
disease category. We may get more increasing prevalence of lifestyle diseases in India
funds in next financial year and one where one out of four Indians at risk of dying from non-
of our focuses will be NCDs," said communicable diseases...keeping in mind modern
Kavita Singh, director finance, Na- lifestyle and increase in lifestyle diseases we designed
tional Rural Health Mission. this policy to meet the need of customer and his en-
While the Union health ministry is tire family," said Rajive Kumaraswami, MD and CEO,
running major screening programmes Magma HDI.
for NCDs, the Indian Council of Medi- OneHealth covers various significant medical conditions and lifestyle diseases.
cal Research (ICMR) launched the Citing a report, Magma HDI said lifestyle diseases like tuberculosis or diarrhea
India Hypertension Management Ini- kill more people in India than communicable diseases.
tiative (IHMI). The IHMI aims to re-
"Very few of the existing health insurance policies cover lifestyle ailments like
duce disability and death related to
Lasik, bariatric surgery, psychiatric treatments. OneHealth...covers all such ail-
CVD, the leading cause of death in
India, by improving the control of ments which are not yet considered medical conditions in the industry," the
high blood pressure (hypertension), company said in a statement.
reducing salt consumption and elimi- Alongside covering all major lifestyle diseases, OneHealth also offers additional
nating artificial trans-fats, leading risk advantages like restoration benefits, cumulative bonus, free annual health check-
factors for CVD. up, among others, Kumaraswami said.
The Insurance Times, January 2018 11
New Health cover to cut 62 per cent of Indians pay from their own pockets
A staggering 62 per cent of Indians paid from their own pockets for their medi-
premium in old age cal expenses in 2016, an annual study by global health
Apollo Munich Health Insurance has services company Cigna showed. The study, 2017 Cigna
introduced a 360° Well-being Score - India Report, unveiled by Cigna
health cover TTK Health Insurance, revealed that Indians primarily
where part depend on their own savings when it comes to fund-
of the pay- ing health emergencies, and also underscored the low
ment during penetration of health insurance in the country.
the earlier
While 85 per cent are covered by private medical insurance, nearly two-thirds
years can be used to fund higher
of medical expenses are self-funded. Local government and public-welfare
rates in future. The advantage for
schemes contribute a paltry 7 per cent. Both employer-provided and self-pur-
the customer in paying a higher rate
chased insurance account for 13 per cent. About 15 per cent of the populace is
now is that the premium is eligible not covered by either private or government insurance schemes.
for tax breaks and most youngsters
do not use up the full amount of Rs Cigna TTK Health Insurance MD and CEO, Sandeep Patel, said: "Cigna 360° Well-
25,000 for this. being survey highlights three major areas that we as a country should focus on
- healthcare moving into digital, financial stability and preparing for retirement."
Unlike life insurance where insurers The Cigna TTK 360° Well-being Score survey was conducted in 13 countries with
are allowed to 'level' the risk pre- a sample size of over 14,219 respondents. In India, over 1,517 respondents were
mium and charge a uniform rate, covered through a 20-minute quantitative online survey covering 10 cities (metro
health insurance rates rise progres- and non-metro).
sively with the age of the insured.
While non-life companies cannot of- Respondents included a mix of males and females above 25. Cigna TTK 360°
fer products with savings compo- Well-being Score is an independent study commissioned by Cigna and conducted
nents, Apollo Munich has devised a by Ipsos. Patel said that the study "enables us to understand the diversity of
the Indian customer". It points out a need for providing health insurance solu-
Health Wallet plan where part of the
tions for customers, focusing on affordability, ease of transaction, accessibility
premium goes toward reserve ben-
and overall security, he said.
efits. The reserve premium can be
used to fund health-related costs not Now, save money through health insurance and pay for
covered by insurance. Every year, the
unused reserve amount gets carried cosmetic surgeries
forward and earns a 6% bonus. This Your doctor may not have prescribed a liposuction procedure but you would still
accumulated reserve kitty can in like to do it on cosmetic grounds. While a regular
turn be used to pay up to 50% of the health insurance will not cover these expenses, Apollo
renewal premium, after five con- Munich Health Insurance has brought out a new
tinuous renewals. product called 'Health Wallet' that helps create a
reserve kitty for future health expenses. In an inter-
To illustrate, a Rs 10,000 annual con- action with Moneycontrol, Antony Jacob, CEO, Apollo
tribution towards reserve from age Munich Health Insurance said that the 'reserve' ben-
30 will result in a cumulative reserve efit in the product that is unused gets carried forward and earns a 6 percent
of Rs 8.48 lakh by age 60. This fac- bonus. This accumulated reserve kitty can be used to pay up to 50 percent of
tors in the 6% bonus on the carried- the renewal premium, post five continuous renewals.
forward amount every year.
Here, whatever money is not used during the policy period gets carried forward
The out-of-pocket expenses the re- and earns a bonus. This can be accumulated and used for paying not just the
serve funds can be used for includes premium but also other healthcare expenses like cosmetic surgeries like
purchase of medicines, vaccinations, liposuction and rhinoplasty. For instance, if you have accumulated Rs 5 lakh over
dental expenses, diagnostic tests, the course of 10 years, that can be used to pay for your cosmetic surgeries that
spectacles, contact lenses, medical is otherwise a standard exclusion under traditional health insurance policies.
devices like blood pressure and sugar Individuals who already are covered by a corporate plan of a company can take
monitors, and consultations with a deductible option that will help them choose how much expense they can take
medical practitioners. care of, in case of an emergency.
12 The Insurance Times, January 2018
Private Life Insurance
IndiaFirst launches micro-insurance plan Insurance Companies
RM Vishakha, Managing Director and CEO, IndiaFirst Life IndiaFirst Life Insur-
stocks become fund man-
ance has launched an unique micro-insurance
plan, 'insurance katha', targeted at those in agers' favourite picks
the informal sector and agricultural labourers Stocks of insurance companies are
with seasonal incomes. This plan will be distrib- emerging as
uted exclusively through the 2.4 lakh common one of the
service centres (CSCs) across the country, RM favourites of
Vishakha, Managing Director and CEO, IndiaFirst Life, said at a launch event. domestic
mutual fund
Alphons Kannanthanam, Minister of State for Electronics & IT, was present on managers.
the occasion. The 'novelty' of the new microinsurance plan is that it provides in- Until last year, the insurance sector
dividuals the flexibility to pay premium in parts, as and when possible, the com- had little or no representation in the
pany said. stock market. But, a slew of big-
"At an individual platform with an entry-level minimum premium of Rs.500, this ticket listings have caught the fancy
is the first-of-its-kind product in the industry," Vishakha told. Taking into account of money managers, who are con-
possibilities of monetary limitations of the target segment, the plan is designed stantly on the lookout to expand
to return the paid premium amount at the end of the term, while ensuring life their stock universe because of the
insurance coverage, during the term. "It is not a high-margin product for us. We gush of inflows.
have kept the cost of servicing at a bare minimum," Vishakha said. This can be gauged from the fact
that three insurers - ICICI Prudential
"For customers, it is a plan where you can keep on increasing the sum insured
Life Insurance, ICICI Lombard Gen-
you had paid and keep on getting back the premium you paid as and when they
eral Insurance and SBI Life Insurance
mature. We offer three options - five, seven and 10 years tenures and five, seven
- put together have consumed over
and 10 times of premium paid as sum insured," Vishakha said.
Rs 6,000 crore of MF equity assets.
Further, HDFC Standard Life Insur-
Bajaj Allianz`s launches 'Pro-fit' platform ance, which listed recently, saw in-
Bajaj Allianz General Insurance has launched 'Pro-fit', a platform that will act vestments from ICICI Prudential
as a one-stop solution to all the health- AMC, Reliance Nippon MF, Sundaram
record tracking needs of customers. MF and Axis MF, among others.
Pro-Fit is available on the company's Not just initial public offerings
self-service app 'Insurance Wallet' and (IPOs), but mutual funds have been
can also be accessed on the company seen lapping up shares of these com-
website. Customers can store their panies from the secondary market as
health records, track their fitness lev- well. For instance, in October, equity
els, and get reminders for vaccinations or medications, a company press release MFs invested over Rs 1,000 crore in
said. ICICI Lombard and SBI Life.

The Insurance Times, January 2018 13

PM Bima schemes response tepid Bundled insurance prod-
The response to three schemes age in the case of accidental death, ucts offer convenience
launched by the government on the and full or partial disability at Rs 2 lakh HDFC Standard Life Insurance and
Jan Dhan Yojana platform two years and Rs 1 lakh, respectively. A p o l l o
ago has not been upto expectations. The scheme has an annual premium of Munich
The three - the Rs 12, and open for Health In-
Pradhan Mantri people of the age 18- surance
Jeevan Jyoti Bima 70. According to the have come
Yojana (PMJJBY), government data, together to
Pradhan Mantri among the about 112 offer a
Suraksha Bima Yojana million enrolled, so far combined
(PMSBY), and Atal the government has product
Pension Yojana (APY) - settled claims for that takes care of health as well as
were meant to pro- about 13,090 against life insurance needs of an individual.
vide insurance and pension to the eco- 17,689 claims. By filling a single form and undergo-
nomically weaker sections of society. As regards the PMJJBY, the premium is ing just one medical test, if required,
The schemes were aimed to give uni- slightly high compared to the PMSBY. an individual can avail Click2Protect
versal social security, especially to the It is open for people in the age group Health by paying a single premium.
unorganised sector. Notably, in Novem- 18-50. The scheme provides a life cover “Both the companies are offering
ber, the enrolment in the Jan Dhan of Rs 2 lakh, against an annual pre- their flagship products through one
Yojana was about 306 million. mium of Rs 330. As of November, policy. For customers, it works like
Against this, in the same month, the against the enrolment of about 35 one policy but at the back, they are
enrolment in the PMSBY was about million, the government settled claims two independent products. In the
112 million, while that of the PMJJBY of about 76,096 applicants, against policy document, on one side are
was about 35 million, according to the claims by about 82,828 individuals. the details of health insurance with
data with the government. The Atal Pension Yojana is a pension premium charged. On the other is
The enrolment under the APY was scheme that offers a guaranteed rate information pertaining to life insur-
around 6 million till August 2017, ac- of 8 per cent assured return for the ance,” says Antony Jacob, chief ex-
cording to a government press release. subscribers and also the opportunity of ecutive officer Apollo Munich Health
The government has now given banks higher earnings in case the rate of re- Insurance.
specific targets for enrolment under turn is higher than 8 per cent at the As far as the life portion goes, the
the APY. time of maturity, after staying invested prospective policyholder can choose
"Like private banks, we have now been in the scheme for 20-42 years. only a term plan. The individual also
given specific targets for enrolment in Under the APY, the subscribers would gets a five per cent discount on the
the APY. We are organising special receive a fixed minimum pension of Rs premiums for buying this bundled
camps for it. However, the problem is 1,000-5,000 per month, depending on product. The discount makes the
that people in general do not have an their contributions. pricing competitive. But a customer
awareness about pension products," "While people have been willing to can still find a cheaper health and
according to an executive of a public spend as little as Rs 12 for an accident life insurance product in the market.
sector bank. coverage scheme, not many are will- If you are fine with sacrificing con-
In general, the PMSBY has received a ing to purchase a scheme that requires venience over premiums, then you
better response because of its low pre- a higher premium," said an executive can look at a separate life and health
mium. The scheme provides risk cover- of a public sector bank. insurance.

14 The Insurance Times, January 2018

Year 2017 may be costli- Swiss Re Says Global Insured Catastrophe Losses will
est year for insurers Hit $136 billion in 2017
Swiss Re has estimated that global insured losses from catastrophes in 2017 will
hit $136 billion, the third-highest on record for the
sector, with the United States being the hardest
hit. Total economic losses from natural and man-
made disasters in 2017 are estimated to be $306
billion, up from $188 billion in 2016, Swiss Re said
in a statement, quoting preliminary data.
"The accumulation of economic and insured losses ramped up in the second half
With its string of hurricanes, floods of the year, due primarily to the three hurricanes - Harvey, Irma and Maria -
and other weather shocks, 2017 that hit the U.S. and the Caribbean, and wildfires in California," Swiss Re said.
may be the most expensive year on More than 11,000 people had died or gone missing in disaster events this year,
record for disaster losses, insurance the world's second-biggest reinsurer said.
experts warned.
Hurricane Harvey in Texas alone Munich Re to Increase Shareholding in Global Aero-
cost $180 billion, with just $19 bil- space to 51%
lion of that loss insured, said mem- Global Aerospace, the London-based provider of
bers of ClimateWise, a network of 28 aerospace insurance, announced that Munich Re
insurance industry organisations. has agreed to purchase an additional 11 percent
Over the last decade, only 30 per of the shares in Global Aerospace Underwriting
cent of catastrophic disaster losses Managers Ltd., the company that manages the
were insured, leaving governments, Global Aerospace Pool. Following the acquisition,
businesses and others to pick up the Munich Re will own 51 percent and a subsidiary of Berkshire Hathaway Inc. will
remaining $1.7-trillion tab, noted continue to own 49 percent.
Swiss Re, the world's second-largest
re-insurer and a member of According to Global Aerospace's website, Munich Re currently has 44.96 per-
ClimateWise. cent of the Global Aerospace Pool; National Indemnity Co. has 23.39 percent of
the pool; Tokio Marine and Nichido Fire Insurance Co. has 12.37 percent share;
The growing gap between the Mapfre Global Risks has 10 percent, and Mitsui Sumitomo Insurance has 9.28
amount insured and actual losses is percent. "We are fortunate in having the backing of two such strong and com-
a threat not just to owners of sod- mitted shareholders," commented Nick Brown, group chief executive officer of
den homes, wind-flattened busi- Global Aerospace Underwriting Manager.
nesses and governments facing bal-
looning recovery bills, but even to "Munich Re has long had a strategic interest in increasing its investment in
the insurance industry itself, the Global, and this deal achieves that, while ensuring that Berkshire Hathaway
network warned in a report. continues to have a very significant interest," he added. "For our customers,
pool-members and employees it is business as usual."
The Insurance Times, January 2018 15
Cover Story


Healthcare-associated infections (HCAI) are infections that patients acquire during the course of receiving treatment
for other conditions within a healthcare setting. HCAI are preventable complications occurring with varying but with
significant frequency. HCAI are preventable complications which adversely affect the Length of Stay (LOS), morbidity
and mortality of the patients.
A review of literature was undertaken to find the magnitude of the reported incidence rate, LOS, morbidity & mortality
rates reported in literature.
HCAI have been reported to have an average incidence rate of 10.8 % (3.9 % to 34 %.). In high income countries
approximately 30% of ICU patients are affected by at least one HCAI.
Additional length of stay in HCAI varies from 9.3 days to 23 days in different studies. Patients with HCAI accounted for
20.2% of the total bed days while 79.8 % bed days were accounted for patients without HCAI. Re-admission rates were
also found to be higher in patients with HCAI (26%) as compared to patients without HCAI (19.6%).
A 30 day mortality rate in Clostridium difficile infection is
About the author estimated to vary from 3%-30% in different countries. 90-
day mortality rate in hospitalized older adults rose from
Prof. Dr. Bharat S. Powdwal 33.2%-49.4% in cases with bloodstream infection. One
MS, MBA, Professor Symbiosis Institute of Health Sciences, year mortality was 15.2% in patients without HAI as
Dr. Tulna Jaiswal compared to 24.5% in patients with HAI. The extra
MBBS, MBA HHM Student Symbiosis Institute of Health mortality due to HCAI was 9.3%.
Sciences Common HCAI are Catheter Associated Urinary Tract
Dr. Sharvari Shukla Infections, Central Venous Catheter Associated Blood
Dr. Biranchi Jena Stream Infections, Ventilator Associated Pneumonia and
16 The Insurance Times, January 2018
Surgical Site Infection. Different infections have a different in a patient during the process of care in a hospital or other
prevalence rates in different wards related to source of health care facility which was neither present nor incubating
infection. Ventilator Associated Pneumonias are more at the time of admission. HCAI can affect patients in any
common in ICUs where patients are on assisted type of setting where they receive care and can also appear
ventilation. Surgical site infections are more frequent in after discharge. Furthermore, they include occupational
surgical wards. Catheter associated Urinary Tract infections among staff. HCAI represents the most frequent
Infections and Central Venous Catheter related Blood adverse and preventable event during care delivery and no
Stream Infections may have high prevalence in both institution or country has ever been able to claim to have
surgical and medical wards. Burns wards also have a high solved the problem as yet.
prevalence rate of HCAI. Gynecology & Obstetrics wards
have usually a low prevalence of HCAIs. Based on a significant amount of data made available from
various countries, it is estimated that each year, hundreds
As the infective organisms originate from the hospital
of millions of patients around the world are affected by
flora, they are resistant to many of the commonly used
HCAI. The burden of HCAI is several fold higher in low and
antibiotics, thereby necessitating use of higher drugs and
middle-income countries than in high-income countries.HCAI
higher cost of treatment.
results in prolonged hospital stays, long-term disability,
The financial impact of this is seen in terms of increased increased resistance of microorganisms to antimicrobials,
burden of treatment costs, from increased Length of Stay massive additional costs for health systems, high costs for
(LOS) loss of earning due to high and prolonged morbidity patients and their family, and unnecessary deaths.
due to absenteeism and loss of earning life span of bread
earner due to higher mortality. This increased cost of Although HCAI is the most frequent adverse event in health
treatment adds to the financial burden to the payers care, its true global burden remains unknown because of
namely, government, insurers as well as patients paying the difficulty in gathering reliable data, most countries lack
out of pocket. surveillance systems for HCAI, and those that do have them
Incidence of HCAI differs from country to country and from struggle with the complexity and the lack of uniformity of
hospital to hospital in different studies and hence the criteria for diagnosing it.[1]
financial burden varies accordingly. Cost of treatment can
be reduced by controlling HCAI. Findings:
Payers such as Government, Insurance companies and Health care associated infection (HCAI), also referred to as
Hospitals should get together to ensure mitigation of the "nosocomial" or "hospital" infection, is an infection occurring
risks of HCAI and bring down the cost of treatments in in a patient during the process of care in a hospital or other
hospitals. health care facility which was not present or incubating at
the time of admission. HCAI can affect patients in any type
Aim: of setting where they receive care and can also appear after
discharge. Furthermore, they include occupational
The aim of this study was to evaluate the impact of HCAI
infections among staff.[1, 2, 3, 4, 5].
on LOS, morbidity, mortality andhealth care costs.

In an attempt to find all relevant information related to the
topic an extensive search of literature in English language
was performed using online search engines: PubMed, Google
Scholar and other digital sources available online. Basis
PRISMA guidelines 19 articles providing information on LOS
and economic impact in the various types of HCAI were
included in this review article.

Health care associated infection (HCAI), also referred to as
"nosocomial" or "hospital" infection, is an infection occurring
The Insurance Times, January 2018 17
HCAI can also present as postoperative infection within 30 treatment. 90,000 of these patients succumb to nosocomial
days from surgery or within 1 year if implantation surgery, infections every year. [11]
device related infections due to central venous catheters,
urinary tract catheters, ventilator treatment, or One year mortality was 15.2% in patients without HAI as
endotracheal tubes or indwelling cerebral ventricular compared to 24.5% in patients with HAI. The extra
drainage, drug-related infections defined as C difficile mortality due to HCAI was 9.3%. [10, 12, 13]. Klevens et al
enteritis, infections related to chemotherapy for cancer, or estimated a US case fatality rate of HAI in hospitalized
infections due to other immune modulating drugs or patients to 5.7% during 1999-2002, with the highest
corticosteroids; and other infections occurring after mortality rate in ventilator associated pneumonia (14.4%)
48?hours of admission. The HAI was categorized according and catheter associated bloodstream infections (12.3%).
to the suspected anatomic site of the infection origin.[6] [13]. In Europe the 30 day mortality rate for Clostridium
difficile infection (CDI) is estimated to be from 3%-30% in
different countries. [14]
HAIs are known to comprise the largest part of adverse Kaye et al showed that the 90 day mortality rate in
events in health care and cause prolonged hospital length hospitalized older adults rises from 33.2%-49.4% in patients
of stay (LOS) and deaths. [2, 3, 4, 5] with a health care associated bloodstream infection. [15]

Different studies on HCAI have reported different incidences

varying between 3.9% and 34%. All studies point to the fact
LOS & Morbidity:
The additional length of stay due to HCAI varies with the
that the problem is significant and poses the payer system
site of organ or the body system affected as well as the
enormous financial burden. [7]. WHO has reported an
specialty of admission, ranging from 9.3 days to 23 days in
incidence of between 5.7 and 19.1% in middle and low
different studies.
income countries.[8]
Plowman et al found that HAIs in general extended the LOS
In high income countries approximately 30% of the patients
by 14 days, which was almost 3 times longer than the
in ICU are affected by at least one HCAI during the stay in
average LOS for patients without an HAI. There was a large
the ICU. HCAIs adversely affect the LOS, morbidity, mortality
variation in extended stay depending on the site of single
and cost of treatments posing a high financial burden on the
infection (2-13 days) and admission specialty (1-23 days).
payer system.[8, 9]
[16, 17]. Sheng et al found an additional LOS was around
20 days for patients affected by an HCAI. [18]
The prevalence rate of HCAI varied significantly between
clinical units, ranging from 3.9% to 34.0%, being the highest
in ICU and Burns wards and lowest in Gynecology & Bed Days:
Obstetrics wards. Patients with HCAI accounted for 20.2% of the total bed
days while 79.8 % bed days were accounted for patients
In a study reported in American Journal of Infection without HCAI.Of all days, 9.3% were considered to be excess
Control,Mikael Rahmqvist et all have reported an average days for the group with an HAI.The average of excess days
prevalence rate of HCAI to be 10.8% with higher prevalence were 10.5 per patient with an HAI. The cost for the excess
in males than females and lower in children (4.3%). [10] days was, after adjustment, 11.4% of the total costs [10].

Mortality: Re-admission rates:

HCAI are known to increase the preventable mortality rates Mikael Rahmqvistet al reported a 30 days re-admission rate
tremendously, thus reducing the earning life span in patients to be 29 % in cases with HCAI as against 16.5% in cases
suffering from HCAI.The study reported an in hospital without HCAI. Half of the readmissions (49.6%) were within
mortality due to HCAI to be 17.4% with 30 day mortality on 10 days of discharge from the hospital. [10]
follow up patients reported to be 15.8%. Both the reported
figures were significantly higher as compared to mortality Readmission rates add to treatment costs increasing the
rates in patients without HCAI.[10] financial burden on payer systems.

In US 20, 00,000 patients are hospitalized every year for Chopra et al found that it was about twice as common in
18 The Insurance Times, January 2018
patients with CDI who had a readmission within 30 days The causes of HCAI have been fairly well identified. Amongst
compared with all other patients (30.1% vs 14.4%). [19] the important ones are- improper hand hygiene, prolonged
and injudicious use of catheters, improper handling of
Cost of Treatment: urinary collection systems and airborne transmission of
infectious agents caused by less than adequate respiratory
A study by the Center for Disease Dynamics Economics &
precautions. [6]
Policy has shown the additional cost of treatment due to
HCAI in US amounts to 9.8 billion US dollars annually.
Healthcare associated infections (HCAI) and antimicrobial
resistance are two main threats to the morbidity & mortality
The healthcare payer system has to meet the additional
to patients being treated in intensive care units. HCAI
expenses due to, the additional length of stay, the cost of
become major determinants of patient treatment outcome.
additional higher drugs that need to be administered due
The associated increased morbidity, mortality, and excess
to drug resistance of the infecting organisms and the
LOS have a direct impact on the financial costs of treatment.
prolonged morbidity and higher mortality with its
accompanying loss of earning for the family.
Healthcare acquired infections rate has been rising in
developing countries. This has led to significant increase in
The 11.4 % additional cost was related only to the additional
LOS and medication costs. Emergence of drug resistant
LOS. There is also additional cost of treatment due to the
species of common infective agents such as MRSA, VRE, and
higher antibiotics administered due to drug resistance to
others add to the burden of medical treatment costs.
routine drugs.
Patients with HCAI spend higher number of bed days and
Discussion: cost higher than average patients without HCAI. Patients
Healthcare associated infections (HCAI) and antimicrobial with HAI have a larger proportion of readmissions compared
resistance are principal threats to the patients of intensive with patients with no HAI (29.0% vs 16.5%).
care units, surgical and burns wards. These remain the major
determining factors for determination of patient treatment Of the total bed days, 9.3% was considered to be excess days
outcome. They are associated with increased morbidity, attributed to the group of patients with an HAI. The excess
mortality, excess & prolonged hospitalization and higher LOS comprised 11.4% of the total costs [10]
financial costs of medical treatments. The incidence of HCAI
varies between 3.9% and 34% of all hospital admissions.[7]. Increasing healthcare costs affect the economical
Patients affected by HCAI have a longer hospital stay functioning of healthcare providers and payers. Apart from
sometimes in excess of 23 days which is about 4 to 5 times the direct financial burden on patients it also leads to
the average LOS of 5 days for their counterparts who have indirect costs in form of loss of income for the patients and
not been infected by HCAI. their families.

Also, patients with HCAI discharged from the hospital have It is imperative for healthcare organizations and payers to
a higher readmission rate of 29% (as against readmission make hospitals accountable for the occurrence of HCAI and
rate of 16.5 % for non HCAI patients)for any of the its related increase in direct and indirect cost of treatment.
complications of HCAI thereby adding to the cost of a
second hospitalization under bed days and medication HCAI also lead to significant morbidity & mortality adding
charges for higher medicines in infections by drug resistant to the sufferings of the patients and their families.It may
organisms. be argued that an increase in mortality would reduce the
LOS and cost of treatment but it may be equally true that
Patients with HCAI have a higher 30 day mortality of 17.4% the prolonged morbidity period and cost may then convert
as compared to patients without HCAI. This may falsely a morbidity into mortality.
reduce the cost and LOS findings due to early death
following HCAI. Follow up patients with HCAI have a lower Sheng et alfoundan additional LOS was around 20 days for
mortality of 15.8%. patients affected by an HCAI.

Health care associated infections are largely preventable, They also addressed a difficulty regarding estimating costs
but are associated with considerable health care burden. for HAIs among inpatients by pointing out a higher mortality
The Insurance Times, January 2018 19
rate among patients with an HAI than among uninfected Associated Infection -Clinical Infectious Diseases,
Volume 65, Issue suppl_1, 15 August 2017, Pages S50-
S54, Published: 01
August 2017]
Death reduces the direct medical costs but represents for
7. S Lahsaeizadeh, H Jafari, M Askarian - Healthcare-
each patient a unique loss of potential life years. [10, 18] associated infection in Shiraz, Iran 2004-2005 ,Journal of
Hospital Infection, 2008 - Elsevier
Conclusions 8. WHO Infection Control. http://www.
HCAI are easily preventable complications of treatments in bioriskreduction/infectioncontrol/en/index.htm/
any healthcare settings. They contribute significantly to 9.
increase in healthcare costs by increasing LOS and higher 10. Mikael Rahmqvist, Annika Samuelsson, SalumehBastami,
medication costs due to infections by drug resistant Hans Rutberg, - Direct healthcare costs and length of stay
related to healthcare acquired infections in adult patients
organisms. HCAI also increase the morbidity and mortality.
based on point prevalence measurements - American
Focusing on reduction of HCAI can reduce healthcare cost Journal of Infection Control.Volume 44, Issue 5, 1 May 2016,
burden on the payer systems. Healthcare providers need to Pages 500-506
focus on the prevention of HCAI and Healthcare payer 11. Joyce M. Black, Jane H. Hawks. Medical Surgical Nursing:
systems should hold healthcare providers accountable for Clinical Management for Positive Outcomes, 8th Edition,
the expenses related to HCAI. Vol I, Pg 328. Perspectives on Infectious Diseases and
12. Dramowski A, Whitelaw A, Cotton MF], Burden,
Summary Spectrumand impact of healthcare infection at a South
HCAI are preventable complications of Healthcare African Childrens' Hospital - JHJ Hospital Infect 2016;
treatments. LOS in hospital is increased due to HCAI and so 94(4):364-372
are the treatment costs related to duration of hospital stay 13. R.M. Klevens, J.R. Edwards, C.L. Richards Jr, T.C. Horan, R.P.
as well as use of higher medications as infective agents are Gaynes, D.A. Pollock, et al. Estimating health care-
resistant to commonly used medicines. HCAI also increase associated infections and deaths in U.S. hospitals, 2002,
the morbidity and mortality of patients undergoing Public Health Rep, 122 (2007), pp. 160-166
treatment. This poses additional financial burden on 14. P.N. Wiegand, D. Nathwani, M.H. Wilcox, J. Stephens, A.
healthcare payer system which can be controlled by proper Shelbaya, S. Haider, Clinical and economic burden of
Clostridium difficile infection in Europe: a systematic
control and surveillance of HCAI. review of healthcare-facility-acquired infection, J Hosp
Infect, 81 (2012), pp. 114
Financial Support & Sponsorship: Nil
15. K.S. Kaye, D. Marchaim, T.Y. Chen, T. Baures, D.J. Anderson,
Conflict of Interest: There are no conflicts of interests. Y. Choi, et al., Effect of nosocomial bloodstream
infections on mortality, length of stay, and hospital costs
in older adults JAGS, 62 (2014), pp. 306-311
16. R. Plowman, N. Graves, M.A. Griffin, J.A. Roberts, A.V. Swan,
B. Cookson, et al. The rate and cost of hospital-acquired
2. B. Allegranzi Report on the burden of endemic health infections occurring in patients admitted to selected
care-associated infection worldwide, Geneva specialties of a district general hospital in England and
Switzerland: World Health Organization (2011) the national burden imposed. J Hosp Infect, 47 (2001),
3. J.P. Burke, Infection control, a problem for patient safety, pp. 198-209
N Engl J Med, 348 (2003), pp. 651, 656 17. S Lahsaeizadeh, H Jafari, M Askarian - Journal of Hospital
4. H. Rutberg, M. BorgstedtRisberg, R. Sjodahl, P. Nordqvist, Infection, 2008 - Elsevier
L. Valter, L. Nilsson- Characterisations of adverse events 18. W.H. Sheng, J.T. Wang, D.C. Lu, W.C. Chie, Y.C. Chen, S.C.
detected in a university hospital: a 4-year study using the Chang, Comparative impact of hospital-acquired
Global Trigger Tool method, BMJ Open, 4 (2014), p. e004879 infections on medical costs, length of hospital stay and
5. N. Graves, D. Weinhold, E. Tong, F. Birrell, S. Doidge, P. outcome between community hospitals and medical
Ramritu, et al. , Effect of healthcare-acquired infection centres. J Hosp Infect, 59 (2005), pp. 205-214
on length of hospital stay and cost , Infect Control 19. T. Chopra, A. Neelakanta, C. Dombecki, R.A. Awali, S.
HospEpidemiol, 28 (2007), pp. 280, 292 Sharma, K. Kaye, et al., Burden of Clostridium difficile
6. Philippe Brouqui Sophia Boudjema Alberto Soto Aladro infection on hospital readmissions and its potential
Eric Chabrière Olga FloreaHoa Nguyen Jean Charles impact under the Hospital Readmission Reduction
Dufour - New Approaches to Prevent Healthcare- Program. Am J Infect Control, 43 (2015), pp. 314-317

20 The Insurance Times, January 2018

Liability Civil Under Common Law: Liability Insurance Act Policy under "Public
A body of law consisting of past court decisions and customs Liability Insurance Act 1991" (Hazardous
and usages recognized by courts.
substances) Effective date 1.4.1991 for new
Liability Contingent: owners and 1.4.1992 for existing owners:
Liability for damages arising out of the acts or omissions of To provide through Insurance, immediate relief by
others, who are not employee or Agents of the entity held "OWNERS" to persons affected due to: "Accidents:
responsible. Fortuitous, sudden or unintentional occurrence" While
"handling e.g., Manufacture, processing, treatment,
Liability Contractual:
package, storage, transportation by vehicles, use, collection,
Liability assumed under some contract such as a lease that
destruction, conversion, offering for sale, transfer or the like.
would not be present except for the contract.
Hazardous Substances viz., Any substance or reparation
Liability Criminal: which, by its reasons of its chemical or physio-chemical
Criminal liability is enforced by the state and it results into properties or handling is liable to cause harm to human
punishment in the form of fine or imprisonment or both. beings, other creature, plants, micro-organism property or
the environment (the Environment protection Act, 1986)
Liability Insurance: and as notified, by the Central Government (Public Liability
Any form of coverage whereby the insured is protected Insurance Act - 1991) " On NO FAULT LIABILITY BASIS.
against claims of other parties from specified events.
Insurance Limit:
About the author "Anyone Accident" - Minimum equal to "Paid-up capital up
to maximum of Rs. 5 crores. "Anyone year" - up to a
Lajpat Ray Chandnani maximum of Rs. 15 Crores.Liability Beyond Insurance Limit: To be met by Environmental relief fund (ERF) Further liability beyond total of Insurance and ERF - to be borne by the
The Insurance Times, January 2018 21
owner. Contribution to relief fund: equal to insurance employees, agents and sub agents and their properties and
premium to be paid to the underwriting company. Limit of belongings (b) Losses due to inherent defects, mechanical
Indemnity: single limit to be selected not below the PAID- or electrical derangements, (c) Consequential loses, and (d)
UP CAPITAL of the insured up to a maximum of Rs. 5 crores. Carriage of illegal, illicit or smuggled goods.
Measure of Indemnity: No fault basis. (a) Death and TPD:
Rs. 25,000/- (b) PPD: on the basis of Percentage of Duration:
disablement as Certified by authorized physician. (c) Loss of The cover is during transit, incidental storage,
wages due to TPD not exceeding Rs. 1000/-per month up transshipments and up to seven days after reaching final
to maximum of 3 months subject to hospitalization place.
exceeding 3 days and victim being above 16 years of age.
(d) Medical Expenses up to Rs. 12,500/- additional in all
Liability Insurance, Charterers:
above cases. (e) Property damage up to Rs. 6000/- on
This covers the damage sustained by the vessel during the
damage to PRIVATE property not belonging to leased to or
period of charter for which the charterers are held legally
under any other control of the owner. Maximum liability of
liable. This also covers demurrage if the vessel is delayed to
insurer: As per limits above.
carry out repairs for which the charterers are held legally
Liability Insurance, Bodily injury:
Insurance against loss due to claims for damages because
Liability Insurance, Cinemas:
of bodily injury (including death) to persons not employees.
Policy covers legal liability for: Accidental bodily injury,
Accidental damage to property of third parties. Policy also
Liability Insurance Carriers Legal Liability covers legal liability for accidental bodily injury / illness of a
Insurance: third party caused by poisonous or foreign or deleterious
Covers Carriers legal liability as per provisions of Carriers' Act matter in food or drink served in the auditorium.
1865. In order to provide an insurance cover to the common
carriers and transporters against the stipulation of absolute Liability Insurance, Clinical Trial Insurance Policy:
liability under the Carriers Act, the Carrier's Legal Liability The policy covers the sum which the insured shall be liable
Policy has been devised. At present the CLL policy gives the to pay as damages / compensation for claims made by
following coverage: subjects for death or injury or any other adverse reaction in
the body as a result of participating in clinical trial. The term
Basic cover: insured would include all stakeholders in the trial. The cover
covers damage to goods caused by fire, explosion and or includes legal costs also. Breaches of data may also be
accident to the vehicle carrying the goods due to negligence covered. The policy is generally issued on NO Fault principle.
or criminal act of his servants. The cover will commence
with the loading of the cargo and end with its unloading. The policy may be a single trial or multi trial policy. Post-
trial coverage is also offered for a limited period as decided.
Wider cover: The territorial limits are also specified. The policy does not
The following risks are covered in wider cover which is
allowed as a package deal and no partial extension may be
allowed: (i) Damage to cargo as in basic cover. (ii) Damage
by fire, burglary, riot & strike and malicious damage
affecting the goods at warehouses or transshipment yard,
whilst in the custody of the carrier. (iii) Shortage of goods
due to theft or pilferage of cargo at any time whilst in the
custody of the carrier. (iv) Breakage, leakage, damage due
to improper handling.

(a)Riot and Strike (available as add-on), war perils, nuclear
and radiation perils, contractual liabilities, liability to own,

22 The Insurance Times, January 2018

extend to cover (i) Damages within permissible limits as are liabilities of Corporate Directors' and Officers' today. The
to be expected within such trials. (ii) Deliberate increase in litigation against directors reflects a change in
contravention of instructions by the subject (iii) the attitude of the general public towards greater
Deterioration in condition which would normally have management accountability and hence the position of a
occurred even without the trial (iv) War and nuclear perils Director is becoming far more onerous. Actions are most
(v) Fines and Penalties. likely to be commended in relation to: (i) Actual or alleged
breach of trust (ii) Breach of duty or warranty of authority
Liability Insurance, Commercial General Liability (iii) Neglect or Omission (iv) Error or misstatement or
/ Combined General Liability / Common General misleading statement (v) Failure to supervise or regulate
Liability (CGL):
The CGL policy is an ISO form, widely used to provide Who might bring an Action?
commercial enterprises with premises and operations (i) Shareholders: alleging financial loss attributable to
liability coverage, products and completed operations failure by Directors or Officers responsible
insurance and personal injury coverage. Premises medical
(ii) Employees: alleging unfair dismissal, discrimination,
payments coverage is often included as well. Under a Public
sexual harassment or mismanagement of pension funds
Liability the indemnity provided is for a claim due to legal
liability arising out of accident occurring in the insured (iii) Customers: alleging that they have suffered financial
premises arising out of injury or damage. loss following wrongful advice on the application or
suitability of product
In case of a product liability policy the indemnity is for claims (iv) Competitors: alleging that their businesses have been
due to legal liability arising out of accidents arising out of adversely affected by a restrictive trade practice e.g.:
defects in products specified. In contrast, the operative price fixing
clause of CGL cover for legal liability to pay damages (v) Members of the Public: failure to effect and maintain
because of bodily injury or property damages. There are no adequate control or services.
limitations for cover in terms of insured premises or products (vi) Regulatory Bodies: for offences under the Companies
specified as long as the occurrence and claims are in
Ordinance or breaches in similar legislation.
coverage territory specified, thereby providing a wider
covers. CGL also provides cover for supplemental payments, Potential Allegations: The following list provides typical
medical expenses and fire damages. Cove rage is restricted examples of "wrongful acts" which could be alleged against
to cover only third party liabilities. a Director or Officer - though, this is not an exhaustive list:
(i) Inaccurate statements of financial conditions
Liability Insurance, Contractual Liability: (ii) Errors in annual accounts
Insurance against loss under a contractual liability
(iii) Conflict of interest
(iv) Lack of judgment, diligence or good faith
Liability Insurance, Cybercrime Liability: (v) Mismanagement of funds
Scope of the Policy is to cover cyber liability exposures like (vi) Misstatements in prospectuses
Libel, Hacking, inadvertent virus transmission, copyright (vii) Allotment of shares
infringement, loss of identity. The policy coverage is on the
(viii) Unauthorized or imprudent loans or investments
lines of an errors and omissions policy to cover liabilities
arising out of hacking email frauds, web developing, website (ix) Failure to obtain competitive bids
maintenance and E-commerce. (x) Imprudent expansion resulting in a loss
(xi) Using inside information
Liability Insurance, Directors and Officers (xii) Unwarranted dividend payment, salaries or
Liability & Insurance: compensation
Liability, Directors and Officers Liability: (xiii) Misleading statements filed with the Stock exchange
The Corporate decisions that yesterday did not materially (xiv) Misrepresentation in acquisition agreement for the
affect other people today powerfully impinge on their lives purchase of another Company
and the subject matter has a direct bearing on the potential (xv) Wrongful dismissal of an employee.
The Insurance Times, January 2018 23
to legal costs but to any damages which might be
awarded against him. The organization will now of
course be precluded from indemnifying him.(b) The
second part of the cover (D&O) will now respond,
provided that the Director/Officer has not acted in a
deliberately dishonest manner. Fines and other
penalties are not recoverable. As in the case of other
liability insurance policies, the D&O policy is subject to
compulsory excess and certain exclusions. Besides, the
policy provides for Directors and Officers to comply with
certain specified claim conditions. Many coverage are
provided under the policy as Add-on extensions.

Liability Insurance, Dram Shop Liability

Possible consequences: Civil Action: May involve personal A form of insurance contract that protects the owners of
liability for: (a) Damages (b) Claimant's Costs (c) Costs of an establishment in which alcoholic beverages are sold
Personal Legal Representation. Criminal Action: prosecution against liability arising out of accidents caused by intoxicated
may be brought under various Statutes. Whilst fines and customers who have been served or sold the alcoholic
penalties under Criminal Actions are not insurable, Directors beverages.
and Officers may face substantial costs in arranging legal
representation to defend such actions. These legal costs are
Liability Insurance, Employers:
covered by the D & O insurance provided the defence is
Insurance against loss to claims for damages by employees
for bodily injuries (including death), excludes liability under
workmen's compensation laws.
Liability Insurance, Directors and Officers
Liability Insurance: Liability Insurance, Farm Liability:
The Directors and Officers of companies may become liable This is a specially designed property liability package policy.
to pay damages for wrongful acts such as failure of The coverage applies to liability arising out of farming
supervision of the affairs of the Company etc. Directors and activities including products liability. Limited pollution cover
Officers liability policy is therefore designed to provide for discharge of smoke or chemicals used in normal farming
protection to Directors and Officers of a Company against operations can be added. Employers' Liability Coverage for
their personal liability for financial losses arising out of farm workers can also be added.
wrongful acts or omissions in their capacity as directors or
officers. Liability Insurance, Global Coverage Policy:
Large business groups which operate in many countries have
The coverage is granted in two parts under the insuring special insurance problems. They may have to arrange local
clause: insurance as per local laws. Nevertheless, the group head
(i) Company Reimbursement: Insurance of the office may arrange a "Global Legal Liability Policy" to cover
Organization itself - Organization is entitled (and often any gaps in local insurance cove rages or on an "excess of
obliged) by way of its articles of association to indemnify loss" basis to take care of large losses.
its Directors and Officers. However, the extent of this
indemnity is strictly limited under the Companies act. Liability Insurance Hotel Owners:
The organization may only reimburse to the extent of Policy covers legal liability of Hotel owners for: (a) Accidental
legal costs expended and then only if the Director/ bodily injury (including death) of any visitor or guest including
Officer successfully defends that action. while using facilities such as Health clubs, Beauty parlors,
(ii) Directors and Officers: (a) Insurance of the Director/ Hair dressers Shops, Swimming Pools (life guard provided or
Officer - if the action against him is successful, then the not), Sports (indoor-Table Tennis, Squash, Bowling, etc.),
Director/Officer is "on his own". He is exposed not only (outdoor: Boating, Deep Sea Diving etc, Skiing, Hang

24 The Insurance Times, January 2018

Gliding, Sky Diving etc) (b) Accidental damage to the Liability Insurance, Multimodal Transport Operator (MTO)
property of any visitor or guests. (c) Injuries (including death) Liability Insurance Policy: The Multimodal Transportation of
due to food poisoning. (d) Loss of visitors property from the Goods Act, 1993 provides for legal liability for loss or damage
premises. The Policy covers legal liability only if both injury to cargo. It provides for the creation of a licensed operator
or damage is caused through fault or negligence of (i) the called the MTO who could be held responsible for the loss or
insured (ii) the insured's contractor (iii) any of its employees damage to the cargo entrusted to them for transportation.
or (iv) defect in the ways, works, machinery or plant. One of the requirements of the MTO license is the insurance
to cover liability that arises on them. MTO is liable for (a) Act
Liability Insurance, Insurable Interest: for their Principal I arranging shipping and transport services,
Insurable interest is the legal right to insure. The three or (b) Contract with the cargo owner to transport goods, or
essentials of insurable interest are: (c) Provide expert advice, assistance and opinions. Although
a. The existence of a potential legal liability which is the MTO came into effect in 1993 Indian insurers were not
capable of being insured providing this cover till 2001. Currently few insurers are
offering this cover in the market. In the light of above Ministry
b. Such potential liability must be the subject matter of
of Finance had given special dispensation allowing foreign
insurance, and
insurers to directly underwrite this business.
c. The insured must bear a legal relationship to the
subject matter whereby he will benefit on freedom from
liability and will lose financially on creation of liability.
To cover insured's liability to (a) A customer or third party
for loss or damage to cargo in the insured's care, custody
Liability Insurance, Lift Third Party Liability: or control (ii) A third party for death, bodily injury or damage
Policy covers legal liability for accidental bodily injury / to property (c) A customer or third party for errors and
accidental Direct damage to wearing apparel or personal omissions or professional negligence (iv) An Authority for
effects of third parties in connection with insured lift fines and duty.
including machinery, plant, door, safety devices or other
Cargo Liability:
Indemnity is provided to the insured for its legal liability an
Liability Insurance, Liquor Liability Policy: claims expenses in respect of claims which arise from
The policy is designed for manufacturers, distributors etc of physical loss of or physical damage to cargo provided such
alcoholic beverages. The policy covers the liability excluded liability arise from The Indian Multimodal Transport Act,
under CGL Policy. The policy is also available to bars, FIATA or Combicon Bill of Lading or the Insured's house bill
restaurants etc for their so called "Liquor Liability" imposed of lading or standard trading conditions or other recognized
by Common Law or by Statutes. Protects the owners of an transport convention.
establishment in which alcoholic beverages are sold against
liability arising out of accidents caused by intoxicated Third Party Legal Liability:
customers who have been served or sold the alcoholic
Indemnity is provided to the insured for its legal liability in
beverages. Refer: Liability Insurance, Dram Shop Liability
respect of a claim arising from an accident causing (i) Bodily
injury to a third party, or (ii) Physical loss or physical damage
to third party property, or (iii) Consequential loss suffered
Liability Insurance, Market Pools: by a third party.
Market pools formed by a consortium of insurers are not
very common in liability insurance except perhaps in extra- Professional Indemnity:
hazardous risks e.g., demolition contracts. However, public Usually an add on extension. Covers the legal liability and
liability insurance for nuclear reactor operations is available expenses arising from (i) The negligent performance of a
on a pooling basis, from the "British Insurance (Atomic professional duty, (ii) Fraud by an employee (iii) Libel, slander
Energy) Committee comprising the insurance companies and or infringement of personal rights that has not arisen from
Lloyd's underwriters. publication in an independent journal etc (iv) An
unintentional breach of warranty of authority where the
Liability Insurance, Medical Practitioners: insured has contracted on another person's behalf believing
Refer: Professional Legal Liability for Medical Practitioners." they have the authority to do so.(v) A misdirected claim
The Insurance Times, January 2018 25
against the insured being one which results from (a) an Liability Insurance, Products and Completed
accident for which legal liability would in the normal course
Operations Liability, CGL:
of vessel operations be covered by any protection and
The liability exposure of the manufacturer whose
indemnity policy for the vessel owner or operator, or (b) A
malfunctioning products may cause injury or property
contract into which the insured entered, within the scope
damage or of the contractors whose failed structure or
of the insured services believing that the insured was acting
projects may do the same. Coverage of the exposure is a
as the principal's agent only.
feature of the commercial general liability policy. The
insurance does not in any constitute a guarantee of either
Fines and Duties: the insured's product or work. Contrast with "Premises and
This too is an extension if opted for. Operations liability."

Liability Insurance, Products Guarantee
(a) Gross Freight Receipts (GFR), (b) The number of containers
handled (in terms of 20 TEU). The rate shall depend on (i) Limit Insurance Policy:
of liability for cargo and TP Liability (ii) Extensions Opted (iii) The product guarantee policy is designed to protect the
Deductibles (iv) Past claims experience (v) Nature of cargo insured against legal liability arising out of failure of products
handled (vi) Destination of Cargo e.g., the % of cargo normally to fulfill their intended function. The policy will pay for (i)
dealt with towards USA/South America/Eastern Europe/Africa The cost of repairing or replacing a defective product, (ii)
etc. (vii) Quality of Management. The cost of recalling defective products (iii) The financial
losses caused by such products where there is no injury to
Liability Insurance, Nuclear Energy Liability or damage to property of third parties. Extension is available
to pay for insured's lost sales as a result of damage to the
Insurance: brand name of the product, advertising expenses already
Usually provided by various pools formed by insurers. Two
incurred, advertising expenses to re-launch the product etc.
types of overage available (i) The facility form for operators
for nuclear facilities and the suppliers. (ii) Transporters' forms
for those that provide services, material etc., for such
Liability Insurance, Products Liability:
facilities or transport property to and from a facility. The Product liability Insurance provides an indemnity to the
coverage is restricted to liability arising out of nuclear manufacturers or distributors and/or components is respect
accidents. Thus, these also need CGL policy. of their liability for accidental damage or injury resulting
from defects in their products Product liability Insurance also
Liability Insurance, Personal: provides an indemnity to manufacturers and others against
third party claims for personal injury or damage to property
The Policy for individuals in respect of legal liability arising
which arise from the purchase or use of product. Ordinary
out of their own negligence or the negligence of their family
public liability policies concern themselves, in the main with
members. These policies are known as "Personal Policies".
accidents occurring on specified premises. Product liability
Liability Insurance, Pollution Coverage: Insurance policies deal with the liability that may arise
The practice varies among insurers. Some incorporate a wherever the claims arising from the utilization of the
general exception in the Public Liability policy, others covered product manufactured, sold, handled, or distributed
consider each risk separately and decide to cover or exclude by the insured or other trading under his name if the
pollution liability. accident occurs after possession has been relinquished to
other and away from premises owned, rented, or controlled
Liability Insurance, Product Recall Insurance: by the insured.
The policy indemnifies the insured for recall expenditure
incurred by insured. The cover includes costs such as Liability Insurance, Professional Malpractice:
customer notification, shipping costs and disposal costs. The liability of a professional for errors or omissions in the
Coverage generally applies to the firm itself though pursuit or his profession.
additional coverage can be purchased to cover the costs of
third parties. This policy is usually purchased by Liability Insurance, Property Damage:
manufacturers such as food and beverages, toy, automobile Insurance against loss due to claims for damages because
parts manufacturer and electronics companies. of injury to others property.
26 The Insurance Times, January 2018
Liability Insurance, Public Liability Industrial liability to pay compensation including Claimant's costs, fees
and expenses anywhere in India in accordance with Indian
Law. The Policy applies to non-industrial risks such as Hotels,
The Insurance Policy shall cover applies to Industrial and
Motels, Club Houses, Restaurant, Boarding and Lodging
storage risks such as Depots, Warehouses, Godowns, Tank
Houses, Flight Kitchens, Cinema Halls, Auditoriums,
farms etc with aggregate limits of Indemnity any one year
Theatres, Public Halls, Pandals, Open Air Theatres,
/during the policy period within the geographical limits of
Residential Premises, Offices/Administrative Premises,
India. Policies shall cover all sums which the Insured
Medical Establishments, Institutions, Airport Premises (other
becomes legally liable to pay as damages to third party in
than aviation liabilities), Schools /Educational Institutions,
respect of accidental death/bodily injury/disease and loss of
Libraries, Exhibitions, Fairs, and Fetes, Stadiums and Pandals,
or damage to property arising out of claims first made in
Permanent Amusement Parks, Film Studios - Indoor &
writing against the Insured during the Policy period,
Outdoor, Zoos, Depots, Warehouses, Godowns, Shops,
including legal costs and expenses incurred with prior
Tank Farms and similar other non-industrial risks with
consent of Insurers, subject always to the limits of indemnity
aggregate limits of indemnity any one year /during the
and other terms, conditions and exceptions of the policy. It
policy period.
shall not be permissible to issue a Public Liability Policy with
unlimited liability. The maximum ratio of limit of indemnity
Policies shall cover all sums which the Insured becomes legally
any one accident to any one year shall not exceed 1:4.
liable to pay as damages to third party in respect of accidental
Policy can be extended to cover Pollution Risks, death/bodily injury/disease and loss of or damage to property
Transportation risks outside Insured's Premises, Cover for arising out of claims first made in writing against the Insured
multiple units, Act of God perils, Technical Collaborators during the Policy period, including legal costs and expenses
Liability For the purpose of rating industries are classified incurred with prior consent of Insurers, subject always to the
under four groups. The Company will indemnify the insured limits of indemnity and other terms, conditions and
against their legal liability(other than liability under the exceptions of the policy. It shall not be permissible to issue a
Public Liability Insurance Act, 1991 or any other Statute that Public Liability Policy with unlimited liability. The maximum
may come into force after the issue of this policy) to pay ratio of limit of indemnity any one accident to any one year
compensation including Claimant's costs, fees and expenses shall not exceed 1:4. Policy can be extended to cover Pollution
anywhere in India in accordance with Indian Law. Risks, Cover for multiple units, Act of God perils.

Indemnity Limits: Company's total liability to pay Liability Insurance, Ship Repairers:
compensation, Claimant's costs, fees and expenses and This covers liabilities of ship repairers towards vessels
defence costs shall not exceed the Any One Indemnity limit repaired by them.
stated in the Schedule. Indemnity Limit applies to any one
claim or series of claims arising from one originating cause. Liability Insurance, Stockbrokers Liability:
Any One Year Indemnity Limit shall represent the total
Stockbrokers can be liable for wrong advice to clients and
amount of Company's Liability during the Policy period.
also failure to execute or wrong execution of clients'
instructions to trade. One of the condition of the coverage
Liability Insurance, Public Liability Non Industrial
is that they are registered members of a Stock Exchange.
The Company will indemnify the insured against their legal Liability Legal, Losses:
Legal liability losses may be classified by any of several
characteristics. One possible classification is in terms of the
entities to which liability may indebted Customers, members
off the general public, employees, governmental bodies to
which an organization may own fines and possibly others.
Another way of classifying liability losses is by the source off
the legal duty whose breach has brought legal liability upon
the organization: liability for breach of a contract (through
intention non-performance or violation of a warranty, for
example), tort or criminal liability.
The Insurance Times, January 2018 27
Finally, liability losses may be classified according to whether Liability, Single Limit:
the amounts the firm must pay, or the revenue of which it Liability Insurance that imposes a single Policy limit on all
is deprived, arise from payment off damages or fines to an claims per occurrence, regardless of the mix off bodily injury
entity whose legal rights have been violated, payment of and property damage and the number of claims.
legal defence costs, or expenses incurred or revenues lost
because of the need to modify or cease a profitable activity.
Liability, Specific Exposures and Problems:
A business faces liability arising out of its property and
Liability Legal, Losses: activities. These sources of liability can be categorized as
That liability which courts recognize and enforce as between follows:
parties litigant. 1. Ownership, use, or possession of premises,
2. Activities that are considered to be a public or private
Liability Legal, Dram Shop Law: nuisance,
Liquor liability laws are called dram shop laws. They provide
3. Sale, manufacture and distribution of products or services.
that a person serving someone who is intoxicated or
contributing to the intoxication of another person may be 4. Property of others in the care, custody or control of the
liable for injury or damage caused by the intoxicated person. business.
Liability Legal, Employers: The common law or special 5. Fiduciary relationships such as the management of
statutory responsible of employers for job related injuries employee benefit plan assets or service on the firm's
and disease caused by their negligence but not covered Board of Directors.
under workmen's compensation. 6. Professional activities.
7. Vehicles - usually automobiles but may include aircraft,
Liability Legal, Joint and Several: watercraft and other vehicles.
Liability under which each off several joint wrong doers are 8. Employees who may suffer a job-related injury or
responsible either on a combined, undivided basis, or on an disease.
individual basis, for the full amount of damages for which
9. All property and activities not listed under any other
the several wrong doers are collectively responsible.

Liability, No Fault: Liability, Strict:

Compulsory Public Liability Insurance: Section 3 of Public A legal doctrine under which a manufacture is held
liability Insurance Act, 1991 imposes a no fault liability on responsible for injuries arising out of defective products,
the person who owns or has control over handling any regardless of whether or not the manufacturer was
hazardous substance to give relief where death or injury negligent.
(including permanent total or permanent partial disability
of sickness) of any person (other than a workman within the Liability, Tort:
meaning of the workmen's compensation Act 1923) as A tort is a civil wrong other than breach of a contract for
amended or damage to any property, has resulted from an which the court will provide a remedy in the form of an
accident. No fault liability means that the claimant is not action for money damages: (i) Intentional torts: involving
required to prove that the death, injury or damage was due conduct that may be intentional or by design (but not
to any wrongful act, neglect or default of any person. necessarily with the intention that the resulting
consequences should occur): (ii) Unintentional torts:
Liability, Pro-rata: involving the failure to act or acting not as a reasonable
Liability on the part of an Insurer for not more than the prudent person would have acted under the similar
proportion of loss which the amount insured bears to the circumstances, and (iii) Wrongs: for which is business may
amount of all Insurance policies covering the loss. be held absolutely or strictly responsible, intent or fault is
not an issue under absolute or strict liability.
Liability, Protective Insurance:
Liability Insurance against claims which may arise out of the Liability, Vicarious:
insured's contingent liabilities for the conduct of others, such Employers 'liability' towards third parties for the acts of his
as independent contractors. servants. T

28 The Insurance Times, January 2018


A) Introduction: Men have invented sophisticated Revolutionary Information

Technologies which enslave men to day with unprecedented
'CYBER' is a term derived from 'CYBERNETICS' which means
dependence on Electronic Mechanisms.Large scale
comparative study of automatic communications and control
disruptions are caused by these Cyber Risks.
of functions of living bodies and in mechanical electronic
systems such as in computers.
It is a serious challenge to Insurance and Reinsurance
Cyber Risk Management is evolving as a specialized science
which does research on volatile issues arising out of
all kinds of Cyber Risks is the main thrust in specialized Cyber
revolutions in all Information Technologies. Computer
Risk Management not by 'Trial and Error' but by 'Trust and
Programming, Artificial Intelligence, Computer Virus and
Advanced Technologies'.
Voluminous and valuable data of business houses can be
damaged, disrupted and lost in events of Cyber Crimes of
Cyber Terrorism is another area where newer challenges are
Hackers. No business is safe from determined Hackers who
to be faced.
use their skill for extortions. Ransomware, Wannaery and
Petrawrap outbreaks have been known to cause 'Crippling
Various types of Cyber Risks with special characteristics of
Disruptions' which can be inflicted across all sectors of all
newer kinds of claims need to be surveyed and handled in
absolutely untraditional ways by all concerned - insurers,
reinsurers, surveyors, brokers etc.
About the author
Again Rating Technologies of Insurable Cyber Risks are to
K. L. Naik
be evolved in the light of past events of losses, kinds of
Managing Director
Xperitus Insurance Brokers Pvt.Ltd exposures and little awareness of Insureds - Insurers -
Reinsurers and Brokers.
The Insurance Times, January 2018 33
Cyber Risks Scenario is emerging since 2011-12 and real viii) Business Houses and Insurance Industry leaders have to
impact is being felt since 2014. make gross investments in security technologies.
ix) First line of defence against Cyber Threats of concerned
We have to look through contemporary historical
Business houses means Comprehensive Risk
advancements in IT Technologies and Cyber Risks.
Management practices to be handled jointly by Insured,
Insurer, Reinsurers and Brokers.
B) Complexities in Handling Cyber Risks:
The scope of possible losses from Cyber Risks includes NDBI x) It is very important that for better understanding of
Non-physical Damage Business Interruption. Cyber Risk Data base must be built from all angles.
Insurers should closely study various problems and
This type of insured risk is detached fully form asset related prospects of clients in dealing with Insurability of Cyber
property risk. The cover protects earnings even when there Risks.
are events of 'Electricity Blackouts', Digitalization etc.Data xi) Insurance of Cyber Risks must help to build RESILIENCE
is turning into a critical asset and such events cause OF BUSINESS HOUSES in an Interconnected world of It
significant economic damages to business. Cyber Risk can Technologies.
trigger events for NDBI. Non-physical Damage Business
xii) Even information given by clients can be incomplete and
First and Third Party NDBI loss events caused by Cyber Risks
have a broad base. Paperless offices remain with larger blanks in
interconnections of information stored in computers when
In 2016 Swiss Re/ IBM conducted a survey of companies breaches take place. Back-up data have their own missing
impacted by Cyber risk landscape covering incidences of links.
2014-2015-2016. The median cost of $ 200,000 of a data
breach event with significantly higher aggregates of losses. C) Some Observations of various lead
Knowledge of the full range and size of Cyber Risks is still in underwriters Emerging Scenario of
its 'infancy stage'. Size of Cyber Risks and reliability of
incident data are not easy to generate 'Actuarial Estimates'.
Cyber Risks from Reinsurance Week and
Reinsurance Magazines from London in
Insurers also worry that the aggregation of Cyber Risks in
an event of loss may result in billions of US$ and modelling
occurrences is for more difficult even there can be threats 1) The most recent Ransomware Attacks are something
to solvencies of Business Houses. that everyone can be affected but 'main business
remains unprepared and unprotected against them'.
The main challenges in insuring Cyber Risks Up until now Cyber Insurances have typically focused
are……….. on breach response, notifications and liability costs
i) Uncertainty about frequencies and severities of losses. increased by companies holding high volumes of
sensitive data such as healthcare providers, financial
ii) Potential correlations of various Cyber Risks.
institutions and retailers.
iii) Cyber Crimes and Cyber Terrorism. In the recent Wannacry and Petrawrap outbreaks all
iv) Malicious intents behind coordinated attacks like have witnessed 'Crippling Disruptions' that can be
Ransomware inflicted by the 'ransomware' across all sectors of
v) Constantly changing threats from untreatable industries.
perpetrators of crimes. Even Large Scale Blue chip are globally recognized
vi) Many business houses using most sophisticated IT brands which are not immune.
Technologies are not well prepared to deal with Cyber The costs of such incidents are not limited to payments
Risks and loss events to quantify volumes of Cyber Event of ransom. Decrypting files or restoring data from back-
losses. ups have higher costs. All these consume valuable
vii) Historical Data of Cyber Loss Events is to be built up for resources and can destroy hard-won reputation.
evolving Risk Modelling. No business is safe from determined Hackers.
34 The Insurance Times, January 2018
Business Houses need to engage insurers, brokers and developments. Extensive digitalization and new
others risk - management specialists to ensure that technologies, communication channels, new types of
there are kept up to date in the face of this developing services and evolving customer demands are rapidly
threat with a particulars focus on patching, back-ups and altering the 'risk landscape' by emerging Cyber risk.
business continuity planning. These are essential to MUNICH RE co-operates with the software company
reduce damaging impacts of such ransomware events SAS and others on data analysis, simulation and
and prevent reputational damage. predictions. By providing their clients with access to big
Mr. Paul Gooch, data systems and tools for advanced analytics an
TMK UNDERWRITER. opportunity is provided to collaborate with in products
developments on a digital and global scale. Besides
2) Technologies will continue to move on and change our these customer's insights, analytics and automations
world at a faster space. The best option is to 'adapt' to are essential to increase insurance margins. It enhances
it. Technology offer opportunities to analyses insurers ability to react faster with efficiency in
prospective portfolios to identify areas of underwriting and claims processes. These are sure to
underperformance and inefficiencies within the make Insurance Business Model more customer-centric.
portfolio. Both Insurers and reinsurers have to analyze Time saved by standardization of product and processes
and understood Cyber Risk Portfolios. can be best utilized on consultation and calculation of
Those who embrace technology can leverage it as an
'OPPORTUNITY' while those who do not will most 5) Reinsurance sector has adopted a 'can do' attitude to
certainly see it as a 'THREAT'. the provision of 'Cyber Capacity' backed by greater
analytics and emergence of Cyber - specialist
Mr. Hans Peter Gerhardt. underwriters.
Group CEOP
ACR Capital Holding Pvt. Ltd. A growing number of insurers recognize that they need
Cyber Capability and how to acquire expertise to insure
3) New Technologies involving things like autonomous and reinsure cyber risks.
vehicles, drones and artificial intelligence may bring These are sure to be rapidly increasing demands to
new business opportunities for the industry. At the same insure and reinsure Cyber Risk locally as well as globally.
time, they my however disrupt the market as There are mature markets in London, U.S., Continental
unexpected risks emerge and / or known risks become Europe and Bermuda for creation of capacity to
non-existent Technological developments, predictions of underwrite Cyber Risks with reinsurance protection.
changes and vision of new opportunities to grow are Essentially these are to cover losses arising out of
all before us. 'disruptive incidences of cyber attacks'.
'Cyber Risk' is one of the emerging risks that offer However, Reinsurers and Insurers have to co-operate
growth potential to the Insurance Industry. Demand for with caution, calculations and claims handling
Cyber Risk Insurances is rising amid the increasing use technologies to successfully face the challenges and
of social media and cloud computing. The Legal and changes passed by
regulatory measures against private data breach is
Automation, Artificial intelligence, Digital Data,
becoming more punitive and there is growing
Ransomware etc. to segregate Cyber Terrorism from
awareness of Cyber Risk Protections. The Lloyds
Pure Risk Losses of Cyber Risks.
Platform is becoming a compelling measure for regional
and local players to gain access to Cyber Risk a specially Mr. Luke Foord
line market. - JONG - GYU WON OF KOREANRE WHO Kelcey of
APRIL 2015.
4) Asia - Pacific: The Insurance Industry is facing disruptive FACING CHALLENGES OF 'CYBER RISKS'. THE GROWTH IN
The Insurance Times, January 2018 35

Underwriters have to closely understand requirements of

Corporate Clients, analyses their board room decisions and
invent cyber Risk solutions! 'UNDERWRITE CYBER RISK
Management of Cyber Risk is to be the main area of thrust.

Everyone has to find a way or make a new one to write,

underwrite and reinsure Cyber Risks to satisfy demands of
clients both small and big corporate firms. Cyber Risks is due mainly to rapidly growing Digital
Transformation, 'Widening Resources' and vulnerability from
The traditional competitions in soft market conditions, hyper-connectivity. The entire process of Cyber Risks
increasing frequencies and severities of all Natural evolution is full of newer types of Threats and
Catastrophes and increasing volatility of investment Opportunities.Cyber Risks structures are rapidly changing
environment are all akin to a perfect storm in the face of and are becoming complicated.
disruptions caused by Cyber Risk.
Firms may underestimate the complexity that is created by
Perhaps 'Cyber Terrorism' can be covered only on by the digital technology. This is absolutely and Reinsurance
creation of Market Pool and other Cyber Risks can be Markets.
covered by specialized Insurance Products.
Growing Cyber Risk Market is impacted by newer
Rating Technologies must be evolved and Transfer of Rating technologies, rapid digitalization with global
Technologies to be achieved by a Global Co-operation of interconnectivity.
Reinsurers and Insurers and (Re) Insurance Brokers. Standalone Cyber Insurance is growing in US Market as well
as in U.K. / Europe. The Cyber Insurance Market is
D) Growing Cyber Insurance Market: concentrated. Main players are AIG, Chubb and XL Group.
Real evolution of Cyber Insurance Market has been from 45% of Global Cyber Premium is in U.S.A.
2014 onwards. However, since 2011 Cyber Liability
Insurances with small limits have their beginnings since 2011. Worldwide Cyber Risk PremiumsApproximate
Projections (2015-25)
The Cyber Risk landscape is changing very fast and Insured Figures in US Dollar Billions
business houses as well as Insurers, Reinsurers and
(Re)insurance Brokers have to keep pace with fast changing Sr. Market 2015 2020 2025
Technological Developments. Technological Revolution is No. Participants
closely linked with (Re)insurance Market Evolutions. 1. Allianz 2.50 7.00 20.00
2. AON 2.00 10.00 TBA
First Party losses result from Cyber incidents which include 3. PWC 3.00 7.50 TBA
forensic Investigation costs to determine cause, notifying
4. Advisen 2.50 5.00 TBA
consumers and campaigns for public awareness.
5. ABI 2.00 10.00 TBA
Third Party losses relate to costs of Private litigations or firms Total 12.00 39.50 20.00
and fees.
Cyber Policy Capacity Limits from US$ 5 MLNS to 100 MLNS.
According to Lloyds CEO Cyber Attacks cost companies Source: SIGMA Report 1/2017
around US$ 400 BLNS every year! - SIGMA Report 1/2017
E) Conclusion
Cyber Risks are evolving continually. The dynamic nature of Cyber Risks Insurances are needed by industries Insureds are

36 The Insurance Times, January 2018

ready to share information on Cyber Risks and are willing to Reinsurance with deep insight and intuition of a Global
increase their resilience in events of Cyber Attacks like Reinsurer at Baden Baden on 23.10.2017. Conclusion of this
Ransomware. topic is best expressed by him.
"Cyber has become highly relevant currently and will be in
Main Industries interested in Cyber Risk future it is more complex risk and carries more accumulation
Insurances: risk……"
Electronics, Media, Health Care, Transportation, Banking,
Looking at the future he said that change has arrived and
Telecom Infrastructures, Pharma - N- Biotech, Chemical -
that the industry could learn from other industries who have
N- Petrol and Manufacturers of Consumer Products,
undergone technology driven changes.
Industrial Products, Auto Manufacturing, Professional
services, Retail, Utilities, Hotels etc. "Digital ingredients will be data and technology. These
ingredients will be the same for our industry. They will allow
Cyber Insurance can be better managed by Captive better risk assessment, they will sophisticate the front end
Insurance Market locations like Bermuda. and the way we interface with customers…."
It remains to be seen if Financial Reinsurance Products of "Those who are good at it will take a bigger share, even if
ART Technologies can be utilized for Cyber Risks the pie does not grow. We need to look at how other
Reinsurances. industries are, have or will transform. They are transforming
and they couldn't care less about how our industry is
The future of Cyber Risk Insurance and Reinsurance will be transforming……."
fully dependent on rapid growth of Newer Technologies,
"How do we profit going formed? By simplifying and speeding
Automation, Software Data with larger volumes and
up for the benefit of our customers……."
enormous values of assets.
"We have to earn the ability to profit from these
CYBER TERRORISM related to Cyber Crimes can be better opportunities and will not do that without transforming our
covered by Market Pools and uniformly adequate ratings. industry."
Reinsurance of Market Pools will be also becoming more
He said that our industry has to transform the way it
effective alternative to competition among Cyber Risk
operates in order to access rapidly changing Business Eco-
Systems and to offer "Systematic Solutions".
Dr. Joachim Wenning, Chairman of the Board of Source - Reinsurance - Baden Baden Meeting
Management at Munich Re has spoken words of wisdom in Day 2 (23.10.2017) T

Insurance Quiz
1. Yes bank has inked agreement with which company.
2. Which health plan offers a reserve benefit to customers.
3. Which platform has been launched to track health related information’s.
4. Which Insurance Company gets a compulsory cession from all insurers.
5. The study 360 Well Being Score has been released by __________.
6. Which is the 3rd largest line of business in general insurance.
7. The insurance regulator has set up a panel to look into innovations in insurance involving_____________,
The answers of the quiz are from this issue itself. Just go through our journal and you will find the answers. Send your
answers by Email to and you can get a chance to win an attractive gift. The gift will be
offered to the person giving all the correct answers. If we receive more than one entry with all correct answers the name
of winner will be drawn from lottery. The last date of receipt of entry is 28th January, 2018.
So Hurry and Submit your entry at the earliest !!!!

The Insurance Times, January 2018 37

(Risk covered, demand, need, existing coverage)

arine Insurance is the oldest form of insurance 3) Any liability to a third party may be incurred by the
and is said to be the foundation base of all owner of or other person interested in or responsible
the other types of insurance policies. Marine for insurance property by reason of maritime perils.
insurance policies have been used since ages
by traders/merchants/ship owners/other Marine insurance covers the losses or damages caused to
contingent interests for protecting their varied maritime ships, terminals and any transport or cargo by which goods
interests. Marine insurance protects the insurers against the are transferred, acquired, or held between different points
losses or damages against the marine risks during the of origin and final destination. The term also includes inland
marine adventure through multiple modes of transportation. marine but it is mostly used in the context of ocean marine
insurance. Marine insurance is a haven for transporters and
According to section 2(d) of Marine Insurance Act, 1963, shipping corporations because it helps to lower the aspect
Marine adventure includes any adventure where: of financial loss due to cargo loss.
1) Any ship, goods or other movable referred to as
insurable property is exposed to maritime perils, It is a comprehensive cover to protect the loss or damage
to goods while being transported from road, rail, air, or sea.
2) The earning or acquisition of any fright, passage money,
It includes separate cover for the loss or damage to the
commission, profit or other pecuniary benefit, or the
cargo, the ships, freight, and Inland transit. Sharing of losses
security for any advances, loans or disbursements is
of few among many is the essentiality of the Insurance i.e.
endangered by the exposure of insurable property to
sharing burden of few unfortunate in the commonality
maritime perils,
environment who is exposed to the same risk.

About the author In modern times Marine Insurance covers all the risks of the
maritime property at an agreed price meeting the
Harpreet Singh requirements of Sales contracts (INCOTERMS) between the
Head - General Insurance overseas traders for LC/banking purposes and become a
Sridhar Insurance Brokers (SIB) India
facilitator of conduction of the modern global trade. The
38 The Insurance Times, January 2018
Coverage is made as per International Institute Cargo 4. Marine Insurance is also available for Cargo
Clauses (ICC) - A clause for sea voyage which has the well Ships (Hull Insurance)
defined terms, conditions, exclusions, period of coverage, Marine Insurance is available for cargo ships also called
loading/unloading coverage, warehouse to warehouse as Marine Hull Insurance. The aim of Hull insurance is
coverage etc. with add ons like War & Strikes Riots and to protect the ships, its machinery and equipment from
Common Commotions (SRCC). unforeseen dangers and conditions. This insurance
covers all kinds of vessels navigating in any permissible
Marine insurance policies have a very fluid underwriting water body. The use of bigger vessels, such as the
process, and most policies are open policies which can be massive 18,000 TEU EEE offer economies of scale but
molded as per the needs of the insured. along with it also increases the risks of loss or damage.
So, with the bigger boats and vessel being used,
Here are some factors which show marine insurance for cargo ships is becoming more vital these
insurance cover is really important: days.
1. Transporting Goods across the nations is much
5. Insure the goods in Transit for Single or Multiple
safer than before (But accidents do occur)
Earlier transportation of goods used to be difficult as
lesser modes of transports were available. But now, with Marine insurance policies are available in different
a constant increase in the transportation business and structures. Based on how frequently one needs to
new sea routes being ascertained, transferring of raw transfer the goods, a structure can be selected
materials and finished goods within and outside the accordingly. These range from Annual Turnover Policy
nation has become quite convenient and safe. But, the (ATOP), Specific Voyage, Open Policy and Annual Policy.
accidents and risks cannot be warded off completely. The
incidents of piracy of ships have increased in the recent 6. Marine Insurance covers cost of emergency
times. Also, nothing is guaranteed whatsoever that there storage
will be no accident of the carrier or theft of the goods. The needs for emergency storage might arise in case
there is emergency condition like extreme weather
2. Worldwide Coverage conditions, riots or some natural disaster such as floods
Certain insurance companies provide global marine that prevent the cargos to reach its final destination.
insurance for all types of marine risks. These policies aim The required expenses in such cases are also borne by
at protecting the single vessels for complex marine policies if special covers are taken for it.
multinational businesses. It is need of the hour for the
businesses which have subsidiaries in more than one 7. Coverage for goods discharged at a distress port
nation. Multinational businesses need a global policy to Goods discharge is often interrupted due to problems
ensure worldwide coverage for the to and fro of the like collapse of a part of a bridge to the port,
products. overturning of the truck that was carrying the goods
during night or any such accident. Marine insurance
3. A Marine Policy covers each and every type of offers covers the risk of such prevented goods discharge
goods transport:
Marine insurance policy is applicable to all kinds of goods
such as:
Y Packed or general Cargo: The packed cargo includes
break bulk (goods packed in boxes, crates, drums
and on pallets), neo bulk (lumber, paper, cars and
trucks) and unitized cargo (packed in big containers)
Y Unpacked or bulk cargo: Bulk cargo includes Liquid/
Wet Bulk (petroleum, gasoline, LNG [Liquefied
Natural Gas], liquid chemicals, Juice & Wine in
tankers) and Dry Bulk (coal, grain, iron ore, bauxite
& cement carried in bulk carrier.)

The Insurance Times, January 2018 39

at the distress port which is also known as inland transit
insurance. Some marine insurance providers also cover
the risk of the loss of profit due to delay in delivery.

8. Marine insurance can also help the financiers

of the goods in transit
The financers such as banks and financial institutions
which may have financed the said voyage of the cargo
in return for interest can also take coverage under the
marine insurance. In cases where there is loss or
damage due to unexpected mishaps, these financers
have to suffer huge losses for which they can be
indemnified under such policies.  Bill of Lading / Air Waybill (AWB) / Guaranteed
Remittance (GR)
9. Can be bought and managed online  Packing list
Now a days, insurers provide insurance facilitates online  Copies of correspondence exchanged with carriers.
services that save your time and prevents paperwork.
Online services have also enabled comparison of the  Copy of notice served to the carriers along with
insurance policies offered by different insurers and acknowledgment or receipt.
choosing the best one or altering it according to one's  Shortage / damage Certificate issued by carriers.
business requirements. Y Survey fee should be paid to the surveyor appointed by
the insurance company, at the moment although; this
How Marine insurance policy can be fee will be refunded along with the claim if the claim is
helpful at the time of loss? admitted by the insurance company.
When one has Marine Insurance coverage, the following Y Additional Documents may be required depending upon
steps should be taken at the time of loss or damage: the nature and type of the loss that has occurred.
Y Taking immediate steps to minimize the losses.
Y Inform the nearest office of the marine insurance What all can be covered by marine
company or claim settling agent as mentioned in the insurance?
Y CARGO-Import/Export/Inland/Coastal shipments
Y In case of damage to goods as long as they are on ship
Y SHIPS HULL & MACHINERY with all its fittings
or port, arrange for joint ship survey or port survey.
Y Freight/ Other Earnings/ Charter rent
Y In case there is a Declaration Policy - the consignment
should be declared within the limit of balance sum that Y Ship's Builders Risk/ Ship's Dismantling Risk
is insured. Y On board Store, Provisions, Voyage preparation
Y In case of loss damage in transportation, a monetary expenses etc.
claim should be lodged with the carrier keeping the Y Duty Insurance
time limit in mind to protect the recovery rights. Y Increased Value Insurance
Y Damage or Shortage Certificate must definitely be
taken from the carrier. What is the method of evaluation of the
Y In case any damage is feared in transit, open delivery marine insurance cover?
should be looked forward to. The carrier and their
The evaluation of the goods is done with subject to the
certificate should be obtained.
conditions of contract of sale of goods and accordingly
Y Submit duly assigned insurance policy certificate along insurance cover is decided. The marine insurance coverage
with the original invoice and other documents which are is proposed keeping in mind, the Cost, Insurance and Freight
required to validate the claim. Examples of such (CIF) along with a nominal extra 10%, taking care of
documents are: incidental expenses (Agreed Value).

40 The Insurance Times, January 2018

What are the types of policy/coverage Get Latest News / Updates on Insurance Sector
available in Indian market? THE INSURANCE TIMES
Marine insurance policies can be altered according to the Widely Read Monthly Magazine on Insurance in India
requirements of the insured but these are the basic kinds of
policies available in the Indian market: Covers Schemes
 Life Insurance 1 Year 840 ‰
Y Specific Marine Policy for Short Duration of Transit
 Non Life Insurance 3 Year 2100 ‰
 Risk Management / Safety 5 Year 3000 ‰
Y Open Policy for Import/Export  Consumers
Y Inland Transit open Policy or Special Declaration Policy Subscribe Now !!
or Special Storage Risk or Annual Policy
Y Specific Policy for Inland Transit ORDER FORM
Y Open Cover with General Terms & Conditions (T&C) of
‰New ‰Rental Subscription No.
Coverage (Please tick)
Y Sailing Vessels Name of Executive :
Y Duty/Increased Value Insurance Designation:
Y Tea/Crop Insurance Company's Name :
Y Sellers Contingency Insurance Address :
Y Insurance of Containers Pincode :

What are the types of marine losses/ Phone : Mobile :

Fax : E.Mail :
damages coverage available in Indian
Publication Order :
While deciding the policy, one should look for the different *Scheme Opted : No.of Copies
(Please mention the scheme name example : IT-1, LIT-1 or Combo 4-1)
kinds of coverage available and choose as per their goods
(some goods are more perishable as compared to others). Period of Subscription : From to
Following are the types of coverage available in the Indian Details of payment : Cash/M.O./D.D./Cheque* No
Y Partial Damage Claims
Dt drawn Rs.
Y Constructive Total Loss
‰Ordinary ‰Registered Post (Please tick)
Y Actual Total Loss *For outstation cheque please add Rs.50/- towards bank charges.
Y Other Liabilities such as both to Blame Liabilities, Outstation cheques accepted in metro cities only. No Charges ap-
Collision Liabilities, General Average, Salvage Charges, plicable for payable at per cheques.
Other Expenses, Passengers Liability Etc. Do not make any Cash Payment
for Subcription of Journals Signature of Subcriber
Marine insurance plays a vital role in domestic trade as well
as in international trade. Goods may be totally lost by the Please tear and send it along with your letter
operation of the marine hazards, the resulting loses can be
immense, restoring operations can take weeks and even Mode of Payment
months, which leaves the companies without their cargo and 1. Payable at per Cheque/Demand Draft favouring Sashi Pulbications
Private Limited, Payable at Kolkata
no sales activity. In the case of piracy, ships and cargos are
2. You can directly ECS/Deposit cash in our bank account number
held for months on end before any ransom negotiations even below in your city and send us copy of Pay in slip by email/fax.
start to begin. This leaves the businesses massively exposed A/C Name : Sashi Publications Private Limited
to the loss if they are not insured properly. A/C No. : 402120110000327
Bank : Bank of India
It is imperative that the cargo owners should insure Branch : V V K Road Branch., Kolkata, India
whatever is accurate for their goods, as marine insurance IFSC Code : BKID0004021
not only protects them from a severe loss but could also Make Online Payment by Credit Card/Debit Card or your net banking
protect their businesses from getting its doors closed. T account at our website

The Insurance Times, January 2018 41

Panel Discussions on "Issues and
Challenges in Health Insurance :
The Road Ahead"

"Issues and Challenges in Health Insurance

: The Road Ahead" @ Christ (deemed to be
University) Bengaluru organized by Center
for Research and Department of
Commerce for Undergraduate and Post
Graduate Students Pursuing Insurance
Studies and Banking.

The panel discussion and presentation on

emphasized on interesting topics such as
1) Introduction to Health
(Jaswanth Singh G Insurance Domain
Consultant and Faculty for Insurance
Studies and Pensions - Bengaluru)
Mr Jaswanth introduced the fundamental concepts of
in the minds of the audience at the start of the seminar.
health insurance that lay the foundation of the health
Professor Jaswanth also covered the history of health
insurance sector of India. His presentation helped the
insurance schemes in India starting from the ESIS
audience understand the functioning of Health
Insurance and answered a plethora of questions existing
2) Health Insurance Research
(Dr Uma Associate Professor Department of Commerce
Christ, deemed to be University Bengaluru)
Dr Uma presented her research paper on health
insurance focusing on awareness of health insurance
and few consumer behavior analysis on opting health

3) Under penetration of Health Insurance

(Mr Sumit Ramani FIA (UK), FIAI (India) Founder
Actuaria Consultants Bengaluru)
Mr. Sumit spoke about the challenges faced by the
rapidly growing health insurance industry of India
including under penetration in several areas that is
acting as hurdle in the growth of this sector. His talk
instilled curiosity in the audience and motivated them
to find solutions to the challenges faced by the health
insurance industry.
42 The Insurance Times, January 2018
to combat the challenges faced by the health
insurance sector in India. He also spoke about the
need to spread awareness about the importance
of health insurance, especially in rural areas for the
economic well being of people and growth of the

7) Claims Mechanism - Claims Process,

Settlement and Grievances
(K Sankaraiah Professional Expert, Office Of
Insurance Ombudsman Bengaluru Centre)
Mr. K Sankaraiah, a Professional Expert of the
Office of Insurance Ombudsman, spoke about his
experience in claim settlement and explained the series
4) Comparative study of Administration of
of steps in the claim settlement process and grievance
health insurance schemes in our country settlement mechanism. He engaged the audience by
and other countries presenting various experiential learnings from his role
(Dr V ijaya Bhaskar Associate Professor Acharya in the Office of Insurance Ombudsman such as 90% of
Bangalore Business School - Bengaluru) grievances are from the health insurance segment.
Dr. Vijaya Bhaskar introduced the international aspect Along with professionals & faculties students also
of health insurance by presenting a comparative study explored new learning and development initiatives in
of administration of health insurance schemes n India Insurance Industry. Such discussions should be
and abroad. The presentation encapsulated the frequently initiated which will bring in new vibrant
audience by giving them a jist about the expanse of the talents in the insurance industry as well as growth and
health insurance sectors in other countries which awareness of Insurance Industry
allowed to bring in several new perspectives.
News Compiled by
5) Underwriting aspect along with life and Ankit Puri
health combi products and critical illness BBA F & A Student @ Christ (Deemed to be University)
riders - Reinsurance Perspective
Jaswanth Singh G
(George K Kurian Assistant Vice President Underwriting Insurance Domain Consultant and Faculty for Insurance
Life and Health Products @ Swiss Re Bengaluru) Studies and Pensions.
Mr. George introduced the concept of
underwriting behind the life insurance and
health insurance products, and also gave
exposure to the audience by stating the
diversity in types of life and health insurance
products. Not only did he ask questions to the
audience but also gave interesting case study
examples that kept the audience engaged.

6) Best Model to follow and implement

the health insurance scheme
(C R Nanda Kumar Senior Branch Manager N
R Square Branch Bengaluru The Oriental
Insurance Company Ltd))
Mr. C R Nanda Kumar tried to introduce a way
The Insurance Times, January 2018 43
Life Insurance Plan

Cancer Protect
from Future Generali India Life
Insurance Co. Ltd.

etting diagnosed with Cancer is really heart breaking, and because of our lifestyle and surroundings, the
risk of getting Cancer is on an all time high. Cancer cases in India is skyrocketing and nobody is safe. The
most demoralizing part about Cancer is that it not only affects your health but also puts a major burden
on your financial status. However, the financial burden that you face can be eased with the help of a Cancer
insurance. A cancer insurance policy by Future Generali will help you stay financially and psychologically secure in case
you or a family member of yours is diagnosed with Cancer.

Coverage Options
Benefits offered under various Plan Options.
Lump Sum Cover Lump Sum Cover with Income Benefit
(Option 1) (Option 2)
If Cancer is diagnosed in Receive 25% of your cover amount (Sum Assured) instantly
the Minor Stage +
$ Your premiums are waived off for next three years or till the end of the policy term,
whichever is earlier.
If Cancer is diagnosed #Receive your entire cover amount #Receive your entire cover amount
in Major Stage (Sum Assured) (Sum Assured)
Income of 2% of the cover amount (Sum
Assured) per month for a period of 60
months on diagnosis of Major Stage
If Cancer is diagnosed during Receive 25% of your cover amount (Sum Receive 25% of your cover amount (Sum
Minor Stage and later a Assured) on diagnosis of Minor Stage Assured) on diagnosis in Minor Stage
Major Stage Cancer is Cancer Cancer
diagnosed* + +
$ Your premiums are waived off for next $ Your premiums are waived off for next
three years or till the end of the policy three years or till the end of the policy
term, whichever is earlier. term, whichever is earlier.
+ +
#75% of your cover amount (Sum Assured) #75% of your cover amount (Sum Assured)
on diagnosis of Major Stage Cancer Assured) on diagnosis of Major Stage
Income benefit of 2% of the cover
amount (Sum Assured) per month for a
period of 60 months on diagnosis of
Major Stage cancer

44 The Insurance Times, January 2018

a) Minor Stage Cancer benefit shall be payable once the policy anytime by surrendering the policy for a
during the entire life of the policy for Cancer of a surrender value.
particular organ.
b) Maximum 4 times Minor Stage Cancer benefit is For single premium option, surrender benefit is equal to
payable upto a maximum of sum assured, for separate single premium including extra premium for substandard
organs, in the entire life of the policy. lives, if any (exclusive of Goods & Services Tax) multiplied
by surrender value factor as given below:
c) The policy will terminate once the Sum Assured is
exhausted. Policy Year of Guaranteed Surrender Value Factor
d) Sum Assured shall be highest of the following: Surrender as a percentage of Premium
 10 times Annualised Premium, or 1 56%
 105% of total premiums paid as on date of claim 2 42%
event, or 3 28%
 Maturity Sum Assured which is NIL. 4 14%
 Absolute amount payable on death which is NIL. 5 NIL
 Sum Assured
$ Not applicable for single premium plan.
Grace Period:
You get a grace period of 30 days for annual mode / 15
# Lump Sum benefit on diagnosis of Major Stage Cancer is
days for monthly mode from the premium due date to pay
Sum Assured minus Lump Sum benefits paid during Minor
your missed premium. During this grace period, you will
Stage Cancer.
continue to be insured and be entitled to receive the
benefits. If a valid claim arises under the policy during the
Benefits Grace Period, but before the payment of due premium,
Free Look Period: In case you disagree with any of the the claim will be honoured. In such cases, the due premium
terms and conditions of the policy, you can return the will be deducted from the benefit payable.
policy to the company within 15 days (30 days if policy is
sold through direct marketing mode) of its receipt for Tax Benefits:
cancellation, stating your objections. Future Generali will The Premium(s) paid by you are eligible for tax benefit as
refund the policy premium after the deduction of stamp may be available under the provisions of Section(s) 80D as
duty charges, medical expenses, if any and proportional applicable. For further details, consult your tax advisor. Tax
risk premium for period of cover, if any. benefits are subject to change from time to time.

Surrender Value: There is no surrender value applicable Target Group

under regular pay option. For the customers who want to financially protect
themselves and their family from the medical and non
The policy acquires a Surrender Value immediately after medical expenses that are incurred in case Cancer is
payment of single premium. The policyholder may terminate diagnosed and also save taxes

Articles/Feedback Invited
We invite articles on Life Insurance, General insurance, Risk Management or any other related topics on insurance
for publication in our journal The Insurance Times and Life Insurance Today. You may also send your feedback on the
current scenario of Insurance Industry in form of Letters to Editor Column.
If you come across any important caselaws that we might have missed or any other news item of importance, please
send us by mail/post for publication. We also invite your suggestions and feedbacks for inclusion of new topics in the
journal which you would like us to cover. You can also post comment on Facebook at
bimabazaar and or on twitter at
- Editor

The Insurance Times, January 2018 45

Non-Life Insurance Plan

Comprehensive car
insurance policy
from Cholamandalam MS General
Insurance Company Ltd

omprehensive car insurance policy provides you What does it Cover
with all the above benefits along with a complete
Chola MS Motor Insurance protects your vehicle against:
peace of mind and sense of security. Not only does
Y Third Party Personal Liability with unlimited coverage.
it cover your vehicle from accidents and losses but
The amount awarded by the court as your liability to a
also from the damage done through natural calamities like
third party due to accidental death or injuries caused
earthquake, cyclones and floods. Our easy to buy online ve-
by your vehicle will be compensated for under the ve-
hicle insurance policy ensures that your vehicle is in safe hands
hicle insurance policy.
and your losses are covered in the most optimum manner.
Y Third Party Property Damage with a maximum cover
of INR 7,50,000, in case of private cars.
Here's a look at the wide range of benefits you stand to Y Own Damage Cover protects against the loss due to:
gain when you choose Chola MS for your car insurance:  Fire, lightning, self-ignition or explosion
Y Complete comprehensive cover that offers both Third  Burglary, theft or housebreaking
Party Cover and Own Damage Cover  Strike or riot
Y Third Party Liability Cover that includes TP Personal  Earthquake (shock damage and fire)
Liability & Property Liability
 Flood, inundation, storm, tempest, typhoon, hur-
Y Personal Accident Cover for the owner, driver and pas- ricane, Cyclone and Hailstorm
 Accidental external means
Y Protection for your vehicle against damage or loss due
 Malicious acts
to accidental external means, theft, burglary and vari-
ous other perils  Terrorist activity
Y Discount on Own Damage (OD) premium for claim free  During transit by rail, road, inland waterway, air
policy years - No Claim Bonus or lift
Y Optional cover for personal accident of up toINR 2 lakhs  Landslide and rockslide
for passengers in your car  Personal Accident Cover with compensation for
Y Cashless claims facility available at more than 3750 owner cum driver.
Chola MS preferred garages  LL to Paid Driver.
Y Seamless and hassle free claims process  PA cover for named & unnamed passengers, includ-
Y Facility to buy online car insurance through simple and ing spouse, children, parents, etc
hassle free procedures  Legal liability towards employees arising out of an
Y Quick and easy online insurance renewal process accident involving the insured vehicle.

46 The Insurance Times, January 2018

Sum Insured Increased Sum Assured on maintaining healthy
The Insured's Declared Value (IDV) of the vehicle will be lifestyle-
deemed to be the 'Sum Insured,' fixed at the commence- During the policy term, we will offer you another chance
ment of each policy period for the insured vehicle. The IDV to avail our Super Elite Premium Rates, in case you were
of the vehicle is fixed on the basis of the manufacturer's eligible for these rates while applying for this policy.
listed selling price for the specific brand and model of the On successful completion of 25 months of your policy, you
insured vehicle at the time of commencement of the insur- can undergo medical tests at our cost. If your medical evalu-
ance or renewal, and adjusted for depreciation. ation turns out to be favorable as per our underwriting
guidelines, we will increase your policy sum assured. This
The table below lists the schedule of age-wise depreciation, increase will come to you at no addition premium amount
for fixing IDV. and will be applicable from your 4th policy year onwards.
Age of the Vehicle % of Depreciation
for fixing IDV Option for Family Income Benefit of 5 or 10 years-
While applying for this plan, you can choose how you would
Not exceeding 6 months 5%
like your nominee to receive policy payouts. There are 3
Exceeding 6 months but not 15% flexible pay-out options to choose from:
exceeding 1 year
Payout Option How is the Illustration:
Exceeding 1 year but not 20%
pay-out made? Sum Assured =
exceeding 2 years
Rs. 2 Crore
Exceeding 2 years but not 30%
Option A: 100% Sum Assured Rs. 2 Crore is
exceeding 3 years
Lumpsum is paid in a paid as lump sum
Exceeding 3 years but not 40% Payout single pay-out
exceeding 4 years
Option B: 50% of Sum Rs. 1 crore as
Exceeding 4 years but not 50% Lumpsum Assured is paid as Lump sum
exceeding 5 years Payout lumpsum and +
0.95% of Sum Rs. 1.9 lakhs
Key Benefits Assured is paid every month for
Substantial Life Cover at affordable premiums- every month for 60 months
Under this plan, you can benefit from lower premiums if 60 months (5 years) (5 years)
you are leading a healthier lifestyle. You will have to un- Option C: 1.07% of Sum Rs. 2.14 lakhs
dergo a medical examination to purchase this plan. Family Income Assured is paid every month for
Y If you do not smoke or consume tobacco, you are of- Benefit (FIB) every month for 120 months
fered preferential premium rates. 120 months (10 years)
(10 years)
Y If your medical evaluation turns out to be favorable as
per our underwriting guidelines, you may be eligible for
our Super Elite Premium Rates.
Option for policy term extension by 5 or 10 years-
You can choose to increase your policy term by 5 or 10 years
Y We offer further premium discounts when you choose by agreeing to pay a higher premium without any change
a sum assured of Rs. 5 Crores and above. in the premium payment term. This option is only
Y Lower Premium rates are applicable for females. availableto regular pay policies at inception only.

!! Hearty Congratulations !!
Thanks readers for excellent response for our Insurance Quiz published in our December 2017 issue. This month the
lucky winner of the Quiz is Sharad Sharda & M. L. Juliet.
Who will be the next?????
The Insurance Times, January 2018 47
Group Personal Accident

Ahmedabad Ombudsman Center FINDINGS

The insurer submitted that Company was intimated about
Case No.11-005-1207-12 the death of late (Shri) Gurdev Singh after seven months,
which was in violation of the policy term and condition. He
Mr. Urvishbhai A. Patel clarified that considering hardship being faced by the fam-
Vs. ily of the deceased, a liberal view has been taken and claim
was settled on sub-standard basis by paying 75% of the
Oriental Insurance Co. Ltd. admissible amount. Complainant represented that family
was in a state of shock, even then necessary documents
Repudiation of Treatment expense Complainant treated for were produced for a claim.
accidental injury of his leg and expense incurred for
Rs.26,712/- was repudiated by the Respondent giving rea-
It was held that penalizing a widow for the delay caused in
son that there was no evidence to prove the treatment was
lodging claim is notjustified as reasons for the delay in com-
due to accidental injury.
municating the claim were spelt out by the widow. Accord-
The policy was not an individual it is a Group Personal Acci- ingly, an award was passed with a direction to the insur-
dent policy issued to a Master Policy holder. ance company to release the balance payment of Rs.
Complainant was a known case of DM and taken treatment 25,000/-.
for unhealing ulcer which is not payable as per policy terms
and conditions. Guwahati Ombudsman Centre
In view of this, complaint fails to succeed. Complaint No. 11-G8-059/12-13
Mrs. Jaya Deka
Chandigarh Ombudsman Center Vs
Case No. GIC/324/REL/11/11 The Reliance General Insurance Co. Ltd.
Raj Kaur Complainant: The Complainant stated that her husband Mr.
Kashab Deka was an insured member under Personal Acci-
Vs dent Insurance Policy (Group) bearing Policy No.
Reliance General Insurance Company Ltd. 1503302914000026 procured from the above Insurer by the
Employer GTFS Multi Services Limited covering the period
FACTS from 29.05.2010 to 28.05.2011. While the policy was in
The complaint was filed about Group Personal Accident force, the Insured met with a motor accident on 03.02.2011
Policy that covers police personnel. Complainant’s husband, and succumbed to his injuries on 09.02.2011. Thereafter,
late (Shri) Gurdev Singh, insured under the policy for Rs. she lodged a death claim before the Insurer along with all
1,00,000/- had died in a road accident on 22.04.2009 and supporting documents. But, the Insurer has repudiated the
its claim was settled by the company for Rs. 75,000/- only. claim without any justified ground. Feeling aggrieved, the
Hence, feeling aggrieved, she had approached this office Complainant has lodged this complaint.
for release of remaining balance amount. Insurer : The Insurer has stated in their “Self Contained

48 The Insurance Times, January 2018

Note” that the death claim covered under Personal Acci- Office of The Insurance Ombudsman, Kochi
dent was intimated to them on 23.07.2010. As per the in-
timation the deceased met with a motor accident on Complaint No. IO/KCH/GI/11-003-030/2012-13
03.02.2011 and latter succumbed to his injuries and Subhadra
breathed his last breathe on 09.02.2011. The Complainant
has intimated the claim after a delay of 162 days from the Vs
day of death which grossly violates policy condition No.1
which hereby states that “In case of death, written notice
National Insurance Co. Ltd
of the death must, unless reasonable cause is shown, be so
given before internment / cremation, and in any case, The complainant’s deceased son was covered under Group
within one calendar month after the death”. Therefore, the PA policy taken by PNYS Chit Fund. He was covered for Rs.
Insurer has repudiated the claim. 1 Lac under two policies. He died in a road traffic accident
while riding a motor cycle. The claim for the same was
Decision : It is apparent from the policy terms and condi- repudiated by the insurer on account of non-production of
tion that the claimant must submit written notice of the driving licence of the deceased and also contended that the
death within one calendar month after the death. In the insured committed breach of law with criminal intent.
instant case, it is apparent that the Complainant did not Therefore, the complaint.
submit the written notice directly to the Insurer within one
month from the date of death. It appears from the copy of The complainant submitted that the driving licence was lost
letter written by the Complainant addressing to the Em- in the accident and hence could not submit the same. The
ployer of the Insured (GTFS Multi Services Limited) that she deceased had not contravened any of the provisions of the
intimated them about the death of her husband on MV Act or any other law. The repudiation of the claim is
09.02.2011 due to accident which was received by the against policy conditions.
Employer on 15.02.2011. The copy of letter dated The insurer submitted that the deceased was not holding
18.07.2011 written by the GTFS Multi Services Limited to valid driving licence and thereby, he had contravened the
the Manager, Reliance General Insurance Co. Ltd. goes to provision contained in the MV Act regarding driving licence.
show that they had forwarded the 09 Nos. of claim papers He rode the motor cycle with criminal intent. Thereby, he
to the Insurer. had violated exception Clause 5 of the policy conditions. The
It is clear from the above that the Employer (GTFS Multi repudiation is legal and proper.
Service Ltd.) of the Insured did not send the written claim Decision:- A perusal of the terms and conditions of the
intimation letter to the Insurer within the stipulated period Group policy would reveal that there is no stipulation that
of time. It is an admitted fact that in case of Group Policy, the policy conditions relating to PA Insurance (Individual)
the Insured person do not have the copy of policy document “policy are made applicable as far as the impugned policies
with them and any claim “arises, it is to be submitted to are concerned. There is no specific provision in the terms
the Employer first by the claimant. The Master Policy is kept and conditions of the disputed policy that in case of road
by the Employer. In the instant case also the Complainant traffic accident while the insured is driving a motor vehicle,
is not exceptional from that. It is also ample clear that there the claimants must produce the driving licence of the in-
was no lapse on the part of the Complainant in intimating sured. So, the closure of the claims on that ground can not
the death claim through proper channel. It is proved that be sustained based on the terms and conditions of the dis-
there is huge fault on the part of the Employer for which puted policies.
genuine party has suffered. For the fault of the Employer In other words, there is no evidence that the accident took
the claimant should not be allowed to suffer. It is against place on account of breach of law. Even while the insurer
the principle of natural justice. Considering the entire facts alleges breach of law with criminal intent, the criminal
and circumstances of the case, the Insurer is asked to re- intent in riding the motor cycle in violation of MV Act is
consider the claim of the Complainant and arrange to settle not revealed by the insurer. In an almost identical situation,
the claim by condoning the delay. Hence, the decision of Hon. HC of Kerala in Binoma Vs State of Kerala, 2013(3) KLT
repudiation of the claim by the Insurer is set aside. 172, after considering the policy conditions and other rel-
Insurer is accordingly directed to settle the claim within 15 evant documents, held that what has to be considered is
days allowing penal interest @ 8% P.A. on the premium not the cause for drowning but the cause for the death.
amount. So, cause of accident is irrelevant and cause of death is
material. T

The Insurance Times, January 2018 49


IRDAI Circular

The Prevention of Money-laundering September 2010, it is being undertaken in 25

jurisdictions (now 29), with systemically important
(Maintenance of Records) Seventh financial sectors, including India, every five years. Last
Amendment Rules, 2017 FSAP for India was conducted in 2011-12 and the report
published by IMF on Jan 15, 2013.
Ref. No: IRDAI/SDD/CIR/MISC/267/12/2017
2. Second comprehensive FSAP has been successfully
Date: 18-12-2017 conducted for India in 2017. The FSAP scoping mission
of the joint IMF-WB team visited India in December
This is further to our Circular ref: IRDAI/SDD/MISC/CIR/248/ 2016 to outline the areas of financial sector to be
11/2017 dated 8th November, 2017 with regard to the covered in the exercise, followed by two more mission
Prevention of Money-laundering (Maintenance of Records) visits – in March and June-July 2017. The team met
(Second Amendment) Rules, 2017. officials of various related Ministries/ Departments/
The Central Government has notified the PML Agencies and all financial sector regulators i.e. RBI,
(Maintenance of Record) (Seventh Amendment) Rules, 2017 SEBI, IRDAI and PFRDA and public and private sector
on 12.12.2017 and has issued Gazette Notification on participants. IMF and WB have released the Financial
13.12.2017. Accordingly, the date of submission of the System Stability Assessment (FSSA) and Financial Sector
Aadhaar Number and Permanent Account Number or Form Assessment (FSA) respectively in their websites on 21st
60 by the clients to the reporting entity is 31st March, 2018 Dec 2017.
or six months from the date of commencement of account 3. India welcomes assessment of the Indian financial
based relationship. system undertaken by the joint IMF-World Bank team
This is for your information and necessary action. conforming to the highest international standards.
4. The FSAP assessment acknowledges that India has
Member (Life) recorded strong growth in recent years in both
economic activity and financial assets with size of the
India: F inancial Sector Assessment financial system remaining broadly stable in terms of
GDP at about 136 per cent. Increased diversification,
Program 2017 commercial orientation, and technology-driven inclusion
Ref. No:File No. 18/24/2015-FSDC(Pt)-Volume(5) have supported growth in the financial industry, backed
Date:22-12-2017 up with improved legal, regulatory, and supervisory
frameworks. The FSAP report acknowledges many
1. The Financial Sector Assessment Program (FSAP), a joint efforts by Indian authorities like tackling Non-
program of the International Monetary Fund (IMF) and Performing Assets (NPAs), recent recapitalization
the World Bank (WB involved in developing countries measures for banks and introduction of special
and region only), undertakes a comprehensive and in- resolution regime, formalization of National Pension
depth analysis of a country’s financial sector. Since System (NPS) and making the pension sector regulator

50 The Insurance Times, January 2018

statutory, passing of Insolvency and Bankruptcy Code the provision of public capital should be contingent
and setting up of Insolvency and Bankruptcy Board of upon meaningful restructuring of PSBs. The FSAP also
India (IBBI), to name a few. It appreciates initiatives recommends that governance and financial operations
such as ‘no frills’ account (under Jan Dhan Yojana), of PSBs could be improved by developing a strategic
promoting digitization, introduction of unique plan for their consolidation, divestment, and
biometric identification number (AADHAR), currency privatization. The supplement also notes that on
exchange initiative etc. It also recognizes the improved November 1, the Government of India announced the
inter-agency co-operation since the establishment of establishment of an Alternative Mechanism panel,
Financial Stability and Development Council (FSDC), headed by India’s Finance Minister, to seek
supported by its Sub-Committee and four technical consolidation across state-owned banks.
groups and progress in setting up of Financial Data 7. In relation to securities market, the report
Management Centre (FDMC). acknowledges that SEBI has made significant changes
5. FSAP assessment acknowledges that RBI has made to its regulatory programs that directly address many
substantial progress in strengthening banking findings and recommendations contained in the detailed
supervision by introduction of risk-based supervision in IOSCO (International Organization of Securities
2013 through a comprehensive and forward-looking Commissions) assessment published in 2013. SEBI has
Supervisory Program for Assessment of Risk and Capital significantly expanded its regulatory programs,
(SPARC), domestic and cross-border cooperation expanded its on-site inspection program and developed
arrangements, Asset Quality Review (AQR) and the a risk-based matrix. The Amendments to the SEBI Act
strengthening of regulations in 2015 leading to have granted SEBI additional investigative powers,
improved distressed asset recognition, to name a few. created a special court that handles criminal cases filed
The Basel III framework and other international norms by SEBI, and gave SEBI full authority to regulate pooled
have been implemented or are being phased in, investment schemes exceeding Rs. 1 billion. The report
including stricter regulations on large exposures. It also also appreciates the measures undertaken to quicken
notes RBI establishing a new Enforcement Department the pace of bond market development.
and revising the Prompt Corrective Action (PCA) 8. The reports note that India is moving towards a new
framework that incorporates more prudent risk- state-of-the-art bankruptcy regime and the newly
tolerance thresholds. The Report notes that risks in created regime on insolvency and bankruptcy is
shadow banking sector in India were limited and that comprehensive and aims at restructuring companies
risks in non-bank financial subsectors appear contained within ambitious timelines.
but continue to warrant close monitoring.
9. On the financial market infrastructures (FMIs), the FSAP
6. The stress tests conducted by IMF FSAP experts covered team assessed that the RBI designated qualified central
the 15 largest banks, including 12 public sector banks counterparty (CCP) that plays a critical role in money,
(PSBs) which account for 71 per cent of the banking G-sec repo and secondary markets has a prudent risk
sector assets. The FSSA and FSA note that the largest management framework and high operational
banks appear sufficiently capitalized and profitable to reliability.
withstand a deterioration in economic conditions.
However, some PSBs have vulnerabilities and would be 10. On resolution regime for financial institutions, while
requiring additional capital. These capital needs were recognizing the efforts of Indian authorities in
assessed between 0.75-1.5 per cent of GDP for baseline developing a comprehensive resolution framework
through the Financial Resolution and Deposit Insurance
and adverse scenarios. This estimate was made prior
(FRDI) Bill (“Bill”), the assessment identifies some gaps,
to the announcement of the plan for recapitalization
by Government of India. The post-assessment including further strengthening of deposit insurance
supplement points out that the major recapitalization framework and resolution tools, particularly the bail-in
plan for PSBs announced on October 24, 2017 power (cancellation of liabilities) being limited to
amounting to approximately $32 billion or 1.3 per cent contractual write-down of securities with explicit
conversion clauses (as opposed to broader statutory bail-
of GDP is expected to largely address the PSBs’
in powers), some duplication of supervisory authority in
recapitalization needs. The reports, however, note that
The Insurance Times, January 2018 51
the pre-resolution phase and the requirement to modify trusts of Asset Reconstruction Companies (ARCs),
the clause on preferential treatment of domestic bringing in 5/25 Scheme to extend long tenor loans to
creditors over foreign creditors. The Bill attempts to infrastructure projects, take-out finance, flexible
revamp and strengthen the deposit insurance structuring etc.
framework in India, by providing for faster and stricter 13. Recognizing that cyber security is critical for
timelines for payment, and shifting to a risk-based safeguarding the integrity and stability of the financial
premium framework for charging premiums from banks. sector, Government has decided to set up a Computer
With regard to bail-in, as the Report rightly points out, Emergency Response team for the Indian Financial
India currently has no provision for the same, and Sector (CERT-Fin), which will work in close co-ordination
believes that only a consensual, hybrid form with both with all financial sector regulators and other
statutory and contractual forms of bail-in may be stakeholders and initiatives in this regard are already
suitable for the country. The Bill also distinguishes, to under way.
the extent possible, the roles and responsibilities of the
regulators and the resolution authority. Any duplication 14. The recommendations in case of India FSAP are mainly
in their function is both unavoidable, and necessary, for to bring about further improvements in the structure
and functioning of the financial system and many of the
the effective monitoring of distressed financial firms. On
detailed recommendations are in sync with the
the issue of cross border co-ordination, the Bill gives
flexibility to recognise or adopt support measures of authorities’ own developmental plans.
foreign resolution actions through bilateral agreements, 15. As a member of the FSB, BCBS, IOSCO, IAIS and IMF,
in the absence of which, in line with the prudential India actively participates in post-crisis reforms of the
regulations in place in India, the creditors of the branch international regulatory and supervisory framework
office in India, of a parent body established outside under the aegis of the G20. India remains committed
India would have first charge on the assets of the to adoption of international standards and best
specified service provider for the purpose of resolution practices, in a phased manner, calibrated to domestic
or liquidation under the Bill. The FRDI Bill, 2017 is needs and economic conditions, wherever necessary.
presently under the consideration by a Joint The FSSA released by IMF can be accessed here
Parliamentary Committee.
The FSA released by World Bank can be accessed here
11. On the need for modernising insurance solvency
framework and further development of risk-based (Dr. C.S.Mohapatra)
supervision, IRDAI is already taking steps by drawing a Adviser (FS)
road map on the implementation of risk based capital
(RBC) system in India and is in the process of formulating Insurance Regulatory and Development
an overall strategy to develop an appropriate “Risk
Based Supervisory Framework” for effective and Authority of India
efficient monitoring and evaluation of potential risks in Date: 20-12-2017
the insurance sector. On 21 Sep 2017, IRDAI has already
formed a ten-member steering committee to Insurance Regulatory and Development Authority of India’s
implement the Risk Based Capital (RBC) Regime in Head Office will be shifted to its own premises with effect
accordance with the recommendation of Risk Based from 26.12.2017 at the following Address.
Capital Committee Report.
12. Government has also taken various steps to enhance Address:
investment in infrastructure sector including launching Insurance Regulatory and Development Authority of India
of innovative financial vehicles such as Infrastructure Sy. No. 115/1
Debt Funds (IDFs), Real Estate Investment Trusts (REITs)/ Financial District
Infrastructure Investment Trust (InvITs), National Nanakramguda, Gachibowli
Infrastructure Investment Fund (NIIF), laying down a Hyderabad - 500 032
framework for municipal bonds, allowing complete pass Tel: 040-20204000
through of income tax to securitization trusts including This is for the information of all concerned.
52 The Insurance Times, January 2018
The Insurance Times, January 2018 53
(Rs. in crores)
INSURER For the month of Upto Market Share Growth over the
November 2017 November 2017 upto the corresponding
Month of period of
2017-18 2016-17 2017-18 2016-17 Nov., 2007 previous year
Bajaj Allianz 537.35 478.55 5,975.03 4,672.36 6.22 27.88
Bharti AXA General 118.54 109.23 1112.08 875.75 1.16 26.99
Cholamandalam 319.97 236.56 2806.44 1968.36 2.92 42.58
DHFL General** 12.31 NA 12.31 NA 0.01 NA
Future Generali 138.63 130.43 1248.61 1140.75 1.30 9.46
HDFC ERGO General# 403.59 604.26 4,767.56 3,802.36 4.96 25.38
ICICI-lombard 885.00 833.00 8,466.00 7,264.00 8.81 16.55
IFFCO-Tokio 339.6 572.79 3214.17 3083.59 3.34 4.23
Kotak Mahindra 16.66 8.54 109.10 41.63 0.11 162.07
Liberty 58 46 532 385 0.55 38.18
Magma HDI 35.41 32.85 310.19 257.78 0.32 20.33
National 1238.2 1057.57 10733.39 9122.8 11.17 17.65
New India 1525.21 1234.01 14478.32 12182.31 15.06 18.85
Oriental 761.18 683.42 7408.66 7010.9 7.71 5.67
Raheja QBE 4.33 4.29 47.71 36.2 0.05 31.80
Reliance General 343.26 274.01 3,668.68 2,893.00 3.82 26.81
Royal Sundaram 200.07 165.05 1719.17 1445.81 1.79 18.91
SBI General 294.94 216.74 2,262.59 1,578.19 2.35 NA
Shriram General 158.88 148.25 1313.47 1174.84 1.37 11.80
Tata-AIG 417.00 340.00 3513.00 2816.00 3.66 24.75
United India 1229.18 1217.91 10401.07 10631.42 10.82 -2.17
Universal Sompo 151.27 76.36 925.30 677.39 0.96 36.60
Gen. Insurer's Total 9188.58 8469.82 85024.85 73060.44 88.47 16.38
Aditya Birla Health 10.63 1.80 126.84 2.56 0.13 4854.69
Apollo MUNICH 118.84 81.83 837.09 632.77 0.87 32.29
Cigna TTK 27.2 16.47 184.27 129.12 0.19 42.71
Max BUPA 55.38 43.56 439.34 347.29 0.46 26.51
Religare 84.42 50.7 636.82 405.62 0.66 57.00
Star Health & Allied Insurance 313.87 224.11 2145.35 1530.26 2.23 40.20
Stand-alone Pvt Health Insurers 610.34 418.47 4369.71 3047.62 4.55 43.38
AIC 107.36 193.54 5943.97 4891.85 6.18 21.51
ECGC 106.13 98.01 768.02 755.54 0.80 1.65
Specialized Insurers 213.49 291.55 6711.99 5647.39 6.98 18.85
GRAND TOTAL 10012.41 9179.84 96106.55 81755.45 100.00 17.55
Note: Compiled on the basis of data submitted by the Insurance companies
# 1. The Insurance Regulatory and Development Authority of India (IRDAI), vide letter dated August 14, 2017 has given
final approval in respect of merger of HDFC Ergo General Insurance Co. Ltd. with HDFC General Insurance Ltd. ( formerly
Known as L&T General Insurance Co.Ltd.). The merged entity is known as HDFC ERGO General Insurance Co.Ltd.
2. Figures for Previous Year pertain to HDFC ERGO and HDFC General Insurance Ltd. (Formerly known as L & T General
Insurance Com. Ltd.)
** commenced operations in November 2017 (Source : IRDAI)
54 The Insurance Times, January 2018
(Rs. in crores)
Sl Insurer March June September December March
No. 2015 2015 2015 2015 2016
1 BAJAJ ALLIANZ 1.82 2.46 2.54 2.54 2.51
2 BHARTI AXA 1.57 1.72 1.61 1.30 1.59
3 CHOLAMANDALAM MS 1.59 1.72 1.55 1.61 1.61
4 FUTURE GENERALI 1.66 1.54 1.59 1.53 1.54
5 HDFC ERGO 1.65 1.54 1.66 1.78 1.67
6 ICICI LOMBARD 1.95 1.93 1.94 1.93 1.82
7 IFFCO TOKIO 1.65 1.63 1.65 1.62 1.60
8 KOTAK MAHINDRA*** --- --- --- 2.58 2.45
9 L&T 1.97 1.69 1.60 1.40 1.52
10 LIBERTY VIDEOCON 6.71 4.91 3.87 2.87 2.24
11 MAGMA HDI 1.24 1.69 1.51 1.53 1.78
12 RAHEJA QBE 4.26 4.28 4.37 4.44 4.43
13 RELIANCE 1.53 1.50 1.54 1.64 1.55
14 ROYAL SUNDARAM 1.64 1.6 1.66 1.60 1.55
15 SBI 2.80 2.62 2.40 2.19 1.81
16 SHRIRAM 1.79 1.91 2.01 2.09 1.98
17 TATA AIG 1.55 1.57 1.53 1.58 1.66
18 UNIVERSAL SOMPO 1.86 1.84 1.67 1.75 1.69
18 NATIIONAL 1.52 1.51 1.51 1.51 1.26
19 NEW INDIA 2.44 2.47 2.40 2.31 2.30
20 ORIENTAL 1.68 1.77 1.78 1.74 1.59
21 UNITED INDIA 2.36 2.4 2.43 2.02 1.91
22 APOLLO MUNICH 1.72 1.55 1.51 1.60 1.51
23 MAX BUPA 2.10 1.66 1.84 2.17 2.16
24 RELIGARE HEALTH 2.04 1.84 1.67 1.68 1.85
25 STAR HEALTH 2.40 1.04 1.36 2.10 5.99
26 CIGNA TTK 2.10 1.83 1.81 1.68 1.54
27 AIC 3.18 3.2 3.09 3.13 3.26
28 ECGC 6.61 6.53 6.23 8.93 9.79
29 GIC 3.04 3.33 3.22 3.52 3.48
***Newly incorporated (Source : IRDAI Annual Report 2015-16)

The Insurance Times, January 2018 55

Do you think Pradhan Mantri Health Schemes
are losing steam

Results of Poll in our December 2017 Issue

Do you think IRDA should expedite the hearing
No against Insurance Companies and Intermediar-
ies and announce its verdict within a reason-
Can’t say able period

You may send your views to :
A clause contained in most property
Poll Contest, The Insurance Times Yes 100
insurance policies to encourage policy
holders to carry a reasonable amount 25/1, Baranashi Ghosh Street, Kolkata - 700 007 No 00
Phone : 2269 6035, 2218 4184, 4007 8428
of insurance. If the insured fails to Can’t say 00
maintain the amount specified in the
clause (Usually at least 80%), the in-
sured shares a higher proportion of the
Aadhaar, PAN to be linked to insurance policies by
loss. In medical insurance a percentage March 31
of each claim that the insured will bear.
India's insurance regulator on Monday extended the time to link Aadhaar
Collar number to insurance policies till March 31, 2018. In a circular issued to all
An agreement to receive payments as the life, non-life (including standalone health insurers) the Insurance Regula-
the buyer of an Option, Cap or Floor tory and Development Authority of India (IRDAI) said the date of submission
and to make payments as the seller of
of the Aadhaar Number and Permanent Account Number or Form 60 by cli-
a different Option, Cap or Floor.
ents to reporting entity is March 31, 2018.
Collateral Loans The Irdai cited the central government's gazette notification on December
Unconditional obligations for the pay-
13, relating to Prevention of Money-Laundering (Maintenance of Records)
ment of money secured by the pledge
(Seventh Amendment) Rules, 2017. On November 8, the Irdai had directed
of an investment.
the insurers to link Aadhaar and Pan Card numbers with insurance policies.
"These rules have statutory force and, as such, life and general insurers (in-
A special form of package policy com-
cluding standalone health insurers) have to implement them without await-
posed of personal automobile and
homeowners insurance. ing further instructions," the Irdai had said in a statement.

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56 The Insurance Times, January 2018